EXHIBIT 10.1

 

NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made
and entered into and, except as provided in Sections 2(a) and (c) hereof,
effective as of July 11, 2005, by and among THE ROWE COMPANIES, a Nevada
corporation, ROWE DIVERSIFIED, INC., a Delaware corporation, ROWE FURNITURE WOOD
PRODUCTS, INC., a California corporation, ROWE PROPERTIES, INC., a California
corporation, STOREHOUSE, INC., a Georgia corporation, and ROWE FURNITURE, INC.,
a Virginia corporation (hereinafter referred to collectively as “Borrowers” and
individually as a “Borrower”), the various financial institutions (collectively,
“Lenders”) named in the Loan Agreement (as defined below), and FLEET CAPITAL
CORPORATION, a Rhode Island corporation, in its capacity as collateral and
administrative agent for itself and Lenders (together with its successors in
such capacity, “Agent”).

 

Recitals:

 

Agent, Lenders and Borrowers are parties to that certain Loan and Security
Agreement dated May 15, 2002, as amended by that certain letter amendment dated
as of June 17, 2002, that certain Second Amendment to Loan and Security
Agreement dated October 10, 2002, that certain Third Amendment to Loan and
Security Agreement dated February 28, 2003, that certain Fourth Amendment to
Loan and Security Agreement dated April 3, 2003, that certain Fifth Amendment to
Loan and Security Agreement dated November 30, 2003, that certain Sixth
Amendment to Loan and Security Agreement dated September 23, 2004, that certain
Seventh Amendment to Loan and Security Agreement made, entered into and, except
as provided in Sections 2(c) and 2(e) thereof, effective as of February 24,
2005, and that certain letter agreement dated April 14, 2005 (as so amended, the
“Loan Agreement”), pursuant to which Lenders have made certain revolving credit
and term loans and other financial accommodations to Borrowers.

 

The parties desire to amend the Loan Agreement as hereinafter set forth.

 

NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and
valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:

 

1. Definitions. All capitalized terms used in this Amendment, unless otherwise
defined herein, shall have the meaning ascribed to such terms in the Loan
Agreement.

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2. Amendments to Loan Agreement. The Loan Agreement is hereby amended as
follows:

 

(a) Effective as of December 1, 2002, by deleting Section 9.2.9 of the Loan
Agreement and by substituting in lieu thereof the following:

 

9.2.9. Capital Expenditures: Make Capital Expenditures (including expenditures
by way of capitalized leases but excluding (i) the effect of any SunTrust Lease
Adjustment and (ii) amounts expensed to repair or restore damaged or destroyed
Equipment or Real Estate, to the extent of insurance or condemnation proceeds
received for application (and actually applied for such purpose pursuant to
Section 7.1.2(ii) hereof)) which in the aggregate, as to all Borrowers and their
Subsidiaries, exceed $4,300,000 during Borrowers’ 2002 Fiscal Year, $5,000,000
during Borrowers’ 2003 Fiscal Year, $9,000,000 during Borrowers’ 2004 Fiscal
Year, $2,600,000 during Borrowers’ Fiscal Quarter ending on or about February
27, 2005, $5,000,000 during Borrowers’ two Fiscal Quarters ending on or about
May 31, 2005, $7,500,000 during Borrowers’ three Fiscal Quarters ending on or
about August 31, 2005, $8,800,000 during Borrowers’ 2005 Fiscal Year or
$7,000,000 during any Fiscal Year of Borrowers thereafter; provided, however, in
no event shall Capital Expenditures that affect cash, as to all Borrowers and
their Subsidiaries, exceed an aggregate amount of $3,800,000 during Borrowers’
two Fiscal Quarters ending on or about May 31, 2005, $4,800,000 during
Borrowers’ three Fiscal Quarters ending on or about August 31, 2005 or
$5,900,000 during Borrower’s 2005 Fiscal Year.

 

(b) By deleting Section 9.3.3 of the Loan Agreement and by substituting in lieu
thereof the following:

 

9.3.3 Consolidated Leverage Ratio. Maintain a Consolidated Leverage Ratio of not
more than the ratio set forth below for the period corresponding thereto:

 

Period

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   Ratio

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The 4 Fiscal Quarters ending June 2, 2002

   9.0 to 1.0

The 4 Fiscal Quarters ending September 1, 2002

   8.5 to 1.0

The 4 Fiscal Quarters ending December 1, 2002

   6.5 to 1.0

The 4 Fiscal Quarters ending March 2, 2003

   5.5 to 1.0

The 4 Fiscal Quarters ending June 1, 2003

   5.0 to 1.0

 

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The 4 Fiscal Quarters ending August 31, 2003

   4.5 to 1.0

The 4 Fiscal Quarters ending November 30, 2003

   4.0 to 1.0

The 4 Fiscal Quarters ending on or about February 29, 2004

   4.0 to 1.0

The 4 Fiscal Quarters ending on or about May 31, 2004

   3.75 to 1.0

The 4 Fiscal Quarters ending on or about August 31, 2004

   3.5 to 1.0

The 4 Fiscal Quarters ending on or about November 30, 2004

   3.5 to 1.0

The 4 Fiscal Quarters ending on or about February 28, 2005

   8.25 to 1.0

The 4 Fiscal Quarters ending on or about February 28, 2006 and ending on the
last day of each Fiscal Quarter thereafter

   3.5 to 1.0

 

(c) Effective as of December 31, 2004, by deleting Section 9.3.4 of the Loan
Agreement and by substituting in lieu thereof the following:

 

9.3.4. Consolidated EBITDA. Achieve Consolidated EBITDA of not less than the
amount set forth below for the period corresponding thereto:

 

Period

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   Consolidated
EBITDA

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4-month period ending March 31, 2005

   $ (3,800,000 )

5-month period ending April 30, 2005

   $ (4,300,000 )

6-month period ending May 31, 2005

   $ (4,300,000 )

1-month period ending June 30, 2005

   $ 200,000  

 

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2-month period ending July 31, 2005

   $ 300,000

3-month period ending August 31, 2005

   $ 500,000

4-month period ending September 30, 2005

   $ 1,800,000

5-month period ending October 31, 2005

   $ 2,700,000

6-month period ending November 30, 2005

   $ 3,600,000

 

(d) By deleting the definition of “Inventory Formula Amount” in Appendix A to
the Loan Agreement and by substituting in lieu thereof the following:

 

Inventory Formula Amount - on any date of determination thereof, an amount equal
to the lesser of (i) the lesser of (a) $24,000,000 during the period commencing
on May 27, 2005 and ending on July 31, 2005, $23,000,000 during the period
commencing on August 1, 2005 and ending on August 31, 2005 and $22,000,000 at
all other times or (b) 90% (or such lesser percentage as Agent may in its
reasonable credit judgment determine from time to time) of the net liquidation
value of Eligible Inventory (as determined from time to time based upon
appraisals conducted by Ozer Valuation Services or such other independent
appraisers acceptable to Agent) or (ii) the sum of (a) 16% (or such lesser
percentage as Agent may in its reasonable credit judgment determine from time to
time) of the Value of Eligible Inventory on such date consisting of raw
materials plus (b) the lesser of (1) $2,000,000 or (2) 45% (or such lesser
percentage as Agent may in its reasonable credit judgment determine from time to
time) of the Value of Eligible Inventory on such date consisting of
work-in-process plus (c) 71% (or such lesser percentage as Agent may in its
reasonable credit judgment determine from time to time) of the Value of Eligible
Inventory on such date consisting of retail and manufactured finished goods.

 

3. Ratification and Reaffirmation. Each Borrower hereby ratifies and reaffirms
the Obligations, each of the Loan Documents and all of such Borrower’s
covenants, duties, indebtedness and liabilities under the Loan Documents.

 

4. Acknowledgments and Stipulations. Each Borrower acknowledges and stipulates
that the Loan Agreement and the other Loan Documents executed by such Borrower

 

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are legal, valid and binding obligations of such Borrower that are enforceable
against such Borrower in accordance with the terms thereof; all of the
Obligations are owing and payable without defense, offset or counterclaim (and
to the extent there exists any such defense, offset or counterclaim on the date
hereof, the same is hereby waived by such Borrower); the security interests and
liens granted by such Borrower in favor of Agent are duly perfected, first
priority security interests and liens (except as otherwise explicitly provided
in the Loan Agreement); and on and as of July 8, 2005, the unpaid principal
amount of the Revolver Loans totaled $23,269,912.98 and the unpaid principal
amount of the Term Loan totaled $2,000,000.00.

 

5. Representations and Warranties. Each Borrower represents and warrants to
Agent and Lenders, to induce Agent and Lenders to enter into this Amendment,
that, except for the Designated Defaults referenced in Section 3 above, no
Default or Event of Default exists on the date hereof; the execution, delivery
and performance of this Amendment have been duly authorized by all requisite
corporate action on the part of such Borrower and this Amendment has been duly
executed and delivered by such Borrower; and all of the representations and
warranties made by such Borrower in the Loan Agreement are true and correct on
and as of the date hereof.

 

6. Reference to Loan Agreement. Upon the effectiveness of this Amendment, each
reference in the Loan Agreement to “this Agreement,” “hereunder,” or words of
like import shall mean and be a reference to the Loan Agreement, as amended by
this Amendment.

 

7. Breach of Amendment. This Amendment shall be part of the Loan Agreement and a
breach of any representation, warranty or covenant herein shall constitute an
Event of Default.

 

8. Amendment Fee; Expenses of Agent and Lenders. In consideration of Agent’s and
Lenders’ willingness to enter into this Amendment, Borrowers jointly and
severally agree to pay to Agent, for the Pro Rata benefit of Lenders, an
amendment fee in an amount equal to $21,875. Additionally, Borrowers jointly and
severally agree to pay, on demand, all costs and expenses incurred by Agent and
Lenders in connection with the preparation, negotiation and execution of this
Amendment and any other Loan Documents executed pursuant hereto and any and all
amendments, modifications, and supplements thereto, including, without
limitation, the costs and fees of Agent’s and Lenders’ legal counsel and any
taxes or expenses associated with or incurred in connection with any instrument
or agreement referred to herein or contemplated hereby.

 

9. Effectiveness; Governing Law. This Amendment shall be effective upon
acceptance by Agent and Lenders (notice of which acceptance each Borrower hereby
waives), whereupon the same shall be governed by and construed in accordance
with the internal laws of the State of Georgia.

 

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

 

11. No Novation, etc. Except as otherwise expressly provided in this Amendment,
nothing herein shall be deemed to amend or modify any provision of the Loan
Agreement or any

 

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of the other Loan Documents, each of which shall remain in full force and
effect. This Amendment is not intended to be, nor shall it be construed to
create, a novation or accord and satisfaction, and the Loan Agreement as herein
modified shall continue in full force and effect.

 

12. Counterparts; Telecopied Signatures. This Amendment may be executed in any
number of counterparts and by different parties to this Amendment on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.

 

13. Further Assurances. Each Borrower agrees to take such further actions as
Agent or Lenders shall reasonably request from time to time in connection
herewith to evidence or give effect to the amendments set forth herein or any of
the transactions contemplated hereby.

 

14. Section Titles. Section titles and references used in this Amendment shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreements among the parties hereto.

 

15. Waiver of Jury Trial. To the fullest extent permitted by Applicable Law, the
parties hereto each hereby waives the right to trial by jury in any action,
suit, counterclaim or proceeding arising out of or related to this Amendment.

 

[Signatures commence on following page]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed under seal and delivered by their respective duly authorized officers
on the date first written above.

 

   

THE ROWE COMPANIES

ATTEST:

 

(“Borrower”)

/s/ Garry W. Angle

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By:

 

/s/ Gerald M. Birnbach

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Garry W. Angle, Assistant Secretary

     

Gerald M. Birnbach,

[CORPORATE SEAL]

     

Chairman of the Board and President

    ROWE DIVERSIFIED, INC.

ATTEST:

 

(“Borrower”)

/s/ Deborah C. Jacks

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By:

 

/s/ Gerald M. Birnbach

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Debbie Jacks, Secretary

     

Gerald M. Birnbach,

[CORPORATE SEAL]

     

Chairman of the Board and President

    ROWE FURNITURE WOOD PRODUCTS, INC.

ATTEST:

 

(“Borrower”)

/s/ Garry W. Angle

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By:

 

/s/ Gerald M. Birnbach

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Garry W. Angle, Assistant Secretary

     

Gerald M. Birnbach,

[CORPORATE SEAL]

     

Chairman of the Board and President

    ROWE PROPERTIES, INC.

ATTEST:

 

(“Borrower”)

/s/ Garry W. Angle

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By:

 

/s/ Gerald M. Birnbach

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Garry W. Angle, Assistant Secretary

     

Gerald M. Birnbach,

[CORPORATE SEAL]

     

Chairman of the Board and President

 

[Signatures continued on following page]

 

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    STOREHOUSE, INC.

ATTEST:

 

(“Borrower”)

/s/ Garry W. Angle

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By:

 

/s/ Gerald M. Birnbach

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Garry W. Angle, Assistant Secretary

      Gerald M. Birnbach,

[CORPORATE SEAL]

     

Chairman of the Board

        ROWE FURNITURE, INC.

ATTEST:

     

(“Borrower”)

/s/ Garry W. Angle

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By:

 

/s/ Gerald M. Birnbach

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Garry W. Angle, Assistant Secretary

      Gerald M. Birnbach,

[CORPORATE SEAL]

     

Chairman of the Board

   

LENDERS:

    FLEET CAPITAL CORPORATION
(“Lender”)    

By:

 

/s/ Douglas Cowan

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Title:

 

Vice President

    THE CIT GROUP/COMMERCIAL SERVICES, INC.    

(“Lender”)

   

By:

 

/s/ Jeffrey Lew

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Title:

 

Vice President

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AGENT:

   

FLEET CAPITAL CORPORATION, as Agent

   

(“Agent”)

   

By:

 

/s/ Douglas Cowan

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Title:

 

Vice President

 

 

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