picaamendment.htm

                                            EXHIBIT
    4.1

     

    


      AMENDMENT
        TO NOTE PURCHASE

    

    AND
      PRIVATE SHELF AGREEMENTS

    


    


    THIS
      AMENDMENT TO NOTE PURCHASE AND
      PRIVATE SHELF AGREEMENTS (this “Amendment”),
      is made and entered into as of October 12, 2007, by and among Stanley Furniture
      Company, Inc. (the “Company”), The Prudential
      Insurance Company of America (together with its successors and assigns,
“PICA”), Pruco Life Insurance Company of New Jersey
      (“Pruco”), Prudential Retirement Insurance and Annuity
      Company (“PRIAC”), Hartford Life Insurance Company
      (“Hartford”), Mutual of Omaha Insurance Company
      (“Mutual”) and Medica Health Plans
      (“Medica” and, together with PICA, Pruco, PRIAC,
      Hartford, Mutual and Medica, the
“Noteholders”).

    


    WITNESSETH:

    


    WHEREAS,
      (i) the
      Company and PICA are parties to that certain Note Purchase and Private Shelf
      Agreement, dated as of June 29, 1995 (as amended, restated, supplemented or
      otherwise modified from time to time, the “1995 Note
      Agreement”) and (ii) the Company, PICA, Hartford and Medica are
      parties to that certain Private Shelf Facility, dated as of September 8, 1999
      as
      amended and restated pursuant to that certain Amended and Restated Note Purchase
      and Private Shelf Agreement dated January 26, 2007 among the Company, PICA,
      Pruco, PRIAC, Hartford, Mutual and Medica (as amended, restated, supplemented
      or
      otherwise modified from time to time the “2007 Note
      Agreement” and, together with the 1995 Note Agreement, the
“Note Agreements”); capitalized terms used herein
      and
      not otherwise defined shall have the meanings assigned to such terms in the
      Note
      Agreements; and

     

    WHEREAS,
      the
      Company has requested that the Noteholders amend certain provisions of the
      Note
      Agreements, and subject to the terms and conditions hereof, the Noteholders
      are
      willing to do so;

     

    NOW,
      THEREFORE, for
      good and valuable consideration, the sufficiency and receipt of all of which
      are
      acknowledged, (i) the Company, and PICA agree that the 1995 Note Agreement
      is
      amended as follows and (ii) the Company, PICA, Pruco, PRIAC, Hartford, Mutual
      and Medica agree that the 2007 Note Agreement is amended as
      follows:

    


    1.  Amendment.

     

    The
      definition of “Consolidated Net Earnings”
set forth in Section 10B of the Note Agreements is hereby amended by replacing
      such definition in its entirety with the following:

     

    “Consolidated
      Net
      Earnings” shall mean, for any applicable period, for the Company
      and its Subsidiaries on a Consolidated basis, the excess of (a) gross revenues
      (including, but not  limited to, any and all proceeds received in
      connection with the Continued Dumping and Subsidy Offset Act of 2000) 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 (x) excluding from expenses and charges for the applicable period
      (A) a one time charge of $6,600,000 taken in the second quarter of the 2007
      fiscal year in connection with the termination of the Company’s defined benefit
      pension plan and (B) a one time restructuring charge of up to $6,000,000 to
      be
      taken no later than the 2009 fiscal year in connection with the conversion
      of
      the Company’s Martinsville, Virginia facility from a manufacturing facility to a
      warehouse facility and (y) 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 Company 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 generally accepted accounting
      principles,

    


    (iv)           any
      deferred credit representing the excess of equity in any Subsidiary of the
      Company 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
      Company,

    


    all
      as determined
      in accordance with generally accepted accounting principles.

     

    If
      the above calculation results in an amount less than zero, then for such period
      there shall be a “Consolidated Net Loss” as determined
      below.

     

    


     

    2.  Conditions
      to Effectiveness of this Amendment.
Notwithstanding any other provision of this
      Amendment, it is understood
      and agreed that this Amendment shall not become effective until (i) PICA shall
      have received executed counterparts to this Amendment from the Company and
      each
      Noteholder, (ii) the Noteholders have received reimbursement of, or evidence
      of
      the direct payment of, the reasonable fees, charges and disbursements of King
      & Spalding LLP, counsel to the Noteholders incurred in connection with this
      Amendment, and (iii) PICA shall have received copies of an amendment to the
      Company’s credit facility, amending such credit facility in a manner similar to
      the amendments to Section 10B of the Note Agreements contained
      herein.

    


    3.  Representations
      and Warranties.  To induce the
      Noteholders to enter into this Amendment, the Company hereby represents and
      warrants to the Noteholders that:

    


    (a)           The
      execution, delivery and performance by the Company of this Amendment
      (i) are within the Company’s power and authority; (ii) have been duly
      authorized by all necessary corporate and shareholder action; (iii) are not
      in contravention of any provision of the Company’s certificate of incorporation
      or bylaws or other organizational documents; (iv) do not violate any law or
      regulation, or any order or decree of any governmental authority; (v) do
      not conflict with or result in the breach or termination of, constitute a
      default under or accelerate any performance required by, any indenture,
      mortgage, deed of trust, lease, agreement or other instrument to which the
      Company or any of its Subsidiaries is a party or by which the Company or any
      such Subsidiary or any of their respective property is bound; (vi) do not result
      in the creation or imposition of any Lien upon any of the property of the
      Company or any of its Subsidiaries; and (vii) do not require the consent or
      approval of any governmental authority or any other person;

    


    (b)           This
      Amendment has been duly executed and delivered for the benefit of or on behalf
      of the Company and constitutes a legal, valid and binding obligation of the
      Company, enforceable against the Company in accordance with its terms;
      and

    


    (c)           After
      giving effect to this Amendment, no Default or Event of Default has occurred
      and
      is continuing as of the date hereof.

    


    4.  Effect
      of Amendment.  Except as set forth expressly herein, all
      terms of the Note Agreements, as amended hereby, shall be and remain in full
      force and effect and shall constitute the legal, valid, binding and enforceable
      obligations of the Company to the Noteholders.  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 the
      Noteholders under either Note Agreement, nor constitute a waiver of any
      provision of either Note Agreement.

    


    5.  Governing
      Law.   This Amendment shall be governed
      by, and construed in accordance with, the internal laws of the State of New
      York
      and all applicable federal laws of the United States of America.

    


    6.  No
      Novation.  This Amendment is not
      intended by the parties to be, and shall not be construed to be, a novation
      of
      either Note Agreement or an accord and satisfaction in regard
      thereto.

    


    7.  Costs
      and Expenses.  The Company agrees to pay on demand all
      costs and expenses of the Noteholders in connection with the preparation,
      execution and delivery of this Amendment, including, without limitation, the
      reasonable fees and out-of-pocket expenses of outside counsel for the
      Noteholders with respect thereto.

    


    8.  Counterparts.This
      Amendment may be executed by one or more of the parties
      hereto in any number of separate counterparts, each of which shall be deemed
      an
      original and all of which, taken together, shall be deemed to constitute one
      and
      the same instrument.  Delivery of an executed counterpart of this
      Amendment by facsimile transmission or by electronic mail in pdf form shall
      be
      as effective as delivery of a manually executed counterpart
      hereof.

    


    9.  Binding
      Nature.  This Amendment shall be binding
      upon and inure to the benefit of the parties hereto, their respective
      successors, successors-in-titles, and assigns.

    


    10.  Entire
      Understanding.  This Amendment sets
      forth the entire understanding of the parties with respect to the matters set
      forth herein, and shall supersede any prior negotia­tions or agreements,
      whether written or oral, with respect thereto.

    


    [Signature
      Pages To Follow]


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


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

    


    
 STANLEY
      FURNITURE COMPANY, INC.

     

    
      	 By:          /s/
              Douglas I.
              Payne	 	 
	 Name:    Douglas
              I. Payne	 	 
	 Title:      
Exective
              Vice-President
              - Finance & Adminstration	 	 


    

     

    The
      foregoing Agreement is

    hereby
      accepted as
      of the date

    first
      above
      written.

     

     

    
      	
              THE
                PRUDENTIAL INSURANCE COMPANY OF
                AMERICA

            
	By:
/s/
              Jay S.
              White
	Name:
              Jay S. White
	Title:
              Vice President


    

     

    
      
        	 HARTFORD
                LIFE INSURANCE COMPANY
	 
	 By:
                Prudential Private Placement Investors, LP
	 (as
                Investment Advisor)
	 
	 By:
                Prudential Private Placement Investors,
                Inc.
	 (as
                its General Partner)
	 
	 By:
/s/
                Jay S.
                White
	 Name:
                Jay S. White
	 Title:
                Vice President


      

    

                                             
      

                                             
      
      
        	 MEDICA
                HEALTH PLANS
	 By:
                Prudential Private Placement Investors, LP
	(as
                Investment Advisor)
	 
	 By:
                Prudential Private Investment
                Investors, Inc.
	(as
                its
                General Partner)
	 
	 By:
/s/
                Jay S. White   
	 Name:
                Jay S. White
	 Title:
                Vice President
	 


      

    

                                                 

                                                
      
        	 PRUCO
                LIFE INSURANCE COMPANY OF NEW
                JERSEY
	 
	 By:
/s/
                Jay S.White 
	 Name:
                Jay S. White
	 Title:
                Assistant Vice
                President


      

    

                     

     

    
      	 PRUDENTIAL
              RETIREMENT INSURANCE AND ANNUITY
              COMPANY
	 By: 
              Prudential Investment Management,
              Inc.,
	 as
              investment manager
	 
	 By:
/s/
              Jay S.
              White
	 Name:
              Jay S.
              White       
	 Title:
              Vice President
	 


    

     

     

    
      	 MUTUAL
              OF OMAHA INSURANCE COMPANY
	 By:
 
Prudential
              Private Placement
              Investors,
	 LP
              (as Investment Advisor)
	 
	 By:Prudential
              Private Placement Investors, Inc.
	 (as
              its General Partner)
	 
	 By:
/s/
              Jay S.
              White
	 Name:
              Jay S. White
	Title:
              Vice President