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EXHIBIT NO. 10.6
AMENDMENT TO SUPPLEMENTAL
SECURITIES PURCHASE AGREEMENT
This Amendment to Supplemental Securities Purchase Agreement (this "Agreement")
is made as of April 10, 2001 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
incorporated in the British Virgin Islands ("JOL").
Whereas, the Company, GECC and JOL are parties to the Supplemental Securities
Purchase Agreement, dated as of August 14, 1997 (as amended, the "Purchase
Agreement"; capitalized terms not defined herein shall have the meanings set
forth in the Purchase Agreement), which provided for the purchase and sale of
certain Notes and amended and restated the provisions of the Original Agreement
relating to such Notes; and
Whereas, pursuant to the terms of the Notes, the Company is required to make a
principal repayment to GECC and JOL in the amount of $1,000,000 (the "Scheduled
Repayment Amount") on March 31, 2001; and
Whereas, the Company has requested that GECC and JOL waive the requirement that
the Company pay the Scheduled Repayment Amount on March 31, 2001 and adjust the
payment schedule so that no principal repayment shall be required until March
31, 2002; and
Whereas, GECC and JOL are willing to waive such payment on such date, subject to
the terms and conditions contained herein; and
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
Section 1. Maturity; Principal and Interest Payments.
(a) The maturity date of the Notes is hereby extended until June
30, 2004.
(b) GECC and JOL hereby waive any Event of Default under the
Purchase Agreement which would arise from a failure by the
Company to pay the Scheduled Repayment Amount on March 31,
2001; provided that the full amount of such unpaid Scheduled
Repayment Amount and all other principal from time to time
outstanding under the Notes (together with all unpaid
interest thereon from time to time outstanding) shall bear
interest thereon from and including March 31, 2001 at the
rate of 12% per annum computed in the manner provided in the
Notes and otherwise in accordance with the terms of the
Notes and this Agreement until paid in full.
(c) Pursuant to a letter agreement dated May 5, 2000, GECC and
JOL agreed that interest on the Notes would be deferred
until March 31, 2001 and that such deferred interest could
be satisfied by issuance of shares of the Company's Series A
Preferred Stock to GECC and JOL. The parties acknowledge and
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agree that interest shall accrue on the Notes from and
including March 31, 2001, but such amount of accrued
interest shall be added to the principal amount of the Notes
at the June 30, September 30 and December 31 for 2001.
Accrued interest shall be paid in full on each date for
which principal payments become due (as set forth in Section
1(d) below) or upon any prepayment of principal.
Accordingly, on March 31, 2002 an interest payment shall be
made of all accrued interest from and including December 31,
2001 to March 31, 2002.
(d) Each of the Notes and the Purchase Agreement is hereby
amended to provide that the payment date for each scheduled
payment of principal is as follows:
Payment Date Amount of Principal Due
March 31, 2001 0
June 30, 2001 0 (accrued interest added to principal)
September 30, 2001 0 (accrued interest added to principal)
December 31, 2001 0 (accrued interest added to principal)
March 31, 2002 $1 million (plus accrued interest)
June 30, 2002 $1 million (plus accrued interest)
September 30, 2002 $1 million (plus accrued interest)
December 31, 2002 $1 million (plus accrued interest)
March 31, 2003 $1 million (plus accrued interest)
June 30, 2003 $1 million (plus accrued interest)
September 30, 2003 $1 million (plus accrued interest)
December 31, 2003 $1 million (plus accrued interest)
March 31, 2004 $2 million (plus accrued interest)
June 30, 2004 Balance (plus accrued interest)
Section 2. Financial Covenants Amendments. Effective as of the date of this
Agreement, Section 6.2 (Financial Covenants) of the Purchase Agreement shall be
amended in its entirety to read as follows:
6.2. Financial Covenants. For purposes of this Section 6.2, "fiscal
year" and "fiscal quarter" are both measured on the basis of the fiscal
year of the Company ending on the Sunday closest to the last day of January
of the succeeding calendar year as determined by the 52/53 week retail
fiscal year.12
(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:
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(1) E.g., Fiscal year 2001 is the twelve-month period ending 12/23/01 and the
fiscal quarters of fiscal year 2001 are the quarterly periods ending
3/25/01, 6/24/01, 9/23/01 and 12/23/01.
