Case KG Doc 451 Filed 11/15/18 Page 1 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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1 Case KG Doc 451 Filed 11/15/18 Page 1 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE x : Chapter 11 In re: : : Case No (KG) HERITAGE HOME GROUP LLC, et al., : : Jointly Administered Debtors. 1 : : RE: Docket No x ORDER, PURSUANT TO SECTION 105(a) OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 9019, APPROVING THE SETTLEMENT AGREEMENT BY AND BETWEEN THE DEBTORS AND RAYMOUR & FLANIGAN FURNITURE Upon the motion (the Motion ), 2 filed by the above-captioned debtors and debtors in possession (collectively, the Debtors ), seeking entry of an order approving a settlement agreement by and between the Debtors and Raymour (collectively, the Parties ); and this Court having found that it has jurisdiction over this matter pursuant to 28 U.S.C. 1334(b) and 157, and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated as of February 29, 2012; and this Court having found that venue of these cases and the Motion in this district is proper pursuant to 28 U.S.C and 1409; and this Court having found that this matter is a core proceeding pursuant to 28 U.S.C. 157(b); and this Court having found that it may enter a final order consistent with Article III of the United States Constitution; and this Court having found that notice of the Motion has been given as set forth in the Motion and that such notice is adequate and no other or further notice need be given; and this Court having found that the relief sought in the Motion is in the best interests of 01: The Debtors in these chapter 11 cases, along with the last four digits of each debtor s tax identification number, as applicable, are: Heritage Home Group LLC (9506); HH Global II B.V. (0165); HH Group Holdings US, Inc. (7206); HHG Real Property LLC (3221); and HHG Global Designs LLC (1150). The Debtors corporate headquarters is located at 1925 Eastchester Drive, High Point, North Carolina Capitalized terms used in this Order but not otherwise defined herein shall have the meanings ascribed to such terms in the Motion. 1

2 Case KG Doc 451 Filed 11/15/18 Page 2 of 3 the Debtors, their estates, their creditors, and all other parties in interest; and this Court having found that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and after due deliberation and sufficient cause appearing therefor, IT IS HEREBY ORDERED THAT: 1. The Motion is GRANTED as set forth herein. 2. The Settlement Agreement attached hereto as Exhibit 1 is approved in its entirety, pursuant to section 105(a) of the Bankruptcy Code and Bankruptcy Rule The Debtors are authorized to enter into the Settlement Agreement, and to take any and all actions necessary and appropriate to consummate the Settlement Agreement, including, without limitation, executing and delivering any documents, agreements or instruments and remitting payments, as may be necessary or appropriate to implement the Settlement Agreement. 4. Raymour shall pay the Debtors the amount of $1,068, within one (1) business day after the entry of this Order. 5. This Order and the Settlement Agreement shall be binding on the Debtors and Raymour, either of the foregoing parties successors and/or assigns, and all other creditors and parties in interest in the chapter 11 cases (including, without limitation, the Committee, any trustee or examiner appointed in the chapter 11 cases or any chapter 7 trustee, or any other person, party or entity to, in any jurisdiction anywhere in the world, directly or indirectly). 6. Notwithstanding any provision in the Bankruptcy Rules to the contrary, including, without limitation, Bankruptcy Rule 6004: (a) this Order shall be effective immediately and enforceable upon its entry; (b) the Debtors are not subject to any stay in the implementation, enforcement or realization of the relief granted in this Order; and (c) the 01:

3 Case KG Doc 451 Filed 11/15/18 Page 3 of 3 Debtors are authorized and empowered to, and may in their discretion and without further delay, take any action and perform any act necessary to implement and effectuate the terms of this Order. 7. The automatic stay in the chapter 11 cases is hereby modified to the extent necessary to permit the implementation of the terms of the Settlement Agreement. 8. This Court shall retain jurisdiction with respect to any matters, claims, rights or disputes arising from or related to the Motion, the Settlement Agreement or the implementation of this Order. 01: Dated: November 15th, 2018 Wilmington, Delaware KEVIN GROSS UNITED STATES BANKRUPTCY JUDGE 3

