**Exhibit 10(g)-3**

 

**EXECUTION COPY**

 

AMENDMENT NO. 1

 

Dated as of October 23,2009

 

to

 

CREDIT AGREEMENT

 

Dated as of May 29, 2009

 

THIS AMENDMENT NO. 1 (“Amendment”)is made as of October 23, 2009 by and among Ethan Allen Global, Inc.(the “Borrower”), Ethan Allen Interiors Inc. (“Holdings”), thefinancial institutions listed on the signature pages hereof and JPMorganChase Bank, N.A., as Administrative Agent (in such capacity, the “AdministrativeAgent”) under that certain Credit Agreement dated as of May 29, 2009by and among the Borrower, Holdings, the Lenders and the Administrative Agent(as may be further amended, supplemented or otherwise modified from time totime, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shallhave the respective meanings given to them in the Credit Agreement.

 

WHEREAS, the Borrower hasrequested that the Lenders and the Administrative Agent agree to certainamendments to the Credit Agreement;

 

WHEREAS, the Lenders partyhereto and the Administrative Agent have agreed to such amendments on the termsand conditions set forth herein;

 

NOW, THEREFORE, inconsideration of the premises set forth above, the terms and conditionscontained herein, and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the Borrower, Holdings, theLenders party hereto and the Administrative Agent have agreed to enter intothis Amendment.

 

# 1.             Amendments to Credit Agreement.  Effective as of the date of satisfaction of theconditions precedent set forth in Section 2 below, the CreditAgreement is hereby amended as follows:

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## (a)           Section 1.01 of the Credit Agreement is amendedto replace the corresponding previously existing definitions as follows:

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“Amendment No. 1Effective Date” means October 23, 2009.

 

“IP Collateral TriggerDate” means the Amendment No. 1 Effective Date.

 

“Issuing Bank” means,as the context may require, (i) Chase, with respect to Letters of Creditissued by it, or (ii) Wells Fargo Retail Finance, LLC and its affiliates,with respect to Letters of Credit issued by it, in each case in its capacity asan issuer of Letters of Credit hereunder, and its successors in such capacityas provided in Section 2.06(i). Each Issuing Bank may, in its discretion, arrange for one or moreLetters of Credit to be issued by Affiliates of such Issuing Bank, in whichcase the term “Issuing

 

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Bank” shall include any such Affiliate withrespect to Letters of Credit issued by such Affiliate.

 

## (b)           The definition of “Borrowing Base” appearingin Section 1.01 of the Credit Agreement is amended to add theparenthetical “(provided that availability represented by Eligible Accountsincluded in the Borrowing Base shall not at any time exceed $10,000,000)”immediately after the phrase “Eligible Accounts at such time” appearing inclause (b) thereof.

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## (c)           The definition of “Change in Law” appearingin Section 1.01 of the Credit Agreement is amended to (i) delete thefirst reference to “the Issuing Bank” appearing therein and to replace suchreference with “any Issuing Bank” and (ii) delete the second reference to “theIssuing Bank’s” appearing therein and to replace such reference with “suchIssuing Bank’s”.

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## (d)           The definitions of “Defaulting Lender”, “ExcludedTaxes” and “Obligations” appearing in Section 1.01 of theCredit Agreement are amended to delete each reference to “the Issuing Bank”appearing therein and to replace each such reference with “any Issuing Bank”.

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## (e)           The definition of “Eligible Inventory”appearing in Section 1.01 of the Credit Agreement is amended to (i) deletethe phrase “, to the extent requested by the Administrative Agent in itsPermitted Discretion,” appearing in clause (g) thereof and (ii) deletethe phrase “sixty (60) days following the Effective Date” appearing in clause(g)(iii) thereof and to replace such phrase with the phrase “thirty (30)days following the Amendment No. 1 Effective Date”.

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## (f)            The definition of “Excluded Assets” appearingin Section 1.01 of the Credit Agreement is amended to (i) delete thecomma appearing at the end of clause (i) thereof and to replace such commawith the word “and”, (ii) delete the word “and” appearing at the end ofclause (ii) thereof and (iii) delete clause (iii) thereof in itsentirety.

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## (g)           The definition of “Fixed Charge Coverage Ratio”appearing in Section 1.01 of the Credit Agreement is amended to add thephrase “, plus cash Rentals,” immediately after the reference to “EBITDA”appearing therein.

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## (h)           The definition of “LC Disbursement” appearingin Section 1.01 of the Credit Agreement is amended to delete the referenceto “the Issuing Bank” appearing therein and to replace such reference with “anIssuing Bank”.

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## (i)            The definition of “Material Adverse Effect”appearing in Section 1.01 of the Credit Agreement is amended to delete thereference to “the Issuing Bank” appearing therein and to replace such referencewith “the Issuing Banks”.

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## (j)            The definition of “Negative Covenant PermissionTrigger” appearing in Section 1.01 of the Credit Agreement is amendedto add the phrase “at the time thereof and for the six (6) month periodfollowing such acquisition or payment as determined based on the updatedProjections most recently delivered to the Lenders, which Projections (x) shallhave been delivered no earlier than the date that is thirty (30) days prior tosuch acquisition or payment and (y) must be reasonably satisfactory to theAdministrative Agent” immediately after the phrase “including pro forma effect”appearing therein.

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## (k)           The definition of “Secured Parties” appearingin Section 1.01 of the Credit Agreement is amended to (i) delete thefirst reference to “the Issuing Bank” appearing therein and to replace suchreference with “each Issuing Bank” and (ii) delete the second reference to“the Issuing Bank” appearing therein and to replace such reference with “theIssuing Banks”.

 

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## (l)            Section 2.05(d) of the Credit Agreement isamended to (i) delete the phrase “shall request settlement” appearingtherein and to replace such phrase with the phrase “shall effect settlement”and (ii) delete the phrase “Settlement is requested” appearing therein andto replace such phrase with the phrase “Settlement is effected”.

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## (m)          Section 2.06 of the Credit Agreement is amendedand restated in its entirety to read as follows:

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SECTION 2.06.  Letters of Credit.  (a) General.  Subject to the terms and conditions set forthherein, the Borrower may request the issuance of Letters of Credit for its ownaccount, in a form reasonably acceptable to the Administrative Agent and therelevant Issuing Bank, at any time and from time to time during theAvailability Period.  In the event of anyinconsistency between the terms and conditions of this Agreement and the termsand conditions of any form of letter of credit application or other agreementsubmitted by the Borrower to, or entered into by the Borrower with, therelevant Issuing Bank relating to any Letter of Credit, the terms andconditions of this Agreement shall control. The letters of credit identified on Schedule 2.06 (the “ExistingLetters of Credit”) shall be deemed to be “Letters of Credit” issued on theEffective Date for all purposes of the Loan Documents.

 

(b) Notice of Issuance, Amendment, Renewal, Extension; CertainConditions.  To request theissuance of a Letter of Credit (or the amendment, renewal or extension of anoutstanding Letter of Credit), the Borrower shall hand deliver or facsimile (ortransmit by electronic communication, if arrangements for doing so have beenapproved by the relevant Issuing Bank) to an Issuing Bank and theAdministrative Agent (reasonably in advance of the requested date of issuance,amendment, renewal or extension) a notice requesting the issuance of a Letterof Credit, or identifying the Letter of Credit to be amended, renewed orextended, and specifying the date of issuance, amendment, renewal or extension(which shall be a Business Day), the date on which such Letter of Credit is toexpire (which shall comply with paragraph (c) of this Section), the amountof such Letter of Credit, the name and address of the beneficiary thereof andsuch other information as shall be necessary to prepare, amend, renew or extendsuch Letter of Credit.  If requested bysuch Issuing Bank, the Borrower also shall submit a letter of creditapplication and (in the case of a commercial Letter of Credit) a masteragreement for the issuance of commercial Letters of Credit, in each case onsuch Issuing Bank’s standard form in connection with any request for a Letterof Credit.  A Letter of Credit shall beissued, amended, renewed or extended only if (and upon issuance, amendment,renewal or extension of each Letter of Credit the Borrower shall be deemed torepresent and warrant that), after giving effect to such issuance, amendment,renewal or extension (i) the LC Exposure shall not exceed $30,000,000, (ii) theStandby LC Exposure shall not exceed $25,000,000 and (iii) the totalRevolving Exposures shall not exceed the lesser of the Aggregate Commitment andthe Borrowing Base.

 

(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of businesson the earlier of (i) the date one year after the date of the issuance ofsuch Letter of Credit (or, in the case of any renewal or extension thereof, oneyear after such renewal or extension) and (ii) the date that is five (5) BusinessDays prior to the Maturity Date.

 

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter ofCredit increasing the amount thereof) and without any further action on thepart of any Issuing Bank or the Lenders, each Issuing Bank hereby grants toeach Lender, and

 

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each Lender hereby acquiresfrom each Issuing Bank, a participation in such Letter of Credit equal to suchLender’s Applicable Percentage of the aggregate amount available to be drawnunder such Letter of Credit.  Inconsideration and in furtherance of the foregoing, each Lender herebyabsolutely and unconditionally agrees to pay to the Administrative Agent, forthe account of the relevant Issuing Bank, such Lender’s Applicable Percentageof each LC Disbursement made by such Issuing Bank and not reimbursed by theBorrower on the date due as provided in paragraph (e) of this Section, orof any reimbursement payment required to be refunded to the Borrower for anyreason.  Each Lender acknowledges andagrees that its obligation to acquire participations pursuant to this paragraphin respect of Letters of Credit is absolute and unconditional and shall not beaffected by any circumstance whatsoever, including any amendment, renewal orextension of any Letter of Credit or the occurrence and continuance of aDefault or reduction or termination of the Commitments, and that each suchpayment shall be made without any offset, abatement, withholding or reductionwhatsoever.

 

(e) Reimbursement. If any Issuing Bank shall make any LC Disbursement in respect of aLetter of Credit, the Borrower shall reimburse such LC Disbursement by payingto the Administrative Agent an amount equal to such LC Disbursement not laterthan 12:00 noon, New York City time, on the date that such LC Disbursement ismade, if the Borrower shall have received notice of such LC Disbursement priorto 10:00 a.m., New York City time, on such date, or, if such notice hasnot been received by the Borrower prior to such time on such date, then notlater than 12:00 noon, New York City time, on (i) the Business Day thatthe Borrower receives such notice, if such notice is received prior to 10:00 a.m.,New York City time, on the day of receipt, or (ii) the Business Dayimmediately following the day that the Borrower receives such notice, if suchnotice is not received prior to such time on the day of receipt; providedthat, subject to the conditions to borrowing set forth herein, request inaccordance with Section 2.03 or 2.05 that such payment be financed with anABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to theextent so financed, the Borrower’s obligation to make such payment shall bedischarged and replaced by the resulting ABR Revolving Borrowing or SwinglineLoan.  If the Borrower fails to make suchpayment when due, the Administrative Agent shall notify each Lender of theapplicable LC Disbursement, the payment then due from the Borrower in respectthereof and such Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice,each Lender shall pay to the Administrative Agent its Applicable Percentage ofthe payment then due from the Borrower, in the same manner as provided in Section 2.07with respect to Loans made by such Lender (and Section 2.07 shall apply,mutatis mutandis, to the payment obligations of the Lenders), and theAdministrative Agent shall promptly pay to such Issuing Bank the amounts soreceived by it from the Lenders. Promptly following receipt by the Administrative Agent of any paymentfrom the Borrower pursuant to this paragraph, the Administrative Agent shalldistribute such payment to the relevant Issuing Bank or, to the extent thatLenders have made payments pursuant to this paragraph to reimburse such IssuingBank, then to such Lenders and such Issuing Bank as their interests mayappear.  Any payment made by a Lenderpursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement(other than the funding of ABR Revolving Loans or a Swingline Loan ascontemplated above) shall not constitute a Loan and shall not relieve theBorrower of its obligation to reimburse such LC Disbursement.

 

(f) Obligations Absolute.  The Borrower’s obligation to reimburse LCDisbursements as provided in paragraph (e) of this Section shall beabsolute, unconditional and irrevocable, and shall be performed strictly inaccordance with the

 

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terms of this Agreementunder any and all circumstances whatsoever and irrespective of (i) anylack of validity or enforceability of any Letter of Credit or this Agreement,or any term or provision therein, (ii) any draft or other documentpresented under a Letter of Credit proving to be forged, fraudulent or invalidin any respect or any statement therein being untrue or inaccurate in anyrespect, (iii) payment by an Issuing Bank under a Letter of Credit againstpresentation of a draft or other document that does not comply with the termsof such Letter of Credit, or (iv) any other event or circumstancewhatsoever, whether or not similar to any of the foregoing, that might, but forthe provisions of this Section, constitute a legal or equitable discharge of,or provide a right of setoff against, the Borrower’s obligationshereunder.  Neither the AdministrativeAgent, the Lenders nor any Issuing Bank, nor any of their Related Parties,shall have any liability or responsibility by reason of or in connection withthe issuance or transfer of any Letter of Credit or any payment or failure tomake any payment thereunder (irrespective of any of the circumstances referredto in the preceding sentence), or any error, omission, interruption, loss ordelay in transmission or delivery of any draft, notice or other communicationunder or relating to any Letter of Credit (including any document required tomake a drawing thereunder), any error in interpretation of technical terms orany consequence arising from causes beyond the control of the relevant IssuingBank; provided that the foregoing shall not be construed to excuse anyIssuing Bank from liability to the Borrower to the extent of any direct damages(as opposed to consequential damages, claims in respect of which are herebywaived by the Borrower to the extent permitted by applicable law) suffered bythe Borrower that are caused by such Issuing Bank’s failure to exercise carewhen determining whether drafts and other documents presented under a Letter ofCredit comply with the terms thereof. The parties hereto expressly agree that, in the absence of grossnegligence or willful misconduct on the part of any Issuing Bank (as finallydetermined by a court of competent jurisdiction), such Issuing Bank shall bedeemed to have exercised care in each such determination.  In furtherance of the foregoing and withoutlimiting the generality thereof, the parties agree that, with respect todocuments presented which appear on their face to be in substantial compliancewith the terms of a Letter of Credit, each Issuing Bank may, in its solediscretion, either accept and make payment upon such documents withoutresponsibility for further investigation, regardless of any notice orinformation to the contrary, or refuse to accept and make payment upon suchdocuments if such documents are not in strict compliance with the terms of suchLetter of Credit.

 

(g) Disbursement Procedures.  Each Issuing Bank shall, promptly followingits receipt thereof, examine all documents purporting to represent a demand forpayment under a Letter of Credit.  EachIssuing Bank shall promptly notify the Administrative Agent and the Borrower bytelephone (confirmed by facsimile) of such demand for payment and whether suchIssuing Bank has made or will make an LC Disbursement thereunder; providedthat any failure to give or delay in giving such notice shall not relieve theBorrower of its obligation to reimburse such Issuing Bank and the Lenders withrespect to any such LC Disbursement.

 

(h) Interim Interest.  If any Issuing Bank shall make any LCDisbursement, then, unless the Borrower shall reimburse such LC Disbursement infull on the date such LC Disbursement is made, the unpaid amount thereof shallbear interest, for each day from and including the date such LC Disbursement ismade to but excluding the date that the Borrower reimburses such LCDisbursement, at the rate per annum then applicable to ABR Revolving Loans; providedthat, if the Borrower fails to reimburse such LC Disbursement when due pursuantto paragraph (e) of this Section, then Section 2.13(d)

 

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shall apply.  Interest accrued pursuant to this paragraphshall be for the account of such Issuing Bank, except that interest accrued onand after the date of payment by any Lender pursuant to paragraph (e) ofthis Section to reimburse such Issuing Bank shall be for the account ofsuch Lender to the extent of such payment.

 

(i) Replacement of an Issuing Bank.  Any Issuing Bank may be replaced at any timeby written agreement among the Borrower, the Administrative Agent, the replacedIssuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any suchreplacement of an Issuing Bank.  At thetime any such replacement shall become effective, the Borrower shall pay allunpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b).  From and after the effective date of any suchreplacement, (i) the successor Issuing Bank shall have all the rights andobligations of an Issuing Bank under this Agreement with respect to Letters ofCredit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to suchsuccessor or to any previous Issuing Bank, or to such successor and allprevious Issuing Banks, as the context shall require.  After the replacement of an Issuing Bankhereunder, the replaced Issuing Bank shall remain a party hereto and shallcontinue to have all the rights and obligations of an Issuing Bank under thisAgreement with respect to Letters of Credit issued by it prior to suchreplacement, but shall not be required to issue additional Letters of Credit.

