8-K

UNITED STATES
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): December 8, 2009

Stanley Furniture Company, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-14938	54-1272589
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1641 Fairystone 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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) On December 8, 2009, Stanley Furniture, Inc. (the “Company”) announced that it was eliminating the position of Executive Vice President — Operations and that the employment of Steve Bullock, who serves as Executive Vice President—Operations, will terminate on December 31, 2009.

(e) On December 10, 2009, the Compensation Committee (the “Committee”) of the Company adopted the Company’s 2010 annual incentive compensation program (the “Incentive Plan”) which is for corporate officers and key employees who can directly influence the Company’s financial results. Under the 2010 Incentive Plan, 75% of the bonus will be based on earnings (loss) before interest and taxes (“EBIT”) and 25% of the bonus will be based on returns and allowances (“R&A”). The Company’s executive officers will receive a cash bonus of up to 75% of their total bonus target if the Company’s EBIT achieves or exceeds a specified threshold amount for fiscal 2010 (the “EBIT Bonus”) and up to 25% of their total bonus target if the Company’s R&A achieves or exceeds a specified threshold amount for fiscal 2010 (the “R&A Bonus”). No EBIT Bonus will be paid if the EBIT threshold is not met and the EBIT Bonus will be larger for Company performance above the EBIT threshold up to a maximum award (which would be achieved at 100% of EBIT target) on a per employee basis. No R&A Bonus will be paid if the R&A threshold is not met and the R&A Bonus will be larger for Company performance above the R&A threshold up to a maximum award (which would be achieved at 100% of R&A target) on a per employee basis. The Committee established a bonus potential of $200,000 for Glenn Prillaman, President and Chief Operating Officer, and $250,000 for Douglas I. Payne, Executive Vice President, Finance. Albert L. Prillaman, Chairman and Chief Executive Officer does not participate in the Incentive Plan.

On December 11, 2009, the Company entered into a Change in Control Protection Agreement (the “Agreement”) with Glenn Prillaman. During the two years after a change in control (as defined in the Agreement), Mr. Prillaman is entitled to receive severance pay if the Company terminates his employment other than for cause (as defined in the Agreement) or if he terminates his employment with the Company for good reason which generally is defined to exist if: (i) there is a material reduction in his base salary, (ii) his authority, duties or responsibilities are materially reduced, (iii) he is required to report to a corporate officer or employee instead of reporting directly to the board of directors of the Company or its ultimate parent following a change in control, (iv) his place of employment is relocated further than 50 miles from his current place of employment, or (v) any other action or inaction that constitutes a material breach by the Company or its successor of the Agreement. In the event Mr. Prillaman’s employment is terminated in the circumstances described in the preceding sentence, he is entitled to receive the following severance payments:

• two times base salary paid in a lump sum at termination;

• two times the average bonus paid over the last two prior fiscal years paid in a lump sum at termination;

• a pro rata annual bonus for the year of termination, based on actual Company results, payable when the bonus is otherwise payable; and

• vesting in the outstanding stock awards that would have vested in the next two years.

The Agreement will continue in effect until December 31, 2011, subject to automatic extensions for additional one-year terms at the beginning of each year unless either party to the Agreement gives notice on or before October 1 of any year that the agreement will not be extended.

The foregoing description of the Agreement is qualified in its entirety by reference to the Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

In connection with his termination, Mr. Bullock entered into a separation agreement with the Company (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Bullock will continue to receive salary payments in the amount of $6,605 semi-monthly beginning on the effective date of his termination and continuing until December 31, 2010, or until Mr. Bullock obtains any other full time employment, whichever occurs first; however, Mr. Bullock is entitled to a minimum payment of $13,210 regardless of when he obtains other employment. The Separation Agreement provides for a general release by Mr. Bullock of the Company. Mr. Bullock 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.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

10.1 Change in Control Protection Agreement, dated December 11, 2009, by and between Stanley Furniture Company, Inc. and Glenn Prillaman.

10.2 Form of Separation Agreement and General Release between Stephen A. Bullock and Stanley Furniture Company.

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: December 14, 2009	By:	s/ Douglas I. Payne
		Douglas I. Payne
		Executive Vice President, Finance and Administration

EX-10.1

Exhibit 10.1

Change in Control
Protection Agreement

This CHANGE IN CONTROL PROTECTION AGREEMENT is dated December 11, 2009, by and between Stanley Furniture Company, Inc., a Delaware corporation (the “Company”), and Glenn Prillaman (the "Executive”).

