Document:

Exhibit 10.2

Exhibit 10.2

WARRANT NO. 142

THE OFFER AND SALE OF THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE OFFER AND SALE THEREOF
HAS BEEN REGISTERED UNDER THOSE LAWS OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT SUCH DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.

Right to Purchase 60,000 Shares

of Common Stock of First Physicians Capital

Group, Inc.

FIRST PHYSICIANS CAPITAL GROUP, INC.

Common Stock Purchase Warrant

FIRST PHYSICIANS CAPITAL GROUP, INC., a Delaware corporation f/k/a Tri-Isthmus Group, Inc.
(the “Company”), hereby certifies that, for value received, Richardson Sells, with an
address of 18 Audubon Pond, Hilton Head, South Carolina 29928 (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company at any time on or before 5:00
p.m., Pacific Time, on December 8, 2011 (the “Expiration Date”), Sixty Thousand (60,000)
fully paid and nonassessable shares of common stock of the Company, par value $0.01 per share (the
“Common Stock”), at a purchase price per share equal to the Purchase Price, as defined
herein. The number of such shares of Common Stock and the Purchase Price are subject to adjustment
as provided in this Warrant. The initial purchase price for shares subject to this Warrant will be
$0.50 per share (the “Initial Purchase Price”), and will be adjusted from time to time as
provided herein. The Initial Purchase Price or, if such price has been adjusted, the price per
share of Common Stock as last adjusted pursuant to the terms hereof is referred to as the
“Purchase Price” herein.

1. Exercise of Warrant. This Warrant may be exercised by the Holder hereof in full at
any time until the Expiration Date by surrender of this Warrant and the subscription form annexed
hereto (duly executed by the Holder), to the Company, and by making payment in cash or by certified
or official bank check payable to the order of the Company, in the amount obtained by multiplying
(i) the number of shares of Common Stock subject to the Warrant by (ii) the Purchase Price then in
effect.

2. Delivery of Stock Certificates, etc., on Exercise. As soon as practicable after
the exercise of this Warrant, the Company will cause to be issued in the name of and delivered to
the Holder hereof a certificate for the number of fully paid and nonassessable shares of Common
Stock (or Other Securities) to which the Holder shall be entitled on such exercise, plus, in lieu
of any fractional share to which the Holder would otherwise be entitled, cash

 

 

 

equal to such
fraction multiplied by the then current fair market value (as reasonably determined by the Company)
of one full share, together with any other stock or other securities or property (including cash,
where applicable) to which the Holder is entitled upon such exercise. “Other Securities”
shall mean any stock (other than Common Stock) and other securities of the Company or any other
person (corporate or otherwise) which the Holder at any time shall be entitled to receive, or shall
have received, on the exercise of this Warrant, in lieu of or in addition to Common Stock, or which
at any time shall be issuable or shall have been issued in exchange for or in replacement of Common
Stock or Other Securities pursuant to Sections 3 or 4.

3. Adjustment.

(a) Initial Purchase Price; Subsequent Adjustment of Price and Number of Purchasable
Shares. The Initial Purchase Price will be adjusted from time to time as provided below. Upon
each adjustment of the Purchase Price, the Holder will thereafter be entitled to purchase, at the
Purchase Price resulting from such adjustment, the number of shares of Common Stock obtained by
multiplying the Purchase Price in effect immediately before such adjustment by the number of shares
of Common Stock purchasable pursuant to this Warrant immediately before such adjustment and
dividing the product by the Purchase Price resulting from such adjustment.

(b) Adjustment for Stock Splits and Combinations. If the Company at any time or from
time to time after the date of this Warrant effects a subdivision of the outstanding shares of
Common Stock, by stock split or otherwise, the Purchase Price then in effect immediately before
that subdivision shall be proportionately decreased; and, conversely, if the Company at any time or
from time to time after the date of this Warrant combines the outstanding shares of Common Stock,
by reverse stock split or otherwise, the Purchase Price then in effect immediately before that
combination shall be proportionately increased. Any adjustment under this Section 3(b) shall
become effective at the close of business on the date the subdivision or combination becomes
effective.

(c) Adjustment for Certain Dividends and Distributions. In the event the Company at
any time or from time to time after the date of this Warrant either makes, or fixes a record date
for the determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, then and in each such event the Purchase
Price then in effect shall be decreased as of the time of such issuance or, in the event such a
record date is fixed, as of the close of business on such record date, by multiplying the Purchase
Price then in effect by a fraction (1) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such issuance on the close of
business on such record date, and (2) the denominator of which shall be (i) the total number of
shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date plus (ii) the number of shares of Common Stock issuable in
payment of such dividend or distribution; provided, however, that if such record
date is fixed and such dividend is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business
on such record date or date fixed

 

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therefor and thereafter the Purchase Price shall be adjusted
pursuant to this Section 3(c) as of the time of actual payment of such dividend or distribution.
For purposes of the foregoing formula, “the total number of shares of Common Stock issued and
outstanding” on a particular date shall include shares of Common Stock issuable upon conversion of
stock or securities convertible into Common Stock and the exercise of warrants, options or rights
for the purchase of Common Stock which are outstanding on such date.

(d) Adjustments for Other Dividends and Distributions. In the event the Company at
any time or from time to time after the date of this Warrant makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Company other than shares of Common Stock, then and in each such
event, provision shall be made so that the Holder shall receive upon exercise hereof, in addition
to the number of shares of Common Stock receivable thereupon, the amount and kind of securities of
the Company which it would have received had this Warrant been exercised for Common Stock as of the
date of such event and had it thereafter, during the period from the date of such event to and
including the date of exercise, retained such securities receivable by it as aforesaid during such
period, subject to all other adjustments called for during such period under this Section 3 with
respect to the rights of the Holder.

(e) Adjustment for Recapitalization, Reclassification, or Exchange. If the Common
Stock issuable upon the exercise of this Warrant is changed into the same or a different number of
shares of any class or classes of stock of the Company, whether by recapitalization,
reclassification or other exchange (other than a subdivision or combination of shares, or a stock
dividend or a reorganization, merger, consolidation or sale of assets, provided for elsewhere in
this Section 3), then and in any such event the Holder shall have the right thereafter to exercise
this Warrant to purchase the kind and amount of stock and other securities and property receivable
upon such recapitalization, reclassification or other exchange by holders of the number of shares
of Common Stock which might have been purchased under this Warrant immediately prior to such
recapitalization, reclassification or other exchange, all subject to further adjustment as provided
herein.

(f) Reorganizations, Mergers, Consolidations, Sales of Assets, or Other Change in
Control. If at any time or from time to time there is a capital reorganization of the Common
Stock (other than a subdivision or combination of shares or a stock dividend or a recapitalization,
reclassification or other exchange of shares, provided for elsewhere in this Section 3 or a merger
or consolidation of the Company with or into another corporation, or the sale of all or
substantially all of the Company’s assets to any other person, or any other change in control that
does not involve a change in economic ownership of the Company), then, as a part of such capital
reorganization, provision shall be made so that the Holder shall thereafter be entitled to receive
upon exercise of this Warrant the number of shares of stock or other securities or property of the
Company, or of the successor corporation resulting from such capital reorganization, to which a
holder of the number of shares of Common Stock deliverable upon such exercise would have been
entitled on such capital reorganization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 3 with respect to the rights of the Holder after
the capital reorganization to the end that the provisions of this Section 3 (including the number
of shares deliverable upon exercise of this Warrant) shall continue to be applicable after that
event and shall be as nearly equivalent to the provisions hereof as may be practicable.

 

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(g) Certificate of Adjustment. Upon the occurrence of each adjustment or readjustment
of the Purchase Price and/or the number of shares of Common Stock subject to this Warrant, the
Company at its expense shall promptly compute such adjustment or readjustment in accordance with
the terms hereof, and shall prepare and furnish to the Holder a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.

4. Exercise upon Reorganization, Consolidation, Merger, Change in Control, etc. In
case at any time or from time to time, the Company intends to (i) effect a reorganization, (ii)
consolidate with or merge into any other person, (iii) sell or transfer all or substantially all of
its properties or assets to any other person, (iv) sell the Company through sale of its capital
stock, (v) dissolve, or (vi) effect any other change in control; then, the Company shall give at
least ten (10) days’ notice to the Holder of such pending transaction whereby the Holder shall have
the right to exercise this Warrant prior to any such reorganization, consolidation, merger, sale,
dissolution, conveyance, offering or change in control. Any exercise of this Warrant pursuant to
notice under this Section shall be conditioned upon the closing of such reorganization,
consolidation, merger, sale, dissolution, conveyance, offering or other change in control which is
the subject of the notice and the exercise of this Warrant shall not be deemed to have occurred
until immediately prior to the closing of such transaction.

5. Further Assurances. The Company will take all action that may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock, free from all taxes, liens and charges with respect to the issue thereof,
on the exercise of all or any portion of this Warrant from time to time outstanding.

6. Notices of Record Date, etc. In the event of:

(a) any taking by the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any dividend on, or any
right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or

(b) any capital reorganization of the Company, any reclassification or recapitalization of the
capital stock of the Company or any transfer of all or substantially all of the assets of the
Company to or the sale, consolidation or merger of the Company with, to or into any other person,
or

(c) any voluntary or involuntary dissolution, liquidation or winding up of the Company; or

 

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(d) any other change in control of the Company,
then and in each such event the Company will mail or cause to be mailed to the Holder, at least ten
(10) days prior to such record date, a notice specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation, merger or other change
in control, or dissolution, liquidation or winding up is to take place, and the time, if any is to
be fixed, as of which the holders of record of Common Stock (or Other Securities) shall be entitled
to exchange their shares of Common Stock (or Other Securities) for securities or other property
deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up, and (iii) the amount and character of any stock or
other securities, or rights or options with respect thereto, proposed to be issued or granted, the
date of such proposed issue or grant and the persons or class of persons to whom such proposed
issue or grant is to be offered or made.

7. Reservation of Stock, etc., Issuable on Exercise of Warrants. The Company will at
all times reserve and keep available out of its authorized but unissued shares of capital stock,
solely for issuance and delivery on the exercise of this Warrant, a sufficient number of shares of
Common Stock (or Other Securities) to effect the full exercise of this Warrant and the exercise,
conversion or exchange of any other warrant or security of the Company exercisable for, convertible
into, exchangeable for or otherwise entitling the Holder to acquire shares of Common Stock (or
Other Securities), and if at any time the number of authorized but unissued shares of Common Stock
(or Other Securities) shall not be sufficient to effect such exercise, conversion or exchange, the
Company shall take such action as may be necessary to increase its authorized but unissued shares
of Common Stock (or Other Securities) to such number as shall be sufficient for such purposes.

8. Transfer of Warrant. This Warrant cannot be transferred without the prior written
consent of the Company, which consent shall not be unreasonably withheld.

9. No Rights as a Stockholder. This Warrant shall not entitle the Holder hereof to
any voting rights or other rights as a stockholder of the Company.

10. Notices, etc. All notices which are required to be given pursuant to this Warrant
shall be in writing and shall be delivered by certified mail, return receipt requested, first class
postage prepaid, or sent by overnight express or similarly recognized overnight delivery with
receipt acknowledged or by facsimile, with a copy thereof sent by one of the other means. Notices
shall be deemed to have been given at the time delivered and shall be addressed as follows or to
such other address as a party may designate by proper notice hereunder.

 

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	If to Holder:
	 	To the address set forth on the first page hereof.
	 
	 	 
	If to the Company:
	 	First Physicians Capital Group, Inc.

	 
	 	9663 Santa Monica Blvd., #959

	 
	 	Beverly Hills, California 90210

	 
	 	Attn: David Hirschhorn, Chief Executive Officer
	 
	 	 
	With a copy (which will not constitute notice) to:
	 	K&L Gates, LLP

	
	 	1717 Main Street, Suite 2800

	 
	 	Dallas, Texas  75201

	 
	 	Attn:  I. Bobby Majumder, Esq.

11. Securities Laws. By acceptance of this Warrant, the Holder hereby represents to
the Company that this Warrant is being acquired for investment for the Holder’s own account, not as
a nominee or agent, and not with a view to the resale or distribution thereof, and that the Holder
has no present intention of selling, granting any participation in, or otherwise distributing this
Warrant or the Common Stock issuable upon exercise of this Warrant. By acceptance of this Warrant,
the Holder further represents that the Holder does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant participations to such person
or to any third person, with respect to this Warrant or the Common Stock issuable upon exercise of
this Warrant. The Holder is an “accredited investor” as the term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act and has sufficient knowledge and experience in
finance and business that it is capable of evaluating the risks and merits of its investment in the
shares subject to this Warrant and the Holder is able financially to bear the risks thereof. The
Holder understands that the offer and sale of this Warrant and the offer and sale of the Common
Stock issuable upon exercise of this Warrant have not been registered under the Securities Act, by
reason of a specific exemption from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of the investment intent and the accuracy of the
Holder’s representations as expressed herein. The Holder further recognizes and acknowledges that
because the offer and sale of this Warrant and the offer and sale of the Common Stock issuable upon
exercise of this Warrant are unregistered, they may not be eligible for resale, and may only be
resold in the future pursuant to an effective registration statement under the Securities Act and
any applicable state securities laws, or pursuant to a valid exemption from such registration
requirements and that the Holder must, therefore, bear the economic risk of such investment
indefinitely.

12. Legend. Unless theretofore registered for resale under the Securities Act, each
certificate for shares of Common Stock issued upon exercise of this Warrant shall bear the
following or a similar legend:

 

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THE OFFER AND SALE OF THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE RESOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE OFFER
AND SALE OF THE SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY THAT SUCH DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.

13. Miscellaneous. This Warrant and any terms hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be
construed and enforced in accordance with and governed by the internal laws of the State of
Delaware, without regard to conflict of laws principles. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.

* * *

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf by one of
its officers thereunto duly authorized as of December 8, 2009.

	 	 	 	 	 
	 	FIRST PHYSICIANS CAPITAL GROUP, INC.

 	 
	 	By:  	 	 
	 	 	DAVID HIRSCHHORN 	 
	 	 	Chief Executive Officer 	 
	 

[Signature page to Warrant]

 

 

 

FORM OF SUBSCRIPTION

FIRST PHYSICIANS CAPITAL GROUP, INC.

(To be signed only on exercise of Warrant)

	TO:	 	FIRST PHYSICIANS CAPITAL GROUP, INC.,

1. The undersigned Holder of the attached original, executed Warrant of First Physicians
Capital Group, Inc., a Delaware corporation (the “Company”), hereby elects to exercise its
purchase right under such Warrant with respect to                      (                    ) shares (the “Exercise
Shares”) of Common Stock (as defined in the Warrant), constituting all the shares of Common
Stock subject to the Warrant.

2. The undersigned Holder is hereby paying the aggregate purchase price for such the
Exercise Shares (i) by the enclosed certified or official bank check payable in United
States dollars to the order of the Company in the amount of $                    , or (ii) by wire transfer of
United States funds to the account of the Company in the amount of $                    , which transfer has
been made before or simultaneously with the delivery of this Form of Subscription pursuant to the
instructions of the Company.

3. Please issue a stock certificate or certificates representing the Exercise Shares in the
name of the undersigned Holder.

Dated:                                         

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Signature of HolderExhibit 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

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