UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 4)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Krause's Furniture, Inc.
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.001 par value
- -------------------------------------------------------------------------------
(Title of Class of Securities)
000500760202
- -------------------------------------------------------------------------------
(CUSIP Number)
NANCY E. BARTON, ESQ.
GENERAL ELECTRIC CAPITAL CORPORATION
260 LONG RIDGE ROAD
STAMFORD, CONNECTICUT 06927
(203) 357-4000
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 5, 2000
-----------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box |_|.
<PAGE>
SCHEDULE 13D
CUSIP NO. 000500760202
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
General Electric Capital Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York, U.S.A.
NUMBER OF 7 SOLE VOTING POWER
SHARES 9,151,731
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 909,091
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 9,151,731
10 SHARED DISPOSITIVE POWER
909,091
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,060,822 (includes 909,091 shares as to which General
Electric Capital Corporation has shared voting and
dispositive power.)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.1%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
SCHEDULE 13D
CUSIP NO. 000500760202
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
GE Capital Equity Investments, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware, U.S.A.
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 909,091
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
909,091
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
909,091
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.4%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
SCHEDULE 13D
CUSIP NO. 000500760202
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
General Electric Capital Services, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not Applicable.
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware, U.S.A.
NUMBER OF 7 SOLE VOTING POWER
SHARES Disclaimed. See 11 below.
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH Disclaimed. See 11 below.
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Beneficial ownership of all shares is disclaimed by General
Electric Capital Services, Inc.
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Not Applicable. See 11 above.
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
SCHEDULE 13D
CUSIP NO. 000500760202
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
General Electric Company
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not Applicable.
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York, U.S.A.
NUMBER OF 7 SOLE VOTING POWER
SHARES Disclaimed. See 11 below.
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH Disclaimed. See 11 below.
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Beneficial ownership of all shares is disclaimed by General
Electric Company.
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Not Applicable. See 11 above.
14 TYPE OF REPORTING PERSON*
CO
This Schedule 13D ("13D Amendment No. 4") amends and supplements the
Schedule 13D filed by General Electric Capital Corporation, a New York
corporation ("GECC"), General Electric Capital Services, Inc., a Delaware
corporation ("GECS"), and General Electric Company, a New York Corporation
("GE") on September 9, 1996, as amended on August 15, 1997, on January 12,
1998 and on January 24, 2000 with GE Capital Equity Investments, Inc. ("GE
Equity") added as an additional Reporting Person (the "Schedule 13D"),
relating to the Common Stock, $.001 par value per share (the "Common
Stock") of Krause's Furniture, Inc. (the "Company" or the "Issuer").
Capitalized terms used but not defined herein shall have the meanings set
forth in the Schedule 13D. Except as expressly amended hereby, the
information set forth in the Schedule 13D remains in effect without
modification.
This 13D Amendment No. 4 relates to the issuance of 21,615 shares of
Series A Convertible Preferred Stock (the "Preferred Shares") to GECC and
3,087 Preferred Shares to Japan Omnibus Ltd. ("JOL"), a company formerly
known as Edson Investments, Inc., pursuant to a letter agreement, dated as
of May 5, 2000, by and among the Company, GECC and JOL (the "May 2000
Letter Agreement"), a copy of which is attached hereto as Exhibit 1. Under
the May 2000 Letter Agreement, GECC and JOL agree to receive Preferred
Shares in lieu of cash interest accruing on all of the notes (the "Notes")
of the Company issued under the Supplemental Securities Purchase Agreement
by and among the Company, GECC and JOL, dated as of August 14, 1997, as
amended on March 31, 1999, September 14, 1999, December 14, 1999, January
11, 2000 and April 3, 2000, a copy of which was filed on August 14, 1997 by
GECC, GECS and GE as Exhibit 1 to the Schedule 13D Amendment 1 and the
amendments to which are filed hereto as Exhibit 2, Exhibit 3, Exhibit 4,
Exhibit 5 and Exhibit 6 (the "Supplemental Securities Purchase Agreement").
ITEM 2. Identity and Background
-----------------------
Item 2 (a), (b), (c) is hereby amended to add the following:
For updated information with respect to the identity and background
of: (i) each director and executive officer of GECC, see Schedule I
attached hereto; (ii) each director and executive officer of GE Equity, see
Schedule II attached hereto; (iii) each director and executive officer of
GECS, see Schedule III attached hereto; and (iv) each director and
executive officer of GE, see Schedule IV attached hereto.
This 13D Amendment No. 4 is being filed while the Reporting Persons
are in the process of verifying information required herein from their
respective directors and executive officers. If any Reporting Person
obtains information which would cause a change in the information contained
herein, an amendment will be filed setting forth such change in
information.
Item 2(f) is hereby amended in its entirety to read as follows:
To the best knowledge of the applicable Reporting Person, all persons
identified in Schedules I through IV are United States citizens, except
that: Iain MacKay and Nigel D.T. Andrews are citizens of the United
Kingdom, P. Fresco is a citizen of Italy, C.X. Gonzalez is a citizen of
Mexico and Andrea Jung is a citizen of Canada.
ITEM 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
Item 3 is hereby amended to add the following:
The consideration for the 21,615 Preferred Shares is GECC's agreement
to receive such Preferred Shares in lieu of cash interest in the amount of
$1,080,736.59 due to GECC under the Notes for the period from March 1, 2000
through March 31, 2001.
ITEM 4. Purpose of Transaction
----------------------
Item 4 (a-j) is hereby amended to add the following:
GE Equity acquired the Preferred Shares in connection with the
purchase of the Notes as an investment and in the ordinary course of
business.
ITEM 5. Interest in Securities of the Issuer
------------------------------------
Item 5 (a) is hereby amended in its entirety to read as follows:
GECC has sole voting and dispositive power with respect to 9,151,731
shares of Common Stock (including 400,000 shares issuable upon exercise of
the Standby Warrant, 600,000 shares issuable upon exercise of the 1997
Warrant, 1,400,000 shares issuable upon exercise of the Warrant, 769,231
shares issuable upon exercise of the Performance Warrant and 982,500 shares
issuable upon conversion of the Preferred Shares), representing
approximately 33.7% of the outstanding shares of Common Stock (assuming the
exercise of the Warrant, the 1997 Warrant, Performance Warrant and the
Standby Warrant and conversion of the Preferred Shares) based upon the
Company's most recently filed Form 10-Q for the quarter ended March 26,
2000. GE Equity and GECC have shared voting and dispositive power with
respect to 909,091 shares of Common Stock issuable upon the conversion of
the Preferred Shares, representing approximately 3.4% of the outstanding
shares of Common Stock (assuming the exercise of the Warrant, the 1997
Warrant, and the Standby Warrant) based upon the Company's most recently
filed Form 10-Q for the quarter ended March 26, 2000.
Pursuant to the 2000 Stockholders Agreement, certain provisions of the
prior Stockholders Agreement dated as of August 26, 1996 relating to the
voting of shares held by Permal Group and the Hawleys were eliminated. By
reason of these amendments, GECC and GE Equity believe that, to the extent
GECC previously may have been deemed to constitute a "group," as such term
is defined in Section 13(d)(3) of the Exchange Act, with Permal Group and
the Hawleys, such group has been terminated. Accordingly, GECC and GE
Equity disclaim beneficial ownership of all shares held by Permal Group and
the Hawleys.
Item 5 (b) is hereby amended in its entirety to read as follows:
The responses of each Reporting Person to Items 7 through 11 of the
cover pages of this 13D Amendment No. 4 relating to beneficial ownership of
shares of Common Stock are incorporated herein by reference.
Item 5 (c) is hereby amended in its entirety to read as follows:
Except as set forth above, no Reporting Person nor, to the best
knowledge of the applicable Reporting Person, any person identified in
Schedules I through IV, beneficially owns any shares of Common Stock or has
effected any transactions in shares of Common Stock during the preceding 60
days.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
-------------------------------------------------------------
Respect to Securities of the Issuer
-----------------------------------
Item 6 is hereby amended to add the following:
Reference is made to the May 2000 Letter Agreement and the
Supplemental Securities Purchase Agreement as amended, copies of which are
on file with the Securities and Exchange Commission or attached as Exhibits
hereto, which are hereby incorporated by reference. The May 2000 Letter
Agreement provides, among other things, that the Supplemental Securities
Purchase Agreement is amended to extend cash interest payment deferral
period from March 1, 2000 through March 31, 2001; for such period GECC and
JOL have agreed to receive payment of interest in Preferred Shares at the
stated value of $50 per share; and the Company agreed to issue a total of
24,702 Preferred Shares as of May 5, 2000 to GECC and JOL (21,615 Preferred
Shares to GECC), all as more fully described in the May 2000 Letter
Agreement.
Except as set forth or incorporated by reference in this 13D Amendment
No. 4 or as previously reported in the Schedule 13D, no Reporting Person
nor, to the best knowledge of the applicable Reporting Person, any person
identified in Schedules I through IV, has any contracts, arrangements,
understandings or relationships beneficially owns any shares of Common
Stock or has effected any transactions in shares of Common Stock during the
preceding 60 days.
ITEM 7. Material to be Filed as Exhibits
--------------------------------
Exhibit 1: The May 2000 Letter Agreement
Exhibit 2: The March 31, 1999 Amendment to the Supplemental
Securities Purchase Agreement
Exhibit 3: The September 14, 1999 Amendment to the Supplemental
Securities Purchase Agreement
Exhibit 4: The December 14, 1999 Amendment to the Supplemental
Securities Purchase Agreement
Exhibit 5: The January 11, 2000 Amendment to the Supplemental
Securities Purchase Agreement
Exhibit 6: The April 3, 2000 Amendment to the Supplemental
Securities Purchase Agreement
Exhibit 7: Powers of Attorney
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Michael E. Pralle
---------------------------------
Name: Michael E. Pralle
Title: Vice President
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Michael E. Pralle
---------------------------------
Name: Michael E. Pralle
Title: President/General Manager
GENERAL ELECTRIC CAPITAL SERVICES, INC.
By: /s/ Michael E. Pralle
---------------------------------
Name: Michael E. Pralle
Title: Attorney-in-fact*
GENERAL ELECTRIC COMPANY
By: /s/ Michael E. Pralle
---------------------------------
Name: Michael E. Pralle
Title: Attorney-in-fact*
Dated: May 25, 2000
* Pursuant to a Power of Attorney attached hereto as Exhibit 7.
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
GENERAL ELECTRIC CAPITAL CORPORATION DIRECTORS
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
<S> <C> <C>
Nigel D.T. Andrews General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
Nancy E. Barton General Electric Senior Vice President,
Capital Corporation General Counsel and
260 Long Ridge Road Secretary, General Electric
Stamford, CT 06927 Capital Corporation
James R. Bunt General Electric Company Vice President
3135 Easton Turnpike and Treasurer
Fairfield, CT 06431 General Electric
Company
David L. Calhoun General Electric Capital Executive Vice President
Services, Inc. General Electric Capital
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06431 Services, Inc.
D.D. Dammerman General Electric Company Vice Chairman of the Board,
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06431 Electric Company; Chairman
and Chief Executive Officer,
General Electric Capital
Services, Inc.
B.W. Heineman, Jr. General Electric Company Senior Vice President -
3135 Easton Turnpike General Counsel and
Fairfield, CT 06431 Secretary, General Electric
Company
J.R. Immelt General Electric Company Senior Vice President -
P.O. Box 414 GE Medical Systems
Milwaukee, WI 53201
W.J. McNerney, Jr. General Electric Company Senior Vice President -
1 Neumann Way GE Aircraft Engines
Cincinnati, OH 05215
John H. Myers 303 Summer Street Vice President and Senior
Stamford, CT 06904 Counsel - Corporate Tax,
General Electric Company
<PAGE>
<S> <C> <C>
R.L. Nardelli General Electric Company Senior Vice President -
1 River Road GE Power Systems
Schenectady, NY 12345
Denis J. Nayden General Electric President and Chief
Capital Corporation Executive Officer,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Michael A. Neal General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
James A. Parke General Electric Executive Vice President
Capital Corporation and Chief Financial Officer,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
G.M. Reiner General Electric Company Senior Vice President -
3135 Easton Turnpike Chief Information Officer,
Fairfield, CT 06431 General Electric Company
John M Samuels General Electric Company Vice President and Senior
3135 Easton Turnpike Counsel - Corporate Tax,
Fairfield, CT 06431 General Electric Company
K.S. Sherin General Electric Company Senior Vice President
3135 Easton Turnpike Finance and Chief Financial
Fairfield, CT 06431 Officer, General Electric
Company
Edward D. Stewart General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
J.F. Welch, Jr. General Electric Company Chairman of the Board
3135 Easton Turnpike and Chief Executive
Fairfield, CT 06431 Officer, General Electric
Company
<PAGE>
<S> <C> <C>
William A. Woodburn General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
</TABLE>
<PAGE>
GENERAL ELECTRIC ORPORATION EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
<S> <C> <C>
Nigel D.T. Andrews General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
Nancy E. Barton General Electric Senior Vice President,
Capital Corporation General Counsel and
260 Long Ridge Road Secretary, General Electric
Stamford, CT 06927 Capital Corporation
James A. Colica General Electric Senior Vice President,
Capital Corporation Global Risk Management,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Richard D'Avino General Electric Senior Vice President,
Capital Corporation Taxes, General Electric
260 Long Ridge Road Capital Corporation
Stamford, CT 06927
Michael D. Frazier General Electric Senior Vice President,
Capital Corporation Insurance/Investment
260 Long Ridge Road Products, General Electric
Stamford, CT 06927 Capital Corporation
Robert L. Lewis General Electric Senior Vice President,
Capital Corporation Structured Finance Group,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Denis J. Nayden General Electric President and Chief
Capital Corporation Executive Officer,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Michael A. Neal General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
James A. Parke General Electric Executive Vice President
Capital Corporation and Chief Financial Officer,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
<PAGE>
<S> <C> <C>
Marc J. Saperstein General Electric Senior Vice President,
Capital Corporation Human Resources,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Edward D. Stewart General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
Jeffrey S. Werner General Electric Senior Vice President,
Capital Corporation Corporate Treasury and
260 Long Ridge Road Global Funding Operation,
Stamford, CT 06927 General Electric Capital
Corporation
William A. Woodburn General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
</TABLE>
<PAGE>
SCHEDULE II
GE CAPITAL EQUITY INVESTMENTS, INC. DIRECTOR
<TABLE>
<CAPTION>
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
<S> <C> <C>
Michael E. Pralle GE Capital Equity President and Chairman of
Investments, Inc. the Board, GE Capital
120 Long Ridge Road Equity Investments, Inc.
Stamford, CT 06927
GE CAPITAL EQUITY INVESTMENTS, INC. OFFICERS
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
<S> <C> <C>
Bryant Cohen GE Capital Equity Vice President-Taxes,
Investments, Inc. GE Capital Equity
120 Long Ridge Road Investments, Inc.
Stamford, CT 06927
Barbara J. Gould GE Capital Equity Vice President, Associate
Investments, Inc. General Counsel and
120 Long Ridge Road Assistant Secretary, GE
Stamford, CT 06927 Capital Equity Investments,
Inc.
Iain MacKay GE Capital Equity Vice President-Finance
Investments, Inc. and Treasurer,
120 Long Ridge Road GE Capital Equity
Stamford, CT 06927 Investments, Inc.
Mario Mastrantoni GE Capital Equity Vice President-Controller,
Investments, Inc. GE Capital Equity
120 Long Ridge Road Investments, Inc.
Stamford, CT 06927
Peter J. Muniz GE Capital Equity Vice President, Associate
Investments, Inc. General Counsel and
120 Long Ridge Road Assistant Secretary, GE
Stamford, CT 06927 Capital Equity Investments,
Inc.
<PAGE>
<S> <C> <C>
Michael E. Pralle GE Capital Equity President and Chairman of
Investments, Inc. the Board, GE Capital
120 Long Ridge Road Equity Investments, Inc.
Stamford, CT 06927
Jonathan K. Sprole GE Capital Equity Vice President, General
Investments, Inc. Counsel and Secretary,
120 Long Ridge Road GE Capital Equity
Stamford, CT 06927 Investments, Inc.
