Exhibit 10.24

 

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made
and entered into this          day of November, 2003, by and among THE ROWE
COMPANIES, a Nevada corporation (“Rowe Companies”), ROWE DIVERSIFIED, INC., a
Delaware corporation (“Diversified”), ROWE FURNITURE WOOD PRODUCTS, INC., a
California corporation (“Rowe Wood”), ROWE PROPERTIES, INC., a California
corporation (“Rowe Properties”), STOREHOUSE, INC., a Georgia corporation
(“Storehouse”), and ROWE FURNITURE, INC., a Virginia corporation (“Rowe
Furniture”: Rowe Companies, Diversified, Rowe Properties, Storehouse, Rowe Wood
and Rowe Furniture are sometimes 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 a certain Loan and Security
Agreement dated May 15, 2002, as amended by that certain letter amendment dated
as of June 17, 2002, a certain Second Amendment to Loan and Security Agreement
dated October 10, 2002, a Third Amendment to Loan and Security Agreement dated
February 28, 2003 and a Fourth Amendment to Loan and Security Agreement dated
April 2, 2003 (as so amended, the “Loan Agreement”), pursuant to which Agent and
Lenders have made certain revolving credit and term loans and other financial
accommodations to Borrowers.

 

Home Elements, Inc., a Virginia corporation and one of the original “Borrowers”
under the Loan Agreement, merged into Storehouse, Inc. on May 31, 2002.

 

Effective April 2, 2003, Rowe Companies sold all of the stock of Mitchell Gold
Co., a North Carolina corporation and one of the original “Borrowers” under the
Loan Agreement.

 

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.

 

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

 

(a) By deleting Section 9.2.9 of the Loan Agreement in its entirety and by
substituting the following new Section 9.2.9. in lieu thereof:

 

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Capital Expenditures: Make Capital Expenditures (including expenditures by way
of capitalized leases but excluding (i) the effect of any Sun Trust 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 $4,000,000 during Borrowers’ 2002 Fiscal Year, $4,500,000
during Borrowers’ 2003 Fiscal Year, $6,000,000 during Borrowers’ 2004 Fiscal
Year or $7,000,000 during any Fiscal Year of Borrowers thereafter.

 

(b) By deleting Section 9.3.1 of the Loan Agreement in its entirety and by
substituting the following new Section 9.3.1 in lieu thereof:

 

9.3.1 Consolidated Fixed Charge Coverage Ratio. Maintain a Consolidated Fixed
Charge Coverage Ratio of not less than the ratio shown below for the period
corresponding thereto:

 

Period

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Ratio

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The 3 Reporting Periods ending

June 2, 2002

   .40 to 1.0

The 4 Reporting Periods ending

June 30, 2002

   .50 to 1.0

The 5 Reporting Periods ending

August 4, 2002

   .60 to 1.0

The 6 Reporting Periods ending

September 1, 2002

   .70 to 1.0

The 7 Reporting Periods ending

October 6, 2002

   .90 to 1.0

The 8 Reporting Periods ending

November 3, 2002

   1.0 to 1.0

 

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The 9 Reporting Periods ending

December 1, 2002

   1.1 to 1.0

The 10 Reporting Periods ending

January 5, 2003

   1.1 to 1.0

The 11 Reporting Periods ending

February 2, 2003

   1.1 to 1.0

The 12 Reporting Periods ending

March 2, 2003

   1.1 to 1.0

The 12 Reporting Periods ending

on the last day of each Reporting

Period after March 2, 2003 through

and including the Reporting Period

ending on or about October 31, 2003

   1.1 to 1.0

The 12 Reporting Periods ending

on or about November 30, 2003

   .75 to 1.0

The 12 Reporting Periods ending

on or about February 29, 2004

   1.0 to 1.0

The 12 Reporting Periods ending

on or about May 31, 2004

   1.0 to 1.0

The 12 Reporting Periods ending

on or about August 31, 2004

   1.05 to 1.0

The 12 Reporting Periods ending on

or about November 30, 2004 and ending

on the last day of each Fiscal Quarter

thereafter

   1.1 to 1.0

 

(c ) By deleting Section 9.3.2 of the Loan Agreement in its entirety and by
substituting the following new Section 9.3.2 in lieu thereof:

 

9.3.2 Minimum Consolidated Adjusted Tangible Net Worth. At all times and from
the Fiscal Year ending on or about November 30, 2003, maintain as of the last
day of each Fiscal Quarter thereafter a Consolidated Adjusted Tangible Net Worth
of not less than an amount equal to $30,000,000 plus an amount equal to 50% of
Net Income during each such Fiscal Quarter, but no reduction in the foregoing
amount shall be made if Net Income in any Fiscal Quarter is a negative number.

 

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(d) By deleting Section 9.3.3 of the Loan Agreement in its entirety and by
substituting the following new Section 9.3.3 in lieu thereof:

 

9.33 Consolidated Leveraged Ratio. Maintain a Consolidated Leverage Ratio of not
less 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

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 and

ending on the last day of each

Fiscal Quarter thereafter

   3.5 to 1.0

 

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.

 

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4. Acknowledgements and Stipulations. Each Borrower acknowledges and stipulates
that the Loan Agreement and the other Loan Documents executed by such Borrower
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 the unpaid principal amount of the Loans on and as
of November 24, 2003 totaled $15,269,909,86.

 

5. Representations and Warranties. Each Borrower represents and warrants to
Agent and Lenders, to induce Agent and Lenders to enter into this Amendment,
that 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. Expenses of Agent and Lenders. 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 of the other Loan Documents, each of which shall remain in full
force and effect. This

 

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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.

 

       

BORROWERS:

        THE ROWE COMPANIES

ATTEST:

     

(“Borrower”)

        By:    

Garry W. Angle, Assistant Secretary

          Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board and President

        ROWE DIVERSIFIED, INC.

ATTEST:

     

(“Borrower”)

        By:    

Debbie Jacks, Secretary

          Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board and President

        ROWE FURNITURE WOOD PRODUCTS, INC.

ATTEST:

     

(“Borrower”)

        By:    

Garry W. Angle, Assistant Secretary

          Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board and President

        ROWE PROPERTIES, INC.

ATTEST:

     

(“Borrower”)

        By:    

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”)

        By:    

Garry W. Angle, Assistant Secretary

          Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board

        ROWE FURNITURE, INC.

ATTEST:

     

(“Borrower”)

        By:    

Garry W. Angle, Assistant Secretary

          Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board

       

LENDERS:

        FLEET CAPITAL CORPORATION        

(“Lender”)

        By:                

Title:

            THE CIT GROUP/COMMERCIAL SERVICES, INC.        

(“Lender”)

        By:                     Title:            

AGENT

       

FLEET CAPITAL CORPORATION, as Agent

       

(“Agent”)

        By:                

Title:

   

 

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