Exhibit 10.23

 

FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND

OTHER LOAN DOCUMENTS

 

THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND OTHER LOAN DOCUMENTS
(this “Amendment”) is made and entered into this 3rd day of April, 2003, 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 a certain Loan and Security
Agreement dated May 15, 2002, as amended by a certain letter amendment dated as
of June 17, 2002, a certain Second Amendment to Loan and Security Agreement
dated October 10, 2002 and a certain Fourth Amendment to Loan and Security
Agreement dated February 28, 2003 (as otherwise amended at any time, 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 (“Home Elements”), merged into Storehouse, Inc. on May
31, 2002.

 

All the equity interests of The Mitchell Gold Co., a North Carolina corporation
and one of the original “Borrowers” under the Loan Agreement (“Mitchell Gold
Co.”), have been sold to Furniture Acquisition Corp., a Delaware corporation.

 

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. Global Amendments to Loan Documents. Mitchell Gold Co. and Home Elements are
no longer “Borrowers” under the Loan Agreement. All references to “The Mitchell
Gold Co.,” “Mitchell Gold Co.,” “Home Elements, Inc.,” “Home Elements” or names
of similar import in the Loan Agreement and the other Loan Documents are

 

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hereby deleted. All references to a “Borrower,” “Borrowers” or terms of similar
import in the Loan Agreement and the other Loan Documents shall no longer be
deemed to include or refer to Mitchell Gold Co. or Home Elements.

 

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

 

(a) By deleting the reference to “$45,000,000.00” on the cover page thereof and
by substituting in lieu thereof a reference to “$35,000,000.00”

 

(b) By deleting the introductory paragraph in Section 1 of the Loan Agreement
and by substituting in lieu thereof the following:

 

Subject to the terms and conditions of, and in reliance upon the representations
and warranties made in, this Agreement and the other Loan Documents, Lenders
severally agree to the extent and in the manner hereinafter set forth to make
their respective Pro Rata shares of the Commitments available to Borrowers, in
an aggregate amount up to $35,000,000, as follows:

 

(c ) By deleting Section 9.2.9 thereof in its entirety 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 $4,000,000 during Borrowers’ 2002 Fiscal Year, $4,000,000
during Borrowers’ 2003 Fiscal Year, $6,000,000 during Borrowers’ 2004 Fiscal
Year or $7,000,000 during any Fiscal Year of Borrowers thereafter.

 

(d) By deleting the definitions of “Inventory Formula Amount” and “Revolver
Commitment” in Appendix A to the Loan Agreement and by inserting 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) $22,000,000 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)

 

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the sum of (a) 14% (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) 74% (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.

 

Revolver Commitment - at any date for any Lender, the obligation of such Lender
to make Revolver Loans and to purchase participations in LC Outstandings
pursuant to the terms and conditions of the Agreement, which shall not exceed
the principal amount set forth opposite such Lender’s name under the heading
“Revolver Commitment” on the signature pages of the Agreement or the signature
page on the Assignment and Acceptance by which it became a Lender, as modified
from time to time pursuant to the terms of the Agreement or to give effect to
any applicable Assignment and Acceptance; and “Revolver Commitments” means the
aggregate principal amount of the Revolver Commitments of all Lenders, the
maximum amount of which shall be $30,000,000.

 

(e ) By adding the following new definitions to Appendix A to the Loan Agreement
in the proper alphabetical sequence:

 

Applicable Financial Lease - Master Lease Agreement No. AF10323 dated March 31,
2003, among Borrowers and Applied Financial LLC, and Lease Schedule No. 001
thereto.

 

Applied Financial Leased Equipment - the Unisys CS 7211-S3 Main Frame System
Hardware, Software and Services, as more particularly described in the Applied
Financial Lease.

 

Operating Lease Transaction - the transaction in which Borrowers have leased the
Applied Financial Leased Equipment pursuant to the Applied Financial Lease
Agreement.

