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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
February 6, 1995
(Date of Report (Date of Earliest Event Reported))
LA-Z-BOY CHAIR COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Michigan
(State or Other Jurisdiction of Incorporation)
0-5091
(Commission File Number)
38-0751137
(I.R.S. Employer Identification No.)
1284 N. Telegraph Road
Monroe, Michigan 48161
(Address of Principal Executive Offices, Including Zip Code)
(313) 242-1444
(Registrant's Telephone Number, Including Area Code)
[not applicable]
(Former Name or Former Address If Changed Since Last Report
Item 5. Other Events
No new developments are being reported in this Form 8-K, the sole purpose
of which is to file the exhibits listed in Item 7.
Item 7. Financial Statements and Exhibits.
(99)(a) Form of Change in Control Agreement, accompanied by list of
of employees party thereto.
(99)(b) Supplemental Executive Retirement Plan.
(99)(c) Executive Incentive Compensation Plan Description
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
LA-Z-BOY-CHAIR COMPANY
James J. Korsnack
Corporate Controller
Date: February 6, 1995
Exhibit Index
Exhibits Filed Herewith:
(99)(a) Form of Change in Control Agreement,
Accompanied by List of Employees
Party Thereto
(99)(b) Supplemental Executive Retirement Plan
(99)(c) Executive Incentive Compensation Plan
Description
La-Z-Boy Chair Company
Change in Control Agreement
November 1, 1989
Dear
The La-Z-Boy Chair Company, a corporation (the "Company"),
considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best
interests of the Company and its shareholders. In this
connection, the Company recognizes that, as is the case with many
publicly held corporations, the possibility of a change in
control may arise and that such possibility, and the uncertainty
and questions which it may raise among management, may result in
the departure or distraction of management personnel to the
detriment of the Company and its shareholders. The Company
further recognizes that it is absolutely vital to the Company to
retain well qualified executives and to assure itself of
continuity of management in considering any actual or threatened
change of control of the Company.
For the above reasons, the Board of Directors of the Company
(the "Board") has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company's management to their
assigned duties without distraction in circumstances arising from
the possibility of a change in control of the Company. In
particular, the Board believes that it is important, should the
Company or its shareholders receive a proposal for transfer of
control of the Company, that you be able to assess and advise the
Company and its shareholders and to take such other action
regarding such proposal as the Board might determine to be
appropriate, without being influenced by the uncertainties of
your own situation.
In order to induce you to remain in the employ of the
Company, this letter agreement, which has been approved by the
Board, sets forth the severance benefits which the Company agrees
will be provided to you in the event your employment with the
Company is terminated subsequent to a "change in control" of the
Company under the circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below,
the Company or you may terminate your employment at any time,
subject to the Company's providing the benefits hereinafter
specified in accordance with the terms hereof.
(ii) In the event a tender offer or exchange offer is made
by a Person (as hereinafter defined) for more than 25% of the
combined voting power of the Company's outstanding common stock,
you agree that you will not leave the employ of the Company
(other than as a result of Disability, as that term is
hereinafter defined) and will render the services contemplated in
the recitals to this Agreement until such tender offer or
exchange offer has been abandoned or terminated or a change in
control of the Company, as defined in Section 3 hereof, has
occurred. For purposes of this Agreement, the term "Person"
shall mean and include any individual, corporation, partnership,
group, association or other "person", as such term is used in
Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than the Company, a wholly owned
subsidiary of the Company or any employee benefit plan(s)
sponsored by the Company.
2. Term of Agreement. This Agreement shall commence on the
date hereof and shall continue in effect until December 31, 1990;
provided, however, that commencing on January 1, 1991 and each
January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless at least
90 days prior to such January 1st date, the Company or you shall
have given notice that this Agreement shall not be extended; and
provided, further, that this Agreement shall continue in effect
for a period of thirty-six (36) months beyond the term provided
herein if a change in control of the Company, as defined in
Section 3 hereof, shall have occurred during such term.
Notwithstanding anything in this Section 2 to the contrary, this
Agreement shall terminate if you or the Company terminates your
employment prior to a change in control of the Company, as
defined in Section 3 hereof.
