THIS AGREEMENT, made as of April 1, 1999, between Kelly S. Cain ("Employee") and STANLEY
FURNITURE COMPANY, INC., a Delaware corporation (the "Company").
WHEREAS, the Company desires to assure that it will have the benefit of the continued service and experience
of the Employee, who is a principal executive officer of the Company and an integral part of its management, and
the Employee is willing to enter into an agreement to such end upon the terms and conditions set forth in this
Agreement. In consideration of the foregoing and the mutual agreements herein contained, the parties agree as
1. Employment. The Company hereby employs the Employee and the Employee hereby accepts employment
upon and agrees to the terms and conditions set forth herein.
2. Term. The term of employment under this Agreement (the "Term") shall commence January 1, 1999 and end
on December 31, 1999 and shall continue for each calendar year thereafter unless either party gives notice (a
"Termination Notice") on or before November 1 of any calendar year that employment under this Agreement will
not continue for an additional period of one year beginning on the following January 1.
a. Salary. During the Employee's employment hereunder, the Company shall pay the Employee for all services
rendered by the Employee a base salary at an annual rate of at least $160,000, with upward annual adjustments
as the Board of Directors of the Company shall deem appropriate. Such salary shall be payable to the Employee
in accordance with the Company's usual paying practices, but not less frequently than monthly.
b. Bonus. In addition to base salary, the Employee shall be entitled to receive a potential annual bonus of
$120,000, subject to upward adjustment. The amount of such bonus for any fiscal year shall be related to the
achievement of certain profit thresholds and objectives to be set at the beginning of each fiscal year by the Board
of Directors of the Company.