 

(f) By deleting the principal amounts set forth as the “Revolver Commitment” for
each Lender opposite each such Lender’s name on the signature pages of the Loan
Agreement and by inserting in lieu thereof the principal amounts set forth as
the

 

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“Revolver Commitment” for each Lender opposite each such Lender’s name on the
signature pages of this Amendment.

 

(g) Agent and Lenders hereby consent to Borrowers’ consummation of the Operating
Lease Transaction and agree that Borrowers’ may assign all of their right, title
and interest in and to the Applied Financial Leased Equipment free and clear of
Agent’s Liens.

 

4. Accommodation Fee. To induce Agent and Lenders to enter into this Amendment,
simultaneously with the execution and delivery of this Amendment, Borrowers
shall pay to Agent, for the Pro Rata benefit of Lenders party to the Loan
Agreement as of the date hereof, an accommodation fee in the amount of
$10,000.00.

 

5. 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.

 

6. 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 April 1, 2003, totaled $30,430,680.30.

 

7. 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.

 

8. 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.

 

9. 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.

 

10. 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

 

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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.

 

11. 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.

 

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

 

13. 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 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.

 

14. 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.

 

15. 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.

 

16. 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.

 

17. 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

      By:  

/s/ Gerald M. Birnbach

Garry W. Angle, Assistant Secretary

[CORPORATE SEAL]

         

Gerald M. Birnbach,

Chairman of the Board and President

        ROWE DIVERSIFIED, INC.

ATTEST:

     

(“Borrower”)

/s/ Debbie Jacks

      By:  

/s/ Gerald M. Birnbach

Debbie Jacks, Secretary

[CORPORATE SEAL]

         

Gerald M. Birnbach,

Chairman of the Board and President

        ROWE FURNITURE WOOD PRODUCTS, INC.

ATTEST:

     

(“Borrower”)

/s/ Garry W. Angle

      By:  

/s/ Gerald M. Birnbach

Garry W. Angle, Assistant Secretary

[CORPORATE SEAL]

         

Gerald M. Birnbach,

Chairman of the Board and President

        ROWE PROPERTIES, INC.

ATTEST:

     

(“Borrower”)

/s/ Garry W. Angle

      By:  

/s/ Gerald M. Birnbach

Garry W. Angle, Assistant Secretary

[CORPORATE SEAL]

         

Gerald M. Birnbach,

Chairman of the Board and President

 

[Signatures continued on following page]

 

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        STOREHOUSE, INC.

ATTEST:

     

(“Borrower”)

/s/ Garry W. Angle

     

By:

 

/s/ Gerald M. Birnbach

Garry W. Angle, Assistant Secretary

          Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board

        ROWE FURNITURE, INC.

ATTEST:

     

(“Borrower”)

/s/ Garry W. Angle

     

By:

 

/s/ Gerald M. Birnbach

Garry W. Angle, Assistant Secretary

         

Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board

        FLEET CAPITAL CORPORATION        

(“Lender”)

Revolver Commitment: $16,666,667.00

     

By:

               

Title:

            THE CIT GROUP/COMMERCIAL         SERVICES, INC.        

(“Lender”)

Revolver Commitment: $13,333,333.00

     

By:

               

Title:

   

 

[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

        FLEET CAPITAL CORPORATION        

(“Lender”)

Revolver Commitment: $16,666,667.00

     

By:

 

/s/ Illegible

           

Title:

 

Vice President

        THE CIT GROUP/COMMERCIAL         SERVICES, INC.        

(“Lender”)

Revolver Commitment: $13,333,333.00

     

By:

               

Title:

   

 

[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

       

By:

   

Garry W. Angle, Assistant Secretary

         

Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board

        FLEET CAPITAL CORPORATION        

(“Lender”)

Revolver Commitment: $16,666,667.00

     

By:

               

Title:

            THE CIT GROUP/COMMERCIAL         SERVICES, INC.        

(“Lender”)

Revolver Commitment: $13,333,333.00

     

By:

 

/s/ Illegible

           

Title: Vice President

 

[Signatures continued on following page]

 

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FLEET CAPITAL CORPORATION

as agent (“Agent”)

By:

 

/s/ Illegible

   

Title: Vice President