3. Change in Control. For purposes of this Agreement, a
"change in control" of the Company shall mean a change in control
of a nature that would be required to be reported (assuming such
event has not been "previously reported") in response to Item
5(f) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 or Item 1(a) of the Current
Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Exchange Act; provided that, without
limitation, such a change in control shall be deemed to have
occurred at such time as (a) any Person is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 25% or more of the combined
voting power of the Company's Voting Securities; or (b) the
individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of
at least three quarters of the directors comprising the Incumbent
Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a
nominee for director, without objection to such nomination) shall
be, for purposes of this clause (b), considered as though such
person were a member of the Incumbent Board. Notwithstanding
anything in the foregoing to the contrary, no change in control
shall be deemed to have occurred for purposes of this Agreement
by virtue of any transaction which results in you, or a group of
Persons which includes you acquiring, directly or indirectly, 25%
or more of the combined voting power of the Company's Voting
Securities.
4. Termination Following Change in Control. If any of the
events described in Section 3 hereof constituting a change in
control of the Company shall have occurred, you shall be entitled
to the benefits provided in paragraphs (iii) and (iv) of Section
5 hereof upon the termination of your employment within thirty-
six (36) months after such event, unless such termination is (a)
because of your death, (b) by the Company for Cause or Disability
or (c) by you other than for Good Reason (as all capitalized
terms are hereinafter defined).
(i) Disability. Termination by the Company of your
employment based on "Disability" shall mean termination because
of your absence from your duties with the Company on a full-time
basis for one hundred eighty (180) consecutive days as a result
of your incapacity due to physical or mental illness, unless
within thirty (30) days after Notice of Termination (as
hereinafter defined) is given to you following such absence you
shall have returned to the full-time performance of your duties.
(ii) Cause. Termination by the Company of your employment
for "Cause" shall mean termination upon (a) the willful and
continued failure by you to perform substantially your duties
with the Company (other than any such failure resulting from your
incapacity due to physical or mental illness) after a demand for
substantial performance is delivered to you by the duly
authorized representative of the Compensation Committee of the
Board which specifically identifies the manner in which such
executive believes that you have not substantially performed your
duties, or (b) the willful engaging by you in illegal conduct
which is materially and demonstrably injurious to the Company.
For purposes of this paragraph (ii), no act, or failure to act,
on your part shall be considered "willful" unless done, or
omitted to be done, by you in bad faith and without reasonable
belief that your action or omission was in, or not opposed to,
the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted
by the Board or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done,
by you in good faith and in the best interests of the
corporation. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there
shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board
called and held for the purpose (after reasonable notice to you
and an opportunity for you, together with your counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board you were guilty of the conduct set forth above in
(a) or (b) of this paragraph (ii) and specifying the particulars
thereof in detail.
(iii) Good Reason. Termination by you of your
employment for "Good Reason" shall mean termination based on:
(A) an adverse change in your status or position(s) as a
corporate officer of the Company as in effect immediately prior
to the change in control, including, without limitation, any
adverse change in your status or position as a result of a
material diminution in your duties or responsibilities (other
than, if applicable, any such change directly attributable to the
fact that the Company is no longer publicly owned) or the
assignment to you of any duties or responsibilities which, in
your reasonable judgment, are inconsistent with such status or
position(s), or any removal of you from or any failure to
reappoint or reelect you to such position(s) (except in
connection with the termination of your employment for Cause or
Disability or as a result of your death or by you other than for
Good Reason);
(B) a reduction by the Company in your compensation as in
effect immediately prior to the change in control;
(C) the failure by the Company to continue in effect any
Plan (as hereinafter defined) in which you are participating at
the time of the change in control of the Company (or Plans
providing you with at least substantially similar benefits) other
than as a result of the normal expiration of any such Plan in
accordance with its terms as in effect at the time of the change
in control, or the taking of any action, or the failure to act,
by the Company which would adversely affect your continued
participation in any of such Plans on at least as favorable a
basis to you as is the case on the date of the change in control
or which would materially reduce your benefits in the future
under any of such Plans or deprive you of any material benefit
enjoyed by you at the time of the change in control;
(D) the failure by the Company to provide and credit you
with the number of paid vacation days to which you are then
entitled in accordance with the Company's normal vacation policy
as in effect immediately prior to the change in control;
(E) the Company's requiring you to be based anywhere other
than where your office is located immediately prior to the change
in control except for required travel on the Company's business
to an extent substantially consistent with the business travel
obligations which you undertook on behalf of the Company prior to
the change in control;
(F) the failure by the Company to obtain from any Successor
(as hereinafter defined) the assent to this Agreement
contemplated by Section 6 hereof;
(G) any purported termination by the Company of your
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph (iv) below
(and, if applicable, paragraph ii above); and for purposes of
this Agreement, no such purported termination shall be effective
or
(H) any refusal by the Company to continue to allow you to
attend to matters or engage in activities not directly related to
the business of the Company which, prior to the change in
control, you were permitted by the Board to attend to or engage
in, including without limiting the foregoing, serving on the
Boards of Directors of other companies or entities.
For purposes of this Agreement, "Plan" shall mean any
compensation plan such as an incentive, stock option or
restricted stock plan or any employee benefit plan such as a
savings, pension, profit sharing, medical, disability, accident,
life insurance plan or a relocation plan or policy or any other
plan, program or policy of the Company intended to benefit
employees.
(iv) Notice of Termination. Any purported termination by
the Company or by you following a change in control shall be
communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon.
(v) Date of Termination. "Date of Termination" following a
change in control shall mean (a) if your employment is to be
terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned
to the performance of your duties on a full-time basis during
such thirty (30) day period), (b) if your employment is to be
terminated by the Company for Cause or by you pursuant to
Sections 4(iii)(F) and 6 hereof or for any other Good Reason, the
date specified in the Notice of Termination, or (c) if your
employment is to be terminated by the Company for any reason
other than Cause, the date specified in the Notice of
Termination, which is no event shall be a date earlier than
ninety (90) days after the date on which a Notice of Termination
is given, unless an earlier date has been expressly agreed to by
you in writing either in advance of, or after, receiving such
Notice of Termination. In the case of termination by the Company
of your employment for Cause, if you have not previously
expressly agreed in writing to the termination, then within
thirty (30) days after receipt by you of the Notice of
Termination with respect thereto, you may notify the Company that
a dispute exists concerning the termination, in which event the
Date of Termination shall be the date set either by mutual
written agreement of the parties or by the arbitrators in a
proceeding as provided in Section 13 hereof. During the pendency
of any such dispute, the Company will continue to pay you your
full compensation in effect just prior to the time the Notice of
Termination is given and until the dispute is resolved in
accordance with Section 13.
5. Compensation Upon Termination or During Disability;
Other Agreements.
(i) During any period following a change in control that
you fail to perform your duties as a result of incapacity due to
physical or mental illness, you shall continue to receive your
salary at the rate then in effect and any benefits or awards
under any Plans shall continue to accrue during such period, to
the extent not inconsistent with such Plans, until your
employment is terminated pursuant to and in accordance with
paragraphs 4(i) and 4(v) hereof. Thereafter, your benefits shall
be determined in accordance with the Plans then in effect.
(ii) If your employment shall be terminated for Cause
following a change in control of the Company, the Company shall
pay you your salary through the Date of Termination at the rate
in effect just prior to the time a Notice of Termination is given
plus any benefits or awards (including both the cash and stock
components) which pursuant to the terms of any Plans have been
earned or become payable, but which have not yet been paid to
you. Thereupon the Company shall have no further obligations to
you under this Agreement.
(iii) Subject to Section 8 hereof, if, within thirty-six
(36) months after a change in control of the Company shall have
occurred as defined in Section 3 above, your employment by the
Company shall be terminated (a) by the Company other than for
Cause, Disability, or death or (b) by you for Good Reason, then,
by no later than the fifth day following the Date of Termination
(except as otherwise provided, you shall be entitled, without
regard to any contrary provision of any Plan, to the benefits
provided below:
(A) the Company shall pay your salary through the Date of
Termination at the rate in effect just prior to the time a Notice
of Termination is given plus any benefits or awards (including
both the cash and stock components) which pursuant to the terms
of any Plans have been earned or become payable, but which have
not yet been paid by you; and
(B) as severance pay and in lieu of any further salary for
periods subsequent to the Date of Termination, the Company shall
pay to you an amount in cash equal to three (3) times the sum of
(i) your annualized salary at the rate in effect at the Date of
Termination and (ii) an amount equal to the average bonus paid
you in the previous three (3) years.