</TABLE>
<PAGE>
SCHEDULE III
GENERAL ELECTRIC CAPITAL SERVICES, INC. DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
<S> <C> <C>
Nigel D.T. Andrews General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
Nancy E. Barton General Electric Senior Vice President,
Capital Corporation General Counsel and
260 Long Ridge Road Secretary, General Electric
Stamford, CT 06927 Capital Corporation
James R. Bunt General Electric Company Vice President
3135 Easton Turnpike and Treasurer
Fairfield, CT 06431 General Electric
Company
David L. Calhoun General Electric Capital Executive Vice President
Services, Inc. General Electric Capital
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06431 Services, Inc.
D.D. Dammerman General Electric Company Vice Chairman of the Board,
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06431 Electric Company; Chairman
and Chief Executive Officer,
General Electric Capital
Services, Inc.
B.W. Heineman, Jr. General Electric Company Senior Vice President -
3135 Easton Turnpike General Counsel and
Fairfield, CT 06431 Secretary, General Electric
Company
J.R. Immelt General Electric Company Senior Vice President -
P.O. Box 414 GE Medical Systems
Milwaukee, WI 53201
W.J. McNerney, Jr. General Electric Company Senior Vice President -
1 Neumann Way GE Aircraft Engines
Cincinnati, OH 05215
John H. Myers 303 Summer Street Chief Executive Officer - GE
Stamford, CT 06904 Investments, Inc.
R.L. Nardelli General Electric Company Senior Vice President -
1 River Road GE Power Systems
Schenectady, NY 12345
Denis J. Nayden General Electric President and Chief
Capital Corporation Executive Officer,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Michael A. Neal General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
James A. Parke General Electric Executive Vice President
Capital Corporation and Chief Financial Officer,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
G.M. Reiner General Electric Company Senior Vice President -
3135 Easton Turnpike Chief Information Officer,
Fairfield, CT 06431 General Electric Company
John M Samuels General Electric Company Vice President and Senior
3135 Easton Turnpike Counsel - Corporate Tax,
Fairfield, CT 06431 General Electric Company
K.S. Sherin General Electric Company Senior Vice President
3135 Easton Turnpike Finance and Chief Financial
Fairfield, CT 06431 Officer, General Electric
Company
Edward D. Stewart General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
J.F. Welch, Jr. General Electric Company Chairman of the Board
3135 Easton Turnpike and Chief Executive
Fairfield, CT 06431 Officer, General Electric
Company
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
William A. Woodburn General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
</TABLE>
<PAGE>
GENERAL ELECTRIC CAPITAL SERVICES, INC. EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
<S> <C> <C>
Joan C. Amble General Electric Vice President and
Capital Corporation Controller General Electric
260 Long Ridge Road Capital Services, Inc.
Stamford, CT 06927
Nigel D.T. Andrews General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
Nancy E. Barton General Electric Senior Vice President,
Capital Corporation General Counsel and
260 Long Ridge Road Secretary, General Electric
Stamford, CT 06927 Capital Corporation
David L. Calhoun General Electric Capital Executive Vice President
Services, Inc. General Electric Capital
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06431 Services, Inc.
James A. Colica General Electric Senior Vice President,
Capital Corporation Global Risk Management,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Richard D'Avino General Electric Senior Vice President,
Capital Corporation Taxes, General Electric
260 Long Ridge Road Capital Corporation
Stamford, CT 06927
Barbara E. Daniele General Electric Capital Vice President and
Services, Inc. Senior Litigation Counsel
260 Long Ridge Road General Electric Capital
Stamford, CT 06927 Services, Inc.
<PAGE>
<S> <C> <C>
D.D. Dammerman General Electric Company Vice Chairman of the Board,
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06431 Electric Company; Chairman
and Chief Executive Officer,
General Electric Capital
Services, Inc.
Denis J. Nayden General Electric President and Chief
Capital Corporation Executive Officer,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Michael A. Neal General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
James A. Parke General Electric Executive Vice President
Capital Corporation and Chief Financial Officer,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Marc J. Saperstein General Electric Senior Vice President,
Capital Corporation Human Resources,
260 Long Ridge Road General Electric
Stamford, CT 06927 Capital Corporation
Edward D. Stewart General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
<PAGE>
<S> <C> <C>
Jeffrey S. Werner General Electric Senior Vice President,
Capital Corporation Corporate Treasury and
260 Long Ridge Road Global Funding Operation,
Stamford, CT 06927 General Electric Capital
Corporation
William A. Woodburn General Electric Executive Vice President,
Capital Corporation General Electric Capital
260 Long Ridge Road Corporation
Stamford, CT 06927
</TABLE>
<PAGE>
Schedule IV
GENERAL ELECTRIC COMPANY
DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
<S> <C> <C>
J.I.Cash, Jr. Harvard Business School Professor of Business
Morgan Hall Administration-Graduate
Soldiers Field Road School of Business
Boston, MA 02163 Administration, Harvard
University
S.S. Cathcart 222 Wisconsin Avenue Retired Chairman,
Suite 103 Illinois Tool Works
Lake Forest, IL 60045
D.D. Dammerman General Electric Company Vice Chairman of the Board,
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06431 Electric Company; Chairman
and Chief Executive Officer,
General Electric Capital
Services, Inc.
