Exhibit 4
Execution Version
SECOND AMENDMENT AND WAIVER
TO
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT AND OMNIBUS AMENDMENT
TO GUARANTY AND NOTE PURCHASE
AGREEMENTS
THIS SECOND AMENDMENT AND WAIVER TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT AND OMNIBUS AMENDMENT
TO GUARANTY AND NOTE PURCHASE AGREEMENTS (this
“Amendment”) is made as of the 6
th day of October, 2009, by and among BASSETT
FURNITURE INDUSTRIES, INCORPORATED, a Virginia corporation (the
“Borrower”), BRANCH BANKING AND TRUST COMPANY
(“BB&T”), as agent (in such capacity, the
“Agent”) and Licensee Lender (as defined in the Credit
Agreement identified below), the banks listed on the signature
pages hereof (collectively referred to herein as the
“Banks”) and BASSETT FURNITURE INDUSTRIES OF NORTH
CAROLINA, LLC (formerly Bassett Furniture Industries of North
Carolina, Inc.), THE E.B. MALONE CORPORATION (“Malone
Corporation”), BASSETT DIRECT STORES, LLC (formerly Bassett
Direct Stores, Inc.), BASSETT DIRECT NC, LLC, and BASSETT DIRECT
SC, LLC (collectively referred to herein as the
“Guarantors”).
R E C I T A L S
:
The Borrower, the Agent, the
Guarantors and the Banks (including the Licensee Lender) have
entered into that certain Third Amended and Restated Credit
Agreement dated October 31, 2007, as amended by the First
Amendment thereto dated as of August 7, 2008 (as so amended,
the “Credit Agreement”; capitalized terms used in this
Amendment which are not otherwise defined shall have the respective
meanings assigned to them in the Credit Agreement). Pursuant to the
terms of the Credit Agreement, the Borrower and BB&T, as
Licensee Lender, have entered into each of the Guaranty and Note
Purchase Agreements identified on Schedule 1 hereto (collectively,
together with any other such Guaranty and Note Purchase Agreement
executed and delivered in connection with the Credit Agreement, the
“Licensee Loan Guarantees”).
The Borrower and Guarantors have
requested that the Agent and the Banks (i) amend the Credit
Agreement to modify certain provisions of the Credit Agreement as
more fully set forth herein and (ii) waive the Event of
Default in existence under Section 5.35 of the Credit
Agreement arising as a result of the Borrower’s failure to
comply with the minimum Consolidated Tangible Net Worth covenant
for the Fiscal Quarters ended February 28,
2009, May 30, 2009 and August 29, 2009 (the
“Existing Events of Default”). Subject to the terms and
conditions in this Amendment, the Banks and the Agent have agreed
to such waiver and amendments.
NOW, THEREFORE, in consideration of
the Recitals and the mutual promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrower, the Guarantors, the
Agent and the Banks (including the Licensee Lender), intending to
be legally bound hereby, agree as follows:
SECTION 1. Recitals . The
Recitals are incorporated herein by reference and shall be deemed
to be a part of this Amendment.
SECTION 2. Amendments to Credit
Agreement . The Credit Agreement is hereby amended as set forth
in this Section 2 .
SECTION 2.01. Amendments to
Section 1.01 . Section 1.01 of the Credit Agreement
is hereby amended to:
(a) include the following new
definition:
“Second Amendment Effective
Date” shall have the meaning assigned to such term in the
Second Amendment and Waiver to Third Amended and Restated Credit
Agreement and Omnibus Amendment to Guaranty and Note Purchase
Agreements dated October 6, 2009, by and among the Banks, the
Agent, the Licensee Lender, the Borrower and the
Guarantors.
(b) amend and restate the following
definition to read as follows:
“Borrowing Base” shall
mean, based on the most recent Borrowing Base Certification Report
which as of the date of a determination of the Borrowing Base has
been received by the Agent, an amount equal to: (A) Adjusted
Debt, as of the date of determination, subtracted from (B) the
sum of (i) an amount equal to 75% (or such lesser percentage
as shall be mutually agreed upon by the Agent and Borrower from
time to time) of the face dollar amount of Eligible Accounts as at
the date of determination; and (ii) an amount equal to:
(a) 5% of the LIFO Reserve, as of the date of the
determination of the Borrowing Base, subtracted from (b) 40%
(or such lesser percentage as shall be mutually agreed upon by the
Agent and Borrower from time to time) of the dollar amount of the
Eligible Inventory, valued at the lower of its cost or market value
(as determined by the Agent in its sole discretion), as at the date
of determination. The Agent shall also (x) hold and subtract
from the Borrowing Base a reserve in an amount equal to 125% of the
amount, if any, by which the fair market value of the Marketable
Investments in the Borrower’s Securities Account (as such
terms are defined in Section 5.37) is less than $16,000,000
and (y) be entitled to hold and subtract any other reserve
against the Borrowing Base it deems necessary as security for
payment of the Notes, the obligations of the Guarantors under
Article X of this Agreement, and the obligations of the Borrower
under the Letter of Credit Agreements and the Licensee Loan
Guarantees.
(c) delete the following definitions
appearing therein: “Consolidated Comprehensive EBITDA”;
“Consolidated Interest Expense”; and
“EBITDA”.
SECTION 2.02. Amendments to
Section 2.06 . Section 2.06 of the Credit Agreement
is hereby amended as follows:
(a) by amending and restating
Section 2.06(a) to read in its entirety as follows:
(a) “Applicable Margin”
shall mean 2.75%.
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(b) by amending and restating the
first sentence of Section 2.06(b) to read in its entirety as
follows:
During each Interest Period in which
the Loan (excluding Swing Line Advances) is a Prime Rate Loan, such
Prime Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day during the applicable Interest Period,
at a rate per annum equal to the Prime Rate for such day plus the
Applicable Margin; provided , however , that in no
event shall the interest rate applicable to any such Prime Rate
Loan be less than 4.25% per annum.
(c) by amending and restating the
first sentence of Section 2.06(c) to read in its entirety as
follows:
During each Interest Period in which
the Loan is a Euro-Dollar Loan, such Euro-Dollar Loan shall bear
interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to
the sum of: (1) the Applicable Margin, plus (2) the
applicable Adjusted Monthly Libor Index for such Interest Period;
provided , however , that in no event shall the
interest rate applicable to any Euro-Dollar Loan be less than
4.25% per annum.
(d) by amending and restating
Section 2.06(e) to read in its entirety as follows:
(e) Each Letter of Credit Advance
shall bear interest on the outstanding principal amount thereof,
payable on demand, for each day from the date such Letter of Credit
Advance is made until paid in full at a rate per annum equal to the
Default Rate applicable to Euro-Dollar Loans.
SECTION 2.03. Amendment to
Section 2.07(a) . Section 2.07(a) of the Credit
Agreement is hereby amended and restated to read in its entirety as
follows:
(a) The Borrower shall pay to the
Agent for the ratable account of each Bank a facility fee equal to
the product of: (i) the aggregate of such Bank’s
Commitment (whether or not utilized) as then in effect (or, if the
Commitments are no longer in effect, the aggregate outstanding
principal amount of the Notes, Letter of Credit Advances, Licensee
Loans and Undrawn Amounts) times (ii) 0.50%. Facility fees
shall be payable in advance on the Second Amendment Effective Date
and thereafter on each anniversary of the Second Amendment
Effective Date until the Commitments have been terminated and the
Obligations have been paid in full; provided ;
however , that such facility fee shall be pro rated for the
year in which the Termination Date is scheduled to occur. The
Borrower agrees that all such facility fees shall be fully earned
and paid in immediately available funds when due and payable and
shall be non-refundable under any circumstance.
SECTION 2.04. Amendment to
Section 2.15(a) . Section 2.15(a) of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
(a) The Borrower may, prior to the
Termination Date, as set forth in this Section, request the Swing
Line Lender to make, and the Swing Line Lender may in its sole and
absolute discretion prior to the Termination Date make, Swing Line
Advances to the Borrower, in an aggregate principal amount at any
one time outstanding, not exceeding (i) prior to the Second
Amendment Effective Date, Five Million Dollars ($5,000,000) and
(ii) thereafter, Zero Dollars ($0); provided that the
aggregate principal
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amount of all Swing Line Advances,
together with the aggregate principal amount of all outstanding
Advances, Undrawn Amounts, Licensee Loans and Letter of Credit
Advances, at any one time outstanding shall not exceed the
aggregate amount of the Commitments of all of the Banks at such
time.