(2) The Company's compliance with all of the financial covenants set forth
herein shall take into account all of the Company's business, including the
Company's e-commerce and business-to-business operations and any proceeds
previously segregated in connection therewith.
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Year Q1 Q2 Q3 Q4
---- ---- ---- ---- ----
1998 N/A N/A N/A 11.5
1999 11.5 9.0 8.8 4.0
2000 9.2 9.2 6.8 2.3
2001 3.2 (0.1) (1.7) (1.7)
2002 (1.7) 32 35 40
2003 40 40 45 45
2004 50 50 N/A N/A
; provided, that for purposes of this covenant, for Q2, Q3 and Q4 of the
2001 year and for Q1 of the 2002 year, such amounts shall exclude interest
and fees pursuant to the A/R Line of Credit (defined below), if any;
(b) The Company 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
---- ---- ---- ---- ----
1998 N/A N/A N/A 2.25
1999 2.75 2.75 3.75 7.5
2000 3.2 3.7 5.6 13.4
2001 10.5 35.2 34.7 32.4
2002 32.5 1.0 1.0 1.0
2003 1.0 1.0 0.9 0.9
2004 0.9 0.9 N/A N/A
; provided, that in the event that the Consolidated Net Worth as of the end
of any fiscal quarter is less than 1 it shall be deemed to be 1; provided,
that for purposes of this covenant, for Q2, Q3 and Q4 of the 2001 year and
for Q1 of the 2002 year, such amounts shall exclude interest and fees
pursuant to the A/R Line of Credit, if any; and provided further that for
Q2, Q3 and Q4 of the 2001 year, for purposes of this covenant only,
Consolidated Total Indebtedness shall not include borrowings made pursuant
to a line of credit of the Company secured by receivables generated in the
contract manufacturing business for commercial customers (so long as such
line of credit has customary terms, has a maximum limit of $2 million and
prior to its execution by the Company has been described in reasonable
detail in writing to GECC and JOL (the "A/R Line of Credit")).
(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:
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Year Q1 Q2 Q3 Q4
---- ---- ---- ---- ----
1998 N/A N/A N/A 0.85
1999 0.95 0.70 0.75 0.005
2000 0.65 0.55 0.08 0.5
2001 (0.04) 0.6 5.90 1.14
2002 1.16 1.3 1.3 1.5
2003 1.4 1.4 1.4 1.5
2004 1.5 1.5 N/A N/A
; provided, that for purposes of this covenant, for Q2, Q3 and Q4 of the
2001 year and for Q1 of the 2002 year, such amounts shall exclude interest
and fees pursuant to the A/R Line of Credit, if any;
(d) The Company and its Subsidiaries will not make capital
expenditures (net of any sale leasebacks incurred within such fiscal year)
in excess of the amounts set forth below for the fiscal years indicated:
1998 $7.6 million
1999 $10.0 million
2000 $5.0 million
2001 $1.5 million
2002 $3.0 million
2003 $4.0 million
2004 $5.0 million
Any amount not spent in any one fiscal year may be spend in a
succeeding fiscal year, subject to the Company's annual business plan.
Section 3. Certain Restrictions.
(a) The Company hereby agrees that it shall not, for so long as GECC
is entitled to designate the GECC Designee (whether or not the GECC
Designee is then serving on the Board) directly or indirectly, and shall
not permit any of its Subsidiaries (as defined in the Stockholders
Agreement) to, directly or indirectly, take any of the actions delineated
in Section 2.2 of the Stockholders Agreement without (i) the prior written
consent of GECC or (ii) the approval, at a meeting of the Board or a
committee thereof duly called and held, of the GECC Designee. The Company
further agrees that any approval of the GECC Designee under the
Stockholders Agreement or otherwise may alternatively be provided by GECC
in writing, whether or not the GECC Designee is then serving on the Board.
(b) The term "Stockholders Agreement" means the Amended and Restated
Stockholders Agreement by and among Xxxxxx'x Furniture, Inc. and the
Stockholders listed on the signature pages thereof, dated as of January 14,
200 (as amended, and as may be further amended). As used in this Section 3,
the terms "Board", "GECC Designee" and "Subsidiaries" are used as defined
in the Stockholders Agreement.
Section 4. Conditions. As consideration for and as conditions to the waiver by
GECC and JOL set forth in Section 1 above and further amendments and covenants
above, the Company shall execute and/or deliver the following documents:
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(c) one or more notes, substantially in the form of the Notes and
including the terms relating to the Notes set forth in Section 1 above, in
favor of GECC and JOL, pro rata in accordance with the aggregate
outstanding principal amount of Notes held by them, in the aggregate
principal amount of $200,000, which amount shall constitute a deferred fee
as consideration for the waiver granted in this Agreement (such notes shall
be issued within 10 business days of the date hereof);
(d) any new notes or amendments to the Notes necessary to effect the
terms relating to the Notes set forth in Section 1 above (such notes or
amendments, together with the notes described in clause (a) above, the
"2001 Notes"; for purposes of the Purchase Agreement and this Agreement,
the term "Notes" shall be deemed to include the 2001 Notes) (such notes or
amendments shall be issued within 10 business days of the date hereof);
(e) all shareholder and other consents and actions, including without
limitation the consent of TH Xxx.Xxxxxx Internet Partners, L.P. and TH
Xxx.Xxxxxx Internet Parallel Partners, L.P., together with their
affiliates, necessary to permit the Company to use all of the remaining
proceeds of the private placement of its Series A Convertible Preferred
Stock of the Company for general corporate purposes free of any right of
redemption or other default rights relating thereto, other than the
limitations set forth in the Purchase Agreement or this Agreement; and
(f) all other consents, including, without limitation, under the
Series A Convertible Preferred Stock of the Company or the Senior Credit
Facility (as defined below), necessary to effect the terms of this
Agreement.
In accordance with the terms of Section 12.10 of the Purchase Agreement, the
Company will reimburse GECC and JOL for the reasonable fees and expenses of
their counsel in connection with this Agreement.
Section 5. Limitation on Waiver. Except to the extent expressly set forth in
this Agreement, the amendments and waivers set forth herein shall not constitute
a release of, consent to or waiver of any other provision, term or condition of
the Purchase Agreement or the Notes, and all other agreements, documents,
instruments and certificates executed in connection therewith are ratified and
confirmed in all respects and shall remain in full force and effect in
accordance with their respective terms.
Section 6. Representations and Warranties. To induce GECC and JOL to enter into
this Agreement, the Company hereby represents and warrants that (a) immediately
prior to and after giving effect to this Agreement, (i) no violation of the
Purchase Agreement exists or will exist and no Event of Default has occurred or
will have occurred and be continuing thereunder and (ii) no Event of Default has
occurred or will have occurred and be continuing under the terms of the Senior
Credit Facility; (b) this Agreement and the 2001 Notes have been duly executed
and delivered by the Company, such execution and delivery, and the performance
by the Company of this Agreement and the 2001 Notes, have been duly authorized
by all necessary corporate action on the part of the Company, and this Agreement
and the 2001 Notes each constitute valid, legally binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, and (c) each of the consents and other actions described in clauses (c)
and (d) of Section 4 are and shall at all times after the date of this Agreement
remain in full force with the effect described in such clauses. A breach of any
of the foregoing representations and warranties shall constitute an Event of
Default under the terms of the Purchase Agreement.
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The "Senior Credit Facility" means the Loan and Security Agreement dated as of
January 20, 1995 between Congress Financial Corporation (Western) as lender and
Xxxxxx'x Sofa Factory and Xxxxxx Convertible Corporation as borrowers, including
any amendments, refinancings, refundings, replacements or extensions thereof and
including any guaranty thereof.
Section 7. Governing Law; Jurisdiction. The provisions of Section 12.13
(Governing Law; Consent to Jurisdiction) of the Purchase Agreement shall govern
this Agreement as if set forth herein.
Section 8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the Company, GECC and JOL have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized.
XXXXXX'X FURNITURE, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: EVP and CFO
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Vice President
JAPAN OMNIBUS LTD.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title:
