EXHIBIT 10
FALCON PRODUCTS, INC.
THIRD AMENDMENT
TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is
dated as of June 14, 2001 and entered into by and among Falcon Products,
Inc., a Delaware corporation ("COMPANY"), the Subsidiary Guarantors listed
on the signature pages hereof (the "SUBSIDIARY GUARANTORS"), the financial
institutions listed on the signature pages hereof ("LENDERS"), DLJ Capital
Funding, Inc., as Administrative Agent for Lenders ("AGENT"), First Union
National Bank, as Syndication Agent (the "SYNDICATION AGENT") and
NationsBank, N.A., as Documentation Agent (the "DOCUMENTATION AGENT"), and
is made with reference to that certain Credit Agreement dated as of June 17,
1999, as amended by a First Amendment dated as of April 17, 2000 and a
Second Amendment dated as of September 2000 (as so amended, the "CREDIT
AGREEMENT"), by and among Company, Lenders, Agent, Syndication Agent and
Documentation Agent. Capitalized terms used herein without definition shall
have the same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit Agreement
with respect to reducing the Revolving Loan Commitments and amending the
financial covenants contained therein and to make certain other related
changes, all as more specifically set forth herein;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto
agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SUBSECTION 1.1: DEFINED TERMS
-------------------------------------------
A. Subsection 1.1 of the Credit Agreement is hereby
amended by adding the following definitions thereto in
appropriate alphabetical order:
"`CONSOLIDATED SENIOR LEVERAGE RATIO' means, at any date of
determination, the ratio of (a) an amount equal to (i) Consolidated
Total Debt minus (ii) the aggregate amount of Subordinated
-----
Indebtedness, in each case as of the last day of the Fiscal Quarter
for which such determination is being made, to (b) Consolidated
EBITDA for the consecutive four Fiscal Quarters ending on the last
day of the Fiscal Quarter for which such determination is being
made.
`RESTRUCTURING CHARGES' means those non-recurring cash and
non-cash restructuring charges incurred by Company and its
Subsidiaries during the third and fourth Fiscal Quarters of Fiscal
Year 2001 and the first Fiscal Quarter of Fiscal Year 2002 in
connection with the restructuring of the manufacturing operations of
Company and its Subsidiaries including the closing of certain of
such manufacturing facilities."
B. Subsection 1.1 of the Credit Agreement is hereby further amended
by adding a new clause (vii) to the definition of "Consolidated EBITDA"
immediately succeeding clause (vi) as follows:
"(vii) to the extent deducted in determining Consolidated
EBITDA, Restructuring Charges up to a maximum aggregate amount for
all such Restructuring Charges of not in excess of $20,000,000."
C. Subsection 1.1 of the Credit Agreement is hereby further amended
by adding immediately after the phrase "(or minus accumulated deficit)" in
the definition of "Consolidated Net Worth" the following:
"plus an amount equal to the after-tax effect of Restructuring
Charges up to an aggregate amount not to exceed $13,500,000."
1.2 AMENDMENTS TO SECTION 2: AMOUNTS AND TERMS OF COMMITMENTS
---------------------------------------------------------
AND LOANS
---------
A. Subsection 2.1A(ii) of the Credit Agreement is hereby amended by
deleting the second sentence contained therein in its entirety and by
substituting therefor the following:
"The original amount of each Revolving Lender's Revolving Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate amount of the Revolving Loan Commitments
is $30 million; provided that the Revolving Loan Commitments of the
--------
Revolving Lenders shall be adjusted to give effect to any
assignments of the Revolving Loan Commitments pursuant to
subsection 10.1B; and provided further that the amount of the
-------- -------
Revolving Loan Commitments shall be reduced from time to time by
the amount of any reductions thereto made pursuant to subsections
2.4B(ii) and 2.4B(iii) and shall be increased from time to time by
the amount of any increases thereto made pursuant to the last
paragraph of this subsection 2.1A(ii)."
B. Subsection 2.1A(ii) of the Credit Agreement is hereby further
amended by adding at the end thereof a new paragraph as follows:
"At any time that no Potential Event of Default or Event of
Default has occurred and is continuing the Company may notify the
Administrative Agent that the Company has obtained additional or
new Revolving Loan Commitments from existing Lenders and/or other
lenders not then a party to this Agreement to provide up to an
aggregate amount of $20 million in additional or new Revolving Loan
Commitments. Any such proposed lender which is not then a Revolving
Lender under this Agreement shall be subject to the approval of
Administrative Agent, such approval not to be unreasonably withheld
or delayed. Any increase in the Revolving Loan Commitments pursuant
to this subsection 2.1A(ii) shall constitute an amendment of this
Agreement but shall not require any further approval or action by
Lenders. Nothing contained in this subsection 2.1A(ii) or otherwise
in this
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Agreement is intended to obligate any Lender or Administrative Agent
to provide any portion of any such additional Revolving Loan
Commitments. Each new Lender designated by Company and acceptable to
Administrative Agent shall become an additional party hereto upon its
execution of a counterpart signature page to this Agreement. Upon such
execution, Administrative Agent shall notify the other Lenders to this
Agreement of such increase in the Revolving Loan Commitments. Upon
effectiveness of any such increase, the Revolving Loan Commitments and
Pro Rata Share of each Revolving Lender will be adjusted to give effect
to the increase in the applicable Revolving Loan Commitments. To the
extent that the adjustment of Pro Rata Shares results in losses or
expenses to any Revolving Lender as a result of the prepayment of any
LIBOR Loan on a date other than the scheduled last day of the
applicable Interest Period, Company shall be responsible for such
losses or expenses pursuant to subsection 2.6D."