SECTION 2.05. Amendment to
Section 2.16 . Section 2.16 of the Credit Agreement
is hereby amended by adding the following clause (j) to the
end of such Section:
(j) Notwithstanding any other
provision of this Section 2.16, the Licensee Lender shall not,
and shall have no obligation to, disburse any Licensee Loans at any
time on or after the Second Amendment Effective Date. The Loan
Parties acknowledge and agree that the termination of the Licensee
Lender’s commitment to make Licensee Loans shall not alter,
modify or amend or otherwise affect in any way the Loan
Parties’ respective obligations set forth in this Agreement,
any Licensee Loan Document or any other Loan Document.
SECTION 2.06. Amendment to
Section 5.35 . Section 5.35 of the Credit Agreement
is hereby amended and restated to read in its entirety as
follows:
SECTION 5.35. Minimum
Consolidated Tangible Net Worth . Consolidated Tangible Net
Worth will at no time be less than: (a) (i) for each
Fiscal Quarter ending in Fiscal Year 2009, $95,000,000.00, and
(ii) for each Fiscal Quarter ending in Fiscal Year 2010,
$90,000,000.00; plus (b) 100% of the cumulative Net Proceeds
of Capital Stock/Conversion of Debt received during any period
after the Fiscal Year ended November 30, 2007, calculated
quarterly.
SECTION 2.07. Amendment to Agent
Commitment Amount . The Commitment amount of the Agent as set
forth on the signature page of the Credit Agreement is hereby
decreased from $45,000,000.00 to $30,000,000.00.
SECTION 2.08. Amendment to
Exhibit A . Exhibit A to the Credit Agreement is hereby amended
and restated to read as set forth on Exhibit A attached
hereto.
SECTION 3. Amendment to Licensee
Loan Guarantees . Each Licensee Loan Guarantee is hereby
amended by amending and restating clauses (a) and (b) of
the definition of “ Guaranty Trigger Event ”
therein to read in their entirety as follows:
(a) any required payment of the
Borrower with respect to the Guaranteed Obligations is twenty or
more days past due during any calendar month, and, if such required
payment were to remain unpaid as of the last day of that calendar
month, such payment would on the last day of such calendar month be
30 or more days past due;
(b) the third occurrence of any
required payment of the Borrower with respect to the Guaranteed
Obligations being more than (i) prior to the Second Amendment
Effective Date, 60 days past due and (ii) thereafter, 30 days
past due;
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SECTION 4. Acknowledgments;
Additional Agreements .
(a) The Borrower, the Agent, the
Guarantors and the Banks acknowledge and agree that: (i) prior
to this Amendment, the Agent’s Commitment, as a Bank, was
equal to $45,000,000.00; and (ii) effective as of the Second
Amendment Effective Date, such Commitment shall be decreased in the
amount of $15,000,000.00, and (iii) after giving effect to
such decrease, the Agent’s Commitment, as a Bank, shall be
equal to $30,000,000.00.
(b) The Borrower and Malone
Corporation represent and warrant to Agent and Banks, and covenant
and agree that, as of the date hereof, Malone Corporation does not,
and, after the date hereof it will not, hold any Properties or
other assets or conduct any business, and, as of the date hereof,
it is not, and after the date hereof it will not be, a party to any
material contractual obligations (other than the Loan Documents).
Subject to compliance with the foregoing, Agent and Banks agree
that, notwithstanding anything to the contrary in Sections 6.01(b),
(c) or (d) of the Credit Agreement, the failure of Malone
Corporation to be in good standing in Delaware shall not constitute
a breach of the representations and warranties set forth in
Section 4.01, 4.08 or 4.15 of the Credit Agreement or a
failure to perform or observe the covenants set forth in Sections
5.15, 5.19 or 5.22 of the Credit Agreement.
SECTION 5. Waiver of Compliance
with Section 5.35 of the Credit Agreement . Subject to the
terms and conditions of this Amendment, the Banks hereby waive the
Existing Events of Default. The foregoing waiver is limited solely
to the Existing Events of Default, and nothing contained herein
shall otherwise (i) modify the Borrower’s or the
Guarantors’ respective obligations to comply fully with all
duties, terms, conditions, or covenants contained in the Loan
Documents or (ii) be deemed to constitute a waiver of any
other rights or remedies any Bank or the Agent may have under any
Loan Documents or under applicable law or at equity with respect to
any matters. This is a one-time waiver, and, other than as set
forth in this Amendment, the Banks and the Agent shall have no
obligation to amend, modify or waive any provision of the Credit
Agreement or any other Loan Document. The provisions and agreements
set forth in this Section 5 shall not establish a custom or
course of dealing or conduct between any Bank or the Agent and
Borrower and the Guarantors.
SECTION 6. Conditions to
Effectiveness . The effectiveness of this Amendment and the
obligations of the Agent and Banks hereunder are subject to the
following conditions, unless the Banks waive such
conditions:
(a) receipt by the Agent from each
of the parties hereto of a duly executed counterpart of this
Amendment signed by such party;
(b) the Agent shall have received:
(i) the duly executed Replacement Note (as defined below) for
the account of the Agent; (ii) corporate resolutions and other
evidence as the Agent may reasonably request, respecting the
authorization, execution and delivery of this Amendment and the
Replacement Note; (iii) an opinion from counsel to the
Borrower and Guarantors in form and content satisfactory to the
Agent; and (iv) all other documents that the Agent may
reasonably request in connection with the transactions contemplated
hereby;
(c) the fact that the
representations and warranties of the Borrower and Guarantors
contained in Section 8 of this Amendment shall be true on and
as of the date hereof;
(d) the Agent shall have received:
(i) the entire accrued and unpaid facility fee, calculated in
accordance with Section 2.07(a) as in effect prior to the
Second Amendment Effective Date plus the upfront facility
fee in an amount equal to 0.50% of the aggregate Commitment
(calculated after giving effect to this Amendment), (ii) the
Amendment Fee (as defined below) and (iii) all other
accrued
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and unpaid fees and other amounts owing by the
Borrower and the Guarantors under the Loan Documents, including all
costs and expenses of the preparation, execution and delivery and
closing of this Amendment (including any associated costs of
counsel for the Agent); and
(e) all documents and legal matters
in connection with the transactions contemplated by this Amendment
shall be reasonably satisfactory in form and substance to the Agent
and its counsel.
SECTION 7. No Other Amendment
. Except for the amendments set forth above, the text of the Credit
Agreement and the respective Licensee Loan Guarantees shall remain
unchanged and in full force and effect. This Amendment is not
intended to effect, nor shall it be construed as, a novation of any
Loan Document. The Credit Agreement and this Amendment, and each
Licensee Loan Guaranty and this Amendment, as the case may be,
shall be construed together as a single agreement. On and after the
Second Amendment Effective Date, all references to the Credit
Agreement or the Licensee Loan Guarantees, as the case may be,
contained in the Notes, the Security Agreement, the Securities
Account Control Agreements (as each are defined in the Credit
Agreement), and the other Loan Documents shall mean and include the
Credit Agreement and the Licensee Loan Guarantees, as the case may
be, as modified by this Amendment. Nothing herein contained shall
waive, annul, vary or affect any provision, condition, covenant or
agreement contained in the Credit Agreement or the Licensee Loan
Guarantees, except as herein amended, nor affect nor impair any
rights, powers or remedies under the Credit Agreement and the
Licensee Loan Guarantees, all as hereby amended. The Banks and the
Agent do hereby reserve all of their rights and remedies against
all parties who may be or may hereafter become secondarily liable
for the repayment of the Notes. The Borrower and Guarantors promise
and agree to perform all of the requirements, conditions,
agreements and obligations under the terms of the Credit Agreement
and Licensee Loan Guarantees, all as heretofore and hereby
amended
