FURNITURE BRANDS INTERNATIONAL, INC. BROYHILL FURNITURE INDUSTRIES, INC. HDM FURNITURE INDUSTRIES, INC. LANE FURNITURE INDUSTRIES, INC. THOMASVILLE FURNITURE INDUSTRIES, INC. FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT Due May 17, 2018
EXECUTION
COPY
FURNITURE
BRANDS INTERNATIONAL, INC.
BROYHILL
FURNITURE INDUSTRIES, INC.
HDM
FURNITURE INDUSTRIES, INC.
LANE
FURNITURE INDUSTRIES, INC.
THOMASVILLE
FURNITURE INDUSTRIES, INC.
FIRST
AMENDMENT
$150,000,000
6.83%
Senior Notes
Due
May
17, 2018
Dated
as
of April 16, 2007
To
the
Holders of the Senior Notes
Named
in
the Attached Schedule I
Ladies
and Gentlemen:
Reference
is made to the Note Purchase Agreement dated as of May 17, 2006 (the “Note
Agreement”) among Furniture Brands International, Inc., a Delaware corporation
(the “Company”), each Subsidiary Co-Obligor listed above (together with the
Company, the “Obligors”), and each of the Purchasers named in Schedule A thereto
pursuant to which the Company issued $150,000,000 aggregate principal amount
of
its 6.83% Senior Notes, due May 17, 2018 (the “Notes”). You are referred to
herein individually as a “Holder” and collectively as the “Holders.” Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed
to
them in the Note Agreement, as amended hereby.
The
Obligors have requested an amendment of the Consolidated Debt and Fixed Charge
Coverage covenants contained in Sections 10.1 and 10.2 of the Note Agreement,
respectively. The Obligors have made a similar request of the Banks in respect
of the Credit Agreement. The Holders are willing to amend such sections of
the
Note Agreement on the terms and conditions set forth herein.
In
connection with the amendments described in the preceding paragraph, the Banks,
the Holders and the Obligors have agreed that the obligations to the Banks
under
the Credit Agreement and the obligations to the Holders in respect of the Notes
shall be secured pari
passu
pursuant
to certain security documents. In addition, the Holders and the Banks have
agreed to enter into an Intercreditor Agreement.
In
consideration of the premises and for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the Obligors and the Holders
agree as follows:
1. AMENDMENTS
TO NOTE AGREEMENT
1.1. Amendment
of Section 1.
The
last sentence of Section 1 is replaced with the following:
“The
Notes will be secured pursuant to the Security Documents by a Lien on the
Collateral in favor of the Collateral Agent until such Lien is released as
provided by this Agreement and the Intercreditor Agreement.”
1.2. Amendment
of Section 7.1.
Section
7.1(d) is amended to read in its entirety as follows:
“(d) Notice
of Default or Event of Default
-
promptly, and in any event concurrently with the delivery to the Banks or,
if
earlier, within five Business Days after a Responsible Officer becoming aware
of
the existence of any Default or Event of Default or that any Person has given
any notice to any Obligor or taken any action with respect to a claimed default
hereunder or that any Person has given any notice to any Obligor or taken any
action with respect to a claimed default of the type referred to in Section
11(f), a written notice specifying the nature and period of existence thereof
and what action the Obligors are taking or propose to take with respect
thereto;”
1.3. Amendment
of Section 7.2.
The
reference in Section 7.2(a) to “Section 10.11” shall be replaced with a
reference to “Section 10.14.”
1.4. Amendment
of Section 10.1.
Section
10.1 is amended to read in its entirety as follows:
“10.1.
Consolidated Debt.
The
Company will not permit the ratio of Consolidated Debt (as of any date) to
Consolidated EBITDA (for the Company’s then most recently completed four fiscal
quarters) to be greater than or equal to 3.25 to 1.00 at any time; provided,
however, that solely with respect to the period from and including March 31,
2007 through and including June 29, 2007, the Company shall be deemed in
compliance with this Section 10.1 so long as such ratio is not at any time
during such period greater than 4.25 to 1.00.”
2
1.5. Amendment
of Section 10.2.
Section
10.2 is amended to read in its entirety as follows:
“10.2.
Fixed Charge Coverage.
The
Company will not permit the ratio of Consolidated EBITDAR to Consolidated Fixed
Charges (in each case for the Company’s then most recently completed four fiscal
quarters) to be less than or equal to:
(a) 1.90
to
1.00 as of the end of the fiscal quarter ending on March 31, 2007;
(b) 2.75
to
1.00 as of the end of any fiscal quarter ending prior to March 31, 2009 (other
than the fiscal quarter ending March 31, 2007); or
(c) 3.00
to
1.00 as of the end of any fiscal quarter ending on or after March 31,
2009.”
1.6. Amendment
of Section 10.5.