PURPOSE

In order to induce the Executive to remain in the employment of the Company, particularly in the event of the threat or occurrence of a Change in Control (as hereafter defined), the Company desires to enter into this Agreement to provide the Executive with certain benefits in the event the Executive’s employment is terminated as a result of a Change in Control.

NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows:

SECTION 1. Definitions

For purposes of this Agreement, the following terms have the meanings set forth below:

“Accrued Compensation” means an amount which includes all amounts earned or accrued by the Executive through and including the Termination Date but not paid to the Executive on or prior to such date, including (a) all base salary, (b) all vacation pay, and (c) all bonuses and incentive compensation.

“Base Salary Amount” means the Executive’s annual base salary at the rate in effect on the Termination Date.

“Board” means the Board of Directors of the Company.

“Bonus Amount” means the average of the annual cash bonuses paid to the Executive for the two fiscal years immediately prior to the fiscal year in which the Termination Date occurs. Bonus Amount includes only the annual cash bonus and does not include any multi-year cash bonus, restricted stock awards, options or other long-term incentive compensation that may have been awarded to the Executive.

“Cause” means gross or willful neglect of duty which is not corrected after 30 days’ written notice thereof; misconduct, malfeasance, fraud or dishonesty which materially and adversely affects the Company or its reputation in the industry; or the commission of a felony or a crime involving moral turpitude.

“Change in Control” of the Company means, and shall be deemed to have occurred upon, any of the following events:

(i) The acquisition by a Group of Beneficial Ownership of 35% or more of the Stock or the Voting Power of the Company, but excluding for this purpose: (A) any acquisition by the Company (or a subsidiary), or an employee benefit plan of the Company; or (B) any acquisition of common stock of the Company by management employees of the Company. “Group” means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”), “Beneficial Ownership” has the meaning in Rule 13d-3 promulgated under the Act, “Stock” means the then outstanding shares of common stock, and “Voting Power” means the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors.

(ii) Individuals who constitute the Board on the effective date of this Agreement (the “Incumbent Board”) cease to constitute at least a majority of the Board, provided that any director whose nomination was approved by a majority of the Incumbent Board shall be considered a member of the Incumbent Board unless such individual’s initial assumption of office is in connection with an actual or threatened election contest (as such terms are used in Rule 14a-12(c) of Regulation 14A promulgated under the Act).

(iii) Consummation of a reorganization, merger or consolidation, in each case, in which the owners of more than 50% of the Stock or Voting Power of the Company do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 50% of the Stock or Voting Power of the corporation resulting from such reorganization, merger or consolidation.

(iv) A complete liquidation or dissolution of the Company or of its sale or other disposition of all or substantially all of the assets of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Disability” means either of the following occurs:

(i) The Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

(ii) The Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

“Good Reason” means any of the following events occur:

(i) A material diminution in the Executive’s base compensation.

(ii) A material diminution in the Executive’s authority, duties, or responsibilities.

(iii) A requirement that the Executive report to a corporate officer or employee instead of reporting directly to the board of directors of the Company or its ultimate parent following the Change in Control.

(iv) A change of more than 50 miles in the geographic location at which the Executive must perform the services from the Company’s offices in High Point, North Carolina.

(v) Any other action or inaction that constitutes a material breach by the Company or its successor of this Agreement.

"Pro Rata Bonus” shall mean the annual bonus based on actual results for the year of termination and the relative portion of the year during which the Executive provided services, paid when the annual bonus would have been paid if the Executive had continued employment.

“Release” means a waiver and release by the Executive of claims against the Company in a form reasonably determined by the Company (which shall have no post-employment obligation or limitation in it and shall except out rights of indemnification, rights to directors and officers liability insurance coverage and amounts due under this Agreement).

“Subsidiary” means any corporation with respect to which another specified corporation has the power under ordinary circumstances to vote or direct the voting of sufficient securities to elect a majority of the directors.

“Successor” means a corporation or other entity acquiring all or substantially all the assets and business of the Company, whether by operation of law, by assignment or otherwise.

“Termination Date” means (a) in the case of the Executive’s death, the Executive’s date of death, and (b) in all other cases, the final date of Executive’s employment with the Company. Notwithstanding anything to the contrary herein, an Executive’s employment shall not be considered to have terminated unless the Executive has experienced a “separation from service,” as defined in Code Section 409A and the regulations there under.

