exv4w1



 





Exhibit 4.1




THIRD AMENDMENT TO CREDIT AGREEMENT




     THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of November 13,
2007, is by and among LA-Z-BOY INCORPORATED, a Michigan corporation, (the “Borrower”),
those Subsidiaries of the Borrower identified as a “Guarantor” on the signature pages hereto
(individually a “Guarantor” and collectively the “Guarantors”), and WACHOVIA BANK,
NATIONAL ASSOCIATION, as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”).



WITNESSETH




     WHEREAS, the Borrower, the Guarantors, the several banks and other financial institutions as
may from time to time become parties thereto (the “Lenders”), and the Administrative Agent
have entered into that certain Credit Agreement dated as of March 30, 2004 (as previously amended
and/or modified and as further amended, modified, supplemented, restated or amended and restated
from time to time, the “Credit Agreement”; capitalized terms used but not otherwise defined
herein shall have the meaning ascribed thereto in the Credit Agreement);



     WHEREAS, the Borrower has requested certain amendments to the Credit Agreement as more fully
set forth herein; and



     WHEREAS, the Required Lenders have agreed to such amendments, subject to the terms and
conditions set forth herein.



     NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good
and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:



ARTICLE I

AMENDMENTS TO CREDIT AGREEMENT




     1.1 New Definitions. The following definitions are hereby added to Section 1.1 of the
Credit Agreement in the appropriate alphabetical order:



     “Accounts Receivable” means, as of any date of determination, the amount representing
accounts receivable of the Borrower and the Subsidiaries that would appear on a consolidated
balance sheet of the Borrower and its Subsidiaries at such time prepared in accordance with GAAP.



     “Asset Coverage Ratio” shall mean, as of the last day of any fiscal month of the
Borrower and its Subsidiaries on a consolidated basis, the ratio (a) the numerator of which shall
be equal to the sum of (i) 85% of Eligible Accounts Receivable plus (ii) 60% of Eligible



 









 







Finished Goods Inventory plus (iii) 35% of Eligible Raw Materials Inventory and (b)
the denominator of which shall be equal to all Funded Debt of the Borrower and its Subsidiaries on
a consolidated basis.



     “Eligible Accounts Receivable” shall mean 90% of all Accounts Receivable.



     “Eligible Finished Goods Inventory” shall mean 85% of all Finished Goods Inventory.



     “Eligible Raw Materials Inventory” shall mean 70% of all Raw Materials Inventory.



     “Finished Goods Inventory” means, as of any date of determination, the amount
representing finished goods inventory of the Borrower and the Subsidiaries that would appear on a
consolidated balance sheet of the Borrower and its Subsidiaries at such time prepared in accordance
with GAAP.



     “Raw Materials Inventory” means, as of any date of determination, the amount
representing raw materials inventory of the Borrower and the Subsidiaries that would appear on a
consolidated balance sheet of the Borrower and its Subsidiaries at such time prepared in accordance
with GAAP.



     “Third
Amendment Effective Date” shall mean November 13, 2007.



     1.2 Definition of Applicable Percentage. The pricing grid set forth in the definition
of “Applicable Percentage” in Section 1.1 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Alternate	 	LIBOR Rate Margin	 	 	 	 
	 	 	 	 	Base Rate	 	for Revolving Loans	 	 	 	 
	 	 	Funded Debt to	 	Margin for	 	and Standby Letter	 	Commercial and	 	 
	 	 	Total Capitalization	 	Revolving	 	of	 	Trade Letters of	 	Facility
	Level	 	Ratio	 	Loans	 	Credit Fee	 	Credit Fee	 	Fee
	I
	 	> .400 to 1.0	 	 	0.475	%	 	 	1.475	%	 	 	1.075	%	 	 	0.325	%
	II
	 	< .400 to 1.0 but	 	 	0.225	%	 	 	1.225	%	 	 	0.950 	%	 	 	0.275	%
	 
	 	> .250 to 1.0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	III
	 	< .250 to 1.0	 	 	0.150	%	 	 	1.150	%	 	 	0.9125	%	 	 	0.250	%







     1.3 Fixed Charge Coverage Ratio. Section 6.7(b) of the Credit Agreement is hereby
amended by adding the following proviso to the end of Section 6.7(b):




     ; provided that, notwithstanding the foregoing, the Fixed Charge Coverage Ratio as of
the end of the fiscal quarter ended October 27, 2007 shall be greater than or equal to 2.00
to 1.0.



