EXHIBIT 10.3

                                                                [EXECUTION COPY]


                           AMENDMENT NO. 3 AND CONSENT
                                       to
                           LOAN AND SECURITY AGREEMENT
                            dated as of July 12, 1996


                  THIS AMENDMENT NO. 3 AND CONSENT dated as of December 23,
1996 is made by LADD FURNITURE, INC., a North Carolina corporation, AMERICAN
FURNITURE COMPANY, INCORPORATED, a Virginia corporation, BARCLAY FURNITURE CO.,
a Mississippi corporation, CLAYTON-MARCUS COMPANY, INC., a North Carolina
corporation, LADD CONTRACT SALES CORPORATION, a North Carolina corporation, LADD
INTERNATIONAL SALES CORP., a Barbados corporation, LADD TRANSPORTATION, INC., a
North Carolina corporation, LEA INDUSTRIES, INC., a North Carolina corporation,
PENNSYLVANIA HOUSE, INC., a North Carolina corporation, PILLIOD FURNITURE, INC.,
a North Carolina corporation, NATIONSBANK, N.A. (SOUTH), a national banking
association ("NationsBank"), FLEET CAPITAL CORPORATION, a Rhode Island
corporation ("Fleet" and together with NationsBank, the "Co-Agents"), the
financial institutions parties to the Loan Agreement (as hereinafter defined)
from time to time (the "Lenders"), and NATIONSBANK as administrative agent for
the Lenders (the "Administrative Agent").

                             Preliminary Statements

                  The Borrowers, the Lenders, the Co-Agents and the
Administrative Agent are parties to a Loan and Security Agreement dated as of
July 12, 1996, as amended by Amendment No. 1 dated as of August 15, 1996 and
Amendment No. 2 dated as of October 10, 1996 (said Agreement, as so amended, the
"Loan Agreement"; terms defined therein and not otherwise defined herein being
used herein as therein defined).

                  LADD has informed the Lenders and the Administrative Agent of
its intention to take or cause the following actions to be taken:

         1.       American will transfer all of the shares of Lea (NC) to LADD
                  in a spinoff;

         2.       Lea (NC) will be merged with and into LADD, with LADD being
                  the surviving corporation of such merger;

         3.       LADD will contribute the Lea (NC) plant located in Chilhowie,
                  Virginia and the Equipment, Inventory and other tangible
                  assets related to the operations of the Chilhowie plant to
                  American;


         4.       Pennsylvania House will prepay $4.7 million principal amount
                  (together with accrued and unpaid interest in the approximate
                  amount of $168,000 (assuming 



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                  prepayment on or before February 28, 1997)) of unsecured
                  industrial revenue development bonds related to its plant in
                  Monroe, North Carolina;

         5.       Pennsylvania House will sell the Monroe plant to the entity
                  identified, substantially on the terms summarized in Annex A
                  hereto;

         6.       Clayton-Marcus will lease the Monroe plant from the entity
                  identified, substantially on the terms summarized in Annex A
                  hereto;

         7.       Pennsylvania House will transfer to Clayton-Marcus the
                  Equipment, Inventory and other tangible assets related to the
                  operations of the Monroe plant in exchange for common stock of
                  Clayton-Marcus; and

         8.       Pennsylvania House will distribute all Clayton-Marcus stock so
                  received by it to LADD as a dividend distribution to its sole
                  shareholder.

All of the transactions summarized at points 1 through 3 (the "Lea Transaction")
above will occur substantially simultaneously; all of the transactions
summarized at points 4, 7 and 8 (the "PH Debt Transaction") will occur
substantially simultaneously; and all of the transactions summarized at points 5
and 6 (the "Monroe Sale-Leaseback") will occur substantially simultaneously.

                  The Borrowers have requested the consent of the Lenders and
the Administrative Agent to such of the transactions summarized above as would
otherwise constitute a breach or violation of one or more provisions of the Loan
Agreement and to agree to certain amendments to the Loan Agreement and other
Loan Documents to recognize and give effect to the corporate restructuring and
asset transfers effected by such transactions and to permit the permanent
reduction of the Revolving Credit Facility.

                  Accordingly, in consideration of the Loan Agreement, the Loans
made by the Lenders and outstanding thereunder, the mutual promises hereinafter
set forth and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

                  Section 1. Amendments to Loan Agreement. The Loan Agreement is
hereby amended, subject to the provisions of Section 3, by amending Section 1.1
Definitions by deleting from the definition "Borrower" the phrase "Lea (NC)."

