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EXHIBIT 4.8
AGREEMENT
This Agreement (this "Agreement") is entered into this 11th day of
January, 2000, by and among Xxxxxx'x Furniture, Inc., a Delaware corporation
(the "Company"), General Electric Capital Corporation, a New York corporation
("GECC"), and Japan Omnibus Ltd., an international business corporation
incorporated under the laws of the British Virgin Islands ("JOL").
RECITALS
GECC has purchased from the Company Notes dated (i) as of August
14, 1997, as amended as of March 31, 1999, in the outstanding principal amount
of $5,501,091.20 (the "Initial Note"), (ii) as of August 14, 1997, as amended as
of March 31, 1999, in the outstanding principal amount of $2,500,000 (the
"August 1997 Note") and (iii) as of December 30, 1997, as amended as of March
31, 1999, in the outstanding principal amount of $2,500,000 (collectively with
the Initial Note and the August 1997 Note, the "GECC Notes").
JOL has purchased from the Company Notes dated (i) as of August 14,
1997, as amended as of March 31, 1999, in the outstanding principal amount of
$500,000 (the "JOL August 1997 Note") and (ii) as of December 30, 1997, as
amended as of March 31, 1999, in the outstanding principal amount of $1,000,000
(together with the JOL August 1997 Note, the "JOL Notes"; the JOL Notes and the
GECC Notes are referred to herein collectively as the "Notes").
The Company, GECC and JOL are parties to a Supplemental Securities
Purchase Agreement dated as of August 14, 1997 (as amended on September 14, 1999
and December 14, 1999, the "Supplemental Purchase Agreement") relating to the
Notes. Capitalized terms used herein without definition have the meanings set
forth in the Supplemental Purchase Agreement.
In connection with the transactions contemplated by the Xxxxxx'x
Furniture Inc. Series A Convertible Preferred Stock Securities Purchase
Agreement dated as of January 11th, 2000 (the "2000 Securities Purchase
Agreement"), the Company, GECC and JOL desire to amend certain provisions of the
Notes and the Supplemental Purchase Agreement and to provide certain additional
rights to the holders of the Notes.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Effective as of December 24, 1999, Section 6.2 of the Supplemental Purchase
Agreement shall be amended in its entirety to read as follows:
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6.2. Financial Covenants. For purposes of this Section 6.2, "fiscal
year" and "fiscal quarter" are measured on the basis of a fiscal year ending on
the Sunday closest to December 25 of the relevant calendar year.(1) The
Company's compliance with the financial covenants set forth below shall be
determined based solely on the assets, liabilities and operating results of the
Company's retail and hospitality operations, except that Indebtedness relating
to the Company's e-commerce and business-to-business operations shall be taken
into account for purposes of calculating compliance with the covenant in
paragraph (b) and lease expense (other than lease expense previously approved by
GECC) and interest expense relating to the Company's e-commerce and
business-to-business operations shall be taken into account for purposes of
calculating compliance with the covenant in paragraph (c).
(a) The Company will not permit its Consolidated Net Worth at the
end of any fiscal quarter to be less than the amount set forth below for such
fiscal quarter, provided that, upon any public or private offering of capital
stock of the Company for the Company's account, the amounts set forth below for
fiscal quarters subsequent to such offering shall be adjusted upward by an
amount equal to the net proceeds of any such offering multiplied by 0.9:
Year Q1 Q2 Q3 Q4
---- ------- ------- ------- -------
1999 N/A N/A 8.8 MM 6.0 MM
2000 13.5 MM 14.0 MM 14.5 MM 16.0 MM
2001 17.5 MM 20.0 MM 22.0 MM 26.0 MM
2002 29.0 MM 32.0 MM 35.0 MM 40.0 MM
2003 40.0 MM 40.0 MM N/A N/A
(b) The Company and its Subsidiaries will not incur, create, assume
or permit to exist any Indebtedness at the end of any fiscal quarter if such
Indebtedness would result in a ratio of Consolidated Total Indebtedness to
Consolidated Net Worth of more than the amount for such fiscal quarter indicated
set forth below:
Year Q1 Q2 Q3 Q4
---- ---- ---- ---- ----
1999 N/A N/A 3.75 5.00
2000 1.95 1.95 1.95 1.60
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(1) E.g., fiscal year 2000 is the twelve-month period ending December 24,
2000; the fiscal quarters of fiscal year 2000 are the quarterly periods
ending March 26, June 25, September 24 and December 24 of such year.
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2001 1.30 1.10 1.00 1.00
2002 1.00 1.00 1.00 1.00
2003 1.00 1.00 N/A N/A
(c) The Company will not permit its Fixed Charge Ratio at the end
of any fiscal quarter to be less than the amount set forth below for such fiscal
quarter:
Year Q1 Q2 Q3 Q4
---- ---- ---- ---- ----
1999 N/A N/A 0.75 0.45
2000 0.95 1.10 1.10 1.30
2001 1.20 1.20 1.20 1.35
2002 1.30 1.30 1.30 1.50
2003 1.40 1.40 N/A N/A
(d) The Company and its Subsidiaries will not make capital
expenditures (net of any sale leasebacks incurred within such fiscal year) for
its retail and hospitality operations in excess of the amounts set forth below
for the fiscal years indicated:
1999 $10,000,000
2000 $ 8,000,000
2001 $ 8,000,000
2002 $ 8,000,000
2003(2) $ 4,000,000
Any amount not spent in any one fiscal year may be spent in a succeeding fiscal
year, subject to the Company's annual business plan.
2. Each of the Notes is hereby amended to provide that the payment date for each
scheduled payment of principal under the Note shall be deferred for a period of
eleven months from the date specified in such Note (i.e., the installment of
principal currently payable on
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(2) Applicable to the first two fiscal quarters of 2003.
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April 30, 2000 shall be due and payable on March 31, 2001 and each succeeding
installment of principal shall be due and payable one year from the date
specified in such Note, with the final installment of principal due and payable
on June 30, 2003).
3. Notwithstanding paragraph 2 above, commencing with the Company's fiscal
quarter ending March 31, 2000, 50% of the Company's quarterly "free cash flow
from retail operations" (as defined below) up to a maximum of $4,000,000 in the
aggregate shall be applied ratably to the Notes (in proportion to the
outstanding principal amount of each Note) to prepay the outstanding principal
amount of each Note in the inverse order of maturity of installments under each
Note. For the purposes of this Agreement, "free cash flow from retail
operations" means EBITDA of the Company's retail and hospitality operations,
less debt service payments and less capital expenditures for the Company's
retail and hospitality operations, determined as of the end of each fiscal
quarter as promptly as practicable and in any event within 30 days after such
quarter end. Any prepayments under the Notes required by this paragraph shall be
made as promptly as practicable, and in any event within three days, after the
determination of free cash flow from retail operations for the preceding fiscal
quarter.
4. Commencing June 30, 2000, the Company and its Subsidiaries shall not enter
into any contract or commitment to make any capital expenditure or make any
capital expenditure not previously contracted for by the Company or any of its
Subsidiaries relating to the retail or hospitality operations of the Company and
its Subsidiaries (other than non-new store related retail capital expenditures
not to exceed $250,000 in the aggregate per quarter) unless (i) such capital
expenditure has previously been approved by GECC, (ii) the Company is not (and,
after giving effect to such capital expenditure, will not be) in default of any
obligation under the Notes, the Supplemental Purchase Agreement or this
Agreement and (iii) after giving effect to such proposed capital expenditure,
the Company's projected free cash flow from retail and hospitality operations
(as set forth in the current business plan for the Company's retail and
hospitality operations approved by the Board of Directors, and subject to any
reductions reasonably necessary to reflect deviations from the targets
established in such business plan), will be sufficient to make all payments of
principal and interest under the Notes when due and payable. The Company shall
provide to GECC prior to the end of each fiscal quarter a schedule listing all
capital expenditures for retail or hospitality operations proposed to be
committed or contracted for in the succeeding fiscal quarter.
5. Provided that no cash dividends shall have been paid in respect of shares of
Series A Convertible Preferred Stock of the Company, the Company shall have the
right to defer payments of interest under all (but not less than all) of the
Notes for periods ending on or prior to December 31, 2000. Payments of interest
under any Note deferred in accordance with the preceding sentence shall be due
and payable, together with interest on each such deferred payment from and
including the date on which such payment was otherwise (but for such deferral)
due and payable under the Note to but excluding the date on which such payment
is actually made by the Company as provided in this paragraph, at an annual rate
of 9.5%, compounded quarterly on the basis of a 360-day year of 12 30-day months
(the
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"Deferred Interest Amount"), at the option of the holder of such Note, either
(a) on December 31, 2000, in shares of Series A Convertible Preferred Stock
having an aggregate value (calculated based upon the Issue Price (as defined in
the Certificate of Designation of the Series A Convertible Preferred Stock))
equal to the Deferred Interest Amount as of such date, or (b) on the date on
which the final installment of principal of such Note is due and payable (after
giving effect to any prepayments under such Note required by paragraph 3 of this
Agreement) by the Company in accordance with such Note as amended hereby, in
cash in an amount equal to the Deferred Interest Amount as of such date.
6. Except for any redemption of shares of Series A Convertible Preferred Stock
permitted in accordance with Section 6.2 (a) of the 2000 Securities Purchase
Agreement, no cash payments in respect of the Series A Convertible Preferred
Stock, whether of dividends, payments upon redemption or repurchase by the
Company, or upon any actual or deemed liquidation, dissolution or winding up of
the Company, shall be made unless the entire outstanding principal amount of,
and all accrued interest and other amounts payable under the Notes have been
repaid in full and the Notes have been cancelled and retired.
7. The Company acknowledges and agrees that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that GECC and JOL shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they may be entitled at law or equity.
8. This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective when
one or more of the counterparts have been signed by each party and delivered to
the other parties, it being understood that all parties need not sign the same
counterpart.
9. This Agreement may be amended as to GECC, JOL and their successors and
assigns, and the Company may take any action herein prohibited, or omit to
perform any act required to be performed by it, if the Company shall obtain the
written consent of the registered holders of not less than 66 2/3% of the
aggregate outstanding principal amount of the Notes then held by GECC, JOL and
their successors or assigns; provided, however, that without the written consent
of the holder or holders of all Notes at the time outstanding, no amendment to
or waiver of any terms of this Agreement shall change or affect the interest
rate, maturity, principal amount, time of payment, currency of payment, or the
amount or allocation of any prepayments of any Note. This Agreement may not be
waived, changed, modified, or discharged orally, but only by an agreement in
writing signed by the party or parties against whom enforcement of any waiver,
change, modification or discharge is sought or by parties with the right to
consent to such waiver, change, modification or discharge on behalf of such
party. Notwithstanding anything in this Agreement to the contrary, no provision
of this Section 9 may be waived, changed or modified.
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10. All covenants and agreements contained herein shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns. This
Agreement may be assigned by GECC or JOL to any transferee of Notes. This
Agreement may not be assigned by the Company.
11. The Company agrees to pay GECC and JOL for all reasonable outside legal fees
in connection with this Agreement.
12. This Agreement shall terminate upon the repayment in full of all amounts of
principal, interest and other sums due and payable on all Notes.
13. Each of the parties hereto agrees that it will make no statement regarding
the transactions contemplated hereby which is inconsistent with the press
release agreed to by the parties hereto. Notwithstanding the foregoing, each of
the parties hereto may, in documents required to be filed by it with the
Commission or other regulatory bodies, make such statements with respect to the
transactions contemplated hereby as each may be advised is legally necessary
upon advice of its counsel.
14. This Agreement shall be effective upon delivery of original signature pages
or facsimile copies thereof executed by each of the parties hereto.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR INVESTIGATION
IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION") ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY (AND
AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS),
AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY
U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS AGREEMENT SHALL
BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY
SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE
STATE OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE LOCATED IN THE
COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT
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HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized.
XXXXXX'X FURNITURE, INC.
By:
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Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
and Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By:
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Name: Xxxxxx X. Xxxxxxxxxx, Xx.
Title: Senior Vice President/
Department Operations Manager
JAPAN OMNIBUS LTD.
By:
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Name:
Title:
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