<PAGE>

EXHIBIT 10(F)

                              EXTENSION AND RENEWAL OF
                                          
                                EMPLOYMENT AGREEMENT


            
            THIS AGREEMENT, as of this 9th day of October, 1997 by and 
between DMI FURNITURE, INC., a Delaware corporation ("DMI" or the 
"Corporation") and DONALD D. DREHER ("Employee").

            WHEREAS, Employee and DMI have entered into an Employment 
Agreement dated as of September 1, 1986, which has been amended from time to 
time and extended and renewed for additional terms through December 31, 1998;

            WHEREAS, the Employment Agreement, as amended, extended and 
renewed to date, is intended to complement the terms of the Amendment to 
Employment Agreement and Officer Severance Agreement dated as of May 19, 1988 
between the Employee and DMI (the "Officer Severance Agreement"), which 
provides for the payment of certain benefits to Employee in certain 
circumstances following a "change in control" of DMI (as defined in the 
Officer Severance Agreement).

            WHEREAS, Employee and DMI desire to renew and extend the 
Employment Agreement between them for an additional term expiring on August 
31, 2000; and

            NOW, THEREFORE, intending to be legally bound hereby and in 
consideration of the mutual undertakings hereinafter set forth, DMI and 
Employee agree as follows, effective October 9, 1997;

            1.   EMPLOYMENT.  DMI or its successors hereby employs Employee 
and Employee hereby accepts employment as Chairman of the Board, President, 
and Chief Executive Officer of DMI for a period commencing October 9, 1997 
and ending August 31, 2000.

            2.   DUTIES OF EMPLOYEE.  Employee further agrees as follows:

                (a) To perform well and faithfully all such duties as are 
assigned to him by the Board of Directors of DMI; and
                 
                (b) To devote the time and attention to the performance of 
all matters necessary and appropriate to the discharge of the duties so 
assigned to him in the operation of DMI, it being the intention of this 
provision to require that Employee serve as a "full-time" employee of DMI, to 
devote his best efforts to the performance of the duties of him; and
                 
               (c) To refrain from investment or other involvement in any 
business or other activity that competes with the business of DMI other than 
nominal investments as a passive investor in publicly traded companies.

            3.   COMPENSATION.  As compensation for his services pursuant to 
this Agreement, Employee shall be paid as follows:

                 (a)  SALARY.  A minimum salary of $275,000 per year payable 
                      at the rate of $11,458.33 semi-monthly during the term 
                      of this Agreement.  Each year, on the anniversary of 
                      this Agreement, the Compensation Committee of the 
                      Corporation's Board of Directors will review increases 
                      in the cost of living and may negotiate upward 
                      revisions to salary with the Employee.

                 (b)  CASH BONUS.  For each of the Corporation's fiscal years 
                      during the term of this Agreement, 
                                       
                                     E-18
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                 (c)  Employee shall receive an incentive bonus based on the 
                      "adjusted net pre-tax income" for said fiscal year.  
                      For the purposes of this subsection, "adjusted net 
                      pre-tax income" shall mean the pre-tax income as 
                      reported to the Securities and Exchange Commission on 
                      Form 10-K excluding as expenses all dividends paid by 
                      the Corporation to the holders of any class of its 
                      preferred stock, as well as all interest paid by the 
                      Corporation in connection with any funds borrowed for 
                      the redemption of 675,000 shares of  preferred stock at 
                      $2.49 per share or $1,680,750 on August 28, 1989 and 
                      any future redemptions of preferred stock, and also 
                      excluding (i) any gains or losses resulting from the 
                      sale, conversion or other disposition of capital 
                      assets; (ii) accruals made in accordance with general 
                      accepted accounting principles to recognize the costs 
                      associated with the permanent closure of an operation 
                      and the carrying costs prior to the sale of the assets 
                      of that operation; (iii) gain or loss resulting from 
                      non-operational litigation; and (iv) charges or credits 
                      resulting from the adoption of a change in accounting 
                      principle.

                 Employee shall receive a fractional share of the adjusted 
net pre-tax income calculated as follows:  X = (.0325 + .0195 {Y}) x Z where 
X equals the bonus earned, Y equals the adjusted net pre-tax income expressed 
in millions of dollars rounded to three decimal places, and Z equals the 
adjusted net pre-tax income.
<TABLE>
       Example:
       <S>                                               <C>
       Reported income before income tax                 $1,525,169
       Add back: Interest on borrowing for
                 Preferred stock redemption                 201,500
       Deduct:   Gain on sale of building                  {156,000}
                                                         ----------
       Adjusted pre-tax income                           $1,570,369
       then:
       X =  (.0325 + (.0195 x 1.570)) x $1,570,369
       X =  (.0325 + .0306) x $1,570,369
       X =  .0631 x $1,570,369
       X =  $99,090
</TABLE>

                 (c)  STOCK BONUS.  For each fiscal year during the term of 
this Agreement, Employee shall be eligible to earn a stock bonus as provided 
herein. All stock granted pursuant to this bonus shall be granted as of the 
date upon which the cash bonus earned by Employee is paid to him and shall be 
valued at the bid price of the Corporation's common stock as listed by NASDAQ 
on the last day of the fiscal year.  To the extent feasible, stock (or other 
equity securities of the Corporation) granted pursuant to this bonus shall be 
issued under a plan meeting the terms and conditions of Rule 16b-3 under the 
Exchange Act.

                 Employee shall have the option to receive a grant for shares 
of common stock with a value equal to 59.3% of Employee's Cash Bonus.

                 Employee may decline to exercise the right to receive any 
stock grant by so advising the Corporation within 10 days of the date upon 
which he is advised of his bonus.  The grant of stock referred to herein is 
subject to the Corporation's shareholders having approved the issuance of 
sufficient shares of stock to permit the grant of these shares.  The 
Corporation agrees to seek such approval, as and to the extent, required.     

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<PAGE>

            (d)  BONUS PAYMENTS.  Any bonus under this paragraph 3 shall be 
                 paid within one hundred thirty days of the end of the fiscal 
                 year.  

                 For any fiscal year of DMI during which the period of 
Employee's employment set forth in paragraph 1 (or any extension thereof) 
expires before completion of the fiscal year, Employee shall receive a cash 
bonus and a stock bonus equal to the bonuses that would have been due 
Employee under paragraphs 3(b) and 3(c) had Employee remained employed until 
the end of DMI's fiscal year multiplied by a fraction, the numerator of which 
is the number of complete calendar months during which Employee was employed 
during the fiscal year and the denominator of which is 12.

            3.   FRINGE BENEFITS.  DMI will provide Employee with fringe 
                  benefits as follows:

                (a)  DMI will maintain, without contribution by Employee, 
life insurance with benefits payable as designated by Employee in a face 
amount equal to three times Employee's annual base salary rate hereunder 
provided however the face amount of life insurance benefits are not to exceed 
$750,000.

               (b)  DMI will maintain health insurance at least as 
comprehensive as provided for other key and executive employees.

               (c)  DMI will maintain, without contribution by Employee, 
travel accident insurance with benefits payable as designated by Employee in 
a face amount equal to $250,000 death benefits for accidental death in the 
course of travel.

               (d)  DMI will provide Employee with an automobile comparable 
to those furnished to other key executives, or its cash equivalent of $675 
per month, for Employee's business related use.

               (e)  Employee shall receive reimbursement for expenses 
incurred by him in connection with Medical Care for Employees, his spouse and 
his dependents, provided, however, that the amount paid by DMI to Employee 
pursuant to this subsection in any fiscal year during the term of this 
Agreement shall not exceed $2,000.  For the purpose of this subsection the 
term "Medical Care" means amounts paid for the diagnosis, care, medication, 
treatment, or prevention of disease, or for the purpose of affecting any 
structure or function of the body (including amounts paid for accident or 
health insurance), or for transportation primarily for and essential to 
Medical Care.  Payments hereunder may be made from time to time as requested 
by Employee with or without requiring proof of the medical expenses in 
questions, in the discretion of the Board of Directors, and it is not 
necessary that such medical expenses have already been paid by Employee, his 
spouse, or his aforesaid dependents, but merely that, if not yet paid, there 
exists an obligation to pay them.  Premiums paid by DMI under any group 
accident or health insurance policy that may be maintained by DMI covering or 
for the benefit of some or all of its employees, and payments made by 
insurers pursuant to said policy, shall not to any extent be regarded as 
payments made pursuant to this subsection.

               (f)   Employee shall receive annual reimbursement for expenses 
incurred by him in connection with personal or tax financial planning, not to 
exceed $2,000 per year.

                                     E-20
<PAGE>

                 (g)  Employee shall be entitled to participate in any 
benefit plan of a type not specifically covered by this Agreement and 
established by DMI for key employees during the term of Employee's employment 
hereunder on a basis consistent with his age, position, responsibilities, and 
level of compensation.
            
