Exhibit 10.2


 


AMENDMENT NO. 3 TO THE SEVENTH
AMENDED AND RESTATED LOAN AND

SECURITY AGREEMENT


 


This AMENDMENT NO. 3 TO
THE SEVENTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (together with all
exhibits and schedules attached hereto, this “Amendment”)
is entered into this 18th day of November, 2003 by and among FLEET CAPITAL
CORPORATION (“Fleet”), a Rhode Island corporation, individually as a Lender and
as Agent (“Agent”) for itself and any other financial institution which is or
becomes a party thereto (each such financial institution, including Fleet, is
referred to hereinafter individually as a “Lender” and collectively as the
“Lenders”), THE CIT GROUP/BUSINESS CREDIT, INC., individually as a Lender and
as Co-Administrative Agent, the other financial institutions party thereto as
Lenders, RESTORATION HARDWARE, INC., a Delaware corporation (“Lead Borrower”)
and THE MICHAELS FURNITURE COMPANY, INC., a California corporation (“Michaels,”
together with the Lead Borrower, the “Borrowers”) (each, an “Amendment Party” and, collectively, the “Amendment Parties”), and is made with
reference to the following facts:


 


RECITALS


 


A.                                   WHEREAS,
Borrowers, the Agent, the Co-Administrative Agent and the Lenders (each a “Party” and, collectively, the “Parties”) have previously entered into that
certain Seventh Amended and Restated Loan and Security Agreement dated as of
November 26, 2002, as amended by a First Amendment dated as of
April 28, 2003, and as further amended by a Second Amendment dated as of
September 12, 2003 (as amended, modified or supplemented from time to
time, the “Loan Agreement”) and
various agreements and instruments collateral thereto (collectively with the
Loan Agreement, the “Loan Documents”).  All capitalized terms used herein, unless
otherwise defined herein, shall have the meanings set forth in the Loan
Documents.


 


B.                                     WHEREAS,
the Amendment Parties desire to amend the Loan Agreement on the terms and
subject to the conditions of this Amendment.


 


NOW THEREFORE, in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Amendment Parties agree as follows:


 


ARTICLE I

AMENDMENTS TO LOAN AGREEMENT


 


1.1                               Section 1.1 of the
Loan Agreement is hereby amended by adding the following after the end of the
last sentence thereof:


 


1

















 


“In no event shall the
aggregate of the Revolving Credit Loans and the LC Amount exceed the Revolving
Credit Maximum Amount.”


 


1.2                               Appendix A of the Loan
Agreement is hereby amended by deleting the definition of the term “Borrowing
Base” and inserting the following in lieu thereof:


 


““Borrowing Base”
– as at any date of determination thereof, the result of the following:


 


(A)                              The
Cost of Eligible Inventory (excluding Eligible Letter of Credit Inventory) of
the Lead Borrower (net of Inventory Reserves) multiplied by the applicable
Inventory Advance Rate, not to exceed the applicable Inventory Appraisal Cap


 


plus


 


(B)                                The
Cost of Eligible Letter of Credit Inventory of the Lead Borrower (net of
Inventory Reserves) multiplied by the applicable Inventory Advance Rate


 


plus


 


(C)                                The
Cost of Eligible Inventory (excluding Eligible Letter of Credit Inventory) of
the Canadian Affiliate (net of Inventory Reserves) multiplied by the applicable
Inventory Advance Rate, not to exceed the applicable Inventory Appraisal Cap,
which, together with the result of subsection (D) below, shall not exceed
$1,500,000.00


 


plus


 


(D)                               The
Cost of Eligible Letter of Credit Inventory of the Canadian Affiliate (net of
Inventory Reserves) multiplied by the applicable Inventory Advance Rate, which,
together with the result of subsection (C) above, shall not exceed
$1,500,000.00


 


plus


 


(E)                                 The
product of the Cost of Eligible Inventory of Michaels (net of Inventory
Reserves) multiplied by 25%, which, together with the result of
subsection (F) below shall not exceed $2,000,000.00


 


plus


 


(F)                                 The
product of the face amount of Eligible Accounts of Michaels (net of Receivables
Reserves) multiplied by the applicable Receivables Advance Rate, which,
together with the result of subsection (E) above, shall not exceed
$2,000,000.00


 


2

















 


plus


 


(G)                                The
product of the face amount of Eligible Credit Card Receivables of the Lead
Borrower (net of Receivables Reserves) multiplied by the applicable Receivables
Advance Rate, which, together with the result of subsection (H) below,
shall not exceed $5,000,000.00


 


plus


 


(H)                               The
product of the face amount of Eligible Credit Card Receivables of the Canadian
Affiliate (net of Receivables Reserves) multiplied by the applicable
Receivables Advance Rate, which, together with the results of
subsection (G) above, shall not exceed $5,000,000.00.


 


Provided,
however, as of the Effective Date, Agent does not have a perfected security
interest in the Canadian Assets and the Canadian Inventory, therefore, until
such time as the Agent’s security interest becomes perfected, the amounts in
subsections (C), (D) and (H) shall not be included in the Borrowing Base
calculation.”


 


1.3                               Appendix A of the Loan
Agreement is hereby amended by deleting the definition of the term “Revolving
Loan Commitment” and inserting the following in lieu thereof:


 


““Revolving Loan
Commitment” – with respect to any Lender, the amount of such Lender’s
Revolving Loan Commitment pursuant to subsection 1.1 of the Agreement, as
set forth below such Lender’s name on the signature page for Amendment No. 3 to
the Agreement.”


 


ARTICLE II


[RESERVED]


 


ARTICLE III

CONDITIONS PRECEDENT


 


This Amendment shall
become effective upon satisfaction of the following conditions (the date of
satisfaction of such conditions being referred to herein as the “Third Amendment Effective Date”):


 


3.1                               Execution and delivery
to the Agent of counterparts hereof by the Borrowers, the Lenders, the Agent
and the Co-Administrative Agent.


 


ARTICLE IV

MISCELLANEOUS


 


4.1                               Each of the Borrowers
reaffirms and restates the representations and warranties set forth in
Section 7 of the Loan Agreement, as amended by this Amendment (the “Amended Agreement”), and, after giving
effect to the transactions contemplated herein, all such representations and
warranties shall be true and correct in all material respects on and as of the
date hereof (except insofar as such representations and warranties expressly
relate to an earlier date).


 


3

















 


4.2                               Each of the Borrowers
warrants and represents (which warranty and representation shall survive the
execution and delivery hereof) that:


 


(a)                                  It
has the corporate power and authority to execute and deliver this Amendment,
and to carry out the terms and provisions of this Amendment and the Amended
Agreement and the transactions contemplated hereby and thereby, and has taken
or caused to be taken all necessary corporate action to authorize the execution
and delivery of this Amendment and the performance of this Amendment and the
Amended Agreement and the transactions contemplated hereby and thereby;


 


(b)                                 No
consent of any other person (including, without limitation, its shareholders or
creditors), and no action of, or filing with any governmental or public body or
authority is required to authorize, or is otherwise required in connection with
the execution and delivery of this Amendment and the performance of this
Amendment and the Amended Agreement;


 


(c)                                  The
execution and delivery of this Amendment and the performance of this Amendment
and the Amended Agreement will not violate any law, statute or regulation, or
any order or decree of any court or governmental instrumentality, or conflict
with, or result in the breach of, or constitute a default under any contractual
obligation; and


 


(d)                                 This
Amendment has been duly executed and delivered by a duly authorized officer,
and this Amendment and the Amended Agreement constitute a legal, valid and
binding obligation of it, enforceable in accordance with their terms, subject
to laws affecting the enforcement of creditors’ rights generally and the
exercise of judicial discretion in accordance with general principles of
equity.


 


4.3                               The Loan Documents,
subject to the foregoing terms and conditions provided by this Amendment,
constitute the complete agreement of the Parties with respect to the subject
matters referred to herein and supersede all prior or contemporaneous
negotiations, promises, agreements, or representations, all of which have
become merged and finally integrated into the Loan Documents and this
Amendment.  No agreements or
undertakings varying, modifying, amending, extending, discharging or
terminating the same shall be binding upon any Party unless in writing signed
by a duly authorized official or agent thereof.  No waiver by any Party of any breach hereunder shall be deemed a
waiver of any other or subsequent breach.


 


4.4                               Each Borrower agrees to
pay, on demand, all attorneys’ fees and costs incurred in connection with the
negotiation, documentation, and execution of this Amendment.  If any legal action or proceeding shall be
commenced at any time by any Party in connection with its interpretation or
enforcement, the prevailing Party or Parties in such action or proceeding shall
be entitled to reimbursement of its reasonable attorneys’ fees and costs in
connection therewith, in addition to all other relief to which the prevailing Party
or Parties may be entitled.  Each of the
Amendment Parties waives its right to a trial by jury in any action to enforce,
defend, or interpret, or otherwise concerning this Amendment.


 


4

















 


4.5                               Except as herein
expressly amended, the Loan Agreement is ratified and confirmed in all respects
and shall remain in full force and effect in accordance with its terms.


 


4.6                               This Amendment and all
rights and obligations hereunder, including matters of construction, validity,
and performance, shall be governed by and construed under the laws of the State
of California and shall inure to the benefit of and shall be binding upon the
successors, heirs and assigns of the Parties.


 


4.7                               All references to the
Loan Agreement contained in the Loan Agreement and the other Loan Documents and
the other documents and instruments delivered pursuant to or in connection
therewith shall mean the Loan Agreement, as amended hereby and as may in the
future be amended, restated, supplemented or modified from time to time.


 


4.8                               This Amendment may be
executed in counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.


 


4.9                               Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.


 


5

















 


IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date
first above written.


 




	
   

  	
  RESTORATION HARDWARE, INC.,

  the Lead Borrower

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia McKay

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Patricia McKay

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  
	
   

  	
  THE MICHAELS FURNITURE COMPANY,

  as a Borrower

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin Shahan

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Kevin Shahan

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  V.P. Finance

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEET CAPITAL CORPORATION, a Rhode

  Island corporation, as Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew R. Van Steenhuyse

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Matthew
  R. Van Steenhuyse

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Amount:

  	
  $40,000,000

  	
   

  
	
   

  	
   

  
	
   

  	
  THE CIT GROUP/BUSINESS CREDIT, INC.,

  as the Co-Administrative Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adrian Avalos

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Adrian Avalos

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Amount:

  	
  $32,000,000

  	
   

  
										






 


Signature
Pages to Amendment No. 3  to the Seventh
Amended and Restated

Loan and Security Agreement


 


S-1