(iv) Following a change in control of the Company, unless
you are terminated for Cause, Disability, or death or you
terminate your employment other than for Good Reason, the Company
shall maintain in full force and effect, for the continued
benefit of you and your dependents for a period terminating on
the earliest of (a) thirty-six (36) months after the Date of
Termination, (b) the commencement date of equivalent benefits
from a new employer or (c) your normal retirement date under the
terms of the La-Z-Boy Chair Company Profit-Sharing Plan (or any
successor or substitute plan or plans of the Company put into
effect prior to a change in control), all insured and self-
insured employee welfare benefits plans in which you were
entitled to participate immediately prior to the Date of
Termination, provided that your continued participation is
possible under the general terms and provisions of such Plans
(and any applicable funding media) and you continue to pay an
amount equal to your regular contribution under such Plans for
such participation. If, at the end of thirty-six (36) months
after the Termination Date, you have not reached your normal
retirement date and you have not previously received or are not
then receiving equivalent benefits from a new employer, the
Company shall arrange to enable you to convert your and your
dependents' coverage under such Plans to individual policies or
programs upon the same terms as employees of the Company may
apply for such conversions.
(v) Except as specifically provided in paragraph (iv)
above, the amount of any payment provided for in this Section 5
shall not be reduced, offset or subject to recovery by the
Company by reason of any compensation earned by you as the result
of employment by another employer after the Date of Termination,
or otherwise,
(vi) Upon entering into this Agreement and for a period of
14 days following each anniversary of the date hereof (the
"Election Period"), you may, in writing, direct, the Company that
any amounts which should become payable to you pursuant to
Section 5(iii) hereof shall be paid to you in three (3) equal
annual installments, with the first such installment payable
within five business days of the Date of Termination and each
successive installment paid on the anniversary of the Date of
Termination or the next following business day if such date is
not a business day (the "Deferred Payment Election"). A Deferred
Payment Election, once made, cannot be revoked except during an
Election Period; provided, however, no Deferred Payment Election
can be made or revoked by you during an Election Period that
occurs after a change in control of the Company or at a time
when, in the judgment of the Company, a change in control may
occur within sixty (60) days of such Election Period.
Notwithstanding anything in the foregoing to the contrary, a
Deferred Payment Election shall be automatically revoked should
you terminate your employment under the circumstances described
in Section 6 below.
6. Successors; Binding Agreement.
(i) Upon your written request, the Company will seek to
have any Successor (as hereinafter defined), by agreement in form
and substance satisfactory to you, assent to the fulfillment by
the Company of its obligations under this Agreement. Failure of
the Company to obtain such assent at least three (3) business
days prior to the time a Person becomes a Successor (or where the
Company does not have at least three (3) business days advance
notice that a Person may become a Successor, within one (1)
business day after having notice that such Person may become or
has become a Successor) shall constitute Good Reason for
termination by you of your employment and, if a change in control
of the Company has occurred, shall entitle you immediately to the
benefits provided in paragraphs (iii) and (iv) of Section 5
hereof upon delivery by you of a Notice of Termination. For
purposes of this Agreement, "Successor" shall mean any Person
that succeeds to, or has the practical ability to control (either
immediately or with the passage of time), the Company's business
directly, by merger or consolidation, or indirectly, by purchase
of the Company's Voting Securities, all or substantially all of
its assets or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be
payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there be no such designee, to
your estate.
(iii) For purposes of this Agreement, the "Company" shall
include any corporation or other entity which is the surviving or
continuing entity in respect of any merger, consolidation or form
of business combination in which the Company ceases to exist.
7. Fees and Expenses; Mitigation.
(i) The Company shall pay all reasonable legal fees and
related expenses incurred by you in connection with this
Agreement following a change in control of the Company,
including, without limitation, (a) all such fees and expenses, if
any, incurred in contesting or disputing any such termination or
incurred by you in seeking advice with respect to the matters set
forth in Section 8 hereof or (b) your seeking to obtain or
enforce any right or benefit provided by this Agreement.
(ii) You shall not be required to mitigate the amount of any
payment the Company becomes obligated to make to you in
connection with this Agreement, by seeking other employment or
otherwise.
8. Taxes.
(i) All payments to be made to you under this Agreement
will be subject to required withholding of federal, state and
local income and employment taxes.
(ii) Notwithstanding anything in the foregoing to the
contrary, if any of the payments provided for in this Agreement,
together with any other payments which you have the right to
receive from the Company or any corporation which is a member of
an "affiliated group" as defined in Section 1504(a) of the Code
(without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute an "excess parachute
payment" as defined in Section 280G(b)(1) of the code as it
presently exists, you agree that the following payments shall be
reduced to the largest amount as will result in no portion of
such payments being subject to the excise tax imposed by Section
4999 of the Code at the present time: first, payments under
Section 5(iii) (B) of this Agreement, and second, all other
payments under this Agreement provided, however, that the
determination as to whether any reduction in payment pursuant to
this agreement is necessary shall be made by you in good faith,
and such determination shall be conclusive and binding on the
Company with respect to its treatment of the payment for tax
reporting purposes.
9. Survival. The respective obligations of, and benefits
afforded to, the Company and you as provided in Sections 5,
6(ii), 7, 8, and 13 of this Agreement shall survive termination
of this Agreement.
10. Notice. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid and addressed, in the case of
the Company, to the address set forth on the first page of this
Agreement or, in the case of the undersigned employee, to the
address set forth below his signature, provided that all notices
to the Company shall be directed to the attention of the duly
authorized representative of the Compensation Committee of the
Board, with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver
or discharge is agreed to in a writing signed by you and the duly
authorized representative of the Compensation Committee of the
Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of Michigan.
12. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any
circumstances, including without limitation any setoff,
counterclaim, recoupment, defense or other right which the
Company may have against you.
13. Confidential Information. You agree that you will hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by you during your
employment by the Company or any of its affiliated companies and
which shall not be public knowledge. After termination of your
employment with the Company you shall not, without the prior
written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted
violation of the provisions of this Section 13 constitute a basis
for deferring or withholding any amounts otherwise payable to you
under this Agreement.
14. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
15. Arbitration. You and the Company agree that final and
binding arbitration is and will be the sole and exclusive remedy
and forum for resolving any dispute or claim between you and the
Company arising out of:
(i) The Company's termination of your employment;
(ii) Any dispute or claim concerning or arising out of
whether your termination was for "Cause" or for "Good Reason."
(iii) You have a right to appeal your dispute to arbitration.
The arbitrator will be selected by mutual agreement. If the
arbitrator is not selected by mutual agreement, then the
arbitrator will be selected from a panel of experienced labor and
employment arbitrators supplied by the American Arbitration
Association (AAA). The parties will alternatively strike names
from the AAA panel until one name (the Arbitrator) remains. The
arbitrator will decide the time and place of a hearing, which
will be conducted according to AAA Rules. At the arbitration
hearing, you will have the opportunity to rebut the evidence
presented by the Company and you may present witnesses and
evidence to support your case. The arbitrator will decide, in
writing, the resolution of the dispute.
(iv) The Company will be responsible for its and your own
costs including attorney fees. If you decide to be represented
by an attorney, you must notify the Company at least one month
before the arbitration hearing. If you do not choose to be
represented by an attorney, then the Company will not be
represented by an attorney.
(v) This arbitration procedure and the decision of the
arbitrator is your exclusive remedy in case of discharge, and is
final and binding on both the Company and you and is fully
enforceable in court.
If this letter correctly sets forth our agreement on the
subject matter hereof, kindly sign and return to the Company the
enclosed copy of this letter which will then constitute our
agreement on this subject.
Sincerely,
LA-Z-BOY CHAIR COMPANY
By
Agreed to this _____ day of ______________________, 19__.
Change in Control Agreement issued to and signed by:
C. T. Knabusch, Chairman of the Board and Vice President
E. J. Shoemaker, Vice Chairman and Executive Vice President
Engineering
G. M. Hardy, Secretary and Treasurer
F. H. Jackson, Vice President Finance
P. H. Norton, Senior Vice President Sales and Marketing
C. W. Nocella, Vice President Manufacturing
L. E. Roussey, Vice President Human Resource
LA-Z-BOY CHAIR COMPANY
Supplemental Executive Retirement Plan
1. Purpose. The purpose of this Plan is to provide for
supplementary retirement benefits as an incentive and reward to
eligible key executives who, through industry, ability and
exceptional service, contribute materially to the success of
La-Z-Boy Chair Company.
2. Definitions. When used herein the following terms shall
have the following meanings:
(a) "Plan" means this Supplemental Executive Retirement
Plan for key executives of La-Z-Boy Chair Company, as the same
may be amended from time to time.
(b) "Effective Date" means May 1, 1991.
(c) "Taxable Year" means the fiscal year of La-Z-Boy Chair
Company which as of the Effective Date is a 52-53 week year
ending on the last Saturday in April.
(d) "Company" means La-Z-Boy Chair Company, a Michigan
corporation, and its successors and assigns.
(e) "Board of Directors" means the Board of Directors of
the Company.
(f) "Committee" means the Administrative Committee provided
for in paragraph 7 below.
(g) "Employee" or "Eligible Employee" means any key officer
or other salaried executive of the Company or any of its
Subsidiaries who is in service at the end of the Taxable Year and
who has been designated by the Committee as eligible to receive
allocations hereunder; provided, however, that if in the judgment
of the Committee an Employee has made an outstanding contribution
to the Company, he or his beneficiary may be credited with a
pro rata allocation hereunder notwithstanding the fact that his
service terminated before the end of the Taxable Year.
(h) "Participant" means any Eligible Employee who has filed
an enrollment application and has been awarded an allocation
under paragraph 3(a) below.
(i) "Contingent Account" or "Account" means the account
established on the books of the Company for a Participant
credited with an allocation hereunder. In addition to any
allocations credited to a Participant, his Contingent Account
shall be credited with, and thereafter include, interest on such
Account at the end of each Taxable Year or whenever payment of
his Account is to be made based upon the following schedule:
Taxable Year
Beginning In Annual Rate
1991 greater of 9%
or the rate announced by
the Committee
1992 and the rate announced by the
thereafter Committee
(j) "Beneficiary" means the beneficiary or beneficiaries
designated by a Participant pursuant to paragraph 6 below to
receive the amount, if any, payable under the Plan upon the death
of the Participant.
(k) "Subsidiary" means a corporation, domestic or foreign,
the majority of whose voting stock is owned directly or
indirectly by the Company.
(l) "Profit Sharing Plan" means the La-Z-Boy Chair Company
Profit Sharing Plan and/or any other tax-qualified profit sharing
plan sponsored by the Company or a Subsidiary, but not including
any plan maintained under Section 401(k) of the Internal Revenue
Code of 1986, as amended.
(m) "Year of Service" shall be defined and computed in the
same manner as such term is defined and computed for vesting
purposes in the La-Z-Boy Chair Company Profit Sharing Plan.
3. Allocations to Participants.
(a) The Committee shall determine in its sole discretion
the amount of individual allocations for Eligible Employees based
on its evaluation of such individual's performance, duties and
responsibilities, contribution to the successful management of
the Company, industry, service, compensation, and such other
criteria as it shall determine to be relevant.
(b) A Participant who desires to receive a portion of any
bonus payment which may be awarded to him by the Company or a
Subsidiary shall have an election, exercisable at such time and
in such manner as the Committee may determine and subject to any
restriction or limitation which may be imposed by the Committee,
as to the portion of such bonus payment (if any) which shall be
paid directly to him rather than be treated as an additional
allocation to his Account under the Plan.
4. Vesting and Payment of Awards.
(a)(1) Upon termination of a Participant's employment
with the Company or any Subsidiary for any reason other than
his permanent and total disability, death or attainment of
age 65, such Participant shall, subject to paragraph 4(c)
below, be entitled only to a percentage of the balance in
his Account based upon the number of his full Years of
Service, as follows:
Full Years of Service Percentage Vesting
less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
(2) If a Participant's employment terminates by reason
of his death or his attainment of age 65, or if the
Committee determines that his employment terminated by
reason of his permanent and total disability, such
Participant shall, subject to paragraph 4(c) below, be 100%
vested in his Account. For purposes of this Plan,
"permanent and total disability" shall be as defined in the
La-Z-Boy Chair Company Short Term Disability Plan.
(b) Payment of Participants' Accounts. Subject to the
provisions of paragraph 4(c) below, upon termination of a
Participant's service, an amount equal to the vested balance of
the Participant's Account as of the date on which his service
terminates shall be paid by the Company. Such payment shall be
made pursuant to the method of distribution described in
paragraph 5 below; provided, however, that if the vested balance
in a Participant's Account does not exceed $5,000, it shall be
paid entirely in one lump cash sum as soon as practicable after
such termination, and further provided that if a Participant dies
before payment of the balance of his Account, an amount equal to
the unpaid portion thereof as of the date of death shall be paid
in one lump cash sum to his Beneficiary.
(c) Forfeiture or Setoff of Participants' Accounts.
If a Participant becomes entitled to a distribution of
benefits under the Plan, and if at such time the Participant has
outstanding any debt, obligation or other liability representing
an amount owing to the Company, then the Company may offset such
amount owed to it against the amount of benefits otherwise
distributable. Such determination shall be made by the Committee
after notification from the Company.
(d) Any payment or distribution to a Participant under this
Plan which is not claