Exhibit 10.21
LOAN AND STOCK PURCHASE AGREEMENT
THIS LOAN AND STOCK PURCHASE AGREEMENT (as amended,
supplemented or modified from time to time, this "Loan Agreement")
is dated as of December 2, 1994 and is between LAWRENCE E. WEBB,
JR. (the "Borrower"), and STANLEY FURNITURE COMPANY, INC., a
Delaware corporation (the "Company").
The Borrower proposes to purchase shares of the common
stock of the Company and desires to borrow an amount to finance the
purchase of 30,000 shares. The Company is willing to lend such
amount to the Borrower on the terms and conditions set forth
herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
THE LOAN
Section 1.1. Commitment to Make Loans. The Company
agrees, on the terms and conditions set forth in this Loan
Agreement, to make a non-recourse loan (the "Loan") to the Borrower
on or prior to December 10, 1994 in an aggregate principal amount
equal to the fair market value (as determined under the Stanley
Furniture Company, Inc. Executive Loan Plan) (the "Fair Market
Value") of 30,000 shares of Company Common Stock, $.02 par value
("Common Stock"). The loan shall be evidenced by, and repayable
with interest in accordance with, a single non-recourse promissory
note substantially in the form of Exhibit A hereto and
appropriately completed (the "Note").
Section 1.2. Non-Recourse Liability. The Company shall
have no recourse against the Borrower on account of the Loan, and
the Borrower shall have no personal liability with respect to any
obligation hereunder or with respect to the representations and
warranties contained herein. The Company shall have no recourse
against the Borrower and the Borrower shall have no obligation to
make any payment on the Loan except to the extent of the Company's
rights under the Loan Agreement or as provided in the Note.
ARTICLE II
FORGIVENESS OF PRINCIPAL AND INTEREST
Section 2.1. Continuation of Employment. If the
Borrower is employed by the Company on a Payment Date (as defined
below), the Company shall forgive the payment of all accrued
principal and interest due under the terms of the Note on that
Payment Date. For purposes of this Loan Agreement, the last day of
December in 1994, 1995, 1996, 1997, and 1998 shall each be a
Payment Date. January 2, 1999 is not a Payment Date.
Section 2.2. Disability.
(a) If the Borrower becomes Disabled before January 1,
1999 and is employed by the Company immediately before he becomes
Disabled, the Company shall forgive the payment of all principal
and interest due on any future Payment Date. The Borrower shall
remain liable for payment of any principal due on the Note that is
not payable on a Payment Date.
(b) For purposes of this Loan Agreement, "Disabled"
means a physical or mental condition that prevents the Borrower
from performing his customary duties with the Company. The Company
shall determine whether the Borrower is Disabled on the basis of
competent medical evidence, and such determination shall be
conclusive.
Section 2.3. Death. If the Borrower dies while
employed by the Company, the Note shall become payable in full
according to its terms.
Section 2.4. Change of Control. If the Borrower is
employed by the Company when a Change of Control occurs, the
Company shall forgive any remaining principal and interest due on
the Note and shall promptly issue to the Borrower shares of Common
Stock as provided in Article III. For purposes of this Loan
Agreement, Change of Control shall have the same meaning as in the
Stanley Furniture Company, Inc. 1994 Stock Option Plan.
Section 2.5. Termination of Employment. If the
Borrower terminates employment with the Company other than as
provided in Sections 2.2 or 2.3, the Company shall not forgive any
further amounts of principal or interest on the Loan and all
payments shall be due and payable as provided in the Note.
Section 2.6. Tax Due on Forgiveness. If the Company
forgives any principal or interest on the Loan under Sections 2.1,
2.2, or 2.4, the Company shall make an additional payment to the
Borrower to compensate the Borrower for any federal and state
income taxes that may be payable by the Borrower due to the
forgiveness of the Loan or due to the payment under this Section
2.6.
ARTICLE III
ISSUANCE OF STOCK
Section 3.1. Issuance of Stock. On January 2, 1999, or
if sooner upon forgiveness and/or payment of the Note in full, the
Company shall issue 30,000 shares of Common Stock, subject to
adjustment pursuant to Section 3.2 and Section 3.3.
Section 3.2. Adjustment for Changes in Capital
Structure. (a) In case the Company shall at any time subdivide
(by any stock split, stock dividend or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the number
of shares issuable pursuant to Section 3.1 prior to such
subdivision shall be proportionately increased, and, conversely, in
case the outstanding shares of Common Stock shall be combined into
a smaller number of shares, the number of shares issuable pursuant
to Section 3.1 prior to such combination shall be proportionately
decreased.
(b) If any capital reorganization or reclassification
of the capital stock of the Company, or any partial or total
liquidation or dissolution or reduction in capital, capital surplus
or paid in capital, shall be effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities or
assets (other than cash) with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or
reclassification, lawful and adequate provisions shall be made
whereby Borrower shall have the right to receive, upon the basis
and upon the terms and conditions specified herein and in lieu of
the shares of Common Stock immediately theretofore receivable
pursuant to Section 3.1, such shares of stock, securities or assets
(other than cash) as would be issued or paid with respect to or in
exchange for a number of outstanding shares of Common Stock
issuable pursuant to Section 3.1 immediately theretofore (subject
to the obligation to repay the Note pursuant to the terms hereof).
In any such case appropriate provisions shall be made with respect
to the rights and interests of Borrower to the end that the
provisions hereof shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets (other
than cash) thereafter issuable pursuant to Section 3.1.
Section 3.3. Adjustment in the Event of Default. Upon
a Payment Default (as defined in Section 5.1(b)), the shares of
Common Stock to be issued pursuant to Section 3.1 shall be reduced
by the number equal to the amount of the Payment Default divided by
the Fair Market Value of a share of Common Stock on the date the
defaulted payment was due.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.1. Binding Effect. This Loan Agreement
constitutes a valid and binding agreement of the Borrower,
enforceable against the Borrower in accordance with its terms,
except as (i) the enforceability hereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability.
ARTICLE V
DISTRIBUTIONS AND DEFAULT
Section 5.1. Distributions. (a) So long as no Event of
Default shall have occurred and be continuing, an amount equal to
the amount of cash dividends with respect to the number of Shares
issuable pursuant to Section 3.1 at the time of such dividend shall
be treated as a prepayment of the portion of the Loan that is due
on January 2, 1999. The following items shall be treated as a
prepayment of the Loan:
(A) an amount equal to the amount of dividends
and other distributions paid or payable in cash on the number of
Shares then issuable pursuant to Section 3.1 at the time of such
dividends in connection with a partial or total liquidation or
dissolution or with a reduction of capital, capital surplus or
paid-in-surplus, and
(B) an amount equal to the amount cash paid in
redemption of, or in exchange for, the number of Shares then
issuable pursuant to Section 3.1.
(b) For purposes of this Loan Agreement, each of the
following events shall be an Event of Default:
(i) the Borrower shall fail to pay within ten
calendar days following the date when due any principal of or
interest on the Note unless such principal or interest is forgiven
by the Company (a "Payment Default");
(ii) the Borrower shall fail to observe or perform
any covenant or agreement contained in this Loan Agreement (other
than those covered by clause (i) above) for 30 days after written
notice thereof has been given to the Borrower by the Company; or
(iii) any representation, warranty, certification or
statement made by the Borrower in this Loan Agreement shall prove
to have been incorrect in any material respect when made.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Notices. All notices, requests and other
communications to a party hereunder shall be in writing and shall
be given to such party at its address set forth on the signature
page hereof or such other address as such party may hereafter
specify for that purpose by notice to the other.
Section 6.2. No Waivers. No failure or delay by the
Company in exercising any right, power or privilege under this Loan
Agreement shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
The rights and remedies provided herein shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 6.3. Amendments and Waivers. Any provision of
this Loan Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and
the Company.
Section 6.4. Successors and Assigns. The provisions of
this Loan Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
This Loan Agreement is for the benefit of the Company and its
successors and assigns, and in the event of an assignment of all or
any of the Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Loan Agreement shall not be transferable
by the Borrower except by will or by the laws of descent and
distribution or, if permitted by Rule 16b-3, pursuant to a
qualified domestic relations order (as defined in Code section
414(p)) ("QDRO").
Section 6.5. Governing Law. This Loan Agreement shall
be governed by and construed in accordance with the laws of the
Commonwealth of Virginia.
Section 6.6. Severability. If any provision hereof is
invalid and unenforceable in any jurisdiction, then, to the fullest
extent permitted by law, (i) the other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Company in order to carry out
the intentions of the parties hereto as nearly as may be possible
and (ii) the invalidity or unenforceability of any provision hereof
in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction.
Section 6.7. Counterparts; Effectiveness. This Loan
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Loan Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
LAWRENCE E. WEBB, JR.
s/Lawrence E. Webb, Jr.
STANLEY FURNITURE COMPANY, INC.
By s/Albert L. Prillaman
Title: President
___________________________________
PROMISSORY NOTE
**************
Stanleytown, Virginia
$300,000.00 Date: December 2, 1994
FOR VALUE RECEIVED, the maker, Lawrence E. Webb, Jr., promises
to pay to the order of Stanley Furniture Company, Inc. (the
"Company"), the principal sum of $300,000.00, together with
interest from the date of this note at the rate of 7.60% per annum,
compounded semi-annually, pursuant to the Loan And Stock Purchase
Agreement dated as of December 2, 1994 between the Borrower and the
Company (as the same may be amended from time to time, the "Loan
Agreement"), in installments as hereinafter provided. The interest
shall be paid in annual installments beginning December 31, 1994
and continuing until this note is fully paid. The principal shall
be paid in five annual installments of $30,000.00 (totaling one-
half of the principal), beginning December 31, 1994 and continuing
until December 31, 1998 and one installment of $150,000.00 (equal
to one-half of the principal) paid on January 2, 1999. If not
sooner paid, the entire indebtedness shall be due and payable on
the earlier of January 2, 1999 or 90 days after the death of the
Borrower.
This Note is payable at the corporate office of the Company or
at such other place as the Company may designate in writing from
time to time.
The right of prepayment is reserved, in whole or in part, at
any time without penalty.
If any payment due hereunder is not made within ten calendar
days following the date on which such payment was due, or if the
maker is declared or adjudicated to be bankrupt by a United States
Bankruptcy Court, the maker shall be in default hereunder.
Presentment, demand, protest, and notices of dishonor and of
protest are hereby waived by the maker. The maker agrees that he
will pay, to the extent permitted by law, all expenses incurred in
collecting this obligation, including reasonable attorney's fees,
should this obligation or any part thereof not be paid as and when
due.
This Note and the obligations evidenced hereby are without
recourse to the Borrower and the Borrower shall have no personal
liability with respect hereto and no holder hereof shall have any
right to assets of the Borrower except as provided in the Loan
Agreement.
This Note is the Note referred to in the Loan Agreement.
Terms defined in the Loan Agreement are used herein with the same
meanings. Reference is made to the Loan Agreement for provisions
for the waiver of certain payments, and the acceleration of the
maturity hereof.
This note shall be governed by, and construed in accordance
with, the substantive laws of the Commonwealth of Virginia.
s/Lawrence E. Webb, Jr.
Lawrence E. Webb, Jr.