SECTION 2. Term of Agreement

The term of this Agreement (the “Term”) will commence on January 1, 2010, and will continue in effect until December 31, 2011; provided however that on January 1, 2012 and on each January 1 thereafter, the Term shall automatically be extended for an additional one (1) year, unless not later than October 1 prior to the end of one of the periods, either the Company or the Executive shall have given notice to the other party not to extend the Term. Notwithstanding the foregoing, the Term shall be deemed to have immediately expired without any further action, and this Agreement will immediately terminate and be of no further effect if, prior to a Change in Control, the Executive’s employment is terminated for any reason. Additionally, in the event that a Change in Control occurs during the Term, then the Term shall automatically extend for a period of up to two additional years, if necessary, so that the Term coincides with the two-year post-Change in Control period specified in Section 3.1 below.

SECTION 3. Termination of Employment after Change in Control

3.1 If the Executive’s employment with the Company is terminated within two (2) years following a Change in Control that occurs during the Term, the Executive will be entitled to the following compensation and benefits:

(a) If the Executive’s employment with the Company is terminated (i) by the Company for Cause, (ii) by the Executive other than for Good Reason, or (iii) by reason of the Executive’s death or Disability, then the Company will pay to the Executive the Accrued Compensation.

(b) If the Executive’s employment with the Company is terminated by the Company other than for Cause, or the Executive terminates his employment for Good Reason, the Executive will be entitled to the following:

(i) the Company will pay the Executive all Accrued Compensation and the Pro Rata Bonus;

(ii) all unvested stock awards then held by Executive shall accelerate and become immediately vested to the extent that the awards would have been vested if Executive had remained an employee for two (2) years following the Change in Control; and

(iii) subject to the Executive providing the Company with a Release, the Company will pay the Executive as severance pay, and in lieu of any further compensation for periods subsequent to the Termination Date, in a single payment an amount in cash equal to two times the sum of (A) the Base Salary Amount and (B) the Bonus Amount.

(c) The Accrued Compensation and the amount provided for in Section 3.1(b)(iii) will be paid in a single lump sum cash payment by the Company to the Executive within sixty (60) days after the Termination Date, subject to the provisions of Section 10. The Pro Rata Bonus will be paid when the bonus would have been paid if the Executive had continued in employment.

3.2 Except as otherwise noted herein, during the term of this Agreement the compensation to be paid to the Executive hereunder will be in lieu of any similar severance or termination compensation (i.e., compensation based directly on the Executive’s annual salary or annual salary and bonus) to which the Executive may be entitled under any other Company severance or termination agreement, plan, program, policy, practice or arrangement. The Executive’s entitlement to any compensation or benefits of a type not provided in this Agreement will be determined in accordance with the Company’s employee benefit plans and other applicable programs, policies and practices as in effect from time to time.

3.3 The Executive shall not be required to mitigate any amounts payable under this Agreement and no such amounts shall be offset or reduced by the amount of any compensation or benefits from any subsequent employment.

SECTION 4. Successors; Binding Agreement. This Agreement will be binding upon and will inure to the benefit of the Company and its Successors, and the Company will require any Successors to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Neither this Agreement nor any right or interest hereunder will be assignable or transferable by the Executive or by the Executive’s beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement will inure to the benefit of and be enforceable by the Executive’s legal representatives.

SECTION 5. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement will be in writing and will be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company will be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications will be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address will be effective only upon receipt.

SECTION 6. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representation, oral or otherwise, express or implied, with respect to the subject matter hereof has been made by either party which is not expressly set forth in this Agreement.

SECTION 7. Governing Law. This Agreement will be governed by and construed and enforced in accordance with the laws of the Commonwealth of Virginia without giving effect to the conflict of laws principles thereof.

SECTION 8. Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof.

SECTION 9. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to severance protection in connection with a Change in Control.

SECTION 10. Code Section 409A.

(a) It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“ Code Section 409A ”) so as not to subject the Executive to payment of any interest or additional tax imposed under Code Section 409A. To the extent that any amount payable under this Agreement would trigger the additional tax, penalty or interest imposed by Code Section 409A, this Agreement shall be modified to avoid such additional tax, penalty or interest yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Executive.

(b) To the extent a payment or benefit is nonqualified deferred compensation subject to Code Section 409A, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” If the Executive is deemed on the date of a separation from service (within the meaning of Code Section 409A) to be a “specified employee” (within the meaning of that term under Section 409A(a)(2)(B) of the Code and determined using any identification methodology and procedure selected by the Company from time to time, or, if none, the default methodology and procedure specified under Code Section 409A), then with regard to any payment or the provision of any benefit that is “nonqualified deferred compensation” within the meaning of Code Section 409A and

which is paid as a result of the Executive’s “separation from service,” such payment or benefit shall not be made or provided prior to the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this clause (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(c) For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

(d) With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit; (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided, that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Internal Revenue Code solely because such expenses are subject to a limit related to the period the arrangement is in effect; and (iii) such payments shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.