     1.4 Asset Coverage Ratio. Section 6.7 of the Credit Agreement is hereby amended by
adding the following clause (c):




     (c) Asset Coverage Ratio. The Asset Coverage Ratio measured as of the last day
of the twelve month period ending as of each fiscal month end shall be greater than



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or equal to 1.10 to 1.0 at all times; provided that it is acknowledged and
agreed that Credit Parties shall not be required to show such calculations except in
connection with the delivery of the financial statements referred to in Sections 6.1(a) and
6.1(b) in accordance with Section 6.2(a).



     1.5 Indebtedness. Section 7.1(b) and (c) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:




     (b) Priority Debt existing as of the Third Amendment Effective Date; and




     (c) Indebtedness existing as of the Third Amendment Effective Date plus 
other Indebtedness (other than Priority Debt) in an aggregate amount not to exceed
$5,000,000 at any time outstanding; provided that the Credit Parties are in
compliance with the financial covenants set forth in Section 6.7 on a Pro Forma Basis.



     1.6 Liens. Section 7.2(a) of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:




     (a) (i) purchase money security interests in fixed assets granted prior to the Third
Amendment Effective Date (including such security interests granted in connection with the
issuance of industrial development revenue bonds issued to permit the Borrower or any of its
Subsidiaries to acquire fixed assets) and (ii) purchase money security interests in fixed
assets granted after the Third Amendment Effective Date in an aggregate amount not to exceed
$4,000,000 at any time outstanding (including such security interests granted in connection
with the issuance of industrial development revenue bonds issued to permit the Borrower or
any of its Subsidiaries to acquire fixed assets), provided that each such security
interest is created substantially contemporaneously with the acquisition of such fixed
assets and does not extend to any property other than the fixed assets so financed;



     1.7 Mergers, Sale of Assets and Indebtedness of Subsidiaries. Section 7.4(v) of the
Credit Agreement is hereby amended and restated in its entirety to read as follows:




     (v) in addition to the foregoing, the sale, lease or transfer of property or assets to
Persons other than the Borrower and its Subsidiaries not to exceed 10% of Consolidated
Assets (determined as of the end of the most recently ended fiscal quarter prior to the
Closing Date) in the aggregate during the term of this Credit Agreement; or



     1.8 Advances, Investments and Loans. Section 7.5(c) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:




     (c) consummate any acquisition except for Permitted Acquisitions that are dealer
acquisitions in an aggregate amount not to exceed $6,000,000 from the Third Amendment
Effective Date through the end of this Agreement;



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provided that after giving effect to the making of any Investment, loan or advance
permitted by this Section 7.5, no Default or Event of Default shall have occurred and be
continuing.




     1.9 Restricted Payments. Section 7.9 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:



     7.9 Restricted Payments.




     Directly or indirectly, declare, order, make or set apart any sum for or pay any
Restricted Payment, except (a) to make dividends payable solely in the same class of Capital
Stock of such Person, (b) to make dividends or other distributions payable to the Borrower
(directly or indirectly through Subsidiaries) and (c) the Borrower may pay cash dividends to
the shareholders of the Borrower so long as, after giving effect thereto on a Pro Forma
Basis, no Default or Event of Default shall exist.



ARTICLE II

CONDITIONS TO EFFECTIVENESS




     2.1 Closing Conditions. This Amendment shall become effective as of the day and year
set forth above upon satisfaction of the following conditions (in form and substance reasonably
acceptable to the Administrative Agent):




     (a) Executed Amendment. The Administrative Agent shall have received a copy of
this Amendment duly executed by each of the Credit Parties, the Required Lenders and the
Administrative Agent.




     (b) New Facility. The Borrower shall be actively engaged in obtaining a new
credit facility for the purpose of terminating all Credit Party Obligations under the Credit
Documents.




     (c) Fees and Expenses. The Administrative Agent shall have received from the
Borrower, on behalf of each Lender that executes and delivers a Lender Consent to the
Administrative Agent by 2:00 p.m. (Charlotte, NC time) on November 6, 2007, an amendment fee
in an amount equal to 5.0 basis points on the aggregate Revolving Commitments of such
approving Lenders. In addition, the Administrative Agent shall have received from the
Borrower such other fees and expenses that are payable in connection with the consummation
of the transactions contemplated hereby, including, without limitation, the reasonable fees
and expenses of Moore & Van Allen PLLC.




     (d) Miscellaneous. All other documents and legal matters in connection with
the transactions contemplated by this Amendment shall be reasonably satisfactory in form and
substance to the Administrative Agent and its counsel.



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ARTICLE III

MISCELLANEOUS




     3.1 Amended Terms. All references to the Credit Agreement in each of the Credit
Documents shall hereafter mean the Credit Agreement as amended by this Amendment. Except as
specifically amended hereby or otherwise agreed, all of the terms and provisions and conditions of
each of the Credit Documents shall remain unchanged and are hereby ratified and confirmed and shall
remain in full force and effect according to their respective terms. The amendments to the Credit
Agreement set forth in this Amendment shall be effective from and after the date of this Amendment
and shall not be applied retroactively.



     3.2 Representations and Warranties of Credit Parties. Each of the Credit Parties
represents and warrants as follows:




     (a) It has taken all necessary action to authorize the execution, delivery and
performance of this Amendment.




     (b) This Amendment has been duly executed and delivered by such Person and constitutes
such Person’s legal, valid and binding obligations, enforceable in accordance with its
terms, except as such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting
creditors’ rights generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity).




     (c) No consent, approval, authorization or order of, or filing, registration or
qualification with, any court or governmental authority or third party is required in
connection with the execution, delivery or performance by such Person of this Amendment.




     (d) The representations and warranties set forth in Section 5 of the Credit Agreement
are true and correct as of the date hereof (except for those which expressly relate to an
earlier date).




     (e) No Default or Event of Default exists after giving effect to this Amendment.




     (f) Both before and after giving effect to this Amendment, the Borrower is in
compliance with all representations, warranties, covenants and other terms and conditions
set forth in the definitive documentation for the Private Shelf Facility.



     3.3 Acknowledgment of Guarantors. The Guarantors acknowledge and consent to all of
the terms and conditions of this Amendment and agree that this Amendment and all documents executed
in connection herewith do not operate to reduce or discharge the Guarantors’ obligations under the
Credit Documents.



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     3.4 Credit Document. This Amendment shall constitute a Credit Document under the
terms of the Credit Agreement.



     3.5 Entirety. This Amendment and the other Credit Documents embody the entire
agreement between the parties hereto and supersede all prior agreements and understandings, oral or
written, if any, relating to the subject matter hereof.



     3.6 Counterparts; Telecopy. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. Delivery of an executed counterpart to this
Amendment by telecopy shall be effective as an original and shall constitute a representation that
an original will be delivered. A copy of this Amendment executed by the Borrower and the
Administrative Agent shall constitute definitive evidence that this Amendment has been executed by
all requisite parties.



     3.7 Successors and Assigns. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.



     3.8 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NORTH CAROLINA.



     3.9 Consent to Jurisdiction; Service of Process. The jurisdiction and service of
process provisions set forth in Section 11.14 of the Credit Agreement are hereby incorporated by
reference, mutatis mutandis.