4 Case KG Doc Filed 11/15/18 Page 1 of 6 EXHIBIT 1 SETTLEMENT AGREEMENT 01:

5 Case KG Doc Filed 11/15/18 Page 2 of 6 SETTLEMENT AGREEMENT AND MUTUAL RELEASE THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (the Settlement Agreement ) is made as of October 30th, 2018 (the Effective Date ), by and between HERITAGE HOME GROUP LLC ( HHG ); HH GLOBAL II B.V., HH GROUP HOLDINGS US, INC., HHG REAL PROPERTY LLC, and HHG GLOBAL DESIGNS LLC (collectively, the Debtors ) and RAYMOURS FURNITURE COMPANY, INC. D/B/A RAYMOUR & FLANIGAN FURNITURE ( Raymour ). BACKGROUND WHEREAS, Raymour purchased a certain quantity of goods from HHG under the Broyhill and Thomasville brand names through a series of purchase orders; WHEREAS, at the time Raymour purchased goods from HHG, the Broyhill and Thomasville brand names were owned by HHG and HHG represents and warrants it has not sold or assigned its right to collect the purchase price for such goods from Raymour; WHEREAS, the Debtors filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court in Wilmington, Delaware (the Court ) on July 29, 2018 (the Bankruptcy Cases ); WHEREAS, a dispute arose between HHG and Raymour regarding the amount of a receivables owed by Raymour to HHG; WHEREAS, the Debtors and Raymour have agreed to enter into this Settlement Agreement for the purpose of resolving all claims that the Debtors and Raymour may have against one another, without admission of liability; and WHEREAS, the Debtors will seek Bankruptcy Court approval of this Settlement Agreement by filing a motion (including a proposed order) in the Bankruptcy Cases under Rule 9019 of the Federal Rules of Bankruptcy Procedure (the 9019 Motion ). NOW, THEREFORE, in consideration of the recitals made above (which are made a part of this Settlement Agreement), the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Debtors and Raymour agree as follows: 1. Approval by the Court. This Settlement Agreement and the terms and conditions herein are subject to the Court's entry of a final and non-appealable order in the Bankruptcy Cases pursuant to the 9019 Motion, which order approving this Settlement Agreement shall incorporate the terms and conditions of this Settlement Agreement (the Proposed Order ). The Proposed Order shall be final and non-appealable if the order has not been reversed, stayed, modified, or amended; the time to appeal or to seek certiorari or to move for an appellate reargument or rehearing has expired and no such action has been timely taken; or if an appeal, petition for certiorari or appellate motion for reargument or rehearing has been filed, such matter has been resolved.

6 Case KG Doc Filed 11/15/18 Page 3 of 6 2. Payment by Raymour. Within one business day of the entry of the Proposed Order, Raymour shall remit to the Debtors a payment in the amount of $1,068, (the Settlement Payment ), which shall represent a final settlement of the Debtors claims against Raymour. 3. Debtors Release of Raymour. Upon payment of the Settlement Payment, the Debtors, their estates, predecessors-in-interest, successors-in-interest (including, without limitation, any plan trustee, liquidating trustee, plan administrator or other liquidating agent under any plan of reorganization or any bankruptcy trustee (including any Chapter 7 trustee) appointed in the Bankruptcy Cases), and their affiliates, and their respective officers, directors, shareholders, employees, and agents (and with the Debtors, collectively, the Debtor Release Parties ) hereby irrevocably and unconditionally waive, release, relinquish, remise, acquit and forever discharge Raymour, its respective affiliates, partners, trustees, members, officers, directors, representatives, employees, managers, attorneys, agents, personal representatives, heirs, executors, administrators, successors and assigns (collectively, the Raymour Release Parties ), from any and all claims, rights, cause and causes of action, manner of action and actions, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, agreements, promises, attorneys fees, costs, judgments, executions, claims, damages, and demands whatsoever, in law or in equity, whether known or unknown, accrued or unaccrued, and whether foreseeable or unforeseeable, of whatever kind or character whatsoever (collectively, Claims ). Notwithstanding the foregoing in this Section 3, nothing in this Settlement Agreement shall be deemed to release Raymour of its obligations under this Settlement Agreement. 4. Raymour s Release of the Debtors. Upon payment of the Settlement Payment, the Raymour Release Parties hereby irrevocably and unconditionally waive, release, relinquish, remise, acquit and forever discharge the Debtor Release Parties from any and all Claims. Notwithstanding the foregoing in this Section 4, nothing in this Settlement Agreement shall be deemed to release Debtors of their obligations under this Settlement Agreement; provided, further, if a bankruptcy trustee or creditor or assignee of one or more Debtors asserts against Raymour, that the settlement herein was not valid to compromise or settle the debts of Raymour to Debtors existing on the date hereof, or that sums in excess of the Settlement Payment are due and owing by Raymour on account of sums allegedly owing to one or more Debtors on the date hereof, Debtors jointly and severally shall indemnify, defend and hold harmless Raymour from and against any such additional amount subsequently paid as well as the reasonable attorneys fees and expenses incurred by Raymour in defending such assertion. 5. Remedies. In the event Raymour fails to observe and perform any term or condition of this Settlement Agreement to be observed or performed by Raymour, including, but not limited to, Raymour s obligation to make the Settlement Payment, without any further notice required to be given to Raymour, a default shall be deemed to have occurred hereunder, and the Debtors shall have all rights and remedies allowed under applicable law or equity, or under any provisions of this Settlement Agreement. 6. Miscellaneous. (a) Any notice pursuant to this Settlement Agreement shall be given in writing by (i) overnight delivery service with proof of delivery or (ii) 2

7 Case KG Doc Filed 11/15/18 Page 4 of 6 United States Mail, postage prepaid, registered or certified mail, return receipt requested sent to the intended addressee at the address set forth below, or to such other address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance herewith, and shall be deemed to have been given either at the time of personal delivery, or, in the case of overnight delivery service or mail, as of the date of first attempted delivery at the address and in the manner provided herein. Unless changed in accordance with the preceding sentence, the addresses for notices given pursuant to this Settlement Agreement shall be as follows: If to Debtors: Heritage Home Group LLC Attn: Robert D. Albergotti 1925 Eastchester Drive High Point, North Carolina With a copy (which shall not constitute notice) to: Young Conaway Stargatt & Taylor, LLP Attn: Kenneth J. Enos 1000 N. King Street Wilmington, Delaware If to Raymour: Raymour & Flanigan Furniture Attn: Neil A. Rube Corporate Office 7248 Morgan Road Liverpool, New York (b) Entire Agreement. This Settlement Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes and revokes all prior agreements and understandings, oral and written, between the parties hereto or otherwise with respect to the same subject matter. No change, amendment, termination or attempted waiver of any of the provisions hereof shall be binding upon any party unless set forth in an instrument in writing signed by the party to be bound. (c) Counterparts. This Settlement Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. A pdf of a signature will have the same legal effect as an originally drawn signature. Each party shall have the right to request and receive an originally drawn signature from the other party. (d) Headings. The article, section and other headings contained in this Settlement Agreement are for reference purposes only and shall not be deemed to be a part of this Settlement Agreement or to affect the meaning or interpretation of this Settlement Agreement. 3

8 Case KG Doc Filed 11/15/18 Page 5 of 6 (e) (f) (g) (h) (i) (j) Construction. Within this Settlement Agreement, the singular shall include the plural and the plural shall include the singular, and any gender shall include all other genders, all as the meaning and the context of this Agreement shall require. The parties acknowledge that the parties and their counsel have reviewed, negotiated and revised this Settlement Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Settlement Agreement or any exhibits or amendments hereto. Governing Law. The validity and interpretation of this Settlement Agreement shall be construed in accordance with and governed by the internal laws of the state of Delaware, without giving effect to principles of conflicts of laws. Cooperation. The parties hereto shall cooperate fully at their own expense, except as otherwise provided in this Settlement Agreement, with each other and their respective counsel and accountants in connection with all steps to be taken as part of their obligations under this Settlement Agreement. Severability. If any term, covenant, condition or provision of this Settlement Agreement or the application thereof to any circumstance shall be invalid or unenforceable to any extent, the remaining terms, covenants, conditions and provisions of this Settlement Agreement shall not be affected thereby and each remaining term, covenant, condition and provision of this Settlement Agreement shall be valid and shall be enforceable to the fullest extent permitted by law. If any provision of this Settlement Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only as broad as is enforceable. Retention of Jurisdiction in the Court. The Court shall retain exclusive jurisdiction to resolve any disputes or controversies arising from or related to this Settlement Agreement and any related matters, and the Proposed Order shall provide that the Court shall retain said jurisdiction. Time is of the Essence. Time is of the essence with respect to performance under this Settlement Agreement. 4

9 Case KG Doc Filed 11/15/18 Page 6 of 6 IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have caused their duly authorized representatives to execute this Settlement Agreement. RAYMOUR & FLANIGAN FURNITURE By: /s/ Neil A. Rube Name: Neil A. Rube Title: Senior Vice President & General Counsel HERITAGE HOME GROUP, LLC, et. al By: /s/ Robert D. Albergotti Name: Robert D. Albergotti Title: Chief Restructuring Officer 5