Sections 10.5(b), (f), (g) and (l) and the final paragraph of Section 10.5
are
amended to read in their entirety as follows:
“(b) any
attachment or judgment Lien, unless the judgment it secures has not, within
60
days after the entry thereof, been discharged or execution thereof stayed
pending appeal, or has not been discharged within 60 days after the expiration
of any such stay; provided that the aggregate of such attachment or judgment
Liens not paid or fully covered by a reputable and solvent insurance company
shall not exceed $40,000,000;”
“(f) Liens
(i)
securing Indebtedness of a Subsidiary to the Company or to another Wholly Owned
Subsidiary; or (ii) in favor of the Collateral Agent under the Security
Documents for the ratable benefit of the holders of the Notes and the
Banks;”
“(g) Liens
(i)
existing on property at the time of its acquisition by the Company or a
Subsidiary and not created in contemplation thereof, whether or not the
Indebtedness secured by such Lien is assumed by the Company or a Subsidiary;
or
(ii) on property created contemporaneously with its acquisition or within 180
days of the acquisition or completion of construction or development thereof
to
secure or provide for all or a portion of the purchase price or cost of the
acquisition, construction or development of such property after the date of
Closing; or (iii) existing on property of a Person at the time such Person
is
merged or consolidated with, or becomes a Subsidiary of, or substantially all
of
its assets are acquired by, the Company or a Subsidiary and not created in
contemplation thereof; provided that in the case of clauses (i), (ii) and (iii)
3
such
Liens do not extend to additional property of the Company or any Subsidiary
(other than property that is an improvement to or is acquired for specific
use
in connection with the subject property) and that the aggregate principal amount
of Indebtedness secured by each such Lien does not exceed the fair market value
(determined in good faith by one or more officers of the Company to whom
authority to enter into such transaction has been delegated by the board of
directors of the Company) of the property subject thereto; and provided further
that the aggregate outstanding principal amount of all Indebtedness secured
by
Liens permitted by clause (ii), together with the aggregate amount of
Indebtedness of the Company and its Subsidiaries evidenced by Capital Lease
Obligations, shall not at any time exceed $20,000,000;”
“(l) Liens
securing Indebtedness not otherwise permitted by paragraphs (a) through (k)
of
this Section 10.5 to the extent attaching to properties and assets with an
aggregate fair value not in excess of, and securing liabilities not in excess
of, $30,000,000 in the aggregate at any time outstanding.”
“Notwithstanding
the foregoing, the Company will not, and will not permit any other Subsidiary
to, permit to exist, create, assume or incur, directly or indirectly, any Liens
securing obligations under the Credit Agreement, unless the Company
contemporaneously provides for the Notes to be equally and ratably secured
with
such obligations under the Credit Agreement (pursuant to documentation,
including an intercreditor agreement, reasonably satisfactory to the Required
Holders), and in such case the Notes shall have the benefit, to the fullest
extent that, and with such priority as, the holders of the Notes may be entitled
under applicable law, of an equitable Lien on such property.”
1.7. Amendment
of Section 10.6.
Section
10.6 is amended to include the following new final sentence:
“Notwithstanding
the foregoing, during the period from and including March 31, 2007 through
and
including June 30, 2007, without the consent of the Required Holders, the
Company will not, and will not permit any Subsidiary to, engage in any
transaction otherwise permitted by this Section 10.6, except (i) any Obligor
may
consolidate or merge with any other Obligor or convey, transfer, sell or lease
all or substantially all of its assets in a single transaction or series of
transactions to any other Obligor and (ii) any other Subsidiary may merge into
an Obligor (provided that the Obligor is the surviving corporation) or another
Wholly Owned Subsidiary or sell, transfer or lease all or any part of its assets
to an Obligor or another Wholly Owned Subsidiary; provided in each instance
set
forth in clauses (i) and (ii) that, immediately before and after giving effect
to such transaction, no Default or Event of Default would exist.”
4
1.8. Amendment
of Section 10.7.
Section
10.7 is amended to include the following new final sentence:
“Notwithstanding
the foregoing, during the period from and including March 31, 2007 through
and
including June 30, 2007, without the consent of the Required Holders, the
Company will not, and will not permit any Subsidiary to, sell, lease, convey,
dispose of or otherwise transfer (collectively, for purposes of this sentence,
“transfers”) any assets other than:
(i)
those
made by a Subsidiary to an Obligor or another Wholly Owned Subsidiary or by
an
Obligor to another Obligor;
(ii)
inventory
held for sale or lease;
(iii)
equipment,
fixtures, supplies or materials no longer required in the operation of the
business of the Obligors or any other Subsidiary or that are obsolete;
(iv)
accounts
receivable sold or discounted without recourse in connection with the compromise
or collection thereof; and
(v)
other
transfers of assets so long as:
(a) in
the
good faith opinion of the Company such transfer is in exchange for consideration
having a fair market value at least equal to that of the property exchanged
and
is in the best interest of the Company or such Subsidiary;
(b) immediately
before and after giving effect to such transfer, no Default or Event of Default
would exist; and
(c) together
with all other property of the Company and its Subsidiaries previously
transferred pursuant to this clause (v) during the twelve-month period ending
with the month in which any such transaction occurs, such assets do not
constitute a Substantial Portion of the property of the Company and its
Subsidiaries.
For
purposes of the foregoing clause (v), “Substantial Portion” shall mean property
that (a) represents more than 10% of Consolidated Total Assets as of the
beginning of the twelve-month period ending with the last day of the month
preceding the month in which such determination is made or (b) is responsible
for more than 10% of the consolidated net sales of the Company and its
Subsidiaries or of the Consolidated Net Income for such twelve months.”
5
1.9. Amendment
of Section 10.9.
Section
10.9 is amended to read in its entirety as follows:
“10.9.
Subsidiary Guaranty and Collateral.
The
Company will not permit any Subsidiary that is not an Obligor to become a
borrower or a guarantor of Indebtedness owed to banks under the Credit Agreement
unless such Subsidiary is, or concurrently therewith becomes, a party to the
Subsidiary Guaranty. At such time as such Subsidiary becomes a party to the
Subsidiary Guaranty, such Subsidiary shall (i) execute and deliver a joinder
to
such Security Documents as the Required Holders may
request, and (ii) execute such additional Security Documents as the
Required Holders may
request, in each case as deemed appropriate by the Required Holders to cause
substantially all personal property of such Subsidiary other than equity
interests in foreign Subsidiaries to constitute Collateral and in form and
substance satisfactory to the Required Holders and, in the case of both (i)
and
(ii) above, accompanied by such resolutions, opinions, corporate certificates
and other documents as the Required Holders may
reasonably request.”
1.10. Addition
of Section 10.12.
New
Section 10.12 is added to the Note Agreement as follows:
“10.12.
Certain Prepayments.
The
Company will not, and will not permit any of its Subsidiaries to, directly
or
indirectly, (i) voluntarily prepay, defease or in substance defease, purchase,
redeem, retire or otherwise acquire, any Indebtedness (other than the Notes
and
obligations under the Credit Agreement) having an aggregate principal amount
in
excess of $1,000,000 or (ii) during the period from and including
April 1, 2007 to and including June 30, 2007, repay (other than upon
acceleration, in which case the Notes shall have become immediately due and
payable in accordance with Section 12.1(a)) any principal amounts of
Indebtedness outstanding under the Credit Agreement, unless, after giving effect
to such repayment, the aggregate outstanding principal amount of loans and
unreimbursed letter of credit amounts under the Credit Agreement is $150,000,000
or greater.”
1.11. Addition
of Section 10.13.
New
Section 10.13 is added to the Note Agreement as follows:
“10.13.
Further Assurances, etc.
(a) The
Obligors will, and will cause each of their respective Subsidiaries to, at
the
expense of the Obligors, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers
of
attorney, certificates, reports, and other assurances or
6
instruments
and take such further steps relating to the Collateral covered by any of the
Security Documents as the Required Holders may reasonably require to assure
the
creation and continuation of perfected security interests in the Collateral
and
as are generally consistent with the terms of this Agreement and the Security
Documents. Furthermore, the Obligors will, and will cause their respective
Subsidiaries to, deliver to the Collateral Agent such opinions of counsel and
other related documents as may be reasonably requested by the Required Holders
to assure compliance with this Section 10.13. Without limiting the foregoing,
the Obligors shall use their best efforts to cause to be delivered to the
Collateral Agent for the benefit of the Holders (i) a landlord waiver and/or
mortgagee estoppel letter, as applicable, with respect to each material parcel
of real property leased by any of the Obligors or any of the Subsidiary
Guarantors as and to the extent the Required Holders shall request, each in
form
and substance acceptable to the Required Holders and
(ii)
such bailee letters with respect to Collateral held by third parties as and
to
the extent the Required Holders shall request, each in form and substance
acceptable to the Required Holders.
(b) The
Obligors agree that each action required by clause (a) of this Section 10.13
shall be completed as soon as reasonably practical, but in no event later than
twenty (20) Business Days (or such greater number of days as the Required
Holders may agree) after such action is requested to be taken by the Required
Holders.”
1.12. Addition
of Section 10.14.
New
Section 10.14 is added to the Note Agreement as follows:
“10.14.
Limitation on Interest Rate Protection Arrangements.
During
the period from and including March 31, 2007 through and including June 30,
2007, without the consent of the Required Holders, the Company will not, and
will not permit any Subsidiary to, enter into any interest rate swap agreement,
interest rate cap agreement, interest collar agreement, interest rate hedging
agreement or other similar agreement or arrangement (“Interest ▇▇▇▇▇▇”), other
than Interest ▇▇▇▇▇▇ that renew or replace existing Interest ▇▇▇▇▇▇, provided
that such renewal or replacement Interest ▇▇▇▇▇▇ have a notional amount not
greater than $150,000,000 in the aggregate and a term not greater than four
years.”
1.13. Amendment
of Section 11.
