SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C.  20549
 
 
FORM 8-K
 
CURRENT REPORT
 
 
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported) September 23, 2008
 
 
 
 
                                                                                                                  
                                                                                                 Stanley Furniture Company, Inc.                                                                                              
(Exact name of registrant as specified in its charter)
 
 
                                                       Delaware                                                       0-14938                                                  54-1272589                             
                                                 (State or other                                         (Commission File Number)                                IRS Employer
                                                 jurisdiction of                                                                                                                    Identification No.)
                                                  incorporation)
 
 
                                       1641 Farystone Park Highway, Stanleytown, Virginia                                       24168
                                                        (Address of principal executive offices)                                                         (Zip Code)
 
 
   Registrant's telephone number, including area code:    ( 276) 627-2000
 
                                               
                                                                                                             N/A
(Former name or former address, if changed since last report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
 
 
 
 
 
Item 1.01.                      Entry into a Material Definitive Agreement.
 
[On September 24, 2008, Stanley Furniture Company, Inc. (the “Company”) entered into indemnification agreements with its directors (the “Indemnification Agreements”).  The Indemnification Agreements require the Company, among other things, to indemnify each indemnitee to the fullest extent permitted by law for certain expenses incurred in a proceeding arising out of the indemnitee’s service as a director of the Company or of another company at the request of the Company.  The Indemnification Agreements also provide for the advancement of such expenses to the indemnitee by the Company.  The foregoing description is qualified in its entirety by reference to the form of such Indemnification Agreements, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.]
 
Item 5.02.                      Departure of Directors or Certain Officers; Election of Directors; Appointment ofCertain Officers; Compensatory Arrangements of Certain Officers.
 
On September 23, 2008, the Company announced that Albert L. Prillaman had been elected Chief Executive Officer of the Company.  Biographical information for Mr. Prillaman is incorporated herein by reference to the information presented in the Company’s Proxy Statement for the 2008 Annual Meeting of Stockholders filed with Securities and Exchange Commission on March 4, 2008.
 
Also on September 23, 2008, Jeffrey R. Scheffer resigned as President and Chief Executive Officer and a director of the Company effective immediately. In connection with his resignation, Mr. Scheffer entered into a separation agreement with the Company (the “Separation Agreement”).  Pursuant to the Separation Agreement, Mr. Scheffer will receive a lump sum payment of $1,000,000 on the first day of the seventh month following his separation from service with the Company.  The Separation Agreement provides for a mutual release by the Company and Mr. Scheffer.  Mr. Scheffer is also subject to certain non-solicitation requirements under the Separation Agreement.  The foregoing description is qualified in its entirety by reference to the Separation Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.
 
A copy of the press release announcing Mr. Prillaman’s election and Mr. Scheffer’s resignation is attached hereto as Exhibit 99.1.
 
 
Item 5.03.                      Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
 
On September 24, 2008, the Board of Directors of the Company approved an amendment and restatement of the Company’s Bylaws.  Section 1 and Section 5 of Article IV were amended to remove the title of President to reflect that Albert L. Prillaman as Chairman is the Chief Executive Officer of the Company.  Certain conforming changes were made to other sections of the Company’s Bylaws.
 
The foregoing description of the amendments to the Company’s Bylaws is qualified in its entirety by reference to the full text of the Amended and Restated Bylaws.  This description should be read in conjunction with the Company’s Amended and Restated Bylaws, a copy of which is attached hereto as Exhibit 3.1 and incorporated herein by reference.
 
 
 
 
 
 
 
 
Item 9.01.   Financial Statements and Exhibits .
 
 
(d) Exhibits
 
Exhibit No.
 
Description                                                                                                            
3.1
 
Stanley Furniture Company, Inc. Bylaws Amended and Restated, effective September 24, 2008
10.1
  
Form of Indemnification Agreement
10.2
 
Voluntary Separation Agreement and General Release by and between Jeffrey R. Scheffer and Stanley Furniture Company, Inc., dated September 23, 2008
99.1
 
Press Release, dated September 23, 2008
 
 
 
 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
                                    STANLEY FURNITURE COMPANY, INC.
 
 
Date: September 25, 2008                                                                                       By:/s/ Douglas I. Payne
                                                                Douglas I. Payne- Executive VP – Finance & Administration




Exhibit 3.1
BY-LAWS
OF
STANLEY FURNITURE COMPANY, INC.
(a Delaware corporation, the “Corporation”)
(As amended as of September 24, 2008)

__________________

ARTICLE I
 
OFFICES
 
SECTION 1.   OFFICES.   The Corporation shall maintain its registered office in the State of Delaware, at 229 South State Street, City of Dover, County of Kent  19901, and its Resident Agent at such address is The Prentice-Hall Corporation System, Inc.  The Corporation may also have offices in such other places in the United States or elsewhere as the Board of Directors may, from time to time, appoint or as the business of the Corporation may require.
 
ARTICLE II
 
MEETINGS OF STOCKHOLDERS
 
SECTION 1.   ANNUAL MEETINGS.   Annual meetings of stockholders for the election of directors and for such other business as properly may be conducted at such meeting shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors shall determine by resolution and set forth in the notice of the meeting.  In the event that the Board of Directors fails so to determine the time, date and place for the annual meeting, it shall be held, beginning in 1985, at the principal office of the Corporation at 10:00 A.M. on the first Tuesday of May of each year.  In the event such day shall fall upon a legal holiday, then the annual meeting shall be held on the next succeeding business day at the aforementioned time and place.
 
SECTION 2.   SPECIAL MEETINGS.   Special meetings of the Stockholders for any purpose may be called by the Chairman or by resolution of the Board of Directors.  Notice of each special meeting shall be given according to Section 3 of this Article II.
 
SECTION 3.   NOTICE OF MEETINGS.   Written notice of each meeting of the Stockholders of the Corporation, in which the place, date and time of the meeting and, in the event of a special meeting, the purposes for which it is called are set forth, shall be mailed to or delivered to each Stockholder of record entitled to vote thereat.  Unless otherwise provided by law, the Corporation’s Certificate of Incorporation or these By-laws, such notice shall be given not less than ten (10) days nor more than sixty (60) days before the date of any such meeting.  Except where prohibited by law, the Corporation’s Certificate of Incorporation or these By-laws, business not set forth in the notice of meeting may also be transacted at such meeting, provided only that such business properly comes before the meeting.
 
SECTION 4.   QUORUM.   Except as otherwise required by law or the Corporation’s Certificate of Incorporation, the presence, in person or by proxy, at any meeting of the stockholders of the Corporation, of stockholders holding a majority of the outstanding stock of the Corporation entitled to vote thereat shall constitute a quorum thereof.
 
SECTION 5.   VOTING.   Each Stockholder entitled to vote in accordance with the terms of the Corporation’s Certificate of Incorporation and these By-laws shall be entitled to one (1) vote, in person or by proxy, for each share of stock held by him, on all matters to come before the stockholders.  Upon the demand of any stockholder entitled to vote at any meeting, the vote upon any question before such meeting shall be by written ballot.  All elections of directors shall be decided by plurality vote.  All other questions shall be decided by a majority vote, unless otherwise required by these By-laws, the Corporation’s Certificate of Incorporation or law.
 
SECTION 6.   VOTING LISTS.   A complete list of the stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held.  The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
 
SECTION 7.   INSPECTORS.   The Board of Directors or the Chairman presiding at any meeting of stockholders shall appoint one or more persons to act as inspectors at such meeting in accordance with applicable law.
 
SECTION 8.   CHAIRMAN OF MEETINGS.   The Chairman of the Board of Directors of the Corporation shall preside at all meetings of stockholders and of the Board of Directors, at which he is present.  In the event of his absence or disability, the Vice Chairman, if any be elected, or, in the event of the absence or disability of the Vice Chairman, the Chief Executive Officer of the Corporation shall preside at any such meetings.
 
SECTION 9.   ACTION WITHOUT A MEETING.   Unless otherwise provided by the Corporation’s Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting, without prior notice, and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote were present and voted.  Prompt notice of corporate action taken without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
 
SECTION 10.   ADJOURNMENT.   At any meeting of stockholders of the Corporation, if less than a quorum be present, a majority of the stockholders entitled to vote at the meeting, present in person or by proxy, shall have the power to adjourn the meeting to another time, place and date without notice other than by announcement at the meeting so adjourned.  Any business may be transacted at any adjourned meeting that could have been transacted at the meeting originally noticed, but only those stockholders entitled to vote at the meeting originally noticed shall be entitled to vote at any adjourned meeting.  If the adjournment is for more than thirty (30) days from the date of the meeting originally noticed, or if after the adjournment a new record date, as provided for in Section 5 of Article V of these By-laws is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting.
 
SECTION 11.   NOMINATIONS.   Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote in the election of directors generally.  However, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors of a meeting only if written notice if such stockholders intend to make such nomination or nominations have been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of stockholders (other than the 1994 Annual Meeting), 120 days in advance of the anniversary date of the Corporation's proxy statement (or information statement in lieu thereof) in connection with the previous year's Annual Meeting of Stockholders and (ii) with respect to an election to be held at the 1994 annual meeting or a special meeting of stockholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders.
 
Each such notice shall set forth:  (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholders; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as a director of the Corporation if so elected.  The Chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.
ARTICLE III
 
BOARD OF DIRECTORS
 
SECTION 1.   POWERS.   The property, business and affairs of the Corporation shall be managed and controlled by its Board of Directors.  The Board shall exercise all of the powers of the Corporation except as are by law, the Corporation’s Certificate of Incorporation or these By-laws conferred upon or reserved to the stockholders.
 
SECTION 2.   NUMBER AND TERM.   The number of directors shall be at least one (1).  The number of directors shall be fixed from time to time by the Board.  The number of directors so fixed by the Board of Directors shall, for purposes of these By-laws, be deemed the number of directors constituting the entire Board of Directors.  The Board of Directors shall be elected by the stockholders in the manner and for such terms as specified in the Corporation’s Certificate of Incorporation.  Directors need not be stockholders.
 
SECTION 3.   RESIGNATIONS.   Any director or member of a committee of the Board may resign at any time.  Such resignation shall be made in writing or by electronic transmission, and shall take effect at the time specified therein, and if no time is specified, at the time of its receipt by the Chairman or Secretary.  The acceptance of a resignation shall not be necessary to make it effective.
 
SECTION 4.   REMOVAL.   Any director or the entire Board of Directors may be removed for cause at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote for the election of directors at any annual or special meeting of the stockholders called for that purpose.  Vacancies thus created may be filled by a majority vote of the directors then in office, although less than a quorum, or by a sole remaining director.
 
SECTION 5.   VACANCIES AND NEWLY CREATED DIRECTORSHIPS.   Vacancies in the office of any director or member of a committee of the Board of Directors and newly created directorships may be filled by a majority vote of the remaining directors in office, although less than a quorum or by a remaining sole director.  Any director so chosen shall hold office for the unexpired term of his predecessor and until his successor shall be elected and qualified or until his earlier death, resignation or removal.  However, the directors may not fill the vacancy created by removal of a director by electing the director so removed.
 
SECTION 6.   MEETINGS.   The newly elected directors shall hold their first meeting to organize the Corporation, elect officers and transact any other proper business.  An annual organizational meeting of the Board of Directors shall be held immediately after each annual meeting of the stockholders, or at such time and place as may be noticed for such meeting.
 
Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by the directors.
Special meetings of the board may be called by the Chairman and shall be called by the Secretary on the written request of any two (2) directors with at least one (1) day’s notice to each director.  A special meeting shall be held at such place or places as may be determined by the directors or as shall be stated in the notice of the meeting.
SECTION 7.   QUORUM, VOTING AND ADJOURNMENT.   The presence of at least a majority of the total number of directors or of any committee of the Board shall constitute a quorum for the transaction of business at any meeting of the Board of Directors or committee of the Board, as the case may be.  At any meeting of the Board or any committee of the Board, if less than a quorum be present, a majority of the directors or committee members present may adjourn the meeting from time to time until a quorum is present.  No notice of such adjourned meeting need be given other than the announcement at the meeting so adjourned.  The vote of a majority of the directors or committee members present at the meeting at which a quorum is present shall be the act of the Board or any committee of the Board as the case may be.
 
SECTION 8.   COMMITTEES.   The Board of Directors may, by resolution or resolutions passed by a majority of the entire Board, designate one or more committees, including but not limited to an Executive Committee and an Audit Committee, each such committee to consist of one or more of the directors of the Corporation.  The Board may designate one or more directors as alternate members of any committee, to replace any absent or disqualified member at any meeting of the committee.  Any such committee, to the extent specified by the resolution of the Board, may have and exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Corporation’s Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending these By-laws; and, unless the enabling resolution of the Board expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock of the Corporation.  All committees of the Board shall report their proceedings to the Board when required.
 
SECTION 9.   ACTION WITHOUT A MEETING.   Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board may be taken without notice and without a meeting if all members of the Board or committee, as the case may be, consent to the action in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the records of the meetings of the Board of Directors.
 
Members of the Board of Directors or of any committee of the Board, may participate in a meeting of the Board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.  Participation in a meeting pursuant to this section shall constitute presence in person at such meeting.
SECTION 10.   COMPENSATION.   The Board of Directors may from time to time, in its discretion, fix the amounts which shall be payable to directors and to members of any committee of the Board for attendance at the meetings of the Board of Directors or of such committee and for services rendered to the Corporation.  Any director may serve the Corporation in any other capacity as an officer, agent or otherwise, and receive compensation therefor.
 
SECTION 11.   CORPORATE BOOKS.   The books of the Corporation, except such as are required by law to be kept within the state, may be maintained outside the State of Delaware, at such places as the Board of Directors may from time to time determine.
 
ARTICLE IV
 
OFFICERS
 
SECTION 1.   The officers of the Corporation shall be a Chairman of the  Board, a Chief Executive Officer, one or more Vice Presidents, a Treasurer and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office for a term of one (1) year and until their successors are elected and qualified or until their earlier death, resignation or removal.  In addition, the Board of Directors may elect a Vice Chairman of the Board and additional Vice Presidents, including an Executive Vice President, one or more Assistant Treasurers and one or more Assistant Secretaries, who shall hold their office for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.  The initial officers shall be elected at the first meeting of the Board of Directors and, thereafter, at the annual organizational meeting of the Board held after each annual meeting of the stockholders.  Any number of offices may be held by the same person.
 
SECTION 2.   OTHER OFFICERS AND AGENTS.   The Board of Directors may appoint such other officers and agents as it deems advisable, who shall hold their office for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.
 
SECTION 3.   CHAIRMAN.   The Chairman of the Board shall be a director of the Corporation.  The Chairman shall preside at all meetings of the Board of Directors and of the stockholders and shall have such powers and perform such other duties as from time to time may be assigned to him by the Board of Directors.
 
SECTION 4.   VICE-CHAIRMAN.   The Vice Chairman of the Board of Directors, if any be elected, shall generally aid and assist the Chairman of the Board and shall have such powers and shall perform such duties of the Chairman of the Board, in the absence or disability of such officer.  In addition, the Vice Chairman of the Board shall have such powers and perform such other duties as from time to time may be assigned to him by the Board of Directors.
SECTION 5.   CHIEF EXECUTIVE OFFICER.   The Chief Executive Officer (the “CEO”) shall be the Chief Executive Officer of the Corporation and shall, in connection with the performance of his duties, report directly to the Board.  He shall perform such other duties as may be prescribed from time to time by the Board or these By-laws.
In the absence, disability or failure of the Chairman of the Board or Vice-Chairman of the Board, if any be elected, to act, or a vacancy in such offices, the CEO shall preside at all meetings of the stockholders and of the Board of Directors.  Except as the Board of Directors shall authorize the execution thereof in some other manner, the CEO shall execute bonds, mortgages and other contracts on behalf of the Corporation, and shall cause the seal to be affixed to any instrument requiring it and, when so affixed, the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.
SECTION 6.   VICE PRESIDENTS.    Each Vice President (of whom one or more may be designated an Executive Vice President) shall generally aid and assist the CEO in such manner as the CEO shall direct.  Each Vice President shall have such powers and shall perform such duties as shall be assigned to him by the CEO or the Board of Directors.
 
SECTION 7.   TREASURER.   The Treasurer shall have the custody of the corporate funds, securities, evidences of indebtedness and other valuables of the Corporation and shall keep full and accurate account of receipts and disbursements in books belonging to the Corporation.  He shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors.
 
The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors or the CEO.  He shall render to the CEO and Board of Directors, upon their request, a report of the financial conditions of the Corporation.  If required by the Board of Directors, he shall give the Corporation a bond for the faithful discharge of his duties in such amount and with such surety as the board shall prescribe.
SECTION 8.   SECRETARY.   The Secretary will cause minutes of all meetings of the stockholders and directors to be recorded and kept; cause all notices required by these By-laws or otherwise to be given properly and see that the minute books, stock books, and other non-financial books of the Corporation are kept properly.  In addition, the Secretary shall have such powers and shall perform such duties as shall be assigned to him by the Board of Directors.
 
SECTION 9.   ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.   Each Assistant Treasurer and each Assistant Secretary, if any be elected, shall be vested with all the powers and shall perform all the duties of the Treasurer and Secretary, respectively, in the absence or disability of such officer, unless or until the Board of Directors shall otherwise determine.  In addition, Assistant Treasurers and Assistant Secretaries shall have such powers and shall perform such duties as shall be assigned to them by the Board of Directors.
 
SECTION 10.   CORPORATE FUNDS AND CHECKS.   The funds of the Corporation shall be kept in such depositories as shall from time to time be prescribed by the Board of Directors.  All checks or other orders for the payment of money shall be signed by such officers, employees or agents as may from time to time be authorized by the Board of Directors, with such countersignature, if any, as may be required by the Board of  Directors.
 
SECTION 11.   CONTRACTS AND OTHER DOCUMENTS.   The Chairman of the Board, the CEO, any Vice President or the Treasurer, or such other officer or officers as may from time to time be authorized by the Board of Directors, shall have the power to sign and execute on behalf of the Corporation deeds, conveyances and contracts, and any and all other documents requiring execution by the  Corporation.
 
SECTION 12.   OWNERSHIP OF STOCK OF ANOTHER CORPORATION.   The Chairman of the Board, the CEO, any Vice President, the Treasurer, the Secretary, or such other officer or person as shall be authorized by the Board of Directors, shall have power and authority on behalf of the Corporation to attend and to vote at any meeting of the stockholders of any corporation in which this Corporation may hold stock; may exercise on behalf of this Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting; and shall have power and authority to execute and deliver proxies and consents on behalf of this Corporation in connection with the exercise by this Corporation of the rights and powers incident to the ownership of such stock.
 
SECTION 13.   DELEGATION OF DUTIES.   The Board of Directors may delegate to another officer or director, the powers or duties of any officer, in case of such officer’s absence, disability or refusal to exercise such powers or perform such duties.
 
SECTION 14.   RESIGNATION AND REMOVAL.   Any officer of the Corporation may be removed from office for or without cause at any time by the Board of Directors.  Any officer may resign at any time in the same manner prescribed for the resignation of directors of the Corporation and as set forth in Section 3 of Article III of these By-laws.
 
SECTION 15.   VACANCIES.   In case any office shall become vacant, the Board of Directors shall have power to fill such vacancy.
 
ARTICLE V
 
STOCK
 
SECTION 1.   FORM OF CERTIFICATES; UNCERTIFICATED SHARES . The shares of the Corporation shall be represented by certificates in such form as the Board of Directors may from time to time prescribe; provided, that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by a certificate, and upon request every holder of uncertificated shares of stock in the Corporation, shall be entitled to have a certificate signed in the name of the Corporation by the Chairman of the Board, the CEO or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary (or shall bear the facsimile signatures of such officers) certifying the number and class of shares owned by such holder in the Corporation.  The Board of Directors shall have power to appoint one or more transfer agents and/or registrars for the transfer and/or registration of certificates of stock of any class, and may require that stock certificates shall be countersigned and/or registered by one or more of such transfer agents and/or registrars.
 
SECTION 2.   TRANSFER OF SHARES.   The shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and, in the case of certificated shares of stock, upon such transfer the old certificates shall be surrendered to the Corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such person as the Board of Directors may designate, by whom they shall be cancelled, and new certificates shall be thereupon be issued or, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares or by such person’s attorney lawfully constituted in writing.  A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.  The Board of Directors shall have power and authority to make all such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of all or any certificates for shares of stock of the Corporation.
 
SECTION 3.   LOST CERTIFICATES.   A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation, alleged to have been lost, stolen, destroyed or mutilated, and the Board of Directors may, in its discretion, require the owner of the lost, stolen, destroyed or mutilated certificate, or his legal representatives, to give the Corporation a bond, in such sum as it may direct, not exceeding double the value of the stock, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss or mutilation of any such certificate, or the issuance of any such new certificate.
 
SECTION 4.   STOCKHOLDERS OF RECORD.   The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder thereof, in fact, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.
 
SECTION 5.   STOCKHOLDERS RECORD DATE.   In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of the holding of such meeting or the date of the taking of any of the aforementioned actions, nor more than sixty (60) days prior to any other action.  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
 
SECTION 6.   DIVIDENDS.   Subject to the provisions of the Corporation’s Certificate of Incorporation, the Board of Directors may at any regular or special meeting, out of funds legally available therefor, declare dividends upon the stock of the Corporation as and when it deems appropriate.   Before declaring any dividend there may be set apart, out of any funds of the Corporation available for dividends, such sum or sums as the Board of Directors from time to time in its discretion deems proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the Board shall deem conducive to the interests of the Corporation.
 
ARTICLE VI
 
NOTICE AND WAIVER OF NOTICE
 
SECTION 1.   NOTICE.   Whenever any written notice is required to be given to stockholders by law, the Corporation’s Certificate of Incorporation or these By-laws, such notice, if mailed, shall be deemed to be sufficiently given if it is written or printed and deposited in the United States mail, postage prepaid, addressed to the person entitled to such notice at his address as it appears on the books and records of the Corporation.  The mailing of such notice shall constitute due notice, which shall be deemed to have been given on the day of such mailing.  Whenever any notice is required to be given to the directors by law, the Corporation’s Certificate of Incorporation or these By-laws, such notice shall be given to each director in person, by telephone, or by facsimile, electronic mail or other form of electronic communication, sent to such director’s business or home address or by written notice mailed to such director’s business or home address.  Such notice shall be deemed to be delivered when hand-delivered to such address, read to such director by telephone, deposited in the mail so addressed, with postage thereon prepaid if mailed, dispatched or transmitted if faxed or transmitted by electronic mail or other form of electronic communication.
 
SECTION 2.   WAIVER OF NOTICE.   Whenever any notice is required to be given by law, the Corporation’s Certificate of Incorporation or these By-laws, a written waiver of notice signed, or a waiver by electronic transmission, by the person entitled to notice, whether before or after the time stated in the notice, shall be deemed equivalent to notice.  Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purposes of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders, directors, or members of a committee of the Board need be specified in any written waiver of notice or any waiver by electronic transmission unless required by the Corporation’s Certificate of Incorporation or these By-laws.
 
ARTICLE VII
 
AMENDMENT OF BY-LAWS
 
SECTION 1.   AMENDMENTS.   These By-laws may be amended or repealed or new By-laws may be adopted by the affirmative vote of a majority of the Board of Directors at any regular or special meting of the Board.  If any By-law regulating an impending election of directors is adopted, amended or repealed by the Board, there shall be set forth in the notice of the next meeting of stockholders for the election of directors the By-law(s) so adopted, amended, or repealed, together with a precise statement of the changes made.  By-laws adopted by the Board of Directors may be amended or repealed by stockholders.
 
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1.                                  RIGHT TO INDEMNIFICATION .  Subject to the other provisions of this Article VIII, each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including involvement as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that such person is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise (hereinafter, an “indemnitee”) shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) actually and reasonably incurred by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in Section 2 of this Article VIII, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section 1 of this Article VIII shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advance of expenses”); provided, however, that, if and to the extent that the Delaware General Corporation Law requires, an advance of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Section 1 of this Article VIII or otherwise.
SECTION 2.  PROCEDURE FOR INDEMNIFICATION.   Any indemnification of a director or officer of the Corporation or advance of expenses under Section 1 of this Article VIII shall be made promptly, and in any event within thirty (30) days (or, in the case of an advance of expenses, twenty (20) days), upon the written request of the director or officer. A request for indemnification may be made at any time following the final disposition of the proceeding. If a determination by the Corporation that the director or officer is entitled to indemnification pursuant to this Article VIII is required, and the Corporation fails to respond within sixty (60) days to a written request for indemnity, the Corporation shall be deemed to have approved the request. If the Corporation denies a written request for indemnification or advance of expenses, in whole or in part, or if payment in full pursuant to such request is not made within thirty (30) days (or, in the case of an advance of expenses, twenty (20) days), the right to indemnification or advances as granted by this Article VIII shall be enforceable by the director or officer in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of expenses where the undertaking required pursuant to Section 1 of this Article VIII, if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the Corporation. Neither the failure of the Corporation (including the Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because such person has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including the Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
SECTION 3.                                  EMPLOYEES AND AGENTS .  The Corporation may, by action of the Board of Directors, provide indemnification to persons who are not covered by Section 1 of this Article VIII and who are or were employees or agents of the Corporation, or who are or were serving at the request of the Corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise, with the same or lesser scope and effect as the indemnification provided for directors and officers. The procedure for indemnification of other employees and agents for whom the Board of Directors has provided indemnification pursuant to this Section 3 of this Article VIII shall be the same procedure set forth in Section 2 of this Article VIII for directors and officers, unless otherwise set forth in the action of the Board of Directors providing indemnification for such other employees and agents.
SECTION 4.                                  SERVICE FOR SUBSIDIARIES .  Any person serving as a director, officer, employee or agent of a subsidiary shall be conclusively presumed to be serving in such capacity at the request of the Corporation.
SECTION 5.   RELIANCE .  Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain a director, officer, employee or agent of a subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses and other rights contained in this Article VIII in entering into or continuing such service. The rights to indemnification and to the advance of expenses conferred in this Article VIII shall apply to claims made against an indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof.
SECTION 6.                                  NON-EXCLUSIVITY OF RIGHTS .  The rights to indemnification and to the advance of expenses conferred in this Article VIII shall not be exclusive of any other right which any person may have or hereafter acquire under the Corporation’s Certificate of Incorporation or under any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
SECTION 7.                                  INSURANCE .  The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee or agent of the Corporation or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the Delaware General Corporation Law.
SECTION 8.                                  CONTRACT RIGHTS .  The provisions of this Article VIII shall be deemed to be a contract right between the Corporation and each indemnitee who serves in any covered capacity at any time while this Article VIII and the relevant provisions of the Delaware General Corporation Law or other applicable law are in effect, and any repeal or modification of this Article VIII or any such law shall not affect any rights or obligations then existing with respect to any state of facts or proceeding then existing.
SECTION 9.   MERGER OR CONSOLIDATION .  For purposes of this Article VIII, reference to the “Corporation” shall not include any constituent corporation absorbed in a consolidation or merger with the Corporation unless specifically authorized by the Board of Directors.
SECTION 10.   OTHER TERMS DEFINED .  For purposes of this Article VIII, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” for purposes of this Article VIII.
ARTICLE IX
 
MISCELLANEOUS
 
SECTION 1.   SEAL.   The seal of the Corporation shall be circular in form and shall have the name of the Corporation “Stanley Furniture Company, Inc.” on the circumference and the words and numerals “Delaware 1984” in the center.
 
SECTION 2.   FISCAL YEAR.   The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
 
SECTION 3.   BUSINESS COMBINATIONS.   The provisions of Section 203 of the General Corporation Law of the State of Delaware shall apply to the Corporation.
 

 




 
 
 



Exhibit 10.1
 
INDEMNIFICATION AGREEMENT
 
This Indemnification Agreement (this “ Agreement ”) is made and entered into as of September 24, 2008, by and among Stanley Furniture Company, Inc., a Delaware corporation (“ Company ”), and [Director]   (“ Indemnitee ”).
 
WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company and its related entities:
 
WHEREAS, in order to induce Indemnitee, or continue to provide, services to the Company and its related entities, the Company wishes to provide for the indemnification of, and the advancement of expenses to, Indemnitee to the maximum extent permitted by law;
 
WHEREAS, the Company and Indemnitee recognize the continued difficulty in obtaining liability insurance for directors, officers, employees, agents and fiduciaries, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance;
 
WHEREAS, the Company and Indemnitee recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, agents and fiduciaries to expensive litigation risks and the limitations of coverage of liability insurance;
 
WHEREAS, the Company and Indemnitee desire to continue to have in place the additional protection provided by an indemnification agreement and to provide indemnification and advancement of Expenses (as hereinafter defined) to Indemnitee to the maximum extent permitted by Delaware law;
 
WHEREAS, the Board of Directors has determined that contractual indemnification as set forth herein is not only reasonable and prudent but also promotes the best interests of the Company and its stockholders;
 
WHEREAS, in view of the considerations set forth above, the Company desires that Indemnitee shall be indemnified and advanced Expenses by the Company as set forth herein;
 
NOW, THEREFORE, the Company and the Indemnitee hereby agree as follows:
 
1.   Indemnity .  The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by the DGCL.  In furtherance of the foregoing indemnification, and without limiting the generality thereof:
 
(a)   Proceedings Other Than Proceedings by or in the Right of the Company .  Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(a) if, by reason of his Covered Status (as hereinafter defined), Indemnitee is, or is threatened to be made, a party to or otherwise involved in any Proceeding (as hereinafter defined), other than a Proceeding by or in the right of the Company.  Pursuant to this Section 1(a) , Indemnitee shall be indemnified, by the Company against all Expenses (as hereinafter defined), judgments, penalties, fines, ERISA excise taxes or penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable with or in respect of such Expenses, judgments, penalties, fines, taxes or amounts paid in settlement) actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.
 
(b)   Proceedings by or in the Right of the Company .  Indemnitee shall be entitled to the rights of indemnification provided in this Section  1(b) if, by reason of his Covered Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company.  Pursuant to this Section  1(b) , Indemnitee shall be indemnified by the Company against all Expenses actually and reasonably incurred by Indemnitee, or on Indemnitee’s behalf, in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided , however , if the General Corporation Law of the State of Delaware, as such may be amended from time to time (the “DGLC”) so provides, no indemnification against such Expenses shall be made in respect of any claim, issue, or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.
 
(c)   Indemnification for Expenses of a Party Who is Wholly or Partly Successful .  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Covered Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by the DGCL against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues, or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue, or matter.  For purposes of this Section  1 and, without limitation, the termination of any claim, issue, or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue, or matter.
 
2.   Additional Indemnity .  In addition to, and without regard to any limitations on, the indemnification provided for in Section  1 hereof, the Company shall, and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines, ERISA excise taxes or penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable with or in respect of such Expenses, judgments, penalties, fines, taxes or amounts paid in settlement) actually and reasonably incurred by him or on his behalf if, by reason of his Covered Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company).  The only limitation that shall exist upon the obligations of the Company pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections  6 and 7 hereof) to be unlawful.
 
3.   Contribution .
 
(a)   Whether or not the indemnification provided in Sections  1 and 2 hereof is available, in respect of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall pay, in the first instance, the entire amount of any judgment, penalty, fine, ERISA excise taxes or penalties, or settlement (including all interest, assessments and other charges paid or payable with or in respect of such judgments, penalties, fines, taxes or amounts paid in settlement) of such Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee with respect thereto.  The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.
 
(b)   Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall contribute an amount equal to 100% of Expenses, judgments, penalties, fines, ERISA excise taxes or penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable with or in respect of such Expenses, judgments, penalties, fines, taxes or amounts paid in settlement) actually and reasonably incurred and paid or payable by Indemnitee.  If the Company is prohibited by law from paying 100% of such Expenses, judgments, fines, penalties, ERISA excise taxes or penalties and amounts, the Company shall contribute to the amount of Expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable with or in respect of such Expenses, judgments, penalties, fines, taxes or amounts paid in settlement) actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors, or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided , however , that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors, or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Expenses, judgments, penalties, fines, ERISA excise taxes or penalties or settlement amounts (including all interest, assessments and other charges paid or payable with or in respect of such Expenses, judgments, penalties, fines, taxes or amounts paid in settlement), as well as any other equitable considerations which applicable law may require to be considered.  The relative fault of the Company and all officers, directors, or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their conduct was active or passive.
 
(c)   To the maximum extent permitted by law, the Company shall fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors, employees, agents or fiduciaries of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.
 
(d)   To the fullest extent permissible under the DGCL, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, penalties, fines, ERISA excise taxes or penalties, amounts paid or to be paid in settlement, and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
 
4.   Indemnification for Expenses of a Witness .  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Covered Status (or arising out of the same or relating thereto), a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified by the Company against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.
 
5.   Advancement of Expenses .  Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Covered Status within twenty (20) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and if and to the extent required by the DGCL, shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that Indemnitee is not entitled to be indemnified against such Expenses.  Any advances and undertakings to repay pursuant to this Section  5 shall be unsecured and interest free.
 
6.   Procedures and Presumptions for Determination of Entitlement to Indemnification .  The following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:
 
(a)   To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request together with a brief summary of the Proceeding as to which indemnification is sought.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.
 
(b)   Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section  6(a) hereof other than a request solely for advancement of Expenses pursuant to Section 5, a determination, if (but only if) required by the DGCL, with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following three methods, which shall be at the election of the Indemnitee to the extent permitted by law: (1) by a majority vote of the Disinterested Directors (as hereinafter defined), even though less than a quorum; (2) by Independent Counsel (as hereinafter defined) in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (3) by the stockholders of the Company.  In the event that the Company fails or is unable to implement an election by Indemnitee, it shall promptly communicate the same to Indemnitee, and Indemnitee shall be afforded a right to seek a determination by another method set forth in the preceding sentence, provided , however , that nothing in this sentence shall preclude Indemnitee from seeking any remedy available to it in respect of such failure or inability.
 
(c)   If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section  6(b) hereof, the Independent Counsel shall be selected as provided in this Section  6(c) .  The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board).  The Company or Indemnitee, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to Indemnitee or the Company, as the case may be, a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 12 hereof, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected by the Indemnitee to the extent permitted by law shall act as Independent Counsel.  If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section  6(a) hereof and a written request for a determination pursuant to Section 6(b) hereof by Independent Counsel, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s  selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section  6(b) hereof.  The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section  6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section  6(c) , regardless of the manner in which such Independent Counsel was selected or appointed.
 
(d)   In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
 
(e)   Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on Indemnitee’s reliance on the records or books of account of an Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of an Enterprise in the course of their duties, or on the advice of legal counsel for an Enterprise or on information or records given or reports made to an Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by an Enterprise.  In addition, the knowledge and/or actions, or failure to act, of any director, officer, employee, agent or fiduciary of an Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.  Whether or not the foregoing provisions of this Section  6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
 
(f)   If the person, persons, or entity empowered or selected under Section  6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification; and provided , further , that the foregoing provisions of this Section  6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section  6(b) hereof and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) if an annual meeting is not to be held within seventy-five (75) days, at a special meeting of the stockholders to be held for such purpose within seventy-five (75)  days after such receipt.
 
(g)   Indemnitee shall reasonably cooperate with the person, persons, or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons, or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any Independent Counsel, member of the Board, or stockholder of the Company shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement.  Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons, or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
 
(h)   The Company acknowledges that a settlement or other disposition short of final judgment may be successful if such settlement or other disposition permits a party to avoid expense, delay, distraction, disruption, and uncertainty.  In the event that any action, claim, or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including settlement of such action, claim, or proceeding with or without payment of money or other consideration), it shall be presumed that Indemnitee has been successful on the merits or otherwise in such proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
 
(i)   The termination of any Proceeding or of any claim, issue, or matter therein, by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement or required by the DGCL) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.
 
7.   Remedies of Indemnitee .
 
(a)   In the event that (i) a determination is made pursuant to Section  6 hereof that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section  5 hereof, (iii) no determination of entitlement to indemnification is made pursuant to Section  6(b) hereof within sixty (60) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section  6 hereof, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification.  The Company shall not oppose Indemnitee’s right to seek any such adjudication.
 
(b)   In the event that a determination shall have been made pursuant to Section  6(b) hereof that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section  7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section  6(b) .
 
(c)   If a determination shall have been made pursuant to Section  6(b) hereof that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section  7 , absent a prohibition of such indemnification under the DGCL.
 
(d)   In the event that Indemnitee, pursuant to this Section  7 , seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance (within ten (10) days of receipt by the Company of any request therefor), any and all expenses (of the types described in the definition of Expenses in Section  12 hereof) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.
 
(e)   The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section  7 that the procedures and presumptions of this Agreement are not valid, binding, or enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.
 
(f)   Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.
 
8.   Non-Exclusivity; Survival of Rights; Insurance; Subrogation .
 
(a)   The rights of indemnification and advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under the DGCL, the Certificate or Bylaws of the Company, any agreement, a vote of stockholders, a resolution of directors, or otherwise.  No amendment, alteration, or repeal of this Agreement or of any provision hereof or of the Certificate or Bylaws of the Company or any provision thereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Covered Status prior to such amendment, alteration, or repeal.  To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under this Agreement, the Certificate or Bylaws of the Company, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
 
(b)   To the extent that the Company maintains an insurance policy or policies providing liability insurance for persons of any category of Covered Status, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any persons of such category of Covered Status under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company have director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
 
(c)   In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
 
(d)   The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement, or otherwise.
 
9.   Exception to Right of Indemnification .  Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled under this Agreement
 
(a)   to indemnification or advancement of Expenses with respect to any Proceeding brought by Indemnitee, or any claim therein (except Proceedings and claims brought to enforce rights to indemnification under this Agreement and claims by way of defense, counterclaim or crossclaim), unless (i) the bringing of such Proceeding or making of such claim shall have been approved by the Board of Directors, or (ii) as otherwise required under Section 145 of the DGCL, regardless of whether Indemnitee is determined to be entitled to such indemnification or insurance recovery as the case may be; or
 
(b)   to indemnification or advancement of Expenses with respect to any Proceeding for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law.
 
10.   Duration of Agreement .  All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is serving in a Covered Capacity so long as Indemnitee may be subject to any possible Proceeding (or any proceeding commenced under Section 7 hereof) by reason of (or arising out of or relating to) at Indemnitee’s Covered Status whether or not Indemnitee is acting or serving in any such capacity at the time such Proceeding is commenced or at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors, administrators, and personal and legal representatives. The Company shall not effect any sale, lease, exchange or other disposition of all or substantially all of its assets determined on either an unconsolidated or consolidated basis (in one or a series of related transactions) or be party to any merger, consolidation or similar transaction in which it is not the surviving entity unless the acquiring or surviving entity agrees in writing to (and does) assume all obligations of the Company under this Agreement, it being understood and agreed that this Agreement shall continue in full force and effect after any such transaction, and such surviving entity shall be bound by the terms hereof, whether or not this sentence has been complied with. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or any other enterprise at the Company’s request.
 
11.   Enforcement .
 
(a)   The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve or continue to serve in Indemnitee’s Covered Status (and to eliminate any uncertainty regarding Indemnitee’s continuing enforceable rights to indemnification, advancement of expenses and contribution for acts or omissions occurring before, on or after the date hereof), and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve in any Covered Status, now or hereafter. The Company and Indemnitee concur that such service of Indemnitee, and the warranties, covenants and agreements of the Company and Indemnitee contained herein comprise good and valuable consideration the receipt and sufficiency of which are hereby acknowledged.
 
(b)   This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties thereto with respect to the subject matter hereof.  It is understood and agreed that the foregoing does not limit Indemnitee’s rights under the DGCL or the Certificate or Bylaws of the Company.
 
(c)   The obligations of the Company and the rights of the Indemnitee pursuant to this Agreement are fully effective and vested on the date of this Agreement, are for indemnification, advancement of Expenses and contribution in respect of any action actually or alleged to have been taken or omitted by Indemnitee in any Covered Status regardless of whether such action or omission occurred prior to the date hereof or hereafter, are not contingent or dependent upon the occurrence or existence of any other fact, circumstance or event, and may not be limited or narrowed in any way after the date of this Agreement, whether before or after any Proceeding with respect to any such actual or alleged action or omission is commenced, except by an amendment hereto expressly agreed to in a writing manually executed by the Indemnitee and delivered to the Company.
 
(d)   The Company and the Indemnitee agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that they each will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they are entitled at law or in equity.
 
12.   Definitions .  For purposes of this Agreement:
 
(a)   “ Covered Capacity ” means the capacity, office, or other position (if any) in which a person is serving by reason of his Covered Status.
 
(b)   “ Covered Status ” describes the status of a person (i) who is or was a director, officer, employee, agent, or fiduciary of the Company, (ii) who, at the request of the Company, is or was a director, officer, employee, agent, or fiduciary of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, or other enterprise, or (iii) who is or was a director, officer, employee, agent, or fiduciary of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, or other enterprise that is or was a direct or indirect subsidiary (whether wholly owned or otherwise) of the Company at the time of such person’s service as such a director, officer, employee, agent, or fiduciary.
 
(c)   “ Disinterested Director ” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
 
(d)   “ Enterprise ” shall mean (i) the Company, or (ii) any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, or other enterprise of which Indemnitee is or was serving as a director, officer, employee, agent, or fiduciary either (x) at the request of the Company or (y) that is or was a direct or indirect subsidiary (whether wholly owned or otherwise) of the Company at the time of Indemnitee’s service as such a director, officer, employee, agent or fiduciary.
 
(e)   “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of any nature paid or incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent.
 
(f)   “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
 
(g)   “ Proceeding ” includes any threatened, pending, or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, or any other actual, threatened, or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative, or investigative, in which Indemnitee was, is, or will be involved as a party or otherwise, by reason of the fact that Indemnitee has Covered Status, by reason of any action taken by him or of any inaction on his part while acting in a Covered Capacity, or by reason of the fact that he is or was serving in a Covered Capacity, in each case whether or not he is acting or serving in any such Covered Capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section  7 hereof to enforce his rights under this Agreement.
 
13.   Severability .  If any provision or provisions of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, void, illegal or unenforceable, that is not itself invalid, illegal, void or otherwise unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) to the fullest extent possible, this Agreement and the provisions hereof (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal, void or otherwise unenforceable, that is not itself invalid, illegal, void or otherwise unenforceable) shall be construed so as to give effect to the intent manifested thereby and the intended interpretation of this Agreement as expressed herein; and (c) a court shall have the power to fashion and enforce another provision (or portion thereof), instead of any invalid, void, illegal or otherwise unenforceable provision hereof (or portion thereof), that is enforceable to carry out the intent of such provision and this Agreement as expressed herein.
 
14.   Modification and Waiver .  No supplement, modification, termination or amendment of this Agreement shall be binding or enforceable against the parties hereto unless the same is (i) made by a court of competent jurisdiction pursuant to Section 13 hereof, (ii) if enforcement is sought against Indemnitee, set forth in a writing manually executed by Indemnitee and delivered to the Company; or (iii) if enforcement is sought against the Company, set forth in a writing manually executed by the Company and delivered to the Indemnitee. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
 
15.   Notice By Indemnitee .  Indemnitee shall promptly notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder.  The failure to so notify the Company shall not relieve the Company of any obligations which it may have to Indemnitee under this Agreement or otherwise.
 
16.   Notices .  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next-day delivery, with written verification of receipt.  All communications shall be sent:
 
(a)   To Indemnitee, at the address set forth below the signature of Indemnitee to this Agreement.
 
(b)   To the Company, at:
 
Stanley Furniture Company
1641 Fairystone Park Highway
Stanleytown, VA 24168

Attention:              Douglas I. Payne
Executive Vice President – Finance
and Administration
Telephone:         (276) 627-2157
Fax:                      (276) 629-5114

(c)   With copies to:
 
McGuireWoods LLP
901 East Cary Street
Richmond, VA  23219
Attention: David W. Robertson
Telephone:        (804) 775-1031
Fax:                      (804) 698-2152

 
or to such other address as may have been furnished by a party hereto to the other parties hereto, by like notice.
 
17.   Counterparts .  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.  This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
 
18.   Headings, etc .  The headings of the sections, paragraphs, and subparagraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.  Unless the context of this Agreement otherwise requires: (i) words of any gender or neuter shall be deemed to include the neuter and each other gender; (ii) words using the singular or plural number shall also include the plural or singular number, respectively; (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; and (iv) “or” is not exclusive.
 
19.   Governing Law and Consent to Jurisdiction .  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.  The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “ Delaware Court ”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 

 
 
 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.
 
COMPANY :
 
STANLEY FURNITURE COMPANY, INC.
 

                                                                                    By:  ____________________________
Albert L. Prillaman
Chairman
 

 
[SIGNATURE PAGE 1 OF 2 TO INDEMNIFICATION AGREEMENT]

 
 
 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.
 
INDEMNITEE:
 

[Name]
[Address]






























[SIGNATURE PAGE 2 OF 2 TO INDEMNIFICATION AGREEMENT]

 

 
 
 



Exhibit 10.2


VOLUNTARY SEPARATION AGREEMENT AND GENERAL RELEASE

This Voluntary Separation Agreement and General Release (the “Agreement and Release”) is made and entered into this 23 rd day of September 2008, by and between Jeffrey R. Scheffer (“Scheffer”) and STANLEY FURNITURE COMPANY, INC., a Delaware corporation (the “Company”).  The Company and Scheffer previously entered into an Employment Agreement (the “Employment Agreement”), attached hereto as Exhibit A, on or about April 9, 2001.  Except as specifically provided herein, this Agreement and Release supersedes the Employment Agreement.  The Company and Scheffer have now mutually agreed that it is in the best interest of both parties that Scheffer terminate his employment in accordance with the terms of this Agreement and Release.  To assist Scheffer following his separation from employment, the Company has offered to provide certain benefits to Scheffer, over and above that to which he is presently entitled, in exchange for his promises and general release contained in this Agreement and Release.  Scheffer has voluntarily accepted this offer and Scheffer and the Company now desire to effect an amicable separation of Scheffer’s employment.

THEREFORE, IN CONSIDERATION of the mutual promises and releases contained in this Agreement and Release, IT IS AGREED THAT:

1.   Termination Date .  Scheffer hereby resigns as President and Chief Executive Officer of the Company, and acknowledges his termination as a Company employee, effective as of September 23, 2008 (the “Termination Date”).

2.   Resignation as Director .  Scheffer agrees to submit his resignation as a Director of the Company, its affiliates, and/or its subsidiaries, effective as of Effective Date of this Agreement and Release.

3.   Acknowledgement of Adequate Consideration .  Scheffer agrees and acknowledges that the compensation and benefits provided under this Agreement and Release are adequate and sufficient and in excess of what he would otherwise be entitled to receive from the Company as a result of termination of his employment.

4.   Payment to Scheffer .  The Company shall pay Scheffer (or his estate) the gross sum of $1,000,000 (the “Payment”) in one lump sum on the first day of the seventh month following Scheffer’s “separation from service” with the Company within the meaning of Treasury Regulation Section 1.409A-1(h).  The Payment shall be treated as wages for purposes of federal and state taxation and withholding but shall not be considered as compensation for purposes of any employee benefit plans sponsored by the Company.

5.   COBRA .  Eligibility for health care continuation coverage under the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”), will not be altered by this Agreement and Release.

6.   Confidential Information .  Scheffer agrees and acknowledges that the Confidential Information provision of the Employment Agreement (Exhibit A, § 6c) shall remain in full force and effect.  The Company agrees and acknowledges that the remaining provisions of the Employment Agreement, including the Non-competition Restriction provision of the Employment Agreement (Exhibit A, § 6a), do not remain in effect.

7.   Non-Solicitation .  Scheffer agrees and acknowledges that, except with the prior consent in writing of the Company, for twenty-four (24) months following the Effective Date of this Agreement and Release, Scheffer shall not directly or indirectly hire or employ in any capacity or solicit the employment of or offer employment to or entice away or in any other manner persuade or attempt to persuade any person (i) employed by the Company or any of its subsidiaries to leave the employ of any of them, or (ii) who is an independent sales representative for the Company to terminate such person's status as an independent sales representative.

8.   Releases .  In exchange and in consideration for the promises, obligations, and agreements of the Company contained herein, which Scheffer agrees and acknowledges are adequate and sufficient consideration, Scheffer, on behalf of his agents, representatives, attorneys, assigns, heirs, executors, and administrators, hereby releases and forever discharges the Company, and all its past and present parent companies, affiliates, subsidiaries, divisions, officers, members, employees, partners, directors, shareholders, agents, attorneys, representatives, predecessors, successors, transferees, and assigns, as well as all of their past and present directors, shareholders, partners, employees, members, agents, representatives, and attorneys (collectively referred to as the “ Company Releasees”) from any and all causes of action, remedies, or claims of any type Scheffer now has, or ever has had, as of any day hereof, or at any time prior to the date hereof, arising out of his employment with the Company or otherwise, including, but not limited to: (a) all claims for employment discrimination or retaliation under the Virginia Human Rights Act, Va. Code § 2.2-3900 et seq. , Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Rehabilitation Act of 1973, the Civil Rights Act of 1866, the Americans With Disabilities Act, the Family Medical Leave Act, the Age Discrimination in Employment Act, ERISA Virginia Equal Pay Irrespective of Sex Act, Va. Code § 40.1-28.6 et seq. , the Federal Equal Pay Act and the Fair Labor Standards Act (or any other federal or state statute relating to employment, discrimination, retaliation or wages); (b) all claims for wages, compensation, vacation pay, sick pay, compensatory time, commissions, or benefits including but not limited to those arising under any state or federal wage and hour law, ERISA, ERISA benefit plan or policy, Virginia wage payment laws, Va. Code § 40.1-29; and (c) all claims arising under the common law of any state which relate to or arise out of Scheffer’s employment or the termination of his employment including, but not limited to, claims relating to the Employment Contract (Exhibit A), or any other employment contracts, promissory estoppel, wrongful discharge, defamation, intentional or negligent infliction of emotional distress, wrongful termination of benefits, and wrongful denial of wages and/or commissions (but excluding claims that cannot legally be released).

Scheffer covenants and agrees never to institute directly or indirectly any action or proceeding of any kind against the Company Releasees related to or arising out of any claim released herein.  Further, Scheffer releases and forever discharges the Company and all other Company Releasees from any and all other demands, claims, causes of action, obligations, agreements, promises, representations, damages, suits, and liabilities whatsoever, both known and unknown, in law or in equity, which he has or may have as of the date of this Agreement; provided that notwithstanding the foregoing, nothing in this Agreement and Release  precludes Scheffer from filing an administrative charge of discrimination or an administrative charge within the jurisdiction of the Equal Employment Opportunity Commission (“EEOC”) or National Labor Relations Board, or from filing a charge or communicating with any federal, state or local government office, official or agency.  Scheffer promises never to seek or accept any damages, remedies, or other relief for himself personally (any right to which Scheffer hereby waives and promises never to accept) with respect to any claim included in this Paragraph 8 of this Agreement and Release, in any proceeding, including, but not limited to, any EEOC proceeding.  Scheffer warrants and represents that, as of the date of execution of this Agreement, Scheffer is not aware of any violations of law by the Company or any of the Company Releasees and has not filed any such charge or complaint.

Scheffer has read and understands this Agreement and Release and acknowledges that he was given twenty-one (21) days to consider the terms of the Agreement and Release and to decide whether to sign the Agreement and Release.  Scheffer also acknowledges that he was advised, in writing, to carefully consider the Agreement and Release and to consult with an attorney before signing it.  Scheffer understands that he may revoke this Agreement and Release within seven (7) days of its execution by notifying the Company of that decision, in writing, within the seven (7) day revocation period.  The Agreement and Release will not become effective until after such seven (7) day revocation period has expired (the “Effective Date”).  Scheffer agrees and acknowledges that he has voluntarily signed this Agreement and Release with the full knowledge of its terms and conditions, which are final and binding upon him and upon the Company.

 In exchange and in consideration for the promises, obligations, and agreements of Scheffer contained herein, which the Company agrees and acknowledges are adequate and sufficient consideration, the Company, on behalf of its past and present parent companies, affiliates, subsidiaries, divisions, officers, members, employees, partners, directors, shareholders, agents, attorneys, representatives, predecessors, successors, transferees, and assigns, as well as all of their past and present directors, shareholders, partners, employees, members, agents, representatives, and attorneys hereby releases and forever discharges Scheffer, and all his agents, representatives, attorneys, assigns, heirs, executors, and administrators (collectively referred to as the “Scheffer Releasees”) from any and all causes of action, remedies, or claims of any type the Company now has, or ever has had, as of any day hereof, or at any time prior to the date hereof, arising out of Scheffer’s employment with the Company or otherwise.

The Company covenants and agrees never to institute directly or indirectly any action or proceeding of any kind against the Scheffer Releasees related to or arising out of any claim released herein.  Further, the Company releases and forever discharges Scheffer and all other Scheffer Releasees from any and all other demands, claims, causes of action, obligations, agreements, promises, representations, damages, suits, and liabilities whatsoever, both known and unknown, in law or in equity, which it has or may have as of the date of this Agreement.

9.   No Assignment of Claims .  Scheffer represents and warrants that he has not assigned any of the claims described in Paragraph 8, above, and that he has not authorized any other person or entity to assert any such claim on his behalf.

10.   Binding Effect .  This Agreement and Release shall be binding upon and inure to the benefit of Scheffer, the Company and their respective representatives, predecessors, heirs, successors, and assigns.

11.   Non-Disparagement .  Scheffer agrees that, in discussing his relationship with the Company, or the Company generally, he will not disparage, discredit, or otherwise treat the Company, its officers or employees, in a detrimental way or in any way that would interfere with the Company’s business.  The Company agrees that, in discussing its relationship with Scheffer, or Scheffer generally, the Company and its officers will not disparage, discredit, or otherwise treat Scheffer in a detrimental way.

12.   Applicable Law .  The Company and Scheffer agree that this Agreement and Release shall be interpreted, applied, and enforced in Virginia courts in accordance with Virginia law.

13.   Entire Agreement .  This instrument constitutes and contains the entire Agreement and Release between the parties concerning Scheffer’s employment with the Company and the termination thereof, and supersedes all prior agreements (including, but not limited to, the Employment Agreement, except as specified herein), negotiations, proposed agreements, and understandings, if any, between the parties.  No other promises or agreements shall be binding unless signed by the parties contemporaneously with, or after signing this Agreement and Release, and supported by adequate consideration.

14.   Severability .  In the event that any provision(s) of this Agreement and Release is found or held to be invalid or unenforceable, the remaining provisions of the Agreement and Release shall, nevertheless, continue to be valid and enforceable as though the invalid and unenforceable provision(s) had not been included herein.

15.   Counterparts .  This Agreement and Release may be executed in one or more counterparts, each and all of which shall constitute, and shall be construed as a single original instrument upon execution, delivery and exchange of such signed counterparts by and among the parties hereto.  A fully executed copy of this Agreement and Release may be used with the same force and effect as the original of this Agreement and Release, and in the event this Agreement and Release is signed by a party and delivered to the other via facsimile, the transmitting party intends to be bound by the facsimile signatures thereon as if an original.

16.   Headings .  The headings contained in this Agreement and Release are inserted for convenience only and are not to be considered in the construction of provisions herein.

17.   Voluntary Execution of Agreement Authority ;  By signing below, the parties indicate that they: (a) have carefully read and understand the terms of this Agreement and Release; (b) are entering into the Agreement and Release knowingly, voluntarily, and of their own free will; and (c) understand its terms and significance and intend to abide by its provisions without exception.  Scheffer represents and warrants that he has the capacity to enter into this Agreement and Release and that he is voluntarily and willingly consenting to this Agreement and Release. The Company represents and warrants that the signatory for the Company is executing this Agreement and Release under authority granted to him/her by the Company, that he/she has the power and authority to bind the Company to the terms of this Agreement and Release, and that the Company is voluntarily and willingly consenting to this Agreement and Release.



s/Jeffrey R. Scheffer                                                                                                              9/23/08                                
Jeffrey R. Scheffer                                                                                                                         Date



Accepted for STANLEY FURNITURE COMPANY, INC.:

By:            s/Douglas I. Payne          


Title:          Executive Vice President – Finance and Administration


Date:          9/23/08

 
 
 

Exhibit A

Employment Agreement

[Employment Agreement made as of April 9, 2001 between Jeffrey R. Scheffer and Stanley Furniture Company, Inc. is filed as Exhibit 10.1 to the Stanley Furniture Company, Inc. Form 10-Q (Commission File No. 014938) for the quarter ended June 30, 2001 and is incorporated herein by reference.]



 
 
 

                                                                                                                                   Exhibit 99.1


 
NEWS RELEASE


FOR IMMEDIATE RELEASE:                                                                                                Stanley Furniture Company, Inc.
Investor Contact:                 Douglas I. Payne
(276) 627-2157
Media Contact:                     Karen McNeill
336.884.8700



STANLEY FURNITURE ELECTS
ALBERT L. PRILLAMAN AS CHIEF EXECUTIVE OFFICER

STANLEYTOWN, VA., September 23, 2008/Business Wire/ – Stanley Furniture Company, Inc. (Nasdaq-NGS: STLY ) announced today that its Board of Directors has elected Albert L. Prillaman as Chief Executive Officer.  Jeffrey R. Scheffer has resigned as President, Chief Executive Officer and director of the Company to pursue other interests.

The Company also announced the promotion of R. Glenn Prillaman to Executive Vice President – Sales and Marketing and Stephen A. Bullock to Executive Vice President – Operations, both of whom previously served as senior vice presidents.  Douglas I. Payne, Executive Vice President – Finance and Administration, together with Glenn Prillaman and Stephen Bullock, will operate as the Office of the President to coordinate the company’s day-to-day operations.

Commenting on his return to a more active role in management of the company, Albert Prillaman said, “The executives who make up the Office of the President are highly qualified to run the business and this will allow me to focus on strategic issues that positively impact creating shareholder value.”

“Obviously, no one can predict when an upturn will come in our industry, but it will come. In the meantime, we are focusing on improving our product line and evaluating the ever-changing distribution channels while maintaining our leadership position in delivering quality and service to our customers.  The recently announced restructuring of our manufacturing operations is progressing on schedule and will position Stanley Furniture to compete more effectively going forward,” he said. “We wish Jeff well in his future endeavors.”

Established in 1924, Stanley Furniture Company, Inc. is a leading manufacturer of wood furniture targeted at the upper-medium price range of the residential market. Its common stock is traded on the Nasdaq stock market under the symbol STLY .

Forward Looking Statements:

Certain statements made in this report are not based on historical facts, but are forward- looking statements. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “may,” “will,” “should,’ or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. These statements reflect our reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include the cyclical nature of the furniture industry, disruptions in offshore sourcing including those arising from supply or distribution disruptions or those arising from changes in political, economic and social conditions, as well as laws and regulations, in China or other countries from which we source products, international trade policies of the United States and countries from which we source products, business failures or loss of large customers, manufacturing realignment, competition in the furniture industry including competition from lower-cost foreign manufacturers, the inability to obtain sufficient quantities of quality raw materials in a timely manner, the inability to raise prices in response to inflation and increasing costs, failure to anticipate or respond to changes in consumer tastes and fashions in a timely manner, environmental compliance costs, and extended business interruption at manufacturing facilities. Any forward-looking statement speaks only as of the date of this press release, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.