Amendment No. 1 to Guaranty and Security Agreement


     

    AMENDMENT
      NO. 1 TO GUARANTY AND SECURITY AGREEMENT

     

    Amendment
      No. 1, dated
      as
      of June 5, 2007 to
      the
Guaranty
      and security Agreement, dated
      as
      of October 24, 2006 (the “Guaranty
      and Security Agreement”),
      by
The
      Bombay Company, Inc., BBA Holdings, LLC., Bombay International, Inc.
      and
The
      Bombay Furniture Company, Inc.
      (collectively, the “Grantors”)
      in
      favor of General Electric Capital Corporation, as administrative agent and
      collateral agent for the Secured Parties (in such capacity, the “Agent”).
      Capitalized terms used herein and not otherwise defined herein shall have the
      meanings ascribed to them in the Guaranty and Security Agreement. 

     

    W
      i t n e s s e t h:

     

    Whereas,
      the
      Borrowers have requested that the Agent amend the Guaranty and Security
      Agreement as set forth below; and

     

    Whereas,
      the
      Lenders and the Agent have approved such amendment;

     

    Now,
      Therefore, in
      consideration of the premises and the covenants and obligations contained
      herein, the sufficiency of which is hereby acknowledged, the parties hereto
      agree as follows:

     

    
      	Section
              1.  	
              Amendments
                to the Guaranty and Security
                Agreement

            


    

     

    (a)  The
      definition of “Excluded Property” in Section 1.1 of the Guaranty and Security
      Agreement is hereby amended in its entirety as follows:

     

    “Excluded
      Property”
means
      any Permit, license, contract, instrument or other agreement held by any Grantor
      that prohibits or requires the consent of any Person other than the Borrowers
      and their Affiliates as a condition to the creation by such Grantor of a Lien
      thereon, or any Permit, lease, license contract or other agreement held by
      any
      Grantor to the extent that any Requirement of Law applicable thereto prohibits
      the creation of a Lien thereon, but only to the extent, and for so long as,
      such
      prohibition is not terminated or rendered unenforceable or otherwise deemed
      ineffective by the UCC or any other Requirement of Law; provided,
      however,
      “Excluded
      Property”
shall
      not include any proceeds, substitutions or replacements of Excluded Property
      (unless such proceeds, substitutions or replacements would constitute Excluded
      Property) or any Lease or Leasehold.

    


    (b)  Section
      1.1 of the Guaranty and Security Agreement is hereby amended by inserting the
      following definitions of “Lease” and “Leasehold” in their appropriate
      alphabetical order:

     

    “Lease”
means
      any lease or other agreement, no matter how styled or structured, pursuant
      to
      which any Borrower is entitled to the use or occupancy of any
      space.

     

    “Leasehold”
means
      any lease, leasehold estate or interest of any Borrower in each of the
      properties at or upon which any such Borrower conducts business, offers any
      Inventory for sale, or maintains any of the Collateral, whether or not for
      retail sale, together with the Borrower’s interest in any of the improvements
      and fixtures 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    located
      upon or appurtenant to each such estate or interest, including, without
      limitation, any rights of any such Borrower to payment, proceeds or value of
      any
      kind or nature realized upon the sale, transfer or assignment of any such estate
      or interest, whether or not such sale, assignment or transfer occurs during
      any
      case commenced under the Bankruptcy Code.

     

    (c)  The
      definition of “Software” in Section 1.1 of the Guaranty and Security Agreement
      is hereby deleted in its entirety.

     

    (d)  Section
      3.1 of the Guaranty and Security Agreement is hereby amended in its entirety
      as
      follows:

     

    “Section
      3.1 Collateral.
      For the
      purposes of this Agreement, all personal property, tangible and intangible,
      now
      owned or at any time hereafter acquired by a Grantor or in which a Grantor
      now
      has or at any time in the future may acquire any right, title or interests
      is
      collectively referred to as the “Collateral”,
      which
      term shall include, without limitation, all of the following:

     

    (a) all
      accounts;

     

    (b) all
      inventory, equipment and other goods; 

     

    (c) all
      fixtures;

     

    (d) all
      documents;

     

    (e) all
      general intangibles;

     

    (f) all
      securities accounts and deposit accounts (other than Excluded Deposit Accounts),
      including Store Accounts, Concentration Accounts, the Cash Collateral Account
      and all deposits and credits therein;

     

    (g) all
      investment property; provided, if the grant of a Lien and security interest
      under this Agreement in investment property consisting of equity interests
      of an
      Excluded Foreign Subsidiary of a Grantor would subject a Grantor to a tax on
      the
      earnings and profits of such Excluded Foreign Subsidiary under Section 956
      of
      the Internal Revenue Code, then, in such event (and only for so long as such
      tax
      would be imposed), not more than sixty-five percent (65%) of the voting equity
      securities and one hundred percent (100%) of the non-voting equity securities
      of
      such Excluded Foreign Subsidiary shall be deemed part of the Collateral and
      subject to the Lien and security interest of the Administrative Agent granted
      hereby;

     

    (h) all
      software;

     

    (i) all
      letters of credit, letter-of-credit rights, instruments, promissory notes,
      drafts and chattel paper (including electronic chattel paper and tangible
      chattel paper);

     

    (j) all
      supporting obligations with respect to any of the foregoing;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (k) all
      books, records, and information relating to any of the foregoing and/or to
      the
      operation of any Grantor’s business, and all rights of access to such books,
      records, and information, and all property in which such books, records, and
      information are stored, recorded and maintained;

     

    (l) all
      commercial tort claims;

     

    (m) all
      money
      or other assets of such Grantor, including without limitation all money and
      assets of such Grantor held by any Secured Party, including all property of
      every description, in the custody of or in transit to such Secured Party for
      any
      purpose, including safekeeping, collection or pledge, for the account of such
      Grantor or as to which such Grantor may have any right or power, including
      but
      not limited to cash; and

     

    (n) all
      Leases and Leaseholds;

     

    (o) to
      the
      extent not otherwise included, all proceeds of the foregoing including the
      proceeds of insurance, all property or money resulting from the Sale of any
      of
      the foregoing and all other rights to payment not included in the
      foregoing;

     

    provided, however, that
      “Collateral”
shall
      not include any Excluded Property; and provided,
      further,
      that if
      and when any property shall cease to be Excluded Property, such property shall
      be deemed at all times from and after the date hereof to constitute
      Collateral.”

     

    


    (e)  Section
      4.1 of the Guaranty and Security Agreement is hereby amended in its entirety
      to
      read as follows:

     

    “Section
      4.1 Title;
      No Other Liens.
      Such
      Grantor (a) is the record and beneficial owner of the Collateral pledged by
      it
      hereunder constituting instruments and investment property and (b) has rights
      in
      or the power to transfer each other item of Collateral in which a Lien is
      granted by it hereunder, free and clear of any other Lien (except for Permitted
      Liens).”

     

    (f)  Section
      4.2 of the Guaranty and Security Agreement is hereby amended as
      follows:

     

    (i) by
      deleting “and” immediately preceding (iii) and by inserting “ and (iv) in the
      case of Leases and Leaseholds,
      compliance with applicable state law for the perfection of such Lien”
immediately following “electronic chattel paper”

     

    (ii) by
      inserting the following language at the end of the section, immediately
      preceding the period: “;
      it
      being understood that, subject to the Intercreditor Agreement, the
      Administrative Agent will not seek to perfect its Lien in Leases and Leaseholds
      absent the occurrence of an Event of Default and, following the occurrence
      and
      during the continuation of an Event of Default, and as requested by the
      Administrative Agent, Borrowers shall endeavor to take such action as may
      reasonably be necessary to perfect the Administrative Agent’s Lien in Leases and
      Leaseholds”

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (g)  Section
      5.1 of the Guaranty and Security Agreement is hereby amended by inserting
      Section 5.1(d), immediately following Section 5.1(c) as follows:

     

    “(d)
      Such
      Grantor shall not authorize or permit any assignment, pledge, Lien, security
      interest, encumbrance, restriction or any hypothecation of any Lease or
      Leasehold, except as shall be permitted under the Credit
      Agreement”.

     

    (h)  Section
      5.4(b) of the Guaranty and Security Agreement is hereby amended in its entirety
      to read as follows:

     

    “(b)
      Such
      Grantor shall not grant “control” (within the meaning of such term under Article
      90306 of the UCC) over any investment property or deposit account to any Person
      other than the Administrative Agent, except as otherwise contemplated by the
      Intercreditor Agreement.”

     

    (i)  The
      following sentence is added at the end of Section 6.4 is amended in its entirety
      to read as follows: “The proceeding provisions of this Section are subject to
      the Intercreditor Agreement, and in the event of any conflict the provisions
      of
      the Intercreditor Agreement shall control.

