EXHIBIT 5
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:
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.FN1 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:
--------
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.
Year Q1 Q2 Q3 Q4
------- -------- -------- -------- ---------
1999 N/A N/A 3.75 5.00
2000 1.95 1.95 1.95 1.60
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
2003FN2 $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 Applicable to the first two fiscal quarters of 2003.
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 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 "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.
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 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.
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: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
and Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx, Xx.
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx, Xx.
Title: Senior Vice President/
Department Operations Manager
JAPAN OMNIBUS LTD.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Portfolio Manager
