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 ”).

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