Commitment Letter for $60 Million Senior Secured Financing between GE Capital, Marathon, and The Rowe Companies

GE Commercial Finance

Restructuring Finance

201 Merritt 7, P.O. Box 5201

Norwalk, CT ###-###-####

U.S.A.

Attention:

AGENT:

GE Capital or an affiliate thereof.

LEAD ARRANGER AND BOOKRUNNER:

GE Capital Markets, Inc. (“GECM”).

LENDERS:

GE Capital (or an affiliate thereof), Marathon, and other lenders acceptable to Agent.

BORROWER:

The Rowe Companies (the “Parent”), Rowe Furniture, Inc. and Storehouse, Inc.

REVOLVER LENDERS:

GE Capital and other lenders acceptable to Agent.

MAXIMUM AMOUNT:

Up to $50,000,000 (including a Letter of Credit Sub-facility of up to $5,000,000). Letters of Credit would be issued either by a bank and/or by GE Capital and/or one of its affiliates, and on terms, acceptable to Agent and would be guaranteed or otherwise backed by all Revolver Lenders.

REVOLVER AVAILABILITY:

Revolver Availability would be limited to the lesser of (a) the Maximum Amount or (b) the sum of up to (i) 85% on Borrowers’ eligible accounts receivable (ii) 85% of the net orderly liquidation value (“NOLV”) of Borrowers’ eligible raw material and work in process inventory, (iii) 92.5% (the “Finished Goods Advance Rate”) of the NOLV of Borrowers’ eligible finished goods inventory (iv) 50% of the FMV of Borrower’s eligible owned real estate (limited to 25% of the Financing) and (v) 90% on the net cash surrender value of eligible life insurance policies (the “Eligible Life Insurance Policies”) after associated indebtedness, in each case, less reserves (the “Borrowing Base”). Agent would retain the right from time to time to establish or modify advance rates, standards of eligibility and reserves against availability, using its reasonable credit judgment; provided, however, no such adjustment shall be made to decrease advance rates or change standards of eligibility absent a material adverse change in the financial condition of the Borrowers, the failure of the Borrowers to comply with the covenants contained in the Loan Agreement, or a material adverse change or diminution in value of the collateral which is subject to

the security interest granted to the Agent. The face amount of all letters of credit outstanding under the Letter of Credit Subfacility would be reserved in full against availability.

Reserves shall include without limitation: (a) a reserve against Storehouse’s open customer deposits (“Customer Deposits”) which shall be determined as follows: There shall be a reserve on Customer Deposits aged 30 days or less (which Lenders and Borrowers anticipate to be approximately 50% of all Customer Deposits) equal to (i) 75% of such Customer Deposits if Excess Availability is $10MM or greater and (ii) 100% of such Customer Deposits if Excess Availability is less than $10MM (aging shall be based on open Customer orders); and (b) a Tranche B Availability Reserve equal to the greater of (i) $0 and (ii) the outstanding amount of the Tranche B Loan minus the sum of (A) 5.0% of eligible accounts receivable, (B) 7.5% of the NOLV of Borrowers’ eligible inventory and (C) 25% of FMV of owned real estate.

Agent will retain the right from time to time to establish or modify reserves against availability based upon changes in the collectability or realization values of accounts or changes in the salability or realization values of inventory, real property or other assets, in each case arising or discovered by the Agent after the closing date.

Appraisals of the assets referred to above shall be performed by appraisers retained by and acceptable to Agent, and shall reflect asset values acceptable to Agent and Marathon in their reasonable judgment.

“Excess Availability” shall mean the Borrowing Base minus amounts outstanding under the Revolver, including any issued and outstanding letters of credit.

TERM:

36 months.

TRANCHE B LENDERS:

Marathon and lenders acceptable to Marathon and Agent.

TRANCHE B AMOUNT:

Up to $10,000,000 available in one advance on the Closing Date.

TERM:

36 months, if the Revolver is terminated, the Tranche B Loan would immediately be due and payable in full.

PRIORITY:

The repayment rights of Lenders under the Tranche B Loan would rank second in priority to the repayment rights of Lenders under the Revolver. Subject to the payment of the Prepayment Premium (as set forth below), the Borrowers shall have the right to prepay the Tranche B Loan so long as (a) no default or event of default exist and (b) the Borrowers have complied with to be determined minimum excess availability requirements.

USE OF PROCEEDS:

Loans made on the date the Financing is consummated (the “Closing Date”) would be used to repay existing debt, for immediate working capital, to fund the Transaction and other corporate purposes. Loans made after the Closing Date would be used for Borrower’s working capital purposes.

        General:

At Borrower’s option, all loans would bear interest at either (a) a floating rate equal to the index Rate plus the Applicable Margin(s) or (b) absent a default, a fixed rate for periods of one, two or three months equal to the reserve adjusted London Interbank Offered Rate (“LIBOR Rate”) plus the Applicable Margin(s).

        Revolver Rates:

The following Applicable Margins (consisting of per annum rate margins) shall apply:

The Applicable Revolver Margins and Applicable Standby L/C Margin would be subject to quarterly adjustment after the first six months after the Closing Date (up or down) so long as Excess Availability is less than $15,000,000 based on Borrower’s average Excess Availability for the quarter most recently ended in accordance with the following grid:

Excess Availability

Applicable Revolver Index Margin

Applicable Revolver LIBOR Margin

Applicable Standby L/C Margin

Once a certain agreed upon financial performance is attained, interest adjustment shall be based on a pricing grid tied to certain agreed upon performance ratios or such other financial performance measures acceptable to Borrowers and Agent.

        Tranche B Loan Rates:

The following Applicable Margins (consisting of per annum rate margins) shall apply:

        Payment Dates:

Interest would be payable monthly in arrears for Index Rate loans and at the expiration of each LIBOR period for LIBOR loans.

        Other Terms:

All interest would be calculated based on a 360 day year and actual days elapsed. The Financing documentation would contain (a) LIBOR breakage provisions and LIBOR borrowing mechanics, (b) LIBOR

Rate definitions, and (c) the Index Rate definition would equal the higher of the prime rate as reported by The Wall Street Journal or the overnight Federal funds rate plus 50 basis points.

FEES:

The following fees would be payable to Agent under the definitive documentation:

        Letter of Credit Fee:

Equal to the Applicable Standby L/C Margin for Standby Letters of Credit or the Applicable Revolver LIBOR Margin less 25 basis points for Documentary Letters of Credit, in each case, per annum (calculated on the basis of a 360-day year and actual days elapsed) on the face amount of the letters of credit under the Revolver, payable monthly in arrears, plus any costs and expenses incurred by Agent in arranging for the issuance or guaranty of Letters of Credit and any charges assessed by the issuing financial institution.

        Closing Fee:

Closing Fee of 0.75% on the Revolver and 1.00% on the Tranche B Loan, with 50% due and payable upon acceptance of a this letter and the balance due and payable at closing, less any unused amounts under the Underwriting Deposit.

        Agency Fee:

Annual administrative agency fee of $10,000, fully earned, due and payable to GE Capital at closing and on each anniversary thereof.

        Unused Facility Fee:

For the first six months after Closing equal to 0.375% per annum (calculated on the basis of a 360-day year and actual days elapsed) on the average unused daily balance of the Revolver, payable monthly in arrears. After the first six months, the Unused Facility Fee will decrease to 0.25%.

        Prepayment Premium:

Payable in the event that the Revolver Commitment or Tranche B Loan is reduced or terminated on or prior to the second anniversary of the Closing Date, in an amount equal to the Revolver Maximum Amount (or, in the case of a commitment reduction, the amount of such reduction) and/or the amount being prepaid on the Tranche B Loan, multiplied by 0.50% upon a

prepayment during the first year following the Closing Date, 0.25% upon a prepayment during the second year following the Closing Date.

DEFAULT RATES:

From and after the occurrence of a default, the interest rates applicable to all Loans and the Letter of Credit Fee would be increased by 2% per annum over the interest rate or Letter of Credit Fee otherwise applicable and such interest and fees would be payable on demand.

SECURITY:

To secure all obligations of Borrowers to Agent and Lenders, Agent, for itself and the ratable benefit of Lenders, would receive a fully perfected first priority security interest in all of the existing and after acquired real and personal, tangible and intangible assets of each Borrower and its subsidiaries (except “Excluded Subsidiaries”, as defined below), if any, including, without limitation, all cash, cash equivalents, bank accounts, accounts, other receivables, chattel paper, contract rights, inventory (wherever located), instruments, documents, securities (whether or not marketable), equipment, fixtures, real property interests, franchise rights, patents, trade names, trademarks, copyrights, intellectual property, general intangibles, investment property, supporting obligations, letter of credit rights, commercial tort claims, causes of action and all substitutions, accessions and proceeds of the foregoing (including insurance proceeds) (collectively, the “Collateral”).

Further, Collateral shall include the Eligible Life Insurance Policies.

All Collateral would be free and clear of other liens, claims and encumbrances, except permitted liens and encumbrances acceptable to Agent. Further, there shall be no liens on the outstanding stock of each Borrower (other than Parent) and each of their subsidiaries (if any and applicable).

Each subsidiary (if any) of the Borrowers other than Rowe Properties Sylmar, Inc., Rowe Properties Jessup,

Inc. and Rowe Furniture Wood Products, Inc., to the extent these subsidiaries have no assets (the “Excluded Subsidiaries”) would guarantee the obligations of the Borrowers under the Financing documents.

FINANCIAL REPORTING:

The definitive documentation would require Borrowers, on a monthly basis, to provide to Agent and Lenders internally prepared financial statements. Annually, Borrowers would be required to provide audited financial statements, a board approved operating plan for the subsequent year. All financial statements shall be prepared on a consolidated and consolidating basis.

DOCUMENTATION:

The Financing documentation would contain representations and warranties; conditions precedent; affirmative, negative covenants; indemnities; events of default and remedies as required by Agent and Marathon. Relevant documents, such as transaction documents, intercreditor and subordination agreements, equity or stockholder agreements, incentive and employment agreements, tax agreements, and other material agreements, to be acceptable to Agent and Marathon.

AVAILABILITY REQUIREMENT:

Borrowers would be required to maintain minimum Excess Availability of $9,000,000 (the “Excess Availability Requirement”). Borrowers shall have the option to (a) reduce the above Excess Availability Requirement to $3,000,000 in exchange for a requirement that the Borrowers comply with a minimum Fixed Charge Coverage Ratio or (b) eliminate the above Excess Availability Requirement after such time that the Borrowers’ Fixed Charge Coverage Ratio, as measured for any 4 quarter rolling period, is greater than an amount and time period to be determined in exchange for (i) a permanent reduction in the Finished Goods Advance Rate to 85% of the NOLV of eligible finished goods inventory and (ii) a requirement that the Borrowers comply with a minimum Fixed Charge Coverage Ratio.

FINANCIAL COVENANTS:

Those affirmative, negative and financial covenants (applicable to the Borrowers and their subsidiaries)

customarily found in loan documentation for similar secured financings and others appropriate in the judgment of Agent and Marathon for the Transaction, such Financial Covenants to take into account projected negative cash flow and losses. Financial Covenants are expected to include, but not limited to, minimum Fixed Charge Coverage Ratio measured at any time after the Excess Availability Requirement has been lowered to an amount less than $9 million. Financial covenants shall be based upon the Company’s financial projections delivered in form and substance acceptable to GE Capital. Fixed Charge Coverage Ratio shall mean, as measured for any 4 quarter rolling period, the ratio of (A) EBITDA less the sum of (i) Non-financed Capital Expenditures actually incurred and (ii) all federal, provincial and local income tax expenses paid by the Borrower and its subsidiaries to (B) the sum of (x) all interest obligations paid or due (excluding amortization on discounts of debt and amortization of preferred financing fees), (y) the amount of principal repaid or scheduled to be repaid and (z) all dividends paid or scheduled to be paid.

EBITDA shall mean, for any 4 quarter rolling period, all consolidated earnings of the Borrowers and their Subsidiaries before all (i) interest and tax obligations, (ii) depreciation and (iii) amortization for said period, all determined in accordance with GAAP on a consistent basis with the latest audited financial statements of the Companies and their subsidiaries, but excluding the effect of extraordinary gains or losses for such period.

SYNDICATION:

GECM may provide to industry trade organizations information with respect to the Financing that is necessary and customary for inclusion in league table measurements.

OTHER TERMS:

GE Capital’s proposal with respect to the Financing is conditioned upon satisfaction of the following conditions as of the Closing Date, and the definitive documents would require, among other things, compliance with covenants pertaining to the following

(all in form and substance satisfactory to Agent and Marathon):

Limitations on, or prohibitions of, cash dividends, other distributions to equity holders (except distributions and dividends may be made in connection with any preferred stock issued by any Borrower at any time Excess Availability is equal to

or greater than a to be determined amount), payments in respect of subordinated debt, capital expenditures, payment of management fees to affiliates (if and to the extent such affiliates are not borrowers or guarantors) and redemption of common or preferred stock, subject to certain exceptions based upon minimum Excess Availability thresholds to be determined and the absence of any default.

OTHER CONDITIONS:

GE Capital’s proposal with respect to the Financing would be further conditioned upon the following (all to Agent’s and Marathon’s satisfaction):

security interest granted to Agent and Lenders or in the prospects or projections of Borrowers, (ii) no litigation commenced which, if successful, would have a material adverse impact on the Borrowers , their business, or their ability to repay the loans, or which would challenge the transactions under consideration, (iii) since the Parent’s last 10Q filed with the SEC no material increase in the liabilities, liquidated or contingent, of the Borrowers, or material decrease in the assets of the Borrowers and (iv) since the date hereof, no change in loan syndication, financial or capital market conditions generally that in GECM’s judgment would materially impair syndication of the Financing.

Agreed to and Accepted this

18^th day of November, 2005

By:

Name:

Title: