EXHIBIT 2
AMENDMENT TO THE SUPPLEMENTAL
-----------------------------
SECURITIES PURCHASE AGREEMENT
-----------------------------
This agreement is made as of March 31, 1999 by and among Krauses's
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 (the
"Supplemental Purchase Agreement"), which provided for the purchase and
sale of the New Securities and amended and restated certain provisions of
the Original Agreement (all capitalized terms not defined herein shall have
the meanings set forth in the Supplemental Purchase Agreement).
Whereas, the parties hereto have agreed to amend and restate the
provisions of the Notes and to replace the Notes with amended notes in the
same initial principal amounts in the forms attached hereto as Exhibits A -
E (the "Amended Notes").
Whereas, the parties hereto have further agreed to amend certain
financial covenants contained in Section 6.2 of the Supplemental Purchase
Agreement.
INTENDING TO BE LEGALLY BOUND and in consideration of the mutual
covenants and obligations contained herein and in the Supplemental Purchase
Agreement, the parties agree as follows:
1. Any reference in the Supplemental Purchase Agreement to
"Note" or "Notes" shall mean an Amended Note or the Amended
Notes.
2. Effective as of January 30, 1999, Section 6.2 Financial
Covenants 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.FN1
----------------------
1 E.g. Fiscal year 1999 is the twelve-month period ending 1/30/2000
and the fiscal quarters of fiscal year 1999 are the quarterly
periods ending 5/02/99, 8/01/99, 10/31/99 and 1/30/00.
(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
---- -- -- -- --
0000 X/X X/X X/X 11.5 MM
1999 11.5 MM 11.5 MM 11.5 MM 13.0 MM
2000 14.5 MM 16.5 MM 19.0 MM 21.0 MM
2001 23.5 MM 26.0 MM 28.5 MM 31.0 MM
2002 34.0 MM 37.0 MM 40.0 MM N/A
(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
---- -- -- -- --
0000 X/X X/X X/X 2.25
1999 2.75 2.75 2.75 2.45
2000 2.10 1.75 1.50 1.30
2001 1.10 1.00 1.00 1.00
2002 1.00 1.00 1.00 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
---- -- -- -- --
0000 X/X X/X X/X 0.85
1999 .95 1.05 1.15 1.20
2000 1.25 1.30 1.35 1.40
2001 1.45 1.45 1.45 1.45
2002 1.45 1.45 1.45 N/A
(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 $7,600,000
1999 $10,000,000
2000 $9,000,000
2001 $8,000,000
2002FN2 $4,000,000FN2
---------------------------
2 Applicable to the first two fiscal quarters of 2002.
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.
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
--------------------------------------
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: Department Operations Manager
JAPAN OMNIBUS LTD.
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Portfolio Manager
