wachoviaamendment.htm

                                           EXHIBIT
    10.2


    


    This
      FIFTH
      AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of October 12, 2007,
      and effective as of September 28, 2007, and is by and between STANLEY FURNITURE
      COMPANY, INC., a Delaware corporation (the “Borrower”); and WACHOVIA BANK,
      NATIONAL ASSOCIATION, a national banking association and successor to SouthTrust
      Bank, an Alabama banking corporation (the “Lender”).

    


    


    RECITALS

    


    The
      Lender has made
      a certain credit facility (the “Loan”) available to the Borrower pursuant to the
      terms and conditions contained in that certain Credit Agreement dated as of
      August 29, 2003 between the Borrower and the Lender (as amended by that certain
      First Amendment to Credit Agreement dated as of April 23, 2004, that certain
      Second Amendment to Credit Agreement effective as of August 29, 2005, that
      certain Third Amendment to Credit Agreement effective as of August 28, 2006,
      and
      that certain Fourth Amendment to Credit Agreement effective as of July 13,
      2007,
      the “Credit Agreement”).

    


    The
      Borrower has
      requested that the Lender amend certain provisions of the Credit Agreement
      and,
      subject to the terms and conditions set forth in this Amendment, the Lender
      has
      agreed to do so.

    


    NOW,
      THEREFORE, the
      Borrower and the Lender hereby agree as follows:

    


    1.  The
      Credit
      Agreement is hereby amended as follows:

    


    (a)           The
      definition of "Consolidated Net Earnings" in Section 5.1 of the Credit
      Agreement is hereby replaced in its entirety with the following:

    


    "Consolidated
      Net
      Earnings" shall mean, for any applicable period, for the Borrower and its
      Subsidiaries on a Consolidated basis, the excess of (a) gross revenues
      (including all cash proceeds received in connection with the Continued Dumping
      and Subsidy Offset Act of 2000 for the applicable period) over (b) all expenses
      and charges of a proper character (including current and deferred taxes on
      income and current additions to reserves) each for the applicable period, but
      not including in gross revenues:  (i) any gains (net of expenses and
      taxes applicable thereto) in excess of losses resulting from the sales,
      conversions or other dispositions of capital assets outside the ordinary course
      of business,  (ii) any gains resulting from the write-up of
      assets,  (iii) any earnings or deferred credit (or amortization of a
      deferred credit) of any Person acquired by the Borrower or any Subsidiary
      through purchase, merger or consolidation or otherwise for any year prior to
      the
      year of acquisition not included in gross revenues under GAAP,
      or  (iv) any deferred credit representing  the excess of
      equity in any Subsidiary of the Borrower at the date of acquisition over the
      cost of the investment in such Subsidiary, (v)  proceeds of life
      insurance  policies on any Responsible Officer exceeding $250,000 for
      such period, (vi) gains arising from the acquisition of debt securities for
      a
      cost less than the principal amount and accrued interest,  (vii)
      extraordinary items or transactions of a non-recurring or non-operating and
      material nature or arising from gains or sales relating to the discontinuance
      of
      operations, or  (viii) any portion of the net earnings (included in
      the determination of such Consolidated Net Earnings or such Consolidated Net
      Loss) of any Subsidiary which for any reason shall be unavailable for payment
      of
      dividends to the Borrower, all as determined in accordance with
      GAAP.  If the above calculation results in an amount less than zero,
      then for such period there shall be a Consolidated Net Loss as determined in
      the
      definition thereof in this Section.

    


    (b)           The
      definition of "Consolidated Net Loss" in Section 5.1 of the Credit Agreement
      is
      hereby replaced in its entirety with the following:

    


    "Consolidated
      Net
      Loss" shall mean, for any applicable period, for the Borrower and its
      Subsidiaries on a Consolidated basis, the excess of (a) expenses and charges
      of
      a proper character (including current and deferred taxes on income, provision
      for taxes on unremitted foreign earnings which are included in gross revenues,
      and current additions to resources) over (b) gross revenues for the same period
      (including all cash proceeds received in connection with the Continued Dumping
      and Subsidy Offset Act of 2000 for the applicable period), but not including
      in
      gross revenues those items listed in clauses (i) through (iv), inclusive, in
      the
      definition of “Consolidated Net Earnings” herein, all as determined in
      accordance with GAAP.  If the above calculation results in an amount
      of zero or more, then for such period there shall be Consolidated Net Earnings
      as determined in the definition thereof in this Section.

    


    (c)           Section
      5.2 of the Credit Agreement is hereby replaced in its entirety with the
      following:

    


    Section
      5.2.  Consolidated Operating Income to Consolidated Fixed
      Charges.  Consolidated Operating Income shall at all times be
      greater than 200% of Consolidated Fixed Charges.  This covenant shall
      be tested on a rolling four-quarter basis.  For purposes of
      calculating this ratio in each of the rolling four-quarter periods, the
      following amounts shall be excluded from the calculation of Consolidated Net
      Earnings and/or Consolidated Net Loss, as applicable for any
      period:  (1) the net, after tax effect of actual cash and non-cash
      charges, as applicable, recorded for any period in fiscal 2007 and fiscal 2008,
      in an amount up to $7,000,000 pretax in the aggregate (of which the cash portion
      of such charges shall be no greater than $2,000,000) related to the termination
      of the Borrower’s defined benefit pension plan and (2) the net, after tax effect
      of actual cash and non-cash charges, as applicable, recorded for any period
      in
      fiscal 2007 and fiscal 2008,  in an amount up to $10,000,000 pretax in
      the aggregate (of which the cash portion of such charges shall be no greater
      than $6,000,000) related to Borrower’s conversion of its Martinsville, Virginia
      facility.

    


    2.           This
      Amendment shall be deemed to be a contract made under, and for all purposes
      shall be construed in accordance with, the laws of the Commonwealth of
      Virginia.

    


    3.           The
      Borrower hereby acknowledges and agrees that, as of the date hereof, the unpaid
      principal balance of the Loan is $0.00 and that there are no set-offs or
      defenses against the Credit Agreement or the Note (as defined in the Credit
      Agreement).  The parties to this Amendment do not intend that this
      Amendment be construed as a novation of the Note or the Credit
      Agreement.  Except as hereby expressly extended and modified, the Note
      and Credit Agreement shall otherwise be unchanged, shall remain in full force
      and effect, and are hereby expressly approved, ratified and
      confirmed.

    


    IN
      WITNESS WHEREOF, the parties hereto have executed or caused this instrument
      to
      be executed under seal as of the day and year first above written.

     

     

     

    
      STANLEY
        FURNITURE COMPANY, INC.        [SEAL]

       

      
        	 By:	 /s/ Douglas I.
                Payne        
	 Name: 	 Douglas I. Payne
	 Title:	 Vice President -  Finance and
                Administration


      

       

                                                                        


      WACHOVIA
        BANK, NATIONAL ASSOCIATION       
[SEAL]

       

      
        	 By:     	 /s/ Jonathan R. Richardson
	 Name:	 Jonathan R. Richardson
	 Title:	 Vice President