1.3 AMENDMENTS TO SUBSECTION 7.6: FINANCIAL COVENANTS
-------------------------------------------------
A. Subsection 7.6A of the Credit Agreement is hereby amended by
deleting the table contained therein with respect to the Third Fiscal
Quarter of Fiscal Year 2001 and thereafter and by inserting in lieu thereof
the following:
-------------------------------------------------
Minimum Fixed Charge
"Period Coverage Ratio
------- --------------
-------------------------------------------------
-------------------------------------------------
3rd Fiscal Quarter of 1.00:1.00
Fiscal Year 2001 through
3rd Fiscal Quarter of
Fiscal Year 2003
-------------------------------------------------
4th Fiscal Quarter of 1.05:1.00"
Fiscal Year 2003
and thereafter
-------------------------------------------------
-------------------------------------------------
B. Subsection 7.6B of the Credit Agreement is hereby amended by
deleting the table contained therein with respect to the Third Fiscal
Quarter of Fiscal Year 2001 through and including the Second Fiscal Quarter
of Fiscal Year 2002 and by inserting in lieu thereof the following:
----------------------------------------------
Maximum
Consolidated
"Period Leverage Ratio
------- --------------
----------------------------------------------
----------------------------------------------
3rd Fiscal Quarter of 4.85:1.00
Fiscal Year 2001
----------------------------------------------
4th Fiscal Quarter of 4.80:1.00
Fiscal Year 2001
----------------------------------------------
----------------------------------------------
1st Fiscal Quarter of 4.75:1.00
Fiscal Year 2002
----------------------------------------------
2nd Fiscal Quarter of 4.35:1.00"
Fiscal Year 2002
----------------------------------------------
C. Subsection 7.6C of the Credit Agreement is hereby amended by
deleting the table contained therein with respect to the Second Fiscal
Quarter of Fiscal Year 2001 through and
3
including the Fourth Fiscal Quarter of Fiscal Year 2005 and by inserting in
lieu thereof the following:
----------------------------------------------
Minimum Consolidated
"Period EBITDA
------- ------
----------------------------------------------
----------------------------------------------
2nd Fiscal Quarter of $37,000,000
Fiscal Year 2001
----------------------------------------------
3rd Fiscal Quarter of $33,000,000
Fiscal Year 2001
----------------------------------------------
4th Fiscal Quarter of $31,000,000
Fiscal Year 2001
----------------------------------------------
----------------------------------------------
1st Fiscal Quarter of $31,000,000
Fiscal Year 2002
----------------------------------------------
2nd Fiscal Quarter of $32,500,000
Fiscal Year 2002
----------------------------------------------
3rd Fiscal Quarter of $34,000,000
Fiscal Year 2002
----------------------------------------------
4th Fiscal Quarter of $35,000,000
Fiscal Year 2002
----------------------------------------------
----------------------------------------------
1st Fiscal Quarter of $36,500,000
Fiscal Year 2003
----------------------------------------------
2nd Fiscal Quarter of $38,500,000
Fiscal Year 2003
----------------------------------------------
3rd Fiscal Quarter of $40,000,000
Fiscal Year 2003
----------------------------------------------
4th Fiscal Quarter of $40,000,000
Fiscal Year 2003
----------------------------------------------
----------------------------------------------
1st Fiscal Quarter of $42,500,000
Fiscal Year 2004
----------------------------------------------
2nd Fiscal Quarter of $42,500,000
Fiscal Year 2004
----------------------------------------------
3rd Fiscal Quarter of $42,500,000
Fiscal Year 2004
----------------------------------------------
4th Fiscal Quarter of $45,000,000
Fiscal Year 2004
----------------------------------------------
----------------------------------------------
1st Fiscal Quarter of $45,000,000
Fiscal Year 2005
----------------------------------------------
2nd Fiscal Quarter of $47,000,000
Fiscal Year 2005
----------------------------------------------
3rd Fiscal Quarter of $47,500,000
Fiscal Year 2005
----------------------------------------------
4th Fiscal Quarter of $48,000,000"
Fiscal Year 2005
and thereafter
----------------------------------------------
4
D. Subsection 7.6D of the Credit Agreement is
hereby amended by deleting the table contained therein and by
inserting in lieu thereof the following:
----------------------------------------------
MINIMUM CONSOLIDATED
"PERIOD NET WORTH
----------------------------------------------
One day after the Closing
Date through Fiscal Year $60 million
2000
----------------------------------------------
Fiscal Year 2001 through $75 million
2nd Fiscal Quarter Fiscal
Year 2002
----------------------------------------------
3rd Fiscal Quarter Fiscal $80 million
Year 2002 through 4th
Fiscal Quarter Fiscal Year
2002
----------------------------------------------
Fiscal Year 2003 $85 million
----------------------------------------------
Fiscal Year 2004 $90 million
----------------------------------------------
Fiscal Year 2005 and $95 million"
thereafter
----------------------------------------------
E. A new subsection 7.6E is hereby added to the
Credit Agreement in appropriate numerical order as follows:
"E. MAXIMUM CONSOLIDATED SENIOR LEVERAGE RATIO.