P. Fresco Fiat SpA Chairman of the Board,
via Nizza 250 Fiat SpA
10126 Torino, Italy
A. M. Fudge Kraft Foods, Inc. Executive Vice President,
555 South Broadway Kraft Foods, Inc.
Tarrytown, NY 10591
C.X. Gonzalez Kimberly-Clark de Mexico, Chairman of the Board
S.A. de C.V. and Chief Executive
Jose Luis Lagrange 103, Officer,
Tercero Piso Kimberly-Clark de Mexico,
Colonia Los Morales S.A. de C.V.
Mexico, D.F. 11510, Mexico
A. Jung Avon Products, Inc. President and Chief
1345 Avenue of the Americas Executive Officer,
New York, NY 10105 Avon Products, Inc.
K.G. Langone Invemed Associates, Inc. Chairman, President and
375 Park Avenue Chief Executive Officer,
New York, NY 10152 Invemed Associates, Inc.
<PAGE>
<S> <C> <C>
Scott G. McNealy Sun Microsystems, Inc. Chairman, President and
901 San Antonio Road Chief Executive Officer,
Palo Alto, CA 94303-4900 Sun Microsystems, Inc.
G.G. Michelson Federated Department Stores Former Member of the
151 West 34th Street Board of Directors,
New York, NY 10001 Federated Department
Stores
S. Nunn King & Spalding Partner, King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
R.S. Penske Penske Corporation Chairman of the Board
13400 Outer Drive, West and President, Penske
Detroit, MI 48239-4001 Corporation
F.H.T. Rhodes Cornell University President Emeritus
3104 Snee Building Cornell University
Ithaca, NY 14853
A.C. Sigler Champion International Retired Chairman of the
Corporation Board and CEO
1 Champion Plaza and former Director,
Stamford, CT 06921 Champion International
Corporation
D.A. Warner III J. P. Morgan & Co., Inc. Chairman of the Board,
& Morgan Guaranty Trust Co. President, and Chief
60 Wall Street Executive Officer,
New York, NY 10260 J.P. Morgan & Co.
Incorporated and Morgan
Guaranty Trust Company
J.F. Welch, Jr. General Electric Company Chairman of the Board
3135 Easton Turnpike and Chief Executive
Fairfield, CT 06431 Officer, General Electric
Company
</TABLE>
<PAGE>
GENERAL ELECTRIC COMPANY EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
<S> <C> <C>
P.D. Ameen General Electric Company Vice President and
3135 Easton Turnpike Comptroller, General
Fairfield, CT 06431 Electric Company
J.R. Bunt General Electric Company Vice President and
3135 Easton Turnpike Treasurer, General Electric
Fairfield, CT 06431 Company
W.J. Conaty General Electric Company Senior Vice President -
3135 Easton Turnpike Human Resources,
Fairfield, CT 06431 General Electric Company
D.D. Dammerman General Electric Company Vice Chairman of the Board
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06431 Electric Company; Chairman
and Chief Executive Officer,
General Electric Capital
Services, Inc.
L.S. Edelheit General Electric Company Senior Vice President -
P. O. Box 8 Corporate Research
Schenectady, NY 12301 and Development, General
Electric Company
B.W. Heineman, Jr. General Electric Company Senior Vice President -
3135 Easton Turnpike General Counsel and
Fairfield, CT 06431 Secretary, General Electric
Company
J.R. Immelt General Electric Company Senior Vice President -
P.O. Box 414 GE Medical Systems
Milwaukee, WI 53201
L. R. Johnston General Electric Company Senior Vice President -
Appliance Park GE Appliances
Louisville, KY 40225
W.J. McNerney, Jr. General Electric Company Senior Vice President -
1 Neumann Way GE Aircraft Engines
Cincinnati, OH 05215
R.L. Nardelli General Electric Company Senior Vice President -
1 River Road GE Power Systems
Schenectady, NY 12345
R.W. Nelson General Electric Company Vice President -
3135 Easton Turnpike Corporate Financial Planning
Fairfield, CT 06431 and Analysis, General
Electric Company
G.M. Reiner General Electric Company Senior Vice President -
3135 Easton Turnpike Chief Information Officer,
Fairfield, CT 06431 General Electric Company
J.G. Rice General Electric Company Vice President -
2901 East Lake Road GE Transportation Systems
Erie, PA 16531
G.L. Rogers General Electric Company Senior Vice President -
1 Plastics Avenue GE Plastics
Pittsfield, MA 01201
K.S. Sherin General Electric Company Senior Vice President
3135 Easton Turnpike Finance and Chief Financial
Fairfield, CT 06431 Officer, General Electric
Company
L.G. Trotter General Electric Company Senior Vice President -
41 Woodford Avenue GE Industrial Systems
Plainville, CT 06062
J.F. Welch, Jr. General Electric Company Chairman of the Board and
3135 Easton Turnpike Chief Executive Officer,
Fairfield, CT 06431 General Electric Company
M.S. Zafirovski General Electric Company Senior Vice President -
Nela Park GE Lighting
Cleveland, OH 44112
</TABLE>
<PAGE>
JOINT FILING AGREEMENT
This will confirm the agreement by and among all the undersigned that
the Amendment No. 4 to Schedule 13D filed on or about this date and any
further amendments to the Schedule 13D with respect to beneficial ownership
by the undersigned of shares of the Common Stock, par value $0.001 per
share, of Krause's Furniture, Inc., are being filed on behalf of each of
the undersigned in accordance with Rule 13D-1(k)(1) under the Securities
Exchange Act of 1934. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Dated: May 25, 2000
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Michael E. Pralle
------------------------------
Name: Michael E. Pralle
Title: Vice President
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Michael E. Pralle
------------------------------
Name: Michael E. Pralle
Title: President/General Manager
GENERAL ELECTRIC CAPITAL SERVICES, INC.
By: /s/ Michael E. Pralle
------------------------------
Name: Michael E. Pralle
Title: Attorney-in-fact*
GENERAL ELECTRIC COMPANY
By: /s/ Michael E. Pralle
------------------------------
Name: Michael E. Pralle
Title: Attorney-in-fact*
* Pursuant to a Power of Attorney attached to the Amendment No. 4
to Schedule 13D.
EXHIBIT 1
May 5, 2000
Mr. George Hashbarger
General Electric Capital Corporation
120 Long Ridge Road
Stamford, CT 06927
Mr. James R. Hodge
Japan Omnibus Ltd.
c/o Permal Capital Management Inc.
900 Third Ave., 28th Floor
New York, NY 10022
This letter is to acknowledge our understanding regarding payment
of interest on the notes (the "Notes") of Krause's Furniture, Inc. (the
"Company") issued under the Supplemental Securities Purchase Agreement
between the Company, General Electric Capital Corporation ("GECC") and
Japan Omnibus, Ltd. ("JOL") dated August 14, 1997, as amended on March 31,
1999, September 14, 1999, December 14, 1999, January 11, 2000 and April 3,
2000 (the "Agreement").
Paragraph 5 of the January 11, 2000 agreement between the
Company, GECC and JOL provides as long as no cash dividends have been paid
with respect to the Series A Convertible Preferred Stock of the Company,
the Company may defer cash payment of interest accruing on all of the Notes
through December 31, 2000, and the holders thereof may elect to receive
such deferred payments of interest in the form of Series A Convertible
Preferred Stock of the Company (at the original issue price of $50 per
share) or cash on the date the last installment of principal on the Notes
is due and payable.
The Company has made a timely payment in cash of interest
payments accruing through February 29, 2000. You have orally given notice
of your intent to receive Series A Convertible Preferred Stock in lieu of
interest on December 31, 2000 in the event the Company defers cash interest
payments for the period through December 31, 2000. You have also indicated
your willingness to receive Series A Convertible Preferred Stock in lieu of
cash interest payments for the period from January 1, 2001 through March
31, 2001.
In light of the foregoing we agree as follows:
1. The period for deferral under the Agreement is hereby
amended so that it runs from March 1, 2000 through March 31,
2001.
2. The Company shall defer all interest payments for the period
March 1, 2000 through March 31, 2001.
3. Cash interest accruing during such period will equal
$1,235,112, and, subject to the delivery by the Company of
its Series A Convertible Preferred Stock in accordance with
Paragraph 5 below, GECC and JOL shall waive any right to
additional interest arising as a result of deferral thereof.
4. GECC and JOL irrevocably elect to receive payments of
interest accruing during the period March 1, 2000 through
March 31, 2001 in the form of Series A Convertible Preferred
Stock at the stated value of $50 per share, equal to its
original issue price.
5. The Company irrevocably agrees to issue as of the date
hereof a total of 24,702 shares of Series A Convertible
Preferred Stock. Such shares shall (i) be, when issued,
fully paid and non-assessable, and free and clear of any
liens, encumbrances or rights of third parties of any kind
(including, without limitations pre-emptive rights), (ii)
have all rights and benefits of all other previously issued
shares of Series A Convertible Preferred Stock, including
without limitation, registration rights and rights under the
Company's Stockholders Agreement and (iii) be delivered as
soon as practicable after the date hereof.
6. Except as agreed to hereby, the Notes and the Agreement
shall remain unchanged and in full force and effect.
<PAGE>
Please indicate your agreement with the above by signing in the
space provided below.
Very truly yours,
s/Dan Felsenthal
Dan Felsenthal
Vice President & Controller
cc: Judith Olson Lasker
Acknowledged and agreed:
GENERAL ELECTRIC CAPITAL CORPORATION
By: s/George Hashbarger, Jr.
------------------------
Name: George Hashbarger, Jr.
------------------------
Its: SVP
---
JAPAN OMNIBUS LTD.
By: /s/ James R. Hodge
----------------------------
Name: James R. Hodge
----------------------------
Its: Portfolio Manager
----------------------------
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
---- -- -- -- --
1998 N/A N/A N/A 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
---- -- -- -- --
1998 N/A N/A N/A 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
---- -- -- -- --
1998 N/A N/A N/A 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.
<PAGE>
IN WITNESS WHEREOF, the Company, GECC and JOL have caused this
Agreement to be executed and delivered by their respective officers
thereunto duly authorized.
KRAUSE'S FURNITURE, INC.
By: /s/ Robert A. Burton
--------------------------------------
Name: Robert A. Burton
Title: Executive Vice President
and Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ George L. Hashbarger, Jr.
--------------------------------------
Name: George L. Hashbarger, Jr.
Title: Department Operations Manager
JAPAN OMNIBUS LTD.
By: /s/ James R. Hodge
--------------------------------------
Name: James R. Hodge
Title: Portfolio Manager
EXHIBIT 3
AMENDMENT TO THE SUPPLEMENTAL
-----------------------------
SECURITIES PURCHASE AGREEMENT
-----------------------------
This agreement is made as of September 14, 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, as amended (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 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:
Effective as of August 1, 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
---- -- -- -- --
1998 N/A N/A N/A 11.5 MM
1999 11.5 MM 9.0 MM 11.3 MM 11.3 MM
2000 11.7 MM 13.0 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
---- -- -- -- --
1998 N/A N/A N/A 2.25
1999 2.75 2.75 2.70 2.70
2000 2.55 2.30 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
---- -- -- -- --
1998 N/A N/A N/A 0.85
1999 0.95 0.70 1.04 1.12
2000 1.20 1.20 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.
KRAUSE'S FURNITURE, INC.
By: /s/ Robert A. Burton
--------------------------------------
Name: Robert A. Burton
Title: Executive Vice President
and Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ George L. Hashbarger, Jr.
--------------------------------------
Name: George L. Hashbarger, Jr.
Title: Department Operations Manager
JAPAN OMNIBUS LTD.
By: /s/ James R. Hodge
--------------------------------------
Name: James R. Hodge
Title: Portfolio Manager
EXHIBIT 4
AMENDMENT TO THE SUPPLEMENTAL
-----------------------------
SECURITIES PURCHASE AGREEMENT
-----------------------------
This agreement is made as of December 14, 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, as
amended (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 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:
Effective as of November 1, 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
(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:
- ---------------------
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.
<PAGE>
Year Q1 Q2 Q3 Q4
------ --------- --------- ------- ----------
1998 N/A N/A N/A 11.5 MM
1999 11.5 MM 9.0 MM 8.8 MM 7.0 MM
2000 6.6 MM 7.0 MM 8.0 MM 9.0 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
------ --------- --------- ------- ----------
1998 N/A N/A N/A 2.25
1999 2.75 2.75 3.75 4.85
2000 4.85 4.5 4.0 3.5
2001 1.10 1.00 1.00 1.00
2002 1.00 1.00 1.00 N/A
<PAGE>
(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
------ --------- --------- ------- ----------
1998 N/A N/A N/A 0.85
1999 0.95 0.70 0.75 0.83
2000 1.0 1.05 1.10 1.20
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
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 2002.
<PAGE>
IN WITNESS WHEREOF, the Company, GECC and JOL have caused this
Agreement to be executed and delivered by their respective officers
thereunto duly authorized.
KRAUSE'S FURNITURE, INC.
By: /s/ Robert A. Burton
------------------------------------
Name: Robert A. Burton
Title: Executive Vice President
and Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ George L. Hashbarger, Jr.
------------------------------------
Name: George L. Hashbarger, Jr.
Title: Department Operations Manager
JAPAN OMNIBUS LTD.
By: /s/ James R. Hodge
-------------------------------------
Name: James R. Hodge
Title: Portfolio Manager
EXHIBIT 5
AGREEMENT
This Agreement (this "Agreement") is entered into this 11th day
of January, 2000, by and among Krause's 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 Krause's
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.
<PAGE>
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.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized.
KRAUSE'S FURNITURE, INC.
By: /s/ Robert A. Burton
-------------------------------------
Name: Robert A. Burton
Title: Executive Vice President
and Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ George L. Hashbarger, Jr.
-------------------------------------
Name: George L. Hashbarger, Jr.
Title: Senior Vice President/
Department Operations Manager
JAPAN OMNIBUS LTD.
By: /s/ James R. Hodge
-------------------------------------
Name: James R. Hodge
Title: Portfolio Manager
EXHIBIT 6
AGREEMENT
This Agreement (this "Agreement") is entered into this 3rd day of
April, 2000, by and among Krause's 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 and January 11, 2000, 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 and January 11, 2000,
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 and
January 11, 2000, 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 and January 11, 2000, 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 and January
11, 2000, 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, December 14, 1999 and January 11, 2000, the
"Supplemental Purchase Agreement") relating to the Notes. Capitalized terms
used herein without definition have the meanings set forth in the
Supplemental Purchase Agreement.
The Company, GECC and JOL desire to amend certain provisions of
the Supplemental Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Effective as of March 26, 2000, Sections 6.2(a), 6.2(b) and 6.2(c) of
the Supplemental Purchase Agreement shall be amended in their entirety to
read as follows:
(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 4.0 MM
2000 9.2 MM 11.2 MM 10.1 MM 10.8 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:
Year Q1 Q2 Q3 Q4
---- -- -- -- --
1999 N/A N/A 3.75 7.50
2000 3.20 2.85 3.30 2.85
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 0.005
2000 0.65 0.74 0.84 1.05
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
2. Effective as of March 26, 2000, the defined term "Consolidated Net
Worth" set forth in Section 11.1 of the Supplemental Purchase Agreement
shall be amended in its entirety to read as follows:
"'Consolidated Net Worth' shall mean the consolidated
stockholders' equity of the Company and its Subsidiaries determined in
accordance with generally accepted accounting principles consistently
applied (it being understood and agreed that (x) the Notes and any
other Subordinated Indebtedness which is not subordinated to the Notes
shall not be treated as equity for this purpose and (y) the Company's
Series A Convertible Preferred Stock, par value $0.001 per share,
shall be treated as equity for this purpose."
3. 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.
4. 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.
5. 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 5 may be waived, changed or modified.
6. 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.
7. The Company agrees to pay GECC and JOL for all reasonable outside legal
fees in connection with this Agreement.
8. This Agreement shall terminate upon the repayment in full of all amounts
of principal, interest and other sums due and payable on all Notes.
9. 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.
10. This Agreement shall be effective upon delivery of original signature
pages or facsimile copies thereof executed by each of the parties hereto.
11. The Company represents and warrants that other than the parties
executing this Agreement no consent, approval or waiver of any other person
or entity is required for the effectiveness or enforceability of this
Agreement.
12. 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.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized.
KRAUSE'S FURNITURE, INC.
By: /s/ Robert A. Burton
--------------------------------------
Name: Robert A. Burton
Title: Executive Vice President
and Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ George L. Hashbarger, Jr.
--------------------------------------
Name: George L. Hashbarger, Jr.
Title: Senior Vice President/
Department Operations Manager
JAPAN OMNIBUS LTD.
By: /s/ James R. Hodge
--------------------------------------
Name: James R. Hodge
Title: Portfolio Manager
EXHIBIT 7
POWER OF ATTORNEY
The undersigned, General Electric Company, a New York corporation
(hereinafter referred to as the "Corporation") does hereby make, constitute
and appoint the persons listed below as the Corporation's true and lawful
agent and attorney-in-fact (hereinafter referred to as the "Attorney") to
act either together or alone in the name and on behalf of the Corporation
for and with respect to the matters hereinafter described.
Name of Attorney: Joan C. Amble
Nancy E. Barton
Jeffrey S. Werner
Leon E. Roday
Michael A. Gaudino
Robert O. O'Reilly, Sr.
Preston Abbott
Murry K. Stegelmann
James Ungari
J. Gordon Smith
Michael E. Pralle
Iain MacKay
Jonathan K. Sprole
Barbara J. Gould
Robert L. Lewis
Wendy E. Ormond
Mark F. Mylon
Each Attorney shall have the power and authority to do the
following:
To execute and deliver any Schedule 13D, Schedule 13G or Forms 3,
4 and 5 or any amendments thereto required to be filed with the
Securities and Exchange Commission under the Securities Exchange
Act of 1934 on behalf of the Corporation with regard to any
securities owned by General Electric Capital Services, Inc.,
General Electric Capital Corporation or any of their
subsidiaries;
And, in connection with the foregoing, to execute and deliver all
documents, acknowledgments, consents and other agreements and to
take such further action as may be necessary or convenient for
the Corporation in order to more effectively carry out the intent
and purpose of the foregoing.
Agreements, commitments, documents, instruments, and other writings
executed by the Attorney in accordance with the terms hereof shall be
binding upon the Corporation without attestation and without affixation of
the seal of the Corporation. The Power of Attorney conferred hereby shall
not be delegable by any Attorney. The Attorney shall serve without
compensation for acting in the capacity of agent and attorney-in-fact
hereunder.
Unless sooner revoked by the Corporation, this Power of Attorney shall
be governed under the laws of the State of New York and the authority of
the Attorney hereunder shall terminate on March 31, 2002.
IN WITNESS WHEREOF, the Corporation has caused this Power of Attorney
to be executed, attested and its corporate seal to be affixed pursuant to
authority granted by the Corporation's board of directors, as of the 22nd
day of February, 2000.
General Electric Company
(Corporate Seal)
By: /s/ Philip D. Ameen
-------------------------------
Philip D. Ameen, Vice President
Attest:
/s/ Robert E. Healing
- ----------------------------
Robert E. Healing,
Attesting Secretary
<PAGE>
POWER OF ATTORNEY
The undersigned, General Electric Capital Services, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation") does hereby
make, constitute and appoint the persons listed below as the Corporation's
true and lawful agent and attorney-in-fact (hereinafter referred to as the
"Attorney") to act either together or alone in the name and on behalf of
the Corporation for and with respect to the matters hereinafter
described.
Name of Attorney:
Michael A. Gaudino
Robert O. O'Reilly, Sr.
Murry K. Stegelmann
James Ungari
Preston Abbott
Leon E. Roday
J. Gordon Smith
Michael E. Pralle
Iain MacKay
Jonathan K. Sprole
Barbara J. Gould
Robert L. Lewis
Wendy E. Ormond
Mark F. Mylon
Each Attorney shall have the power and authority to do the
following:
To execute and deliver any Schedule 13D, Schedule 13G or Forms 3,
4 and 5 or any amendments thereto required to be filed with the
Security and Exchange Commission under the Securities Act of 1934
on behalf of the Corporation with regard to any securities owned
by the Corporation, General Electric Capital Corporation or any
of their subsidiaries.
And, in connection with the foregoing, to execute and deliver all
documents, acknowledgments, consents or other agreements and to take such
further action as may be necessary or convenient for the Corporation in
order to more effectively carry out the intent and purpose of the
foregoing.
Agreements, commitments, documents, instruments, and other writings
executed by the Attorney in accordance with the terms hereof shall be
binding upon the Corporation without attestation and without affixation of
the seal of the Corporation. The Power of Attorney conferred hereby shall
not be delegable by any Attorney. The Attorney shall serve without
compensation for acting in the capacity of agent and attorney-in-fact
hereunder.
Unless revoked by the Corporation, this Power of Attorney shall be
governed under the laws of the State of New York and the authority of the
Attorney hereunder shall terminate on March 31, 2002.
IN WITNESS WHEREOF, the Corporation has caused this Power of Attorney
to be executed, attested and its corporate seal to be affixed pursuant to
authority granted by the Corporation's board of directors, as of the 22nd
day of February, 2000.
General Electric Capital Services, Inc.
(Corporate Seal)
By: /s/ Nancy E. Barton
------------------------------------
Nancy E. Barton, Senior Vice President
Attest:
/s/ Brian T. McAnaney
- -------------------------
Brian T. McAnaney,
Assistant Secretary
