Consent Agreement, dated December 7, 2017, between Stanley Furniture Company, Inc. and Wells Fargo Bank, National Association

Re:

Consent to Credit Agreement

1.

Defined Terms. Each capitalized term contained herein and not otherwise defined herein shall have the respective meaning set forth in the Loan Documents.

2.

Consents.

(a)

Subject to the terms, conditions and limitations set forth herein, Wells Fargo hereby consents to the Company’s entry into the APA, and agrees that the Company’s entry into the APA shall not result in an Event of Default under the Credit Agreement.

(b)

Consent to Change in CEO. Subject to the terms, conditions and limitations set forth herein, Wells Fargo hereby agrees to undertake all required background checks on the Interim CEO and further agrees, if the Interim CEO passes all such background checks, to consent to the replacement of the CEO by the Interim CEO. If the Interim CEO does not pass all of such background checks, Wells Fargo shall notify the Company, which shall then appoint a replacement for the Interim CEO by not later than March 1, 2018, in accordance with Section 5.3(c) of the Credit Agreement and subject to the consent of Wells Fargo as provided therein. The failure to so appoint a replacement to the Interim CEO acceptable to Wells Fargo and otherwise in accordance with Section 5.3(c) of the Credit Agreement on or before March 1, 2018 shall constitute an Event of Default under the Credit Agreement.

3.

Limitations on Consent. This letter agreement is limited to the matters expressly set forth above and shall not be deemed to waive, amend or modify, or consent to the non-compliance with, any other term of the Credit Agreement or any other Loan Document, each of which is hereby ratified and reaffirmed, or to consent to any subsequent failure of the Company to comply with any term or provision of the Loan Documents, each of which shall remain in full force and effect. Without limiting the foregoing, this letter agreement shall not constitute a consent to the Company’s transfer of any of its assets to the extent such transfer is prohibited by Section 5.3(g) of the Credit Agreement or any other provision of the Credit Agreement and the other Loan Documents, and this letter agreement shall not constitute or authorize a release of Wells Fargo’s liens and security interests on such assets; provided however, that Wells Fargo acknowledges that the Company may close the sale of such assets and transfer the pursuant to the APA if, prior to or concurrently with such closing, the Company both (x) terminates the Credit Agreement in accordance with Section 1.5(c) of the Credit Agreement, and (y) complies with all requirements of Section 1.5(b) of the Credit Agreement necessary to cause Wells Fargo to release its security interest in the assets of the Company and the Guarantor.  Wells Fargo agrees that (i) it shall not require thirty (30) days prior notice of termination of the Credit Agreement as required by Section 1.5(c) of the Credit Agreement, but Wells Fargo may require up to three (3) Business Days’ notice of such termination to allow it to prepare for such termination, and (ii) it shall release its liens and security interests in the assets of the Company upon the Company’s compliance with the requirements of Section 1.5(b) of the Credit Agreement.

4.

Consent Fee. In consideration of the agreements of Wells Fargo as set forth herein, the Company agrees to pay to Wells Fargo a consent fee in the amount of Fifteen Thousand Dollars ($15,000) (the “Consent Fee”), which Consent Fee shall be due and payable on the date hereof, and which Consent Fee, once due and payable, shall be fully earned and not subject to refund or rebate for any reason.

5.

Additional Events of Default.

(a)

Any default by the Company or the Seller in the payment or performance of any obligation under, or any defined event of default occurs, under the terms of the APA, and in either such case, such default is not cured after the lapse of any applicable cure period provided therein;

(b)

the termination of the APA by any party thereto; or

(c)

the failure to close the sale of substantially all of the assets of the Company as contemplated by the APA on or prior to February 28, 2018.

6.

Limitation on Borrowing. In addition to the other limitations set forth in the Credit Agreement, from the date hereof until February 28, 2018, the Company shall not cause or permit the sum of the outstanding Advances and Letter of Credit Usage to at any time exceed Two Million Dollars ($2,000,000).

7.

Continuing Validity. The Company understands and agrees that in granting its consent as set forth herein, Wells Fargo is relying upon the Company’s representations, warranties, and agreements, as set forth in the Loan Documents. Except as expressly modified pursuant to this letter agreement, the terms of the Loan Documents remain unchanged and in full force and effect. Wells Fargo’s agreement to provide the consent pursuant to this letter agreement in no way shall obligate Wells Fargo to make any future waivers, consents or modifications to the Loan Documents. Nothing in this letter agreement shall constitute a satisfaction of any obligations under the Loan Documents. It is the intention of Wells Fargo and the Company to retain as liable parties all makers and endorsers of Loan Documents, unless the party is expressly released by Wells Fargo. No maker, endorser, or guarantor will be released by virtue of this letter agreement. The terms of this paragraph apply not only to this letter agreement, but also to any subsequent loan modification, consent or waiver.

8.

Release. The Company hereby acknowledges and agrees that to the best of the Company’s knowledge: (a) neither the Company nor any of its affiliates has any claim or cause of action against Wells Fargo (or any of its respective affiliates, officers, directors, employees, attorneys, consultants or agents), and (b) Wells Fargo has heretofore properly performed and satisfied in a timely manner all of its obligations to the Company under the Credit Agreement. Notwithstanding the foregoing, Wells Fargo wishes (and the Company agrees) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any of Wells Fargo’s rights, interests, security and/or remedies under the Credit Agreement. Accordingly, for and in consideration of the agreements contained in this letter agreement and other good and valuable consideration, the Company (for itself and its affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the “Releasors”) does hereby fully, finally, unconditionally and irrevocably release and forever discharge Wells Fargo and each of its affiliates, officers, directors, employees, attorneys, consultants and agents (collectively, the “Released Parties”) from any and all debts, claims, obligations, damages, costs, attorneys’ fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute, or otherwise, which any Releasor has heretofore had, now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done on or prior to date hereof arising out of, connected with or related in any way to the Credit Agreement, or any act, event or transaction related or attendant thereto, or Wells Fargo’s agreements contained therein, or the possession, use, operation, or control of any of the Company’s assets, or the making of any Advance, or the management of such Advance or the collateral securing the Company’s Obligations to Wells Fargo on or prior to the date hereof. Notwithstanding anything to the contrary, the above release only applies to all matters known to Company at this time.

9.

Conditions to Effectiveness. The consent set forth in this letter agreement shall be effective upon satisfaction of all of the following conditions: (a) Wells Fargo’s and the Company’s execution and delivery of this letter agreement, (b) the acknowledgment of this letter agreement by the Guarantor, and (c) receipt by Wells Fargo of the Consent Fee referenced in Section 4 above.

10.

Miscellaneous. This letter agreement may be executed in one or more counterparts, each of which shall constitute an original, and all of which shall constitute one and the same instrument. This letter agreement may be executed by facsimile or other electronic transmission, including by “.pdf” and other similar format. This letter agreement and all acts and transactions hereunder and all rights and obligations of Wells Fargo and Company shall be governed by the laws of the State of New York.

Very truly yours,

Brian J. Martin

Senior Vice President