Company shall not permit the Consolidated Senior
Leverage Ratio, calculated on a Pro Forma Basis, for
any four-Fiscal Quarter period ending during any of
the periods set forth below to exceed the correlative
ratio indicated:
---------------------------------------------------
Maximum Consolidated
Period Senior Leverage Ratio
------ ---------------------
---------------------------------------------------
---------------------------------------------------
3rd Fiscal Quarter of 2.00:1.00
Fiscal Year 2001
---------------------------------------------------
4th Fiscal Quarter of 2.00:1.00
Fiscal Year 2001
---------------------------------------------------
---------------------------------------------------
1st Fiscal Quarter of 1.75:1.00"
Fiscal Year 2002
and thereafter
---------------------------------------------------
1.4 AMENDMENT TO SUBSECTION 7.8: CONSOLIDATED CAPITAL EXPENDITURES
--------------------------------------------------------------
Subsection 7.8 of the Credit Agreement is hereby amended by
deleting from the table contained therein the Consolidated Capital
Expenditures limitations for Fiscal Year 2001 and 2002 and by inserting in
lieu thereof the following:
------------------------------------------------------
"Fiscal Year Maximum Consolidated
------------ Capital Expenditures
--------------------
------------------------------------------------------
------------------------------------------------------
Fiscal Year 2001 $ 8,500,000
------------------------------------------------------
Fiscal Year 2002 $10,000,000"
------------------------------------------------------
5
SECTION 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "AMENDMENT
EFFECTIVE DATE"):
A. On or before the Amendment Effective Date, Company shall deliver
to Lenders (or to Agent for Lenders) the following, each, unless otherwise
noted, dated the Amendment Effective Date:
1. Signature and incumbency certificates of its officers executing
this Amendment;
2. Signature and incumbency certificates of the officers of each
Subsidiary Guarantor executing this Amendment; and
3. Copies of this Amendment executed by Company and each Subsidiary
Guarantor.
B. Company shall pay to each Lender executing this Amendment by
the close of business, New York time, on June 14, 2001, a consent fee equal
to 0.20% multiplied by the sum of (a) such Lender's Tranche A Term Loans
----------
plus (b) such Lender's Revolving Loan Commitments (after giving effect to
this Amendment).
C. On or before the Amendment Effective Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously
found acceptable by Agent, acting on behalf of Lenders, and its counsel
shall be satisfactory in form and substance to Agent and such counsel, and
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Agent may reasonably request.
D. Requisite Lenders and Agent shall have executed
and delivered copies of this Amendment to Agent.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to
amend the Credit Agreement and the other Loan Documents in the manner
provided herein, Company and each Subsidiary Guarantor represent and warrant
to each Lender that the following statements are true, correct and complete:
A. CORPORATE POWER AND AUTHORITY. Each of Company and each
Subsidiary Guarantor has all requisite corporate power and authority to
enter into this Amendment and to carry out the transactions contemplated by,
and perform its obligations under, the Credit Agreement and the other Loan
Documents as amended by this Amendment (the "AMENDED AGREEMENTS").
6
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreements have been duly
authorized by all necessary corporate action on the part of Company and each
Subsidiary Guarantor.
C. NO CONFLICT. The execution and delivery by Company and each
Subsidiary Guarantor of this Amendment and the performance by Company and
each Subsidiary Guarantor of the Amended Agreements do not and will not (i)
violate any provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Company or any of its Subsidiaries or
any order, judgment or decree of any court or other agency of government
binding on Company or any of its Subsidiaries, (ii) conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of Company or any of its
Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of its
Subsidiaries or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Company or any of
its Subsidiaries.
D. GOVERNMENTAL CONSENTS. The execution and delivery by Company and
each Subsidiary Guarantor of this Amendment and the performance by Company
and each Subsidiary Guarantor of the Amended Agreements do not and will not
require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental
authority or regulatory body.
E. BINDING OBLIGATION. This Amendment and the Amended Agreements
have been duly executed and delivered by Company and each Subsidiary
Guarantor and are the legally valid and binding obligations of Company and
each Subsidiary Guarantor, enforceable against Company and each Subsidiary
Guarantor in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case they were true, correct and complete in all material respects on
and as of such earlier date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
SECTION 4. ACKNOWLEDGEMENT AND CONSENT
Company is a party to the certain Collateral Documents, pursuant to
which Company has created Liens in favor of Agent on certain Collateral to
secure the Obligations. The Subsidiary Guarantors are parties to the
Subsidiary Guaranty and certain Collateral Documents specified in the Credit
Agreement, in each case as amended through the Amendment Effective Date,
pursuant to which each Subsidiary Guarantor has (i) guarantied the
Obligations pursuant to the Subsidiary Guaranty and (ii) granted a security
interest in and pledged certain Collateral to Agent to secure the
7
obligations of such Subsidiary under such Subsidiary Guaranty pursuant to
such Collateral Documents. Company and the Subsidiary Guarantors are
collectively referred to herein as the "CREDIT SUPPORT PARTIES and the
Guaranties and Collateral Documents referred to above are collectively
referred to herein as the "CREDIT SUPPORT DOCUMENTS".
Each Credit Support Party hereby acknowledges that it has reviewed
the terms and provisions of the Credit Agreement and the other Loan
Documents and this Amendment and consents to the Credit Agreement as amended
by the First Amendment and to the amendment of the Credit Agreement and the
other Loan Documents effected pursuant to this Amendment. Each Credit
Support Party hereby confirms that each Credit Support Document to which it
is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance of all "Obligations," "Guarantied
Obligations" and "Secured Obligations," as the case may be (in each case as
such terms are defined in the applicable Credit Support Document), including
without limitation the payment and performance of all such "Obligations,"
"Guarantied Obligations" or "Secured Obligations," as the case may be, in
respect of the Obligations of Company and the Subsidiary Guarantors now or
hereafter existing under or in respect of the Amended Agreements and the
Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in
the Amended Agreements and the Credit Support Documents to which it is a
party or otherwise bound are true, correct and complete in all material
respects on and as of the Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case they were true, correct and complete in all material respects on
and as of such earlier date.
Each Credit Support Party (other than Company) acknowledges and
agrees that (i) notwithstanding the conditions to effectiveness set forth in
this Amendment, such Credit Support Party is not required by the terms of
the Credit Agreement or any other Loan Document to consent to the amendments
to the Credit Agreement effected pursuant to this Amendment and (ii) nothing
in the Credit Agreement, this Amendment or any other Loan Document shall be
deemed to require the consent of such Credit Support Party to any future
amendments to the Credit Agreement.
SECTION 5. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
(i) On and after the Amendment Effective Date, each reference in
the Credit Agreement or the other Loan Documents amended hereby to
"this Agreement", "hereunder", "hereof", "herein" or words of like
import referring to the Credit Agreement or such other Loan Document
shall mean and be a reference to the Amended Agreements.
8
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy
of Agent or any Lender under, the Credit Agreement or any of the other
Loan Documents.
B. HEADINGS. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall no
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
C. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
D. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their respective officers thereunto
duly authorized as of the date first written above.
FALCON PRODUCTS, INC.
By:
------------------------------------
Name:
Title:
FALCON HOLDINGS, INC., as a Credit
Support Party and a Subsidiary Guarantor
By:
------------------------------------
Name:
Title:
XXXX FURNITURE CORPORATION, as a
Credit Support Party and a
Subsidiary Guarantor
By:
------------------------------------
Name:
Title:
XXXXXXX INDUSTRIES, INC., as a
Credit Support Party and a
Subsidiary Guarantor
By:
------------------------------------
Name:
Title:
XXXXXX XXXXXXXX INDUSTRIES, INC.,
as a Credit Support Party and a
Subsidiary Guarantor
By:
------------------------------------
Name:
Title:
S-1
SELLERS & XXXXXXXXX, INC., as a
Credit Support Party and a
Subsidiary Guarantor
By:
------------------------------------
Name:
Title:
MADISON FURNITURE INDUSTRIES, INC.,
as a Credit Support Party and a
Subsidiary Guarantor
By:
------------------------------------
Name:
Title:
X-0
XXX XXXXXXX XXXXXXX, XXX.,
individually and as Administrative Agent
By:
------------------------------------
Name:
Title:
S-3
----------------------------------------
By:
------------------------------------
Name:
Title:
S-4