                  Section 2. Consent and Waiver. The Lenders hereby consent,
subject to the provisions of Section 3, to (a) the consummation by the relevant
Borrowers of the Lea Transaction, the PH Debt Transaction and the Monroe
Sale-Leaseback and waive compliance and the effects of non-compliance by the
Borrowers with the provisions of Sections 12.4, 12.6, 12.7 and 12.8 of the Loan
Agreement, to the extent that any transaction included in the Lea Transaction,
the PH Debt Transaction or the Monroe Sale-Leaseback would violate or
constitute a breach thereof, PROVIDED, that, as to each of the Lea Transaction,
the PH Debt 


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Transaction and the Monroe Sale-Leaseback, none of the transactions included
therein shall be consummated unless and until all the related transactions are
consummated and the Lea Transaction and the PH Debt Transaction may occur
without any other transactions being consummated, but the Monroe Sale-Leaseback
may not occur unless the PH Debt Transaction is also consummated substantially
simultaneously, and, PROVIDED FURTHER, that, the sale proceeds in respect of the
Monroe plant received by Pennsylvania House arising out of the Monroe
Sale-Leaseback, net of commissions and other costs of sale, shall be applied to
the Term Loan in accordance with the provisions of Section 5.9 as if such net
proceeds were "Net Proceeds" of an Asset Disposition and (b) the permanent
reduction of the Revolving Credit Facility by $15,000,000 (from $125,000,000 to
$110,000,000) as of January 1, 1997.

                  Section 3. Effectiveness of Amendment. (a) Sections 1 and 2(a)
of this Amendment shall become effective on the date (the "Amendment Effective
Date") on which the Administrative Agent shall have received each of the
following documents (and sufficient copies for each Lender) and other
deliveries:

                  (i) this Amendment duly executed and delivered by the Borrower
and the Lenders,

                  (ii) a certificate of the Secretary of each Borrower having
attached thereto the articles or certificate of incorporation and bylaws of such
Borrower as in effect on the Amendment Effective Date attached thereto (or
containing the certification of such Secretary that no amendment or modification
of such articles or certificate or bylaws has become effective since the last
date on which such documents were delivered to the Administrative Agent pursuant
to the Loan Agreement), having attached thereto a copy of the corporate action
of LADD and the other relevant Borrowers authorizing the Lea Transaction, the PH
Debt Transaction and the Monroe Sale-Leaseback, and to the further effect that
the incumbency certificate and corporate action delivered in connection with the
occurrence of the Effective Date remain in effect, unchanged,

                  (iii) a certificate of the President of LADD or the Financial
Officer to the effect that, after giving effect to this Amendment,

                  (A) the representations and warranties of the Borrowers
         contained in the Loan Documents are true and correct in all material
         respects on and as of the Amendment Effective Date as if made on and as
         of such date, having attached thereto any revised Schedules necessary
         to permit such certification, including but not limited to Schedules
         7.1(a), (b), (c), (f), (h), (i), (j), (t), (u), (v) and (w) to the Loan
         Agreement, and

                  (B) no Default or Event of Default has occurred and is
continuing, and such statements shall be true;


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                  (iv) such additional Financing Statements as are necessary or
desirable to maintain the Security Interest in compliance with the provisions of
Article 8 of the Loan Agreement, or as the Administrative Agent may request,
duly executed and delivered by the relevant Borrower(s), and evidence
satisfactory to the Administrative Agent that the said Financing Statements have
been filed in each jurisdiction where such filing may be necessary or
appropriate;

                  (v) evidence satisfactory to the Administrative Agent that the
Lea Transaction has been consummated in accordance with the summary thereof
appearing in the Preliminary Statements above;

                  (vi) evidence satisfactory to the Administrative Agent, which
shall include paid endorsements (or commitments to issue the same, satisfactory
to the Administrative Agent in its sole discretion) to the existing policies of
mortgagee title insurance in respect of the Chilhowie plant and the plant owned
by Lea (NC) located in Marion, Virginia, that fee title to such Real Estate is
held by a Borrower, that such Real Estate continues to be subject to the Lien of
the Mortgage affecting such Real Estate and to no other Lien or exception to
title that the Administrative Agent has not approved in writing, with priority
from the date of recording of the relevant Mortgage;

                  (vii) such other documents, certificates and instruments in
connection with the effectiveness of this Amendment as the Administrative Agent
or any Lender may reasonably request.