                 (h)  Employee shall be reimbursed for his reasonable 
out-of-pocket travel and business expenses, including but not limited to, 
membership in private clubs for business purposes.  All such club memberships 
will be approved by a majority of outside members of the Board of Directors.  
  

                 (i)  Employee shall designate a medical doctor as his choice 
for annual physical examinations.  DMI shall receive a doctor's report on 
each annual examination.  DMI shall bear the reasonable travel and 
examination expense related with these examinations so long as the 
examinations are performed in the Continental United States.   
    
            5.   VACATION.  Employee shall be entitled to a six-week vacation 
with pay in each 12-month period ending August 31.  A maximum of one week of 
annual paid vacation shall be cumulative and will not be deemed waived if not 
taken during the applicable 12-month period.  Employee's paid vacation shall 
be pro-rated based on the number of months he has remained employed by DMI 
during any fiscal year during which this Agreement expires or is terminated.
            
            6.   OTHER BOARD OF DIRECTORS ACTION.  Nothing in this Agreement 
shall be deemed to prevent the Board of Directors of DMI from taking any 
action it may deem, in its sole discretion, to be desirable to make the terms 
and conditions of this Employment Agreement more beneficial to Employee, or 
to add further benefits to his employment with DMI, provided that Employee 
agrees to such changes and additions.               

            7.   TERMINATION.  This Agreement shall terminate and, except to 
the extent previously accrued or as otherwise provided in the Officer 
Severance Agreement, all rights and obligations of DMI and Employee under 
this Agreement shall be void, upon the earliest to occur of any of the 
following:                    

                 (a)  Expiration of the period of employment set forth in 
paragraph 1, unless the period of employment is extended by the Board of 
Directors, in which event termination shall occur upon the expiration of the 
period of employment as extended by the Board of Directors;  

                 (b)  Death of Employee;       

                 (c)  Mental or physical illness or disability of Employee 
that shall incapacitate him, for a period of 90 successive days or for an 
aggregate period of 120 days during any 12 calendar months, from fully 
performing the duties assigned to him hereunder and in the good faith 
determination of the Board of Directors and upon written notice to Employee.
    

                                     E-21
<PAGE>

            (e)  If Employee (i) is found guilty of having committed against 
                  DMI any criminal act, including criminal fraud, or (ii) is 
                  found guilty of having committed any criminal act involving 
                  moral turpitude, or (iii) the willful and continued failure 
                  by the Employee to substantially perform the

            (f)   Employee's duties with DMI after a written demand for 
                  substantial performance is delivered to the Employee by the 
                  Board, which demand specifically identifies the manner in 
                  which the Board believes that the Employee has not 
                  substantially performed his duties; or (iv) the willful 
                  engaging by the Employee in gross misconduct materially and 
                  demonstrably injurious to the Corporation.  For the 
                  purposes of this definition, no act, or failure to act on 
                  the Employee's part shall be considered "willful" unless 
                  done or omitted to be done by the Employee other than in 
                  good faith and without reasonable belief that the 
                  Employee's action or omission was in the best interests of 
                  DMI.  The Employee shall not be deemed to have been 
                  terminated for Cause (as defined in the Officer Severance 
                  Agreement) unless and until DMI has delivered a Notice of 
                  Termination, as provided therein.          

            (g)  Voluntary cessation by Employee of his duties and
                 responsibilities under this agreement.

                 If DMI terminates Employee's employment other than for Cause 
(as defined in the Officer Severance Agreement), and a change in control (as 
defined in the Officer Severance Agreement) occurs within 9 months 
thereafter, then Employee shall be entitled to all benefits provided under 
the Officer Severance Agreement.

                 Otherwise, if Employee's employment hereunder is terminated 
for any other reason than those specified in subparagraphs (a) through (e) of 
this paragraph 7, then DMI shall remain liable to Employee and shall pay 
Employee in full settlement of DMI's obligations hereunder:  (i) the full 
amount of the balance of his base salary as provided in subparagraph 3(a) 
above, to the expiration date of this Agreement or to such expiration date as 
may have been extended by action of the Board of Directors pursuant to 
subparagraph 7(a), in a lump sum; PLUS (ii) an amount equal to the cash bonus 
and the stock bonus that would have been payable to Employee pursuant to 
subparagraphs 3(b) and 3(c) above had Employee remained employed until the 
end of DMI's fiscal year, multiplied by a fraction, the numerator of which is 
the number of complete calendar months during which Employee was employed 
during the fiscal year and the denominator of which is 12.  The payments 
based upon the cash bonus and the stock bonus shall be paid within 130 days 
of the delivery to DMI of the financial statements upon which they shall be 
based.