1.13.1. Sections
11(c) and (e) are amended to read in their entirety as follows:
“(c) any
Obligor defaults in the performance of or compliance with any term contained
in
Section 7.1(b), Section 7.1(d) or Sections 10.1 through 10.14; or”
7
“(e) any
representation or warranty made in writing by or on behalf of the Obligors
or
any Subsidiary Guarantor or by any officer of any Obligor or any Subsidiary
Guarantor in this Agreement, the Subsidiary Guaranty, any Security Document
or
in any writing furnished in connection with the transactions contemplated hereby
or thereby proves to have been false or incorrect in any material respect on
the
date as of which made; or”
1.13.2. The
period at the end of Section 11(k) is replaced with a semicolon followed by
the
word “or” and new Section 11(l) is added as follows:
“(l) any
Security Document ceases to be in full force and effect, or ceases to give
the
Collateral Agent for the benefit of the Senior Lenders (as defined in the
Intercreditor Agreement) a valid and perfected first priority security interest
or Lien in any of the Collateral purported to be covered thereby, subject only
to Liens described in clauses (a), (c), (d), (e), (g), (h), (i) and (k) of
Section 10.5, or a default or event of default occurs under any of the Security
Documents and such default or event of default continues beyond any period
of
grace with respect thereto.”
1.14. Amendment
of Section 12.1.
Section
12.1(a) is amended to read in its entirety as follows:
“(a) If
an
Event of Default with respect to any Obligor described in Section 11(g) or
(h)
(other than an Event of Default described in clause (i) of Section 11(g) or
described in clause (vi) of Section 11(g) by virtue of the fact that such clause
encompasses clause (i) of Section 11(g)) has occurred and is continuing or,
during the period from and including March 31, 2007 through and including June
30, 2007, Indebtedness under the Credit Agreement has become or been declared
due and payable before its stated maturity or before its regularly scheduled
dates of payment, all the Notes then outstanding shall automatically become
immediately due and payable.”
1.15. Amendment
of Section 15.
Section
15.1 is amended to read in its entirety as follows:
“15.1. Transaction
Expenses.
Whether
or not the transactions contemplated hereby or by the Subsidiary Guaranty are
consummated, the Obligors will pay all reasonable costs and expenses (including
reasonable attorneys’ fees of one special counsel for all holders and, if
reasonably required by the Required Holders, local or other counsel) incurred
by
you and each Other Purchaser or holder of a Note in connection with such
transactions and in connection with any amendments, waivers or consents under
or
in respect of this Agreement, the Notes, the
8
Subsidiary
Guaranty or any Security Document (whether or not such amendment, waiver or
consent becomes effective), including: (a) the costs and expenses incurred
in
enforcing or defending (or determining whether or how to enforce or defend)
any
rights under this Agreement, the Notes, the Subsidiary Guaranty or any Security
Document, or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement, the Notes, the
Subsidiary Guaranty or any Security Document, or by reason of being a holder
of
any Note, (b) the reasonable costs and expenses incurred in connection with
the
insolvency or bankruptcy of any Obligor or any other Subsidiary or in connection
with any work-out or restructuring of the transactions contemplated hereby
or by
the Notes, the Subsidiary Guaranty or any Security Document, (c) the reasonable
costs and expenses incurred in connection with transactions permitted by Section
10.6, and (d) the filing fee charged by the SVO in connection with the initial
filing of this Agreement and all related documents and financial information
with the SVO, provide that the fees under this clause (d) shall not exceed
$5,000. The Obligors will pay, and will save you and each other holder of a
Note
harmless from, all claims in respect of any reasonable fees, costs or expenses
if any, of brokers and finders (other than those retained by you or another
holder in connection with its purchase of the Notes).”
1.16. Amendment
of Section 22.
Section
22 is amended to read in its entirety as follows:
“22. RELEASE
OF SUBSIDIARY GUARANTOR.
You
and
each subsequent holder of a Note agree to release any Subsidiary Guarantor
from
the Subsidiary Guaranty if such Subsidiary Guarantor ceases to be such as a
result of an Asset Disposition or other transaction permitted by Section 10.6
or
10.7; provided, however, that you and each subsequent holder will not be
required to release a Subsidiary Guarantor from the Subsidiary Guaranty if
(A) a
Default or Event of Default has occurred and is continuing, (B) such
Subsidiary Guarantor is to become a borrower or a guarantor under the Credit
Agreement, or (C) such release is part of a plan of financing that contemplates
such Subsidiary Guarantor guaranteeing any other Indebtedness of the Company.
Such Subsidiary Guarantor shall automatically be released from the Subsidiary
Guaranty upon the delivery to the holders of the Notes of a certificate from
a
Senior Financial Officer of the Company stating that such transaction has
occurred and none of the circumstances described in clauses (A), (B) and (C)
above are true. If any fee or other form of consideration is given to any holder
of Indebtedness of the Company for such release, holders of the Notes shall
receive equivalent consideration.”
9
1.17. Amendment
of Schedule B.
1.17.1. The
following defined terms are added to Schedule B:
“Banks”
means
the lenders from time to time party to the Credit Agreement and their respective
successors and assigns.
“Collateral”
shall
be as defined in the Security Documents.
“Collateral
Agent”
means
JPMorgan Chase Bank, N.A. in its capacity as collateral agent under the Security
Documents and its successors and assigns.
“Continuing
Directors”
means
the directors of the Company on April 21, 2006 (the effective date of the
original Credit Agreement) and each other director if such director’s nomination
for election to the board of directors of the Company is recommended by a
majority of the then Continuing Directors.
“First
Amendment”
means
the First Amendment to Note Purchase Agreement dated as of April 16,
2007.
“Intercreditor
Agreement”
means
the Intercreditor and Collateral Agency Agreement dated as of April 16, 2007
among the holders of the Notes, the Banks and the Collateral Agent, as the
same
may from time to time be amended, modified or restated, or replaced in
connection with a refinancing of the Credit Agreement.
“Security
Documents”
means
the security agreements, pledge agreements and each other document or instrument
pursuant to which security is granted to the Collateral Agent for the benefit
of
the holders of the Notes and the Banks, as the same may be amended, modified
or
restated from time to time.
1.17.2. The
following terms are amended to read in their entirety as follows:
“Change
of Control Event”
means
the occurrence of any of the following: (i) the Company shall at any time cease
to own 100% of the capital stock of any of Broyhill Furniture Industries, Inc.,
Lane Furniture Industries, Inc., HDM Furniture Industries, Inc. or Thomasville
Furniture Industries, Inc., (ii) HDM Furniture Industries, Inc. shall cease
to own 100% of the capital stock of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Furniture Industries, Inc.,
(iii) the first date upon which a majority of the Persons on the board of
directors of the Company are not Continuing Directors or (iv) any Person, entity
or “group” (as such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) is or becomes the beneficial owner of an
amount of outstanding Voting
10
Stock
of
the Company in excess of 25% of the total amount of fully diluted shares of
outstanding Voting Stock of the Company. The date on which such event occurs
is
referred to as the “Effective
Date of the Change of Control.”
“Material
Adverse Effect”
means a
material adverse effect on (a) the business, operations, affairs, financial
condition, assets or properties of the Company and its Subsidiaries taken as
a
whole, (b) the ability of any Obligor to perform its obligations under this
Agreement, the Notes or any Security Document, (c) the ability of any Subsidiary
Guarantor to perform its obligations under the Subsidiary Guaranty or any
Security Document, or (d) the validity or enforceability of this Agreement,
the
Notes, the Subsidiary Guaranty, any Security Document or the Liens created
by
the Security Documents.
“Required
Holders”
means,
at any time, the holders of more than 50% in principal amount of the Notes
at
the time outstanding (exclusive of Notes then owned by an Obligor or any of
its
Affiliates); provided, however, that “Required Holders” shall mean the holders
of more than 75% in principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by an Obligor or any of its Affiliates) for
purposes of the following actions: (a) the release of any Liens on Collateral
for which the consent of the holders of the Notes is required, (b) the release
of any Subsidiary Guarantor from the Subsidiary Guaranty for which the consent
of the holders of the Notes is required, or (c) any amendment, modification
or
waiver in respect of the Intercreditor Agreement, or the approval of terms
different from the terms of the Intercreditor Agreement in effect on the date
of
the First Amendment contained in a replacement intercreditor agreement entered
into in connection with a refinancing of the Credit Agreement.
2. COUPON
ADJUSTMENT
Anything
in Section 1, Schedule A or Exhibit 1(a) of the Note Agreement or the
outstanding Notes to the contrary notwithstanding, in consideration of the
Holders entering into this First Amendment, beginning on March 31, 2007 through
June 30, 2007 (the “Relevant Period”), each of (i) the annual interest rate on
the Notes, as stated in clause (a) of the first paragraph of Exhibit 1(a) to
the
Note Agreement and the outstanding Notes, and (ii) the annual interest rate
applicable to overdue payments as specified in clause (b) of the first paragraph
of Exhibit 1(a) to the Note Agreement and the outstanding Notes, shall be
increased by 0.50%. Notwithstanding the foregoing, for purposes of calculating
the Make-Whole Amount during the Relevant Period, the interest rate on the
Notes
shall be deemed to be 6.83%, the interest rate in effect immediately prior
to
this First Amendment.
It
shall
not be necessary for any Holder to surrender its Notes in connection with this
First Amendment. For purposes of the Note Agreement, including Section 11(b),
the amounts due under this Section 2 of this First Amendment shall be deemed
to
be interest on the Notes.
11
3. WAIVER
The
Holders hereby waive any Default or Event of Default under Section 10.9 of
the
Note Agreement resulting from the failure of the Company to cause each of
Broyhill Retail, Inc., Broyhill Home Furnishings, Inc., Lane Home Furnishings
Retail, Inc. and Hickory Business Furniture, Inc. to be a party to the
Subsidiary Guaranty. This waiver is limited to its terms and shall not
constitute a waiver of any other term, condition, representation or covenant
under the Note Agreement or any of the other agreements, documents or
instruments executed and delivered in connection therewith.
4. REAFFIRMATION;
REPRESENTATIONS AND WARRANTIES
4.1. Reaffirmation
of Note Agreement.
The
Obligors reaffirm their agreement to comply with each of the covenants,
agreements and other provisions of the Note Agreement and the Notes, including
the additions and amendments of such provisions effected by this First
Amendment.
4.2. Note
Agreement.
The
Obligors, jointly and severally, represent and warrant that the representations
and warranties contained in the Note Agreement are true and correct as of the
date hereof, except (a) to the extent that any of such representations and
warranties specifically relate to an earlier date, (b) for such changes, facts,
transactions and occurrences that have arisen since May 17, 2006 in the ordinary
course of business, (c) for such other matters as have been previously disclosed
in writing by the Obligors (including in financial statements and notes thereto)
to the Holders and (d) for other changes that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
4.3. No
Default or Event of Default.
After
giving effect to the transactions contemplated hereby, there will exist no
Default or Event of Default.
4.4. Authorization.
4.4.1. Obligors.
The
execution, delivery and performance by each of the Obligors of this First
Amendment and each Security Document to which it is a party have been duly
authorized by all necessary corporate action and, except as provided herein,
do
not require any registration with, consent or approval of, notice to or action
by, any Person (including any Governmental Authority) in order to be effective
and enforceable. The Note Agreement, this First Amendment and such Security
Documents each constitute the legal, valid and binding obligations of the
Obligors, enforceable in accordance with their respective terms, except as
such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered
in
a proceeding in equity or at law).
12
4.4.2. Subsidiary
Guarantors.
The
execution, delivery and performance by each Subsidiary Guarantor of the
Reaffirmation of Subsidiary Guaranty and each Security Document to which it
is a
party have been duly authorized by all necessary corporate action and, except
as
provided herein, do not require any registration with, consent or approval
of,
notice to or action by, any Person (including any Governmental Authority) in
order to be effective and enforceable. Such Security Documents and the
Subsidiary Guaranty each constitute the legal, valid and binding obligations
of
such Subsidiary Guarantor, enforceable in accordance with their respective
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.5. Compliance
with Laws, Other Instruments, etc.
4.5.1. Obligors.
The
execution, delivery and performance by each Obligor of this First Amendment
and
each Security Document to which it is a party will not, except as contemplated
herein, (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of
any
Obligor or any other Subsidiary under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or by-laws, or
any
other agreement or instrument to which any Obligor or any other Subsidiary
is
bound or by which any Obligor or any other Subsidiary or any of their respective
properties may be bound or affected, (ii) conflict with or result in a breach
of
any of the terms, conditions or provisions of any order, judgment, decree,
or
ruling of any court, arbitrator or Governmental Authority applicable to any
Obligor or any other Subsidiary or (iii) violate any provision of any statute
or
other rule or regulation of any Governmental Authority applicable to any Obligor
or any other Subsidiary.
4.5.2. Subsidiary
Guarantors.
The
execution, delivery and performance by each Subsidiary Guarantor of the
Reaffirmation of Subsidiary Guaranty and each Security Document to which it
is a
party will not, except as contemplated herein, (i) contravene, result in
any breach of, or constitute a default under, or result in the creation of
any
Lien in respect of any property of any Subsidiary Guarantor under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which
any
Subsidiary Guarantor is bound or by which any Subsidiary Guarantor or any of
their respective properties may be bound or affected, (ii) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to any Subsidiary Guarantor or (iii) violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable
to
any Subsidiary Guarantor.
4.6. Security
Documents.
The
security interests created in favor of the Collateral Agent, for the benefit
of
the holders of the Notes and the Banks, under the security agreements and pledge
agreements constituting Security Documents constitute
13
perfected
security interests in the Collateral described in such Security Document under
its governing law, subject to no Lien of any other Person, except as permitted
by such Security Document and the Note Purchase Agreement. No filings or
recordings (other than filings or recordings that have been made) are required
in order to perfect (or maintain the perfection or priority of) the security
interests created in the Collateral pledged under any Security Document other
than with respect to Collateral of a type as to which perfection may not be
accomplished by filing under the Uniform Commercial Code.
4.7. Amounts
Outstanding under Credit Agreement.
As of
March 31, 2007, the Company’s obligations under the Credit Agreement were: (i)
revolving loans with an outstanding aggregate principal amount of $150,000,000
and (ii) stand-by letters of credit with a face amount of
$9,426,000.
5. EFFECTIVE
DATE
This
First Amendment shall become effective as of March 31, 2007 upon the
satisfaction of the following conditions:
5.1. Consent
of Holders to First Amendment.
Execution by the Required Holders and receipt by the Holders of a counterpart
of
this First Amendment duly executed by the Obligors.
5.2. Reaffirmation
of Subsidiary Guaranty.
Each
Subsidiary Guarantor shall have executed and delivered to the Holders a
Reaffirmation of Subsidiary Guaranty in the form of Exhibit A
hereto.
5.3. Joinder
to Subsidiary Guaranty.
The
Holders shall have received from each of Broyhill Retail, Inc., Broyhill Home
Furnishings, Inc., Lane Home Furnishings Retail, Inc. and Hickory Business
Furniture, Inc. a Joinder to Subsidiary Guaranty in form and substance
satisfactory to them.
5.4. Opinion
of Counsel for the Obligors.
The
Holders shall have received an opinion of counsel for the Obligors, in form
and
substance satisfactory to the Holders and their special counsel, to the effect
set forth in Sections 4.4 and 4.5 of this First Amendment and to the further
effect that the Holders have a valid and perfected security interest in the
Collateral subject to the Security Documents.
5.5. Security
Interest.
The
Holders shall have received executed Security Documents in form and substance
satisfactory to the Holders. The Collateral Agent shall have filed UCC-1
financing statements in the jurisdiction of incorporation of each of the
Obligors and Subsidiary Guarantors (or arrangement for such filing satisfactory
to counsel for the Holders shall have been made) and shall have taken possession
of stock certificates evidencing the pledged shares, in each case as necessary
to perfect the Liens of the Security Documents, except as contemplated to take
place after the effective date of this First Amendment.
14
5.6. Intercreditor
Agreement.
The
Intercreditor Agreement shall have been executed and delivered by the Holders
and the Banks and acknowledged by the Obligors and each Subsidiary Guarantor.
5.7. Amendment
to Credit Agreement.
The
Holders shall have received a copy of an executed Amendment No. 1 to Credit
Agreement dated as of April 16, 2007, in form and substance satisfactory to
the
Holders.
5.8. Amendment
Fee.
Each
Holder shall have received an amendment fee equal to 0.05% of the outstanding
principal amount of the Notes held by such Holder.
5.9. Fees
of Special Counsel.
The
Obligors shall have paid all fees and expenses of special counsel to the
Holders.
6. MISCELLANEOUS
6.1. Ratification.
Except
as amended hereby, the Note Agreement, including the representations and
warranties contained therein, shall remain in full force and effect and is
ratified, approved and confirmed in all respects as of the date
hereof.
6.2. Reference
to and Effect on the Note Agreement.
Upon
the final effectiveness of this First Amendment, each reference in the Note
Agreement and in other documents describing or referencing the Note Agreement
to
the “Agreement,” “Note Agreement,” “hereunder,” “hereof,” “herein,” or words of
like import referring to the Note Agreement, shall mean and be a reference
to
the Note Agreement, as amended hereby.
6.3. Binding
Effect.
This
First Amendment shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto.
6.4. Governing
Law.
This
First Amendment shall be governed by and construed in accordance with New York
law.
6.5. Counterparts.
This
First Amendment may be executed in any number of counterparts, each executed
counterpart constituting an original, but altogether only one
instrument.
15
IN
WITNESS WHEREOF,
the
Obligors and the Holders have caused this First Amendment to be executed and
delivered by their respective officer or officers thereunto duly
authorized.
|
FURNITURE
BRANDS INTERNATIONAL, INC.
|
||
|
By:
|
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇
|
|
|
Title:
|
Senior
Vice President and Chief Financial Officer
|
|
|
SUBSIDIARY
CO-OBLIGORS
|
||
|
BROYHILL
FURNITURE INDUSTRIES, INC.
|
||
|
HDM
FURNITURE INDUSTRIES, INC.
|
||
|
LANE
FURNITURE INDUSTRIES, INC.
|
||
|
THOMASVILLE
FURNITURE INDUSTRIES, INC.
|
||
|
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
|
Name:
|
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
|
Title:
|
Vice President | |
S-1
|
The
foregoing is agreed
|
||
|
to
as of the date thereof.
|
||
|
THE
PRUDENTIAL INSURANCE
|
||
|
COMPANY
OF AMERICA
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Vice
President
|
||
|
GIBRALTAR
LIFE INSURANCE CO., LTD.
|
||
|
By:
|
Prudential
Investment Management (Japan),
|
|
|
Inc.,
as Investment Manager
|
||
|
By:
|
Prudential
Investment Management, Inc., as
|
|
|
Sub-Adviser
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Vice
President
|
||
|
GATEWAY
RECOVERY TRUST
|
||
|
By:
|
Prudential
Investment Management, Inc., as
|
|
|
Asset
Manager
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
ZURICH
AMERICAN INSURANCE
|
||
|
COMPANY
|
||
|
By:
|
Prudential
Private Placement Investors,
|
|
|
L.P.
(as Investment Advisor)
|
||
|
By:
|
Prudential
Private Placement Investors, Inc. (as
|
|
|
its
General Partner)
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Vice
President
|
||
S-2
|
AMERICAN
MEMORIAL LIFE
|
||
|
INSURANCE
COMPANY
|
||
|
By:
|
Prudential
Private Placement Investors, L.P. (as
|
|
|
Investment
Advisor)
|
||
|
By:
|
Prudential
Private Placement Investors, Inc.
|
|
|
(as
its General Partner)
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Vice
President
|
||
|
UNION
SECURITY INSURANCE
|
||
|
COMPANY
|
||
|
By:
|
Prudential
Private Placement Investors,
|
|
|
L.P.
(as Investment Advisor)
|
||
|
By:
|
Prudential
Private Placement Investors, Inc.
|
|
|
(as
its General Partner)
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Vice
President
|
||
|
AMERICAN
SECURITY INSURANCE
|
||
|
COMPANY
|
||
|
By:
|
Prudential
Private Placement Investors, L.P.
|
|
|
(as
Investment Advisor)
|
||
|
By:
|
Prudential
Private Placement Investors, Inc.
|
|
|
(as
its General Partner)
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Vice
President
|
||
S-3
|
UNITED
SERVICE PROTECTION CORP.
|
||
|
By:
|
Prudential
Private Placement Investors, L.P.
|
|
|
(as
Investment Advisor)
|
||
|
By:
|
Prudential
Private Placement Investors, Inc.
|
|
|
(as
its General Partner)
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Vice
President
|
||
S-4
|
ING
USA ANNUITY AND LIFE
|
||
|
INSURANCE
COMPANY
|
||
|
ING
LIFE INSURANCE AND ANNUITY
|
||
|
COMPANY
|
||
|
RELIASTAR
LIFE INSURANCE
|
||
|
COMPANY
|
||
|
SECURITY
LIFE OF DENVER
|
||
|
INSURANCE
COMPANY
|
||
|
By:
|
ING
Investment Management LLC, as
|
|
| Agent | ||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
|
|
Title:
|
Senior
Vice President
|
|
S-5
|
TRANSAMERICA
LIFE INSURANCE
|
||
|
COMPANY
|
||
|
By:
|
/s/
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
|
|
Title:
|
Vice
President
|
|
S-6
|
THE
GUARDIAN LIFE INSURANCE
|
||
|
COMPANY
OF AMERICA
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
|
|
|
Title:
|
Private
Placements Manager
|
|
7
|
BANKERS
LIFE AND CASUALTY
|
||
|
COMPANY
|
||
|
CONSECO
LIFE INSURANCE COMPANY
|
||
|
CONSECO
SENIOR HEALTH INSURANCE
|
||
|
COMPANY
|
||
|
CONSECO
HEALTH INSURANCE
|
||
|
COMPANY
|
||
|
WASHINGTON
NATIONAL INSURANCE
|
||
|
COMPANY
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇
▇▇▇▇▇▇▇
|
|
|
Title:
|
Senior
Vice President
|
|
S-8
|
AMERUS
LIFE INSURANCE COMPANY
|
||
|
AMERICAN
INVESTORS LIFE INSURANCE
|
||
|
COMPANY
|
||
|
By:
|
Aviva
Capital Management, Inc., its
|
|
|
authorized
attorney-in-fact
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇
▇. ▇▇▇▇
|
|
|
Title:
|
▇.▇.
- ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
|
|
▇-▇
SCHEDULE
I
|
Holder
|
Principal
Amount of Senior Notes
|
|||
|
The
Prudential Insurance Company of America
|
$
|
9,500,000
|
||
|
Gibraltar
Life Insurance Co., Ltd.
|
25,000,000
|
|||
|
Gateway
Recovery Trust
|
5,800,000
|
|||
|
Zurich
American Insurance Company
|
3,450,000
|
|||
|
American
Memorial Life Insurance Company
|
2,000,000
|
|||
|
Union
Security Insurance Company
|
2,000,000
|
|||
|
American
Security Insurance Company
|
1,500,000
|
|||
|
United
Service Protection Corp.
|
750,000
|
|||
|
ING
USA Annuity and Life Insurance Company
|
4,000,000
|
|||
|
ING
Life Insurance and Annuity Company
|
7,000,000
|
|||
|
Reliastar
Life Insurance Company
|
5,000,000
|
|||
|
Security
Life of Denver Insurance Company
|
16,000,000
|
|||
|
Transamerica
Life Insurance Company
|
30,000,000
|
|||
|
The
Guardian Life Insurance Company of America
|
18,000,000
|
|||
|
Bankers
Life and Casualty Company
|
4,000,000
|
|||
|
Conseco
Life Insurance Company
|
2,000,000
|
|||
|
Conseco
Senior Health Insurance Company
|
1,500,000
|
|||
|
Conseco
Health Insurance Company
|
1,000,000
|
|||
|
Washington
National Insurance Company
|
1,500,000
|
|||
|
AmerUs
Life Insurance Company
|
5,000,000
|
|||
|
American
Investors Life Insurance Company
|
5,000,000
|
Schedule
I