     3.10 GENERAL RELEASE. IN CONSIDERATION OF THE REQUIRED LENDERS ENTERING INTO THIS
AMENDMENT, THE CREDIT PARTIES HEREBY RELEASE THE ADMINISTRATIVE AGENT, THE LENDERS, AND THE
ADMINISTRATIVE AGENT’S AND THE LENDERS’ RESPECTIVE OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS,
COUNSEL AND DIRECTORS FROM ANY AND ALL ACTIONS, CAUSES OF ACTION, CLAIMS, DEMANDS, DAMAGES AND
LIABILITIES OF WHATEVER KIND OR NATURE, IN LAW OR IN EQUITY, NOW KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED TO THE EXTENT THAT ANY OF THE FOREGOING ARISES FROM ANY ACTION OR FAILURE TO ACT UNDER
THE CREDIT AGREEMENT OR UNDER THE OTHER CREDIT DOCUMENTS ON OR PRIOR TO THE DATE HEREOF.



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LA-Z-BOY INCORPORATED

THIRD AMENDMENT TO CREDIT AGREEMENT




     IN WITNESS WHEREOF the Borrower, the Guarantors and the Administrative Agent, on behalf of the
Required Lenders, have caused this Amendment to be duly executed on the date first above written.



	 	 	 	 	 
	BORROWER:         	LA-Z-BOY INCORPORATED, a Michigan corporation

 	 
	 	By:  	/s/
M. Skrzypczak 	 
	 	 	Name:  	Michael S. Skrzypczak 	 
	 	 	Title:  	VP and Treasurer 	 
	 
	GUARANTORS:       	KINCAID FURNITURE COMPANY

INCORPORATED, a Delaware corporation

ENGLAND, INC., a Michigan corporation

BAUHAUS U.S.A., INC., a Mississippi corporation

LA-Z-BOY GREENSBORO, INC., a North Carolina corporation

LZB MANUFACTURING, INC., a Michigan corporation

 	 
	 	By:  	/s/
M. Skrzypczak 	 
	 	 	Name:  	Michael S. Skrzypczak 	 
	 	 	Title:  	VP and Treasurer 	 
	 



 









 




LA-Z-BOY INCORPORATED

THIRD AMENDMENT TO CREDIT AGREEMENT




	 	 	 	 	 
	ADMINISTRATIVE AGENT:       	WACHOVIA BANK, NATIONAL ASSOCIATION,

as a Lender and as Administrative Agent

 	 
	 	By:  	 /s/ Martha M. Winters
	 	 	Name:  Martha M. Winters
	 	 	Title:  Director	 	 



 









 






	 	 	 	 	 



LA-Z-BOY INCORPORATED

THIRD AMENDMENT TO CREDIT AGREEMENT




	 	 	 	 	 
	LENDERS:         	JPMORGAN CHASE, N.A.,
as a lender

 	 
	 	By:  	/s/
James M. Sumoski	 
	 	 	Name:  	James M. Sumoski	 
	 	 	Title:  	Vice President	 




 











 




LA-Z-BOY INCORPORATED

THIRD AMENDMENT TO CREDIT AGREEMENT




	 	 	 	 	 
	LENDERS:       	THE NORTHERN TRUST COMPANY,

as a Lender

 	 
	 	By:  	 /s/
J. T. Hall
	 	 	Name:  Jared T. Hall
	 	 	Title:  Vice President	 	 



 









 




LA-Z-BOY INCORPORATED

THIRD AMENDMENT TO CREDIT AGREEMENT




	 	 	 	 	 
	LENDERS:       	SunTrust Bank,

as a Lender

 	 
	 	By:  	 /s/ William Humphries
	 	 	Name:  William Humphries
	 	 	Title:    Managing Director	 	 



 









 




LA-Z-BOY INCORPORATED

THIRD AMENDMENT TO CREDIT AGREEMENT




	 	 	 	 	 
	LENDERS:       	COMERICA BANK,

as a Lender	 
	 
	 	By:  	 /s/
Steven J. McCormack
	 	 	Name:  Steven J. McCormack
	 	 	Title:  Vice President	 	 



 









 




LA-Z-BOY INCORPORATED

THIRD AMENDMENT TO CREDIT AGREEMENT




	 	 	 	 	 
	LENDERS:       	BRANCH BANKING AND TRUST COMPANY,

as a Lender

 	 
	 	By:  	 /s/
Jennifer L. Cudd
	 	 	Name:  Jennifer L. Cudd
	 	 	Title:  Senior Vice President