Exhibit 10.21

 

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made
and entered into this 10th day of October, 2002, 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, ROWE
FURNITURE, INC., a Virginia corporation, and THE MITCHELL GOLD CO., a North
Carolina 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 that certain letter amendment dated
as of June 17, 2002 (as 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, merged into Storehouse, Inc. on May 31, 2002.

 

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) By deleting Section 9.1.5 of the Loan Agreement and by substituting in lieu
thereof the following:

 

9.1.5 Projections. No later than 30 days after the end of each Fiscal Year of
Borrowers, deliver to Agent and Lenders the Projections of Borrowers for the
forthcoming 3 Fiscal Years, year by year, and for the forthcoming Fiscal Year,
month by month.

 

(b) By deleting the reference to “August 31, 2002” in Section 9.1.14 of the Loan
Agreement and by substituting in lieu thereof “November 30, 2002.”

 

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

 

9.3.3. Consolidated Leveraged 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

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 March 1, 2004 and the 4-Fiscal
Quarter period ending on the last day of each Fiscal Quarter thereafter    3.5
to 1.0

 

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(d) By deleting the definition of “Consolidated Adjusted Tangible Assets” from
Appendix A to the Loan Agreement and by substituting in lieu thereof the
following:

 

Consolidated Adjusted Tangible Assets - all assets of Borrowers except: (i) any
surplus resulting from any write-up of assets subsequent to Borrowers’
formation; (ii) patents, copyrights, trademarks, trade names, non-compete
agreements, franchises and other similar intangibles; (iii) good will, including
any amounts, however designated on a Consolidated balance sheet of Borrowers and
their respective Subsidiaries, representing the excess of the purchase price
paid for assets or stock over the value assigned thereto on the books of
Borrowers; (iv) unamortized debt discount and expense; (v) assets located and
notes and receivables due from obligors outside of the United States of America
except for Accounts that are Eligible Accounts; and (vi) Accounts, notes and
other receivables due from Affiliates or employees.

 

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
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 October 8, 2002, totaled $30,369,977.12.

 

5. Representation 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.

 

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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 parries 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 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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ATTEST:

     

STOREHOUSE, INC.

(“Borrower”)

/s/ Garry W. Angle

      By:  

/s/ Gerald M. Birnbach

Garry W. Angle, Assistant Secretary

          Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board

 

ATTEST:

     

ROWE FURNITURE, INC.

(“Borrower”)

/s/ Garry W. Angle

      By:  

/s/ Gerald M. Birnbach

Garry W. Angle, Assistant Secretary

          Gerald M. Birnbach,

[CORPORATE SEAL]

         

Chairman of the Board

 

ATTEST:

     

THE MITCHELL GOLD CO.

(“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”)

        By:                    

Title:

   

 

       

THE CIT GROUP/COMMERCIAL

SERVICES, INC.

(“Lender”)

        By:                    

Title:

   

 

[Signatures continued on following page]

 

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        FLEET CAPITAL CORPORATION, as         Agent                     Title:  
 

 

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