 

(j) Cash Collateralization.  If any Event of Default shall occur and becontinuing, on the Business Day that the Borrower receives notice from theAdministrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenderswith LC Exposure representing greater than 50% of the total LC Exposure)demanding the deposit of cash collateral pursuant to this paragraph, theBorrower shall deposit in an account with the Administrative Agent, in the nameof the Administrative Agent and for the benefit of the Secured Parties (the “LC Collateral Account”), an amount in cashequal to 103% of the LC Exposure as of such date plus accrued and unpaidinterest thereon; provided that the obligation to deposit such cashcollateral shall become effective immediately, and such deposit shall becomeimmediately due and payable, without demand or other notice of any kind, uponthe occurrence of any Event of Default with respect to the Borrower describedin clause (h) or (i) of Article VII.  Such deposit shall be held by theAdministrative Agent as collateral for the payment and performance of theSecured Obligations.  The AdministrativeAgent shall have exclusive dominion and control, including the exclusive rightof withdrawal, over such account and the Borrower hereby grants theAdministrative Agent a security interest in the LC Collateral Account.  Other than any interest earned on theinvestment of such deposits, which investments shall be made at the option andPermitted Discretion of the Administrative Agent and at the Borrower’s risk andexpense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate insuch account.  Moneys in such accountshall be applied by the Administrative Agent to reimburse the relevant IssuingBank for LC Disbursements for which it has not been reimbursed and, to theextent not so applied, shall be held for the satisfaction of the reimbursementobligations of the Borrower for the LC Exposure at such time or, if thematurity of the Loans has been accelerated (but subject to the consent ofLenders with LC Exposure representing greater than 50% of the total LCExposure), be applied to satisfy other Secured Obligations.  If the Borrower is required to provide anamount of cash collateral hereunder as a result of the occurrence of an Eventof Default, such amount (to the extent not applied as aforesaid) shall bereturned to the Borrower within three (3) Business Days after all suchDefaults have been cured or waived.

 

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## (n)           Section 2.07(a) of the Credit Agreement isamended to (i) delete the time “2:00 p.m.” appearing therein and toreplace such time with the time “3:00 p.m.” and (ii) add the word “relevant”immediately prior to the reference to “Issuing Bank” appearing therein.

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## (o)           Sections 2.12(d), 2.18(f) and 10.09 of theCredit Agreement are amended to add the word “relevant” immediately prior toeach reference to “Issuing Bank” appearing therein.

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## (p)           Section 2.12(b) of the Credit Agreement isamended to (i) add the word “relevant” immediately prior the first referenceto “Issuing Bank” appearing therein, (ii) delete the second reference to “theIssuing Bank” appearing therein and to replace such reference with “suchIssuing Bank”, (iii) delete the third reference to “the Issuing Bank”appearing therein and to replace such reference with “any Issuing Bank” and (iv) addthe phrase “attributable to Letters of Credit issued by such Issuing Bank”immediately following the first parenthetical appearing in clause (ii) thereof.

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## (q)           Section 2.15 of the Credit Agreement is amendedand restated in its entirety to read as follows:

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SECTION 2.15.  Increased Costs.  (a) If any Change in Law shall:

 

(i) impose, modify ordeem applicable any reserve, special deposit or similar requirement againstassets of, deposits with or for the account of, or credit extended by, anyLender (except any such reserve requirement reflected in the Adjusted LIBORate) or any Issuing Bank; or

 

(ii) impose on anyLender or any Issuing Bank or the London interbank market any other conditionaffecting this Agreement or Eurodollar Loans made by such Lender or any Letterof Credit or participation therein;

 

and the result of any of theforegoing shall be to increase the cost to such Lender of making or maintainingany Eurodollar Loan (or of maintaining its obligation to make any such Loan) orto increase the cost to such Lender or such Issuing Bank of participating in,issuing or maintaining any Letter of Credit or to reduce the amount of any sumreceived or receivable by such Lender or such Issuing Bank hereunder (whetherof principal, interest or otherwise), then the Borrower will pay to such Lenderor such Issuing Bank, as the case may be, such additional amount or amounts aswill compensate such Lender or such Issuing Bank, as the case may be, for suchadditional costs incurred or reduction suffered.

 

(b) If any Lender orany Issuing Bank determines that any Change in Law regarding capitalrequirements has or would have the effect of reducing the rate of return onsuch Lender’s or such Issuing Bank’s capital or on the capital of such Lender’sor such Issuing Bank’s holding company, if any, as a consequence of thisAgreement or the Loans made by, or participations in Letters of Credit held by,such Lender, or the Letters of Credit issued by such Issuing Bank, to a levelbelow that which such Lender or such Issuing Bank or such Lender’s or suchIssuing Bank’s holding company could have achieved but for such Change in Law(taking into consideration such Lender’s or such Issuing Bank’s policies andthe policies of such Lender’s or such Issuing Bank’s holding company withrespect to capital adequacy), then from time to time the Borrower will pay tosuch Lender or such Issuing Bank, as the case may be, such additional amount oramounts as will compensate such Lender or such Issuing Bank or such Lender’s orsuch Issuing Bank’s holding company for any such reduction suffered.

 

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(c) A certificate of aLender or an Issuing Bank setting forth the amount or amounts necessary tocompensate such Lender or such Issuing Bank or its holding company, as the casemay be, as specified in paragraph (a) or (b) of this Section shallbe delivered to the Borrower and shall be conclusive absent manifesterror.  The Borrower shall pay suchLender or such Issuing Bank, as the case may be, the amount shown as due on anysuch certificate within ten (10) days after receipt thereof.

 

(d) Failure or delay onthe part of any Lender or any Issuing Bank to demand compensation pursuant tothis Section shall not constitute a waiver of such Lender’s or suchIssuing Bank’s right to demand such compensation; provided that theBorrower shall not be required to compensate a Lender or an Issuing Bankpursuant to this Section for any increased costs or reductions incurredmore than 270 days prior to the date that such Lender or such Issuing Bank, asthe case may be, notifies the Borrower of the Change in Law giving rise to suchincreased costs or reductions and of such Lender’s or such Issuing Bank’sintention to claim compensation therefor; providedfurther that,if the Change in Law giving rise to such increased costs or reductions isretroactive, then the 270-day period referred to above shall be extended toinclude the period of retroactive effect thereof.

 

## (r)            Section 2.17 of the Credit Agreement is amendedand restated in its entirety to read as follows:

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SECTION 2.17.  Taxes. (a) Any and all payments by or on account of any obligation of theBorrower hereunder shall be made free and clear of and without deduction forany Indemnified Taxes or Other Taxes; provided that if the Borrowershall be required to deduct any Indemnified Taxes or Other Taxes from suchpayments, then (i) the sum payable shall be increased as necessary so thatafter making all required deductions (including deductions applicable toadditional sums payable under this Section) the Administrative Agent, Lender orthe relevant Issuing Bank (as the case may be) receives an amount equal to thesum it would have received had no such deductions been made, (ii) theBorrower shall make such deductions and (iii) the Borrower shall pay thefull amount deducted to the relevant Governmental Authority in accordance withapplicable law.

 

(b) In addition, theBorrower shall pay any Other Taxes to the relevant Governmental Authority inaccordance with applicable law.

 

(c) The Borrower shallindemnify the Administrative Agent, each Lender and each Issuing Bank, withinten (10) days after written demand therefor, for the full amount of anyIndemnified Taxes or Other Taxes paid by the Administrative Agent, such Lenderor such Issuing Bank, as the case may be, on or with respect to any payment byor on account of any obligation of the Borrower hereunder (includingIndemnified Taxes or Other Taxes imposed or asserted on or attributable toamounts payable under this Section) and any penalties, interest and reasonableexpenses arising therefrom or with respect thereto, whether or not suchIndemnified Taxes or Other Taxes were correctly or legally imposed or assertedby the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered tothe Borrower by a Lender or an Issuing Bank, or by the Administrative Agent onits own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusiveabsent manifest error.

 

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(d) Each Lender andeach Issuing Bank shall indemnify the Borrower and the Administrative Agent,within ten (10) days after written demand therefor, against any and allTaxes and any and all related losses, claims, liabilities, penalties, interestand reasonable expenses (including the fees, charges and disbursements of anycounsel for the Borrower or the Administrative Agent) incurred by or assertedagainst the Borrower or the Administrative Agent by any Governmental Authorityas a result of the failure by such Lender or such Issuing Bank, as the case maybe, to deliver, or as a result of the inaccuracy, inadequacy or deficiency of,any documentation required to be delivered to the Borrower or theAdministrative Agent pursuant to Section 2.17(f).  Each Lender and each Issuing Bank herebyauthorizes the Administrative Agent to set off and apply any and all amounts atany time owing to such Lender or such Issuing Bank, as the case may be, underthis Agreement or any other Loan Document against any amount due to theAdministrative Agent under this Section 2.17(d).

 

(e) As soon aspracticable after any payment of Indemnified Taxes or Other Taxes by theBorrower to a Governmental Authority, the Borrower shall deliver to theAdministrative Agent the original or a certified copy of a receipt issued bysuch Governmental Authority evidencing such payment, a copy of the returnreporting such payment or other evidence of such payment reasonablysatisfactory to the Administrative Agent.

 

(f) Any Foreign Lenderthat is entitled to an exemption from or reduction of withholding tax under thelaw of the jurisdiction in which the Borrower is located, or any treaty towhich such jurisdiction is a party, with respect to payments under thisAgreement shall deliver to the Borrower (with a copy to the AdministrativeAgent), at the time or times prescribed by applicable law, such properlycompleted and executed documentation prescribed by applicable law or reasonablyrequested by the Borrower as will permit such payments to be made withoutwithholding or at a reduced rate.

 

(g) If theAdministrative Agent or a Lender determines, in its sole good faith discretion,that it has received a refund of any Taxes or Other Taxes as to which it hasbeen indemnified by the Borrower or with respect to which the Borrower has paidadditional amounts pursuant to this Section 2.17, it shall pay over suchrefund to the Borrower (but only to the extent of indemnity payments made, oradditional amounts paid, by the Borrower under this Section 2.17 withrespect to the Taxes or Other Taxes giving rise to such refund), net of allout-of-pocket expenses of the Administrative Agent or such Lender and withoutinterest (other than any interest paid by the relevant Governmental Authoritywith respect to such refund); provided, that the Borrower, upon therequest of the Administrative Agent or such Lender, agrees to repay the amountpaid over to the Borrower (plus any penalties, interest or other chargesimposed by the relevant Governmental Authority) to the Administrative Agent orsuch Lender in the event the Administrative Agent or such Lender is required torepay such refund to such Governmental Authority. This Section shall notbe construed to require the Administrative Agent or any Lender to makeavailable its tax returns (or any other information relating to its taxes whichit deems confidential) to the Borrower or any other Person.

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## (s)           Section 2.18(a) of the Credit Agreement isamended to delete the reference to “the Issuing Bank” appearing therein and toreplace such reference with “an Issuing Bank”.

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## (t)            Sections 2.18(b), 9.03(a), 9.03(c), 9.05, 9.09(b), 9.13,10.02, 10.03 and 10.07 of

 

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## the Credit Agreement are amended to delete each reference to “theIssuing Bank” appearing therein and to replace each such reference with “anyIssuing Bank”.

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## (u)           Section 2.18(e) of the Credit Agreement isamended to (i) delete the first and second references to “the Issuing Bank”appearing therein and to replace each such reference with “the Issuing Banks”, (ii) deletethe third reference to “the Issuing Bank” appearing therein and to replace suchreference with “each Issuing Bank” and (iii) add the word “such”immediately prior to the fourth reference to “the Issuing Bank” appearingtherein.

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## (v)           Section 2.19(b) of the Credit Agreement isamended to delete the parenthetical “(and if a Commitment is being assigned,the Issuing Bank)” appearing therein.

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## (w)          Section 2.20(c)(v) of the Credit Agreementis amended to (i) delete the first reference to “the Issuing Bank”appearing therein and to replace such reference with “any Issuing Bank” and (ii) addthe word “relevant” immediately prior to the second reference to “the IssuingBank” appearing therein.

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## (x)            Section 2.20(d) of the Credit Agreement isamended to delete the phrase “the Issuing Bank shall not” appearing therein andto replace such phrase with the phrase “no Issuing Bank shall”.

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## (y)           Section 2.20 of the Credit Agreement is amendedto the delete the reference to “the Issuing Bank” appearing in the finalparagraph thereof and to replace such reference with the phrase “the relevantIssuing Bank(s)”.

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## (z)            Section 4.01 of the Credit Agreement is amendedto delete each reference to “the Issuing Bank” appearing in the first and lastparagraphs thereof and to replace each such reference with “the Issuing Banks”.

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## (aa)         Section 4.02, 9.04(c)(i), 10.01, 10.05, 10.06,10.11 and 10.12 and Article VIII of the Credit Agreement is amended todelete each reference to “the Issuing Bank” appearing therein and to replaceeach such reference with “the Issuing Banks”.

##  

## (bb)         Section 5.01(d) of the Credit Agreement isamended to (i) delete the phrase “clause (a) or (b)” appearingtherein and to replace such phrase with the phrase “clauses (a), (b) or(c)”, (ii) delete the phrase “clause (b)” appearing therein and to replacesuch phrase with the phrase “clauses (b) and (c)” and (iii) deletethe phrase “clauses (a) and (b)” appearing therein and to replace suchphrase with the phrase “clauses (a), (b) and (c)”.

##  

## (cc)         Section 5.11 of the Credit Agreement is amendedto (i) delete the phrase “. It is anticipated that up to three (3) appraisalsper year will be conducted” appearing therein and (ii) amend and restateclause (i) thereof in its entirety to read as follows:

(i) no more than, andno less than, one (1) appraisal per year will be conducted if no Loans areoutstanding and no more than, and no less than, two (2) appraisals will beconducted if any Loans are outstanding (subject to the following clause (ii)),

##  

## (dd)         Section 5.12 of the Credit Agreement is amendedto (i) delete the phrase “. It is anticipated that up to three (3) fieldexaminations per year will be conducted” appearing therein and (ii) amendand restate clause (i) thereof in its entirety to read as follows:

 

10

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(i) nomore than, and no less than, one (1) field examination per year will beconducted if no Loans are outstanding and no more than, and no less than, two (2) fieldexaminations will be conducted if any Loans are outstanding (subject to thefollowing clause (ii)) Administrative Agent elects to conduct a second fieldexamination in its sole discretion,

 

## (ee)         Section 5.14of the Credit is amended to delete the phrase “sixty (60) days after theEffective Date” appearing therein and to replace such phrase with the phrase “thirty(30) days after the Amendment No. 1 Effective Date”.

##  

## (ff)           Section 5.15(f) ofthe Credit Agreement is amended and restated in its entirety to ready asfollows:

##  

(f) As of the Amendment No. 1 Effective Date, each Loan Party acknowledges andagrees that (i) all signature pages and exhibits to ConfirmatoryGrants of Security Interest and all other documents, instruments and deliveriespreviously provided to the Administrative Agent by such Loan Party to evidencea first priority security interest of the Administrative Agent in such LoanParty’s patents, trademarks, and copyrights, shall be automatically andirrevocably released from escrow and (ii) the Administrative Agent shallbe authorized to (A) date any such items the date of the Amendment No. 1Effective Date, (B) attach the executed signature pages of such LoanParty thereto, and (C) make all filings and take any other actionscontemplated thereby in connection with creating and perfecting theAdministrative Agent’s Lien on the patents, trademarks and copyrights of suchLoan Party.

 

## (gg)         Section 6.12(a) ofthe Credit Agreement is amended to delete the phrase “average monthly”appearing therein.

##  

## (hh)         Section 9.01(a)(iii) ofthe Credit Agreement is amended and restated in its entirety to ready asfollows:

##  

(iii) if to an Issuing Bank, to it at (A) JPMorgan Chase Bank, N.A., 270 ParkAvenue, 44th Floor, New York, NY 10017, Attention of Joseph A. Lisack (TelecopyNo. (646) 534-2288) or (B) Wells Fargo Retail Finance, LLC, OneBoston Place, 18th Floor, Boston, MA, 02108, Attention of ConnieLiu (Telecopy No. (617) 523-4029);

 

## (ii)           Section 9.02(a) ofthe Credit Agreement is amended to (i) delete the first and thirdreferences to “the Issuing Bank” appearing therein and to replace each suchreference with “any Issuing Bank” and (ii) delete the second reference to “theIssuing Bank” appearing therein and to replace such reference with “the IssuingBanks”.

##  

## (jj)           Section 9.02(b) ofthe Credit Agreement is amended to (i) delete the phrase “clauses (d) and(e)” appearing in clause (ix) thereof and to replace such phrase with thephrase “clauses (c) and (d)”, (ii) add the parenthetical “(or anymaterial portion of Collateral constituting patents, trademarks or copyrights)”immediately after the phrase “all of the Collateral” appearing in clause (ix) thereof,(iii) delete the first reference to “the Issuing Bank” appearing thereinand to replace such reference with “any Issuing Bank”, (iv) delete thesecond reference to “the Issuing Bank” appearing therein and to replace suchreference with “such Issuing Bank” and (v) delete the third reference to “theIssuing Bank” appearing therein and to replace such reference with “the IssuingBanks”.

##  

## (kk)         Section 9.02(c)(1) ofthe Credit Agreement is amended to add the parenthetical

 

11

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## “(other than a material portion of Collateral constituting patents,trademarks or copyrights)” immediately after the phrase “release its Liens onCollateral” appearing therein.

##  

## (ll)           Section 9.03(b) ofthe Credit Agreement is amended to (i) delete the first reference to “theIssuing Bank” appearing therein and to replace such reference with “eachIssuing Bank” and (ii) delete the second reference to “the Issuing Bank”appearing therein and to replace such reference with “any Issuing Bank”.

##  

## (mm)       Section 9.04(a) ofthe Credit Agreement is amended to (i) add the word “relevant” immediatelyprior to the first and second references to “Issuing Bank” appearing thereinand (ii) delete the third reference to “the Issuing Bank” appearingtherein and to replace such reference with “the Issuing Banks”.

##  

## (nn)         Section 9.04(b)(i) ofthe Credit Agreement is amended to (i) add the word “and” immediatelyfollowing the semicolon appearing at the end of clause (A) thereof, (ii) deletethe phrase “; and” appearing at the end of clause (B) thereof and toreplace such phrase with a period and (iii) delete clause (C) thereofin its entirety.

##  

## (oo)         Section 9.04(b)(iv) ofthe Credit Agreement is amended to (i) delete the first reference to “theIssuing Bank” appearing therein and to replace such reference with “the IssuingBanks” and (ii) delete the second reference to “the Issuing Bank”appearing therein and to replace such reference with “any Issuing Bank”.

##  

## (pp)         Section 9.12of the Credit Agreement is amended to (i) delete the first reference to “theIssuing Bank” appearing therein and to replace such reference with “the IssuingBanks” and (ii) delete each subsequent reference to “the Issuing Bank”appearing therein and to replace each such reference with “any Issuing Bank”.

##  

## (qq)         WellsFargo Retail Finance, LLC shall be an additional Lender under the CreditAgreement.  Schedule 2.01 to the CreditAgreement is replaced in its entirety with Schedule 2.01 attachedhereto.

##  

## (rr)           Exhibit Ato the Credit Agreement is amended to delete the phrase “and as Issuing Bank”from the signature block of the Administrative Agent appearing therein.

##  

## (ss)         Exhibit Dto the Credit Agreement is amended to delete the phrase “the Issuing Bank”appearing in the preamble thereto and to replace such phrase with “an IssuingBank”.

##  

# 2.             Conditionsof Effectiveness.  The effectivenessof this Amendment is subject to the conditions precedent that theAdministrative Agent shall have received (a) counterparts of thisAmendment duly executed by the Borrower, Holdings, the Lenders and theAdministrative Agent and the Consent and Reaffirmation attached hereto dulyexecuted by the Subsidiary Guarantors and (b) legal opinions reasonablyrequested by the Administrative Agent in connection with this Amendment.

#  

# 3.             Representationsand Warranties of Holdings and the Borrower.  Each of Holdings and the Borrower herebyrepresents and warrants as follows:

##  

## (a)           ThisAmendment and the Credit Agreement, as amended hereby, constitute legal, validand binding obligations of such Loan Party and are enforceable against suchLoan Party in accordance with their terms, subject to applicable bankruptcy,insolvency, reorganization, moratorium or other laws affecting creditors’rights generally and subject to general principles of equity, regardless of

 

12

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## whether considered in a proceeding in equity or at law.

##  

## (b)           Asof the date hereof and giving effect to the terms of this Amendment, (i) noDefault shall have occurred and be continuing and (ii) the representationsand warranties of such Loan Party set forth in the Credit Agreement, as amendedhereby, are true and correct as of the date hereof.

##  

# 4.             Referenceto and Effect on the Credit Agreement.

#  

## (a)           Uponthe effectiveness hereof, each reference to the Credit Agreement in the CreditAgreement or any other Loan Document shall mean and be a reference to theCredit Agreement as amended hereby.

##  

## (b)           Exceptas specifically amended above, the Credit Agreement and all other documents,instruments and agreements executed and/or delivered in connection therewithshall remain in full force and effect and are hereby ratified and confirmed.

##  

## (c)           Theexecution, delivery and effectiveness of this Amendment shall not operate as awaiver of any right, power or remedy of the Administrative Agent or theLenders, nor constitute a waiver of any provision of the Credit Agreement orany other documents, instruments and agreements executed and/or delivered inconnection therewith.

##  

# 5.             GoverningLaw.  This Amendment shall beconstrued in accordance with and governed by the law of the State of New York.

#  

# 6.             Headings.  Section headings in this Amendment areincluded herein for convenience of reference only and shall not constitute apart of this Amendment for any other purpose.

#  

# 7.             Counterparts.  This Amendment may be executed by one or moreof the parties hereto on any number of separate counterparts, and all of saidcounterparts taken together shall be deemed to constitute one and the sameinstrument.  Signatures delivered byfacsimile or PDF shall have the same force and effect as manual signaturesdelivered in person.

#  

[Signature Pages Follow]

 

13

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IN WITNESS WHEREOF, thisAmendment has been duly executed as of the day and year first above written.

 

 
|   | ETHAN  ALLEN GLOBAL, INC.,   |
|--------|------------------------------|
|   | as  the Borrower             |
|   |                         |
|   |                         |
|   | By:                          | /s/  M. Farooq Kathwari |
|   | Name                         | M.  Farooq Kathwari |
|   | Title:                       | President |
|   |                         |
|   | ETHAN  ALLEN INTERIORS INC., |
|   |                         |
|   |                         |
|   | By:                          | /s/  M. Farooq Kathwari |
|   | Name                         | M.  Farooq Kathwari |
|   | Title:                       | President |

 

Signature Page toAmendment No. 1

Ethan Allen Global, Inc.

Credit Agreement dated asof May 29, 2009

 

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|   | JPMORGAN  CHASE BANK, N.A.,                                                            |
|--------|----------------------------------------------------------------------------------------|
|   | as  Administrative Agent, Issuing Bank, Swingline Lender and individually as a  Lender |
|   |                                                                                   |
|   |                                                                                   |
|   | By:                                                                                    | /s/  Joseph A. Lisack |
|   | Name:                                                                                  | Joseph  A. Lisack |
|   | Title:                                                                                 | Vice  President |

 

Signature Page toAmendment No. 1

Ethan Allen Global, Inc.

Credit Agreement dated asof May 29, 2009

 

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|   | CAPITAL  ONE LEVERAGE FINANCE CORP., |
|--------|--------------------------------------|
|   | as  a Lender                         |
|   |                                 |
|   |                                 |
|   | By:                                  | /s/  Nick Malatestinic |
|   | Name:                                | Nick  Malatestinic |
|   | Title:                               | SVP |

 

Signature Page toAmendment No. 1

Ethan Allen Global, Inc.

Credit Agreement dated asof May 29, 2009

 

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|   | WELLS  FARGO RETAIL FINANCE, LLC,             |
|--------|-----------------------------------------------|
|   | as  Issuing Bank and individually as a Lender |
|   |                                          |
|   |                                          |
|   | By:                                           | /s/  Cory Loftus |
|   | Name:                                         | Cory  Loftus |
|   | Title:                                        | Vice  President |

 

Signature Page toAmendment No. 1

Ethan Allen Global, Inc.

Credit Agreement dated asof May 29, 2009

 

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CONSENT AND REAFFIRMATION

 

Each of the undersignedhereby acknowledges receipt of a copy of the foregoing Amendment No. 1 tothe Credit Agreement dated as of May 29, 2009 (the “Credit Agreement”)by and among Ethan Allen Global, Inc. (the “Borrower”), Ethan AllenInteriors Inc. (“Holdings”), the financial institutions from time totime party thereto (the “Lenders”) and JPMorgan Chase Bank, N.A., asAdministrative Agent (the “Administrative Agent”), which Amendment No. 1is dated as of October 23, 2009 (the “Amendment”).  Capitalized terms used in this Consent andReaffirmation and not defined herein shall have the meanings given to them inthe Credit Agreement.   Without in anyway establishing a course of dealing by the Administrative Agent or any Lender,each of the undersigned consents to the Amendment and reaffirms the terms andconditions of the Guarantee Agreement and any other Loan Document executed byit and acknowledges and agrees that such agreements and each and every suchLoan Document executed by the undersigned in connection with the CreditAgreement remains in full force and effect and is hereby reaffirmed, ratifiedand confirmed.  All references to theCredit Agreement contained in the above-referenced documents shall be areference to the Credit Agreement as so modified by the Amendment.

 

Dated:  October 23, 2009

 

[SignaturePage Follows]

 

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|   | ETHAN  ALLEN OPERATIONS, INC                           |
|--------|--------------------------------------------------------|
|   |                                                   |
|   |                                                   |
|   | By:                                                    | /s/  M. Farooq Kathwari |
|   | Name                                                   | M.  Farooq Kathwari |
|   | Title:                                                 | President |
|   |                                                   |
|   | LAKE  AVENUE ASSOCIATES, INC.                          |
|   |                                                   |
|   |                                                   |
|   | By:                                                    | /s/  M. Farooq Kathwari |
|   | Name                                                   | M.  Farooq Kathwari |
|   | Title:                                                 | President |
|   |                                                   |
|   | MANOR  HOUSE, INC.                                     |
|   |                                                   |
|   |                                                   |
|   | By:                                                    | /s/  M. Farooq Kathwari |
|   | Name                                                   | M.  Farooq Kathwari |
|   | Title:                                                 | President |
|   |                                                   |
|   | ETHAN  ALLEN REALTY LLC                                |
|   |                                                   |
|   | By  Ethan Allen Operations, Inc., its Sole Member |
|   |                                                   |
|   |                                                   |
|   | By:                                                    | /s/  M. Farooq Kathwari |
|   | Name                                                   | M.  Farooq Kathwari |
|   | Title:                                                 | President |
|   |                                                   |
|   | ETHAN  ALLEN RETAIL, INC.                              |
|   |                                                   |
|   |                                                   |
|   | By:                                                    | /s/  M. Farooq Kathwari |
|   | Name                                                   | M.  Farooq Kathwari |
|   | Title:                                                 | President |

 

Signature Page toConsent and Reaffirmation to Amendment No. 1

Ethan AllenGlobal, Inc.

Credit Agreementdated as of May 20, 2009

 

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**SCHEDULE 2.01**

 

**COMMITMENTS**

 
| **Lender**                         | ** ** | **Commitment** | ** **     |
|------------------------------------|------------|----------------|----------------|
|                               |       |           |           |
| JPMorgan Chase Bank, N.A           |       | $              | 25,000,000     |   |
| Wells Fargo Retail Finance, LLC    |       | $              | 20,000,000     |   |
| Capital One Leverage Finance Corp. |       | $              | 15,000,000     |   |
|                               |       |           |           |
| **Aggregate Commitment:**          | ** ** | **$**          | **60,000,000** | ** ** |

 

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