     

    
      	Section
              2.  	
              Grant
                of Security Interest in
                Collateral

            


    

     

    Each
      Grantor, as collateral security for the prompt and complete payment and
      performance when due (whether at stated maturity, by acceleration or otherwise)
      of the Secured Obligations (as defined in the Guaranty and Security Agreement)
      of such Grantor, hereby mortgages, pledges and hypothecates to the Agent for
      the
      benefit of the Secured Parties, and grants to the Agent for the benefit of
      the
      Secured Parties a Lien on and security interest in, all of its right, title
      and
      interest in, to and under the Collateral of such Grantor; provided,
      however,
      that,
      if and when any property that at any time constituted Excluded Property becomes
      Collateral, the Agent shall have, and at all times from and after the date
      hereof be deemed to have had, a security interest in such property.

     

    
      	Section
              3.  	
              Reference
                to the Effect on the Loan
                Documents

            


    

     

    (a)  As
      of the
      date hereof, each reference in the Guaranty and Security Agreement to “this
      Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each
      reference in the other Loan Documents to the Guaranty and Security Agreement
      (including, without limitation, by means of words like “thereunder”, “thereof”
and words of like import), shall mean and be a reference to the Guaranty and
      Security Agreement as modified hereby, and this Amendment and the Guaranty
      and
      Security Agreement shall be read together and construed as a single
      agreement.

     

    (b)  Except
      as
      expressly modified hereby, all of the terms and provisions of the Guaranty
      and
      Security Agreement and all other Loan Documents are and shall remain in full
      force and effect and are hereby ratified and confirmed. 

     

    (c)  The
      execution, delivery and effectiveness of this Amendment shall not, except as
      expressly provided herein, operate as a waiver of any right, power or remedy
      of
      the Lenders or the Agent under any of the Loan Documents, nor constitute a
      waiver or amendment of any other provision of any of the Loan Documents or
      for
      any purpose except as expressly set forth herein.

     

    (d)  This
      Amendment shall be deemed a Loan Document.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
      	Section
              4.  	
              Execution
                in Counterparts

            


    

     

    This
      Amendment may be executed in any number of counterparts and by different parties
      in separate counterpart (including by facsimile), each of which when so executed
      shall be deemed to be an original and all of which taken together shall
      constitute one and the same agreement. Signature pages may be detached from
      multiple separate counterparts and attached to a single counterpart so that
      all
      signature pages are attached to the same document. Delivery of an executed
      counterpart by telecopy shall be effective as delivery of a manually executed
      counterpart of this Amendment.

     

    
      	Section
              5.  	
              Governing
                Law

            


    

     

    This
      Amendment shall be governed by and construed in accordance with the law of
      the
      State of New York.

     

    
      	Section
              6.  	
              Section
                Titles

            


    

     

    The
      Section titles contained in this Amendment are and shall be without substantive
      meaning or content of any kind whatsoever and are not a part of the agreement
      between the parties hereto.

     

    
      	Section
              7.  	
              Notices

            


    

     

    All
      communications and notices hereunder shall be given as provided in the Credit
      Agreement.

     

    
      	Section
              8.  	
              Severability

            


    

     

    The
      fact
      that any term or provision of this Amendment is held invalid, illegal or
      unenforceable as to any person in any situation in any jurisdiction shall not
      affect the validity, enforceability or legality of the remaining terms or
      provisions hereof or the validity, enforceability or legality of such offending
      term or provision in any other situation or jurisdiction or as applied to any
      person.

     

    
      	Section
              9.  	
              Successors

            


    

     

    The
      terms
      of this Amendment shall be binding upon, and shall inure to the benefit of,
      the
      Lenders, the other parties hereto and their respective successors and
      assigns.

     

    
      	Section
              10.  	
              Waiver
                of Jury Trial

            


    

     

    Each
      of
      the parties hereto irrevocably waives trial by jury in any action or proceeding
      with respect to this Amendment or any other Loan Document.

     

    [Signature
      Pages Follow]

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    



    In
      Witness Whereof,
      the
      parties hereto have caused this Amendment to be executed by their respective
      officers thereunto duly authorized, as of the date first written
      above.

     

    The
      Bombay Company, Inc.,

                                    as
      Grantor

     

    By:__________________________    

                                    Name:


                                    Title:


     

    BBA
      Holdings, LLC,

                                    as
      Grantor

     

    By:__________________________    

                                    Name:


                                    Title:


     

    Bombay
      International, Inc.,

                                    as
      Grantor

     

    By:__________________________    

                                    Name:


                                    Title:


     

    The
      Bombay Furniture Company, Inc.,

                                    as
      Grantor

     

    By:__________________________    

                             
    Name:
      

                                    Title:


     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    


    Accepted
      and Agreed

    as
      of the
      date first above written:

     

    General
      Electric Capital corporation,

    as
      Administrative Agent

     

    By:___________________________

    Name:
      

    Title: