Exhibit 10.2

 

SECURITY AGREEMENT

 

                THIS SECURITY AGREEMENT (this “Agreement”) is entered into as of
October 25, 2016, by and among STANLEY FURNITURE COMPANY, INC., a Delaware
corporation (“Borrower”), STANLEY FURNITURE COMPANY 2.0, LLC, a Virginia limited
liability company ( “Guarantor”; each of the Borrower and the Guarantor is
sometimes hereinafter referenced individually as a “Grantor” and collectively as
the “Grantors”) and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

 

                Pursuant to a Credit Agreement of even date herewith between
Borrower and Lender (as amended, restated or otherwise modified from time to
time, the “Credit Agreement”), Lender has agreed to make certain advances and
other extensions of credit to Borrower.  Pursuant to a Guaranty of even date
herewith by Guarantor in favor of Lender (as amended, restated or otherwise
modified from time to time, the “Guaranty”), Guarantor has guaranteed the
payment and performance by the Borrower of all of Borrower’s obligations under
the Credit Agreement.

 

                As a condition to making advances and other extensions of credit
under the Credit Agreement, Lender has required the execution and delivery of
this Agreement by each Grantor.

 

1.                  DEFINITIONS.

 

                                (a)              All capitalized terms not
otherwise defined in this Agreement shall have the meanings given them in the
Credit Agreement.

 

                                (b)             The following terms, when used
in this Agreement (whether or not capitalized), shall have the meanings given
them in the Code, except that (i) for purposes of this Agreement, the meaning of
such terms will not be limited by reason of any limitation on the scope of the
Code, and (ii) to the extent the definition of any category or type of
Collateral is expanded by any amendment, modification or revision to the Code,
such expanded definition will apply automatically as of the date of such
amendment, modification or revision:  “Accession”, “Account”, “Chattel Paper”,
“Deposit Account”, “Document”, “General Intangible”, “Goods”, “Instrument”,
“Inventory”, “Letter-of-Credit Right”, “Letter of Credit”, “Money”, and
“Supporting Obligations”.

 

2.                  GRANT OF SECURITY INTEREST.  Each Grantor grants and
transfers to Lender, for the benefit of Lender and each Bank Product Provider, a
continuing security interest (the “Security Interest”) in all of the following
property of such Grantor or in which such Grantor has rights, whether presently
existing or acquired after the date of this Agreement (collectively, together
with all Proceeds, the “Collateral”)

 

(a)              Accounts;

 

(b)             Chattel Paper;

 

                (c)             Deposit Accounts;

 

                (d)             Documents;

 

                (e)             General Intangibles;

 

                (f)              Instruments;

 

(g)              Inventory;

 

(h)              Letters of Credit and Letter-of-Credit Rights;

 

(i)               Money and other assets of such Grantor that now or later come
into possession, custody, or control of Lender;

 

(j)               all Accessions and Supporting Obligations relating to any of
the foregoing; and

 

all books and records relating to the above property and all proceeds (as such
term is defined in the Code) and products, whether tangible or intangible of any
of the above property, all proceeds of any condemnation award relating to any of
the above property, all proceeds of insurance covering or relating to any or all
of the above property and all rebates and returns relating to any of the above
property (all such proceeds, collectively, “Proceeds”).

 

 

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3.                  OBLIGATIONS SECURED.  The obligations secured by the
Security Interest are the payment and performance of: 

 

                                (a)              all present and future
Obligations and the guaranty of such Obligations by any Grantor; and

 

                                (b)              all now existing or
subsequently arising obligations of each Grantor and rights of Lender under this
Agreement.  

 

4.                  AUTHORIZATION TO FILE FINANCING STATEMENTS.  Each Grantor
authorizes Lender to file financing statements describing the Collateral to
perfect Lender’s Security Interest in the Collateral, and Lender may describe
the Collateral in such manner as it may determine appropriate, whether generally
or by specific items of Collateral. All financing statements filed before the
date of this Agreement to perfect the Security Interest were authorized by each
Grantor and are ratified.

 

5.                  COLLECTION ACCOUNT.  Any money or other cash Proceeds
received by Lender in respect of the Collateral will be deposited into a
non-interest bearing account over which such Grantor shall have no control, and
the same shall, for all purposes, be deemed Collateral, and such money and cash
shall be applied to the Obligations as set forth in the Credit Agreement or this
Agreement.

 

6.                  REPRESENTATIONS AND WARRANTIES OF GRANTORS.  Each Grantor
represents and warrants to Lender that: 

 

                                (a)             Such Grantor's legal name is
exactly as set forth on the first page of this Agreement, its chief executive
office and principal place of business are set forth on Schedule A, and all of
Such Grantor's organizational documents or agreements delivered to Lender are
complete and accurate in every respect;

 

                                (b)             Such Grantor has legal title to
and has possession or control of the Collateral;

 

                (c)              Such Grantor has the exclusive right to grant a
security interest in the Collateral;

 

                (d)             all Collateral is genuine, free from Liens,
adverse claims, setoffs, default, prepayment, defenses and conditions precedent
of any kind or character, except the Security Interest created by this Agreement
and Permitted Liens;

 

                (e)              all statements contained in this Agreement and,
where applicable, regarding the Collateral are true and complete in all material
respects;

 

                (f)              no financing statement covering any of the
Collateral, and naming any secured party other than Lender and holders of
Permitted Liens, is on file in any public office;

 

                (g)             all Persons appearing to be obligated on
Collateral have authority and capacity to contract and are bound as they appear
to be;

 

                (h)             all property subject to Chattel Paper has been
properly registered and filed in compliance with law and to perfect the interest
of Such Grantor in such property;

 

                (i)              all Accounts and other rights to payment comply
with all applicable laws concerning form, content and manner of preparation and
execution, including where applicable Federal Reserve Regulation Z and any state
consumer credit laws;

 

(j)                   Schedule A lists all real property owned or leased by Such
Grantor;

 

(k)                 Schedule A provides a complete and correct list of: (i) all
registered copyrights and copyright applications owned by Such Grantor, (ii) all
intellectual property licenses entered into by Such Grantor; (iii) all
registered patents and patent applications owned by any Grantor; and (iv) all
registered trademarks and trademark applications owned by any Grantor;

 

(l)                   Schedule A contains a listing of all of Deposit Accounts
of each Grantor, including, with respect to each bank, securities intermediary
or commodity intermediary: (a) the name and address of such entity, and (b) the
account numbers of the Deposit Accounts maintained with such entity;

 

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(m)                Except for Inventory not constituting Eligible Inventory and
having an aggregate value of less than $100,000 at any time, none of the
Inventory of any Grantor is stored with a bailee, warehouseman, processor or
similar party and are located only at, or in-transit between or to, the
locations identified on Schedule A;

 

(n)                 Each Account that is identified as an Eligible Account in a
borrowing base certificate or daily collateral report submitted to Lender is (i)
a bona fide existing payment obligation of the applicable Account Debtor created
by the sale and delivery of Inventory or the rendition of services to such
Account Debtor in the ordinary course of such Grantor’s business, (ii) owed to
such Grantor, and (iii) not excluded as ineligible by virtue of one or more of
the excluding criteria set forth in the definition of Eligible Accounts in the
Credit Agreement; and

 

(o)                 Each item of Inventory that is identified as Eligible
Inventory in a borrowing base certificate or daily collateral report submitted
to Lender, is (i) of good and merchantable quality, free from known defects, and
(ii) not excluded as ineligible by virtue of one or more of the excluding
criteria set forth in the definition of Eligible Inventory in the Credit
Agreement.

 

7.                  COVENANTS OF GRANTORS.                        

 

                (a)              Each Grantor covenants and agrees: 

 

(i)                   to permit Lender to exercise its rights, remedies, and
powers under the Credit Agreement, this Agreement, the other Loan Documents and
under law; 

 

(ii)                 not to change its name, or, as applicable, its chief
executive office, its principal residence or the jurisdiction in which it is
organized without giving Lender thirty (30) days prior written notice;  and

 

                (iii)            not to change the places where such Grantor
keeps any Collateral or such Grantor's records concerning the Collateral without
(A) giving Lender 30 days prior written notice of the address to which such
Grantor is moving same, and (B) delivering to Lender a fully executed Collateral
Access Agreement with respect to such location if not owned by such Grantor; and

 

(iv)            to cooperate with Lender in perfecting all security interests
granted by this Agreement and in obtaining such agreements from third parties as
Lender deems necessary, proper or convenient in connection with the
preservation, perfection or enforcement of any of its rights with regard to
Collateral or access to Collateral.

 

  (b)             Each Grantor agrees with regard to the Collateral, unless
Lender agrees otherwise in writing: 

 

                (i)              not to use any Collateral for any unlawful
purpose or in any way that would void any insurance required to be carried on
such Collateral;

 

(ii)             to insure the Collateral, with Lender named as first lender
loss payee and additional insured, in form, substance and amounts, under
agreements, against risks and liabilities, and with insurance companies
satisfactory to Lender;

 

(iii)                to keep, in accordance with GAAP, records that are complete
and accurate in all material respects regarding all Collateral, and to permit
Lender to inspect the same and make copies thereof at any reasonable time;

 

(iv)                not to sell, pledge or dispose of, nor permit the transfer
by operation of law of, any of the Collateral or any interest in the Collateral,
except as permitted by the Credit Agreement;

 

(v)                 not to permit any lien on the Collateral, including without
limitation, liens arising from the storage of Inventory, except for Liens in
favor of Lender and Permitted Liens;

 

                                (vi)            if requested by Lender, to
receive and use reasonable diligence to collect Accounts, in trust and as the
property of Lender, and to immediately endorse as appropriate and deliver
collections or payments on such Accounts or proceeds thereof to Lender daily in
the exact form in which they are received;

 

                (vii)           not to commingle Accounts, Proceeds or
collections with other property;

 

(viii)          to give only normal allowances and credits consistent with past
practices and in the ordinary course of business and to advise Lender thereof
immediately in writing if they affect any Accounts in any material respect;

 

(ix)            on Lender’s demand, to deliver to Lender returned property
resulting from, or payment equal to, such allowances or credits on any Accounts
or to execute such documents and do such other things as Lender may reasonably
request for the purpose of perfecting, preserving and enforcing its security
interest in such returned property;

 

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                                (x)             from time to time, when
requested by Lender, to prepare and deliver a schedule of all Collateral subject
to this Agreement and to assign in writing and deliver to Lender all Accounts,
contracts, leases and other Chattel Paper, Instruments, Documents and other
evidences thereof;

 

                                (xi)            (Intentionally Omitted)

 

                                (xii)           to deliver to Lender any
Instrument, Document or Chattel Paper constituting Collateral with a value
greater than $50,000, duly endorsed or assigned by such Grantor to Lender;

 

                                (xiii)          to provide any service and do
any other acts which may be necessary to maintain, preserve and protect all
Collateral and, as appropriate and applicable, to keep all Collateral in good
and saleable condition, to deal with the Collateral in accordance with the
standards and practices adhered to generally by users and manufacturers of like
property, and to keep all Collateral free and clear of all defenses, rights of
offset and counterclaims;

 

                                (xiv)          not to withdraw any funds from
any Deposit Account pledged to Lender pursuant to this Agreement, except for
such Grantor’s principal operating account and any Deposit Accounts which are
specifically and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for employees of such Grantor (“Excluded Deposit
Accounts”);

 

                (xv)           not to open, establish or permit to exist any
Deposit Account unless Lender has control of such account as contemplated in the
Code (but excluding Excluded Deposit Accounts); and

 

                (xvi)          not to consign any of its Inventory or sell any
of its Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale.

 

8.                  POWERS OF LENDER.  Each Grantor appoints Lender its attorney
in fact to perform any of the following powers, which are coupled with an
interest, are irrevocable until termination of this Agreement and may be
exercised from time to time by Lender's officers and employees, or any of them,
whether or not an Event of Default has occurred: 

 

                                (a)              to perform any obligation of
each Grantor hereunder in such Grantor's name or otherwise;

 

                                (b)             to give notice to Account
Debtors or others of Lender's rights in the Collateral, to enforce or forebear
from enforcing the same and to make extension or modification agreements;

 

                                (c)              to release Persons liable on
Collateral and to give receipts and compromise disputes;

 

(d)             to release or substitute security;

 

(e)              to resort to security in any order;

 

                                (f)              to prepare, execute, file,
record or deliver notes, assignments, schedules, designation statements, initial
financing statements and amendments, continuation statements, termination
statements, statements of assignment, applications for registration or like
papers to perfect, preserve or release Lender's interest in the Collateral;

 

                                (g)             to receive, open and read mail
addressed to any Grantor;

 

(h)             to take cash, instruments for the payment of money and other
property to which Lender is entitled;

 

(i)              to verify facts concerning the Collateral by inquiry of
obligors thereon, or otherwise, in its own name or a fictitious name;

 

                                 (j)              to endorse, collect, deliver
and receive payment under instruments for the payment of money constituting or
relating to Collateral;

 

(k)              to prepare, adjust, execute, deliver and receive payment under
insurance claims, and to collect and receive payment of and endorse any
instrument in payment of loss or returned premiums or any other insurance refund
or return, and to apply such amounts received by Lender, at Lender's sole
option, toward repayment of the Obligations or replacement of the Collateral;

 

 

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                (l)               to exercise all rights, powers and remedies
which any Grantor would have, but for this Agreement, with respect to all
Collateral;

 

                                (m)             to enter onto any Grantor's
premises to inspect the Collateral;

 

                                (n)             to make withdrawals from and to
close deposit accounts or other accounts with any financial institution,
wherever located, into which Proceeds may have been deposited, and to apply
funds so withdrawn to payment of the Obligations;

 

                                (o)              to preserve or release the
interest evidenced by chattel paper to which Lender is entitled hereunder and to
endorse and deliver any evidence of title to such interest; and

 

(p)             to do all acts and things and execute all documents in the name
of any Grantor or otherwise, deemed by Lender as necessary, proper and
convenient in connection with the preservation, perfection, priority or
enforcement of Lender’s rights.

 

9.                  PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. 
Each Grantor agrees to pay, prior to delinquency, all insurance premiums, taxes,
charges, liens and assessments against the Collateral, and upon the failure of
such Grantor to do so, Lender at its option may pay any of them and shall be the
sole judge of the legality or validity and the amount necessary to discharge the
same. Any such payments made by Lender shall be Obligations under the Credit
Agreement. Any such payments made by Lender shall be obligations of Grantors to
Lender, due and payable immediately upon demand, together with interest at a
rate determined in accordance with the provisions of the Credit Agreement, and
shall be secured by the Collateral, subject to all terms and conditions of this
Agreement.

 

10.               EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an "Event of Default" under this Agreement: 

 

                (a)              any Event of Default under the Credit
Agreement;

 

                                (b)             any representation or warranty
made by a Grantor in this Agreement shall prove to be incorrect, false or
misleading in any material respect when made; and

 

                                (c)              a Grantor shall fail to timely
observe or perform any covenant or other obligation or agreement set forth in
this Agreement.

 

11.               REMEDIES.  Upon the occurrence and during the continuation of
any Event of Default, Lender shall have the right to declare immediately due and
payable all or any Obligations (other than Obligations arising under any Hedge
Agreement, which may be accelerated pursuant to the applicable Hedge Agreement)
secured by this Agreement and to terminate any commitments to make loans or
otherwise extend credit under the Credit Agreement. Lender shall have all other
rights, powers, privileges and remedies granted to a secured party upon default
under the Code or otherwise provided by law, including without limitation, the
right to:

 

                                (a)              contact all Persons obligated
to a Grantor on any Collateral and to instruct such Persons to deliver all
Collateral directly to Lender;

 

                (b)              sell, lease, license or otherwise dispose of
any or all Collateral;

 

                (c)              notify the United States Postal Service to
change the address for delivery of mail of any Grantor to any address designated
by Lender;

 

                (d)             without notice to or consent by any Grantor, and
without the obligation to pay rent or other compensation, to take exclusive
possession of all locations where any Grantor conducts it business or has any
rights of possession and use the locations to store, process, manufacture, sell,
use and liquidate or otherwise dispose of Collateral;

 

                (e)              with regard to any Deposit Account, instruct
the bank maintaining such Deposit Account to pay the balance of such Deposit
Account to Lender or take such other action as Lender shall instruct; and

 

                (f)               (Intentionally Omitted); and

 

                (g)             without regard to the occurrence of waste or the
adequacy of security, apply  for the appointment of a receiver for any Grantor
or for the assets of any Grantor and each Grantor waives any objection to such
appointment or to the right to have a bond or security posted by Lender.  Each
Grantor hereby waives any objection or defense to the appointment of any such
receiver and any right that such Grantor has or may have to seek the posting of
a bond or other security by Lender.

 

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While an Event of Default exists: 

 

                                (1)             Each Grantor will deliver to
Lender from time to time, as requested by Lender, current lists of all
Collateral;

 

                (2)             No Grantor will dispose of any Collateral except
on terms approved by Lender;

 

                (3)             at Lender's request, each Grantor will assemble
and deliver all Collateral, and books and records pertaining thereto, to Lender
at a reasonably convenient place designated by Lender; and

 

                (4)              Lender may, without notice to any Grantor,
enter onto a Grantor's premises and take possession of the Collateral. 

 

12.               CUMULATIVE RIGHTS.  All rights, powers, privileges and
remedies of Lender shall be cumulative.  No delay, failure or discontinuance of
Lender in exercising any right, power, privilege or remedy hereunder shall
affect or operate as a waiver of such right, power, privilege or remedy; nor
shall any single or partial exercise of any such right, power, privilege or
remedy preclude, waive or otherwise affect any other or further exercise or the
exercise of any other right, power, privilege or remedy.

 

13.               WAIVERS AND CONSENTS OF LENDER.  Any waiver, permit, consent
or approval of any kind by Lender of any default, or any such waiver of any
provisions or conditions, must be in writing and shall be effective only to the
extent set forth in writing.

               

14.               DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF
INDEBTEDNESS.  In disposing of Collateral, Lender may disclaim all warranties of
title, possession, quiet enjoyment and the like.  Any proceeds of any
disposition of any Collateral, may be applied by Lender to the payment of
expenses incurred by Lender, including reasonable attorneys' fees, and the
balance of such proceeds may be applied by Lender toward the payment of the
Obligations in such order of application as Lender may from time to time elect.
Upon the transfer of all or any part of the Obligations, Lender may transfer all
or any part of the Collateral and shall be fully discharged from all liability
and responsibility with respect to such transferred Collateral, and the
transferee shall be vested with all rights and powers of Lender hereunder; but
with respect to any Collateral not so transferred, Lender shall retain all
rights, powers, privileges and remedies. It is agreed that public or private
sales or other dispositions, for cash or on credit, to a wholesaler or retailer
or investor, or user of property of the types subject to this Agreement, or
public auctions, are all commercially reasonable since differences in the prices
generally realized in the different kinds of dispositions are ordinarily offset
by the differences in the costs and credit risks of such dispositions. Each
Grantor agrees that, to the extent notice of sale shall be required by law, at
least 10 days’ notice to such Grantor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification and such notice shall constitute a reasonable
“authenticated notification of disposition” within the meaning of Section 9-611
of the Code.  Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given.  Lender may adjourn any public
or private sale from time to time, and such sale may be made at the time and
place to which it was so adjourned. Each Grantor agrees that the internet shall
constitute a “place” for purposes of Section 9-610(b) of the Code. Each Grantor
agrees that any sale of Collateral to a licensor pursuant to the terms of a
license agreement between such licensor and such Grantor is sufficient to
constitute a commercially reasonable sale (including as to method, terms,
manner, and time) within the meaning of Section 9-610 of the Code. Each Grantor
grants to Lender a non-exclusive, worldwide and royalty-free license to use or
otherwise exploit all intellectual property rights of such Grantor for the
purpose of: (a) completing the manufacture of any in-process materials following
any Event of Default so that such materials become saleable Inventory, all in
accordance with the same quality standards previously adopted by any Grantor for
its own manufacturing; and (b) selling, leasing or otherwise disposing of any or
all Collateral following any Event of Default.

 

15.                 GRANTOR NOT AN OBLIGOR. If any Grantor is not a Borrower or
Guarantor (an “Obligor”) under some or all of the Obligations:

 

                                (a)  such Grantor authorizes Lender, from time
to time, without affecting such Grantor's obligations under this Agreement, to
enter into an agreement with Obligor to change the interest rate on or renew the
Obligations or other Indebtedness to Lender; accelerate, extend, compromise, or
otherwise change the repayment terms or any other terms of the Obligations or
such Indebtedness; receive and hold, exchange, enforce, waive, fail to perfect,
substitute, or release Collateral, including collateral not originally covered
by this Agreement; sell or apply any Collateral in any order; or release or
substitute any borrower, guarantor or endorser of the Obligations or such
Indebtedness, or other person.

 

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                (b)  such Grantor waives any defense by reason of any Obligor's
or any other person's defense, disability, or release from liability.  Lender
can exercise its rights against the Collateral even if any Obligor or any other
person no longer is liable on the Obligations because of a statute of
limitations or for other reasons.

 

                                (c)  such Grantor agrees that it is solely
responsible for keeping itself informed as to the financial condition of the
Obligors and of all circumstances which bear upon the risk of nonpayment. Such
Grantor waives any right it may have to require Lender to disclose to such
Grantor any information which Lender may now or hereafter acquire concerning the
financial condition of Obligors.

 

                                (d)  such Grantor waives all rights to notices
of default or nonperformance by Obligors.  Such Grantor further waives all
rights to notices of the existence or the creation of new Obligations by any
Obligor and all rights to any other notices to any party liable on any of the
Obligations.

 

                                (e)  Such Grantor represents and warrants to
Lender that it will derive benefit, directly and indirectly, from the collective
administration and availability of credit under the Obligations. Such Grantor
agrees that Lender will not be required to inquire as to the disposition by any
Obligor of funds disbursed by Lender.

 

                                (f)  Until all obligations to Lender under the
Obligations have been paid in full and any commitments of Lender or facilities
provided by Lender with respect to the Obligations have been terminated, such
Grantor waives any right of subrogation, reimbursement, indemnification and
contribution (contractual, statutory or otherwise), including without
limitation, any claim or right of subrogation under the Bankruptcy Code (Title
11, United States Code) or any successor statute, which such Grantor may now or
hereafter have against any Obligor with respect to the Obligations.  Such
Grantor waives any right to enforce any remedy which  Lender now has or may
hereafter have against any Obligor, and waives any benefit of, and any right to
participate in, any security now or hereafter held by Lender.

 

                (g)  Such Grantor waives any right to require Lender to proceed
against any Obligor or any other person; proceed against or exhaust any
security; or pursue any other remedy. Further, such Grantor consents to the
taking of, or failure to take, any action which might in any manner or to any
extent vary the risks of such Grantor under this Agreement or which, but for
this provision, might operate as a discharge of such Grantor.

 

                (h)  In the event any amount paid to Lender on any Obligations
or any interest in property transferred to Lender as payment on any Obligations
is subsequently recovered from Lender in or as a result of any bankruptcy,
insolvency or fraudulent conveyance proceeding, such Grantor shall be liable to
Lender for the amounts so recovered up to the fair market value of the
Collateral whether or not the Collateral has been released or the security
interest terminated.  In the event the Collateral has been released or the
security interest terminated, the fair market value of the Collateral shall be
determined, at Lender's option, as of the date the Collateral was released, the
security interest terminated, or said amounts were recovered.

 

16.               STATUTE OF LIMITATIONS.  Until all Obligations shall have been
paid in full and all commitments by Lender to extend credit under the Credit
Agreement have been terminated, the power of sale or other disposition and all
other rights, powers, privileges and remedies granted to Lender shall continue
to exist and may be exercised by Lender at any time and from time to time
irrespective of the fact that the Obligations or any part thereof may have
become barred by any statute of limitations, or that the personal liability of
any Grantor may have ceased, unless such liability shall have ceased due to the
payment in full of all Obligations and Indebtedness secured by this Agreement.

 

17.               WAIVERS OF GRANTORS.  Each Grantor waives any right to require
Lender to (a) proceed against any Grantor or any other Person, (b) marshal
assets or proceed against or exhaust any security from any Grantor or any other
Person, (c) perform any obligation of any Grantor with respect to any
Collateral; and (d) make any presentment or demand, or give any notice of
nonpayment or nonperformance, protest, notice of protest or notice of dishonor
hereunder or in connection with any Collateral or Proceeds.  Each Grantor
further waives any right to direct the application of payments or security for
any Indebtedness of such Grantor or indebtedness of customers of such Grantor.

 

18.               JOINT AND SEVERAL LIABILITY.  The obligations of the Grantors
hereunder are joint and several.

 

19.               FURTHER ASSURANCES.  At any time upon the request of Lender,
each Grantor will execute or deliver to Lender any and all financing statements,
security agreements, pledges, assignments, endorsements, and all other documents
(the “Additional Documents”) that Lender may request and in form and substance
satisfactory to Lender, to create, perfect, and continue perfection or to better
perfect Lender’s Liens in all of the assets of such Grantor (whether now owned
or subsequently arising of acquired, tangible or intangible, real or personal),
and in order to fully consummate all of the transactions contemplated under this
Agreement and under the other Loan Documents.  If any Grantor refuses or fails
to execute or deliver any requested Additional Documents, such Grantor
authorizes Lender to execute such Additional Documents in such Grantor’s name,
and authorizes Lender to file such executed Additional Documents in any
appropriate filing office. Each Grantor acknowledges that no Grantor is
authorized to file any financing statement or amendment with respect to any
financing statement filed in connection with this Agreement without the prior
written consent of Lender, subject to such Grantor’s rights under Section
9-509(d)(2) of the Code.

               

 

7

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20.               SUBROGATION RIGHTS.  Until all Obligations shall have been
paid in full and all commitments by Lender to extend credit under the Credit
Agreement have been terminated, no Grantor shall have any right of subrogation
or contribution or similar right, and each Grantor waives any benefit of or
right to participate in any of the Collateral or any other security now or
subsequently held by Lender.

 

21.               NOTICES.  All notices, requests and demands required under
this Agreement must be given, and shall be deemed received, as provided in
Section 7.3 of the Credit Agreement at the  address set forth below each party’s
name on the signature page of this Agreement or to such other address as any
party may designate by written notice to all other parties.

 

22.               COSTS, EXPENSES AND ATTORNEYS' FEES.  Each Grantor shall pay
to Lender immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees, expended or
incurred by Lender in connection with or related to this Agreement, including,
without limitation, all Lender Expenses, as set forth in Section 7.4 of the
Credit Agreement. Further, each Grantor indemnifies Lender against all losses,
claims, demands, liabilities and expenses of every kind caused by property
subject to this Agreement, all in accordance with Section 7.­7 of the Credit
Agreement.

 

23.               SUCCESSORS; ASSIGNS; AMENDMENT.  This Agreement will be
binding upon and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the parties; provided that no
Grantor may assign or transfer its interests, rights, or obligations under this
Agreement without Lender’s prior written consent.  Lender may sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, Lender’s rights and benefits under this Agreement and the other
Loan Documents. This Agreement may be amended or modified only in writing signed
by Lender and each Grantor, except as provided in Section 7(b)(xi) and Section
19 of this Agreement.

 

24.               SEVERABILITY OF PROVISIONS.  If any provision of this
Agreement shall be held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Agreement.

 

25.               GOVERNING LAW. The validity of this Agreement and the
construction, interpretation, and enforcement of this Agreement, and the rights
of the parties, as well as all claims, controversies or disputes arising under
or related to this Agreement will be determined under, governed by and construed
in accordance with the laws of the State of New York without regard conflicts of
laws principles.

 

26.               JURISDICTION.  All actions or proceedings arising in
connection with this Agreement may be tried and litigated in the State and, to
the extent permitted by applicable law, federal courts located in the City of
New York,  and the County of New York, State of New York; provided that any suit
seeking enforcement against any Collateral or other property may be brought, at
Lender’s option, in the courts of any jurisdiction where Lender elects to bring
such action or where such Collateral or other property may be found. Each
Grantor and Lender waive, to the extent permitted under applicable law, any
right they may have to assert the doctrine of forum non conveniens or to object
to venue to the extent any proceeding is brought.

 

27.               WAIVER OF JURY TRIAL.  TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH GRANTOR AND LENDER WAIVE THEIR RESPECTIVE RIGHTS, IF ANY,
TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY
OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS
(EACH, A “CLAIM”). EACH GRANTOR AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

[SIGNATURE PAGES FOLLOW]

 

8

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This Agreement has been duly executed as of the date set forth on page 1.

 

GRANTORS:

 

STANLEY FURNITURE COMPANY, INC.

 

By:

/S/ Anita W. Wimmer

Name:

Anita W. Wimmer

Title:

Vice Present – Finance / Corporate Controller

Address:

 

200 North Hamilton Street

 

No. 200

 

High Point, North Carolina

Attention:

Anita W. Wimmer

Fax No.:

336-841-0913

Email:

AWimmer@stanleyfurniture.com

 

 

STANLEY FURNITURE COMPANY 2.0, LLC.

 

By:

/S/ Steve Wolfe

Name:

Steve Wolfe

Title:

Vice President

Address:

 

200 North Hamilton Street

 

No. 200

 

High Point, North Carolina

Attention:

Anita W. Wimmer

Fax No.:

336-841-0913

Email:

AWimmer@stanleyfurniture.com

 

 

[Signatures Continue on Following Page]

 

9

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LENDER:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:

/S/ Robert J. Ostrowe

Name:

Robert J. Ostrowe

Title:

Senior Vice President

Address:

 

100 Park Avenue, 3rd Floor

 

New York, NY 10017-5516

Attention:

Thomas Dowling

Fax No.:

212-703-3520

Email:

Thomas.Dowling@wellsfargo.com

 

 

And

 

 

 

 

1100 Abernathy Road, Suite 1500

 

Atlanta, Georgia 30328

Office

770-508-2106

Attention:

Brian J. Martin

E-Fax:

866-686-7765

Email:

BJ.Martin@wellsfargo.com

 

 

10

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SCHEDULE A

 

1.                    Owned Real Property:

 

None

 

2.                    Copyrights, Trademarks, Patents and Licensing Agreements:

 

                        Part 1 – Trademarks Owned

 

 

Trademark

Registration
Number

Registration
Date

Expiration
Date

Jurisdiction

BUILTTOGROW

4,134,394

01-May-2012

01-May-2022

USA

CROSSPOINTE

4,561,475

01-July-2014

01-July-2024

USA

STAGS BRAND MARK

4,917,605

15-March-2016

15-March-2026

USA

STANLEY FURNITURE

TMA705,298

22-January-2008

22-January-2023

Canada

STANLEY FURNITURE

3664582

21-January-2009

20-January-2019

China

STANLEY FURNITURE

005687521

19-December-2007

02-February-2017

European Union

STANLEY FURNITURE

1401189

24-November-2005

24-November-2025

India

STANLEY FURNITURE

972801

20-February-2007

16-August-2025

Mexico

STANLEY FURNITURE

40-0643247

15-December-2005

15-December-2025

South Korea

STANELY FURNITURE

2009/05488

12-October-2010

05-February-2019

Turkey

STANLEY FURNITURE

2,906,389

30-November-2004

30-November-2024

USA

STANLEY FURNITURE

4,917,606

15-March-2015

15-March-2026

USA

STANLEY FURNITURE

2.521.437

23-May-2002

23-May-2022

Argentina

STANLEY FURNITURE

2196483

05-May-1999

04-May-2019

United Kingdom

STANLEY KIDS

2010 39521

04-August-2011

16-June-2020

Turkey

YOUNG AMERICA

6018348

07-May-2010

06-May-2020

China

YOUNG AMERICA

005687538

31-January-2008

02-February-2017

European Union

YOUNG AMERICA

IDM000303604

03-May-2011

09-October-2019

Indonesia

YOUNG AMERICA

1175111

23-August-2010

09-April-2020

Mexico

YOUNG AMERICA

40-0822339

06-May-2010

06-May-2020

South Korea

YOUNG AMERICA

2,500,012

23-October-2001

23-October-2021

USA

 

 

11

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Trademark
Application

Application/Serial
Number

Application
Date

Jurisdiction

HAVANA CROSSING

87/111,575

21-Jul-2016

USA

STONE & LEIGH

87/035,021

12-May2016

USA

 

 

                Part 2 – Patents Owned

 

                                None

 

Part 3 – Copyrights Owned

 

                None

 

Part 4 – Other License Agreements

 

Name of
Document

Date of
Document

Licensor

Term

Licensed
Intellectual Property

License Agreement

July 1, 2014

Coastal Living

Through December 2017

Costal Living name (royalty agreement)

License Agreement

September 19, 2016

Meyer Lansky II and Meyer Lansky II, LLC

Through December 31, 2018

Lansky name (royalty agreement)

 

12

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3.                    Deposit Accounts:

 

Name and Address of Bank

Account No.

Purpose

CIMB Bank - Cimb Niaga Plaza LT. 2, Sudirman Kav 25 Jakarta 12920

 

    xxxxxxxx

 

IDR currency for Indonesia office

 

CIMB Bank - Cimb Niaga Plaza LT. 2, Sudirman Kav 25 Jakarta 12920

 

    xxxxxxxx

 

US $ account for Indonesia office

 

CIMB Bank - Cimb Niaga Plaza LT. 2, Sudirman Kav 25 Jakarta 12920

 

    xxxxxxxx

 

US $ account for Indonesia office

 

CIMB Bank - Cimb Niaga Plaza LT. 2, Sudirman Kav 25 Jakarta 12920

 

    xxxxxxxx

 

IDR currency for Indonesia office

Vetcombank - 51/9 KP Dong A, Dong Hoa, TX DI AN.Bduong

 

    xxxxxxxx

 

VND currency for Vietnam office

Vetcombank - 51/9 KP Dong A, Dong Hoa, TX DI AN.Bduong

 

    xxxxxxxx

 

US $ account for Vietnan office

Wells Fargo - Stanley Furniture Co - 300 N Green Street, Greensboro, NC 27401

 

    xxxxxxxx

 

Master account for Stanley Furniture   

Wells Fargo - Stanley Furniture Co LLC 2.0 - 300 N Green Street, Greensboro, NC
27401

 

    xxxxxxxx

 

Master account for Stanley Furniture LLC 2.0

Wells Fargo -  Stanley Furniture Co - 300 N Green Street, Greensboro, NC 27401

 

    xxxxxxxx

 

Restricted cash account

 

Wells Fargo - Stanley Furniture Co, payable account - 300 N Green Street,
Greensboro, NC 27401

    xxxxxxxx

 

Accounts payable disbursements

 

 

13

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4.                    Locations of Collateral and Books and Records:

 

                        Locations of Inventory, Books and Records and Other
Assets

 

Address

Owned/Leased/Third Party*

Name/Address of Lessor or Third Party, as Applicable

High Point Showroom -200 North Hamilton Street, NC 27260 USA

Leased

Showplace AC II, LLC

PO Box 828

High Point, NC 27261

 

Mocksville Warehouse –

970 Milling Road, Mocksville, NC 27028 USA

 

Leased

Johnson Logistics

1640 Blair St.

Thomasville, NC 27360

Las Vegas Showroom - World Market Center Las Vegas, 495 S. Grand Central
Parkway, Spaces A109/A110, Las Vegas, NV 89106 USA

 

Leased

WMCV Phase I, LLC

World Market Center Las Vegas

495 S. Grand Central Pkwy., Suite 2203

Las Vegas NV 89106

Martinsville - 140 Hollie Drive, Martinsville, VA 24112 USA

Leased

Hollie Drive Associates LLC

c/o Basic Sportswear

150 West 28th Street, Suite 1002

New York, New York 10001

 

Asia Vietnam Warehouse - U&I Bonded Warehouse- N2 Street, Nam Tan Uyen
Industrial Park,

Khanh Binh Commune.Tan Uyen District, Binh Duong Province, Vietnam

 

Leased

U&I Bonded Warehouse

N2 Street, Nam Tan Uyen Industrial Park

Khanh Binh Commune

Tan Uyen District, Binh Duong Province

Stanley Starwood Warehouse – Block #7, Uyen Hung Ward, Tan Uyen Toen, Binh Duong
Province, Vietnam

 

Leased

Starwood Furniture Manufacturing VN Corporation

Block #7

Uyen Hung Ward

Tan Uyen Toen, Binh Duong Province

--------------------------------------------------------------------------------

* Indicate in this column next to applicable address whether the locations is
owned by the Company, leased by the Company or owned and operated by a third
party (e.g., warehouse, processor, consignee, etc.)

 

14