IN WITNESS WHEREOF, the parties have executed and delivered this Change in Control Protection Agreement as of the date first above written.

Stanley Furniture Company, Inc.
 

s/ T. Scott McIlhenny, Jr.  

Chairman, Compensation and Benefits Committee 

Glenn Prillaman
 

s/ Glenn Prillaman  

Executive's Signature 

EX-10.2

Exhibit 10.2

SEPARATION AGREEMENT AND GENERAL RELEASE

This AGREEMENT is made between Stephen A. Bullock (“Bullock”) and Stanley Furniture Company, Inc. and its affiliates, subsidiaries, parent, predecessors, successors and assigns (referred to herein, collectively and individually, as “Stanley” or “Company”).

A. REASONS FOR AGREEMENT

1. Bullock is being terminated from his employment as Executive Vice President-Operations with Stanley on December 31, 2009 (the “Separation Date”).

2. Under Company policy, Bullock is not entitled to severance benefits.

3. For the consideration from Bullock specified below, the Company has agreed to provide Bullock with certain benefits in the form of salary and medical benefit continuation.

B. AGREEMENT

For and in consideration of the mutual promises and commitments specified herein, the parties agree as follows:

1. Special Severance Package. The Company agrees to provide Bullock with the following benefits, which are referred to as the “Special Severance Package.”

(a) Beginning on the effective date of his termination, and continuing until December 31, 2010, or until Bullock obtains any other full time employment, whichever occurs first, Stanley shall continue Bullock’s salary payments in the amount of $6,605 semi-monthly, in accordance with its regular payroll practices and subject to standard withholdings. In no event, however, shall the total amount paid in salary continuation pursuant to this paragraph be less than $13,210 [or one month’s salary], regardless of when Bullock obtains other employment. Bullock agrees to notify Stanley within three (3) business days after he obtains any other full time employment.

(b) Until December 31, 2010, or until Bullock obtains coverage from another employer, whichever occurs first, Stanley shall allow Bullock to continue participation in its group medical insurance plan at the applicable premium rates for active Stanley employees. The qualifying event concerning Bullock’s rights under the Consolidated Omnibus Budget Reconciliation Act, 29 U.S.C. § 1161, et seq. (“COBRA”) shall be the actual date on which continued coverage ceases.

2. General Release. In consideration for the Special Severance Package, and to the extent permitted by applicable law, Bullock agrees, for himself and his heirs, representatives, successors and assigns, that he has been finally and permanently separated from employment with Stanley, and that he waives, releases and forever discharges Stanley, its owners,

shareholders, directors, officers, employees and agents (the “Releasees”), from any and all claims, known or unknown, that he has or may have relating to or arising out of his employment with Stanley and the termination thereof, including but not limited to any claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, liability in tort, claims of any kind that may be brought in any court or administrative agency, any claims under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, the Family Medical Leave Act, the Employee Retirement Income Security Act, or any other federal, state or local law relating to employment, employee benefits or the termination of employment, or any other claim arising out of or relating to Bullock’s employment.

Bullock specifically warrants and represents that he is not aware of any factual basis for any claims against Stanley under either the Fair Labor Standards Act or any state equivalents of such law.

3. Special Release Notification. The General Release, paragraph B.2., includes a release of all claims under the Age Discrimination in Employment Act (“ADEA”) and, therefore, pursuant to the requirements of the ADEA, Bullock acknowledges the following:

(a) that he has been advised that this release includes, but is not limited to, all claims under the ADEA arising up to and including the date of execution of this release;

(b) that he has been advised to consult with an attorney and/or other advisor of his choosing concerning his rights and obligations under this release;

(c) that he has been advised to consider fully this release before executing it;

(d) that he has been offered ample time and opportunity, in excess of 45 days, to do so;

(e) that this release shall become effective and enforceable seven (7) days following execution of this Severance Agreement and General Release by Bullock, during which seven (7) day period Bullock may revoke his acceptance of this Severance Agreement and General Release by delivering written notice to Christy Landon, Stanley Furniture Company, P.O. Box 30, 1641 Fairystone Park Highway, Stanleytown, Virginia 24168.

4. No Other Payments. Bullock understands and agrees that the Company and the other Releasees shall neither make nor cause to be made any other payments him, his beneficiaries or dependents, or otherwise on his behalf, except as specifically referenced herein.

5. Taxes. To the extent that any taxes may be due on the payments provided in this Agreement beyond any withheld, Bullock agrees to pay such taxes and to indemnify and hold the Company and its agents and affiliates harmless for any tax payments owed, interest, penalties, levies, or assessments resulting from the payments provided hereunder or from any failure by Bullock to pay such taxes, interest, penalties, levies or assessments.

6. Non-Disclosure. Bullock agrees that the terms of this Severance Agreement and General Release and his Special Severance Package are confidential, and agrees not to disclose the fact, terms or amount thereof to any person other than his attorney, income tax preparer or similar professional, or to his spouse and immediate family. To the extent that he discloses this information, Bullock agrees to instruct such professional, spouse or immediate family member that this information is to be kept confidential.

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7. Confidentiality. Bullock agrees that he will not divulge or give anyone any confidential information obtained by him during his employment concerning Stanley’s business or affairs, including without limitation, information relating to human resources matters, policies, and other confidential or proprietary information or trade secrets, and to the Company’s relationships with actual or potential customers or the needs or requirements of such customers. Employee also agrees not to disclose any information concerning any legal matters in which the Company is involved except as required by lawfully issued subpoena.

8. No Admission. It is understood and agreed that, prior to entering into this Severance Agreement, Stanley has admitted no liability for the Special Severance Package provided herein or for any other benefits other than those provided by contract or Company policy. Stanley has entered into this Severance Agreement and General Release solely for the purpose of maintaining an amicable and cooperative relationship between Bullock and Stanley.

9. Company Property. Bullock acknowledges that he has returned to the Company all property of the Company. For purposes of this Section, “property of the Company” includes, but is not limited to, keys, corporate credit cards, equipment, books, supplies, computer programs, originals and copies of all corporate documents, including financial records and information, and any other materials, whether prepared by Bullock or by others, but excludes anything owned by Bullock individually.

10. Nonsolicition of Employees. For a period of twelve (12) months after the Separation Date, Bullock shall not, either on his own account or for any person, firm, partnership, corporation, or other entity (a) solicit, interfere with, or endeavor to cause any employee of Stanley to leave his or her employment; (b) induce or attempt to induce any such employee to breach his or her employment agreement with Stanley; or (c) identify Stanley employees to his subsequent employer so that the subsequent employer will induce or attempt to induce any such employee to breach his or her employment agreement with Stanley.

11. Governing Law. This Agreement shall be governed by and subject to the laws and exclusive jurisdiction of the courts of the Commonwealth of Virginia.

12. Severability. If any provision of this Agreement is determined to be in violation of any law, rule, or regulation or otherwise unenforceable, such determination will not affect the validity of any other provision of this Agreement, which will remain in full force and effect. Each section, provision, paragraph and subparagraph of this Agreement is severable from every other section, provision, paragraph and subparagraph and constitutes a separate and distinct covenant.

13. Counterparts; Headings. This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes. The paragraph headings in this Agreement are for reference and convenience only, and shall not modify or effect its substantive terms.

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14. Entire Agreement.

(a) The parties understand and agree that all terms of this Severance Agreement and General Release are contractual and are not a mere recital, and represent and warrant that they are competent and possess the full and complete authority to covenant and agree as herein provided.

(b) Bullock understands, agrees, and represents that the covenants made herein and the releases herein executed may affect rights and liabilities of substantial extent and agrees that the covenants and releases provided herein are in his best interest. Bullock represents and warrants that, in negotiating and executing this Severance Agreement and General Release, he has had an adequate opportunity to consult with competent counsel or other representatives of his choosing concerning the meaning and effect of each term and provision hereof, and that there are no representations, promises or agreements other than those expressly set forth in writing herein.

(c) The parties have carefully read this General Release and Severance Agreement in its entirety; fully understand and agree to its terms and provisions; intend and agree that it is final and binding and understand that, in the event of a breach, either party may seek relief, including damages, restitution and injunctive relief, at law or in equity, in a court of competent jurisdiction.

THIS AGREEMENT WAS PROVIDED TO STEPHEN A. BULLOCK
ON DECEMBER 9, 2009

IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed the foregoing General Release and Severance Agreement this ______ day of ___________, 2009.

Date Stephen A. Bullock  

STATE OF

CITY/COUNTY OF

The foregoing instrument was acknowledged and signed before me by Stephen A. Bullock this ______ day of ____________, 2009.

Notary Public  

My Commission Expires: ____________

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	STANLEY FURNITURE COMPANY, INC.
	By:
Date		Its

STATE OF

CITY/COUNTY OF

The foregoing instrument was acknowledged and signed before me this  _____  day of  _____  , 2009.

Notary Public  

My Commission Expires: ____________

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