Contract
EXHIBIT
10.2
This
FIFTH
AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of October 12, 2007,
and effective as of September 28, 2007, and is by and between XXXXXXX FURNITURE
COMPANY, INC., a Delaware corporation (the “Borrower”); and WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association and successor to SouthTrust
Bank, an Alabama banking corporation (the “Lender”).
RECITALS
The
Lender has made
a certain credit facility (the “Loan”) available to the Borrower pursuant to the
terms and conditions contained in that certain Credit Agreement dated as of
August 29, 2003 between the Borrower and the Lender (as amended by that certain
First Amendment to Credit Agreement dated as of April 23, 2004, that certain
Second Amendment to Credit Agreement effective as of August 29, 2005, that
certain Third Amendment to Credit Agreement effective as of August 28, 2006,
and
that certain Fourth Amendment to Credit Agreement effective as of July 13,
2007,
the “Credit Agreement”).
The
Borrower has
requested that the Lender amend certain provisions of the Credit Agreement
and,
subject to the terms and conditions set forth in this Amendment, the Lender
has
agreed to do so.
NOW,
THEREFORE, the
Borrower and the Lender hereby agree as follows:
1. The
Credit
Agreement is hereby amended as follows:
(a) The
definition of "Consolidated Net Earnings" in Section 5.1 of the Credit
Agreement is hereby replaced in its entirety with the following:
"Consolidated
Net
Earnings" shall mean, for any applicable period, for the Borrower and its
Subsidiaries on a Consolidated basis, the excess of (a) gross revenues
(including all cash proceeds received in connection with the Continued Dumping
and Subsidy Offset Act of 2000 for the applicable period) over (b) all expenses
and charges of a proper character (including current and deferred taxes on
income and current additions to reserves) each for the applicable period, but
not including in gross revenues: (i) any gains (net of expenses and
taxes applicable thereto) in excess of losses resulting from the sales,
conversions or other dispositions of capital assets outside the ordinary course
of business, (ii) any gains resulting from the write-up of
assets, (iii) any earnings or deferred credit (or amortization of a
deferred credit) of any Person acquired by the Borrower or any Subsidiary
through purchase, merger or consolidation or otherwise for any year prior to
the
year of acquisition not included in gross revenues under GAAP,
or (iv) any deferred credit representing the excess of
equity in any Subsidiary of the Borrower at the date of acquisition over the
cost of the investment in such Subsidiary, (v) proceeds of life
insurance policies on any Responsible Officer exceeding $250,000 for
such period, (vi) gains arising from the acquisition of debt securities for
a
cost less than the principal amount and accrued interest, (vii)
extraordinary items or transactions of a non-recurring or non-operating and
material nature or arising from gains or sales relating to the discontinuance
of
operations, or (viii) any portion of the net earnings (included in
the determination of such Consolidated Net Earnings or such Consolidated Net
Loss) of any Subsidiary which for any reason shall be unavailable for payment
of
dividends to the Borrower, all as determined in accordance with
GAAP. If the above calculation results in an amount less than zero,
then for such period there shall be a Consolidated Net Loss as determined in
the
definition thereof in this Section.
(b) The
definition of "Consolidated Net Loss" in Section 5.1 of the Credit Agreement
is
hereby replaced in its entirety with the following:
"Consolidated
Net
Loss" shall mean, for any applicable period, for the Borrower and its
Subsidiaries on a Consolidated basis, the excess of (a) expenses and charges
of
a proper character (including current and deferred taxes on income, provision
for taxes on unremitted foreign earnings which are included in gross revenues,
and current additions to resources) over (b) gross revenues for the same period
(including all cash proceeds received in connection with the Continued Dumping
and Subsidy Offset Act of 2000 for the applicable period), but not including
in
gross revenues those items listed in clauses (i) through (iv), inclusive, in
the
definition of “Consolidated Net Earnings” herein, all as determined in
accordance with GAAP. If the above calculation results in an amount
of zero or more, then for such period there shall be Consolidated Net Earnings
as determined in the definition thereof in this Section.
(c) Section
5.2 of the Credit Agreement is hereby replaced in its entirety with the
following:
Section
5.2. Consolidated Operating Income to Consolidated Fixed
Charges. Consolidated Operating Income shall at all times be
greater than 200% of Consolidated Fixed Charges. This covenant shall
be tested on a rolling four-quarter basis. For purposes of
calculating this ratio in each of the rolling four-quarter periods, the
following amounts shall be excluded from the calculation of Consolidated Net
Earnings and/or Consolidated Net Loss, as applicable for any
period: (1) the net, after tax effect of actual cash and non-cash
charges, as applicable, recorded for any period in fiscal 2007 and fiscal 2008,
in an amount up to $7,000,000 pretax in the aggregate (of which the cash portion
of such charges shall be no greater than $2,000,000) related to the termination
of the Borrower’s defined benefit pension plan and (2) the net, after tax effect
of actual cash and non-cash charges, as applicable, recorded for any period
in
fiscal 2007 and fiscal 2008, in an amount up to $10,000,000 pretax in
the aggregate (of which the cash portion of such charges shall be no greater
than $6,000,000) related to Borrower’s conversion of its Martinsville, Virginia
facility.
2. This
Amendment shall be deemed to be a contract made under, and for all purposes
shall be construed in accordance with, the laws of the Commonwealth of
Virginia.
3. The
Borrower hereby acknowledges and agrees that, as of the date hereof, the unpaid
principal balance of the Loan is $0.00 and that there are no set-offs or
defenses against the Credit Agreement or the Note (as defined in the Credit
Agreement). The parties to this Amendment do not intend that this
Amendment be construed as a novation of the Note or the Credit
Agreement. Except as hereby expressly extended and modified, the Note
and Credit Agreement shall otherwise be unchanged, shall remain in full force
and effect, and are hereby expressly approved, ratified and
confirmed.
IN
WITNESS WHEREOF, the parties hereto have executed or caused this instrument
to
be executed under seal as of the day and year first above written.
XXXXXXX
FURNITURE COMPANY, INC. [SEAL]
| By: | /s/ Xxxxxxx X. Xxxxx |
| Name: | Xxxxxxx X. Xxxxx |
| Title: | Vice President - Finance and Administration |
WACHOVIA
BANK, NATIONAL ASSOCIATION
[SEAL]
| By: | /s/ Xxxxxxxx X. Xxxxxxxxxx |
| Name: | Xxxxxxxx X. Xxxxxxxxxx |
| Title: | Vice President |