                  (b) Section 2(b) of this Amendment shall become effective on
or after the Amendment Effective Date upon receipt by the Administrative Agent
of an amount equal to $18,750, for the account of the Lenders, in consideration
of the early reduction of the Revolving Credit Facility.

                  Section 4. Additional Covenant of Borrowers. Contemporaneously
with the execution and delivery of the lease between Clayton-Marcus and the
owner of the Monroe plant as part of the Monroe Sale-Leaseback, the Borrowers
will deliver to the Administrative Agent a landlord's waiver and consent
agreement, in form and substance satisfactory to the Administrative Agent and
duly executed on behalf of the owner of the Monroe plant.

                  Section 5. Effect of Amendment. From and after the
effectiveness of this Amendment:

                  (a) Lea Industries, Inc., a North Carolina corporation, shall
no longer be a "Borrower." Each of the Borrowers expressly acknowledges,
consistent with the provisions of Sections 5.19, 5.20 and 5.21 of the Loan
Agreement, that the merger of Lea (NC) with and into LADD does not impair or
otherwise affect such Borrower's liability in respect of the Secured
Obligations, and


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                  (b) all references in the Loan Agreement and in any other Loan
Document to "this Agreement," "the Loan Agreement," "hereunder," "hereof" and
words of like import referring to the Loan Agreement, shall mean and be
references to the Loan Agreement as amended by this Amendment.

Except as expressly amended hereby, the Loan Agreement and all terms, conditions
and provisions thereof remain in full force and effect and are hereby ratified
and confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Administrative Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.

                  Section 6. Counterpart Execution; Governing Law.

                  (a) Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.

                  (b) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Georgia.



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                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                    BORROWERS:

                                    LADD FURNITURE, INC.


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Executive Vice President

                                    AMERICAN FURNITURE COMPANY,
                                    INCORPORATED


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Vice President

                                    BARCLAY FURNITURE CO.


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Vice President

                                    CLAYTON-MARCUS COMPANY, INC.


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Vice President

                                    LADD CONTRACT SALES CORP.


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Vice President



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                                    LEA INDUSTRIES, INC.
                                    (a North Carolina corporation)


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Vice President

                                    PENNSYLVANIA HOUSE, INC.


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Vice President


                                    PILLIOD FURNITURE, INC.


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Vice President

                                    LADD TRANSPORTATION, INC.


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Vice President

                                    LADD INTERNATIONAL SALES CORP.


                                    By: /s/ William S. Creekmuir
                                       ___________________________
                                       William S. Creekmuir
                                       Vice President



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                                    AGENTS/LENDERS:

                                    NATIONSBANK, N.A. (SOUTH), as
                                    Administrative Agent, a Co-Agent and as a
                                    Lender


                                    By: /S/ David J. Sapp
                                       ___________________________
                                       David J. Sapp
                                       Vice President

                                    FLEET CAPITAL CORPORATION, as a Co-
                                    Agent and as a Lender


                                    By: /s/ John W. Getz
                                        _________________________
                                        Name: John W. Getz
                                        Title: SVP

                                    BANKAMERICA BUSINESS CREDIT, INC.,
                                    as a Lender


                                    By:___________________________
                                       Name:
                                       Title:

                                    THE CIT GROUP/BUSINESS CREDIT,
                                    INC., as a Lender


                                    By:/s/ Robert Bernill
                                       ___________________________
                                       Name: Robert Bernill
                                       Title: VP

                                    SANWA BUSINESS CREDIT CORPORATION,
                                    as a Lender


                                    By:___________________________
                                       Name:
                                       Title:


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                                    THE FIRST NATIONAL BANK OF BOSTON,
                                    as a Lender


                                    By: /s/ John C. Todd
                                       ___________________________
                                       Name: John C. Todd
                                       Title: Director

                                    CREDITANSTALT CORPORATE FINANCE,
                                    INC., as a Lender


                                    By: Robert M. Biringer
                                       ___________________________
                                       Name: Robert M. Biringer
                                       Title: Executive Vice President

                                    BRANCH BANKING AND TRUST COMPANY,
                                             as a Lender


                                    By: /s/ Michael Cox
                                       ___________________________
                                       Name: Michael Cox
                                       Title: Vice President


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