            8.   DIRECTORSHIP.  Employee shall be nominated for election to 
the Board of Directors of DMI at each annual meeting of DMI's stockholders.  
If duly elected or appointed, Employee agrees to serve on the Board and shall 
be designated as Chairman of the Board.

                                     E-22

<PAGE>

            9.   COORDINATION WITH OFFICER SEVERANCE AGREEMENT.  For the 
purposes of the Officer Severance Agreement, this Agreement shall constitute 
a renewal and extension of the Employment Agreement dated as of September 1, 
1986 between Employee and DMI.  If any provision of this Agreement may be 
viewed as conflicting with a provision of the Officer Severance Agreement, 
and the provision at issue does not specifically state that it is intended to 
supersede the Officer Severance Agreement, the office Severance Agreement 
shall control.

            10.  NON-COMPETITION.  If this Agreement is terminated for any 
reason specified in subparagraphs (a) through (e) of Paragraph 7, Employee 
shall refrain, for a period of one year after the termination of this 
Agreement, from carrying on a business that competes with a business 
conducted by DMI within the geographic areas described as follows:    

                 The 50 states of the United States of America and Puerto 
                 Rico, except for the states of Washington, Oregon, Idaho, 
                 Colorado, Wyoming, North Dakota and South Dakota.

For the purposes of this paragraph, a business shall be deemed carried on by 
Employee if carried on by a proprietorship, partnership, association, or 
corporation, or other business entity with which Employee is connected, 
except that Employee shall not be deemed to be connected with a business 
competitive to that conducted by DMI to the extent that Employee is merely a 
passive investor therein or not engaged in the business operations thereof as 
an officer, director, employee, agent, consultant, sales representative, or 
other provider of personal services in a capacity that would enable him to 
use his knowledge or DMI's trade secrets, customer lists or unique business 
methods to compete against DMI.  It is agreed that in the event of a breach 
or a threatened breach of the foregoing, no adequate remedy exists at law to 
protect DMI's interests and that DMI shall be entitled to appropriate 
injunctive relief.  Should the foregoing covenant be adjudged to any extend 
invalid by any court of competent jurisdiction, such covenant shall be deemed 
modified to the extend necessary to make it enforceable.       

            11.  PLACE OF EMPLOYMENT.  DMI agrees that the principal location 
at which Employee is to render his services hereunder will continue to be 
Louisville, Kentucky.

            12.  NOTICES.  Any notice to DMI or Employee hereunder may be 
given by delivering it to, or by depositing it in the United States mail, 
postage pre-paid, addressed to the parties at the following addresses:
            
                 DMI:
                 Mr. Joseph G. Hill
                 DMI Furniture, Inc.
                 One Oxmoor Place
                 101 Bullitt Lane
                 Louisville, KY 40222

                 with a required copy to: 

                                       
                                     E-23

<PAGE>

                 Chairman, Compensation / Stock Option Committee
                 DMI Furniture, Inc.
                 One Oxmoor Place
                 101 Bullitt Lane
                 Louisville, KY 40222
                 EMPLOYEE:
                 Mr. Donald D. Dreher
                 8508 Westover Dr.
                 Louisville, KY 40059     

            13.  ENTIRE AGREEMENT.  This Agreement and the Officer Severance 
Agreement (a) contain the complete and entire understanding and agreement of 
DMI and Employee respecting the subject matter hereof; (b) supersede and 
cancel all understandings or agreements, oral or written, respecting the 
employment of Employee in connection with the business of DMI; and (c) may 
not be modified except by an instrument in writing executed by DMI and 
Employee.        

            14.  WAIVER OF BREACH.  The waiver by either party, of a breach 
of any provision of this Agreement by the other party shall not operate or be 
construed as a waiver of any subsequent breach of either party.         

            15.  ASSIGNMENT.  Employee may not assign his rights or 
obligations under this agreement.  The rights and obligations of DMI shall 
inure to the benefit of and shall be binding upon the successors and assigns 
of DMI.       

            16.  CAPTIONS.  All captions and headings used herein are for 
convenient reference only and do not form part of this Agreement.        

            IN WITNESS WHEREOF, DMI and Employee have caused this Agreement 
to be duly executed and delivered on the day and year first above written, 
but effective January 1, 1996. 

                                     DMI FURNITURE, INC.



ATTEST:                         By
       ------------------          -------------------------------
                                Joseph G. Hill
                                Vice President, Finance, Chief Financial 
                                Officer, Secretary and Treasurer

-------------------------------
                                Donald D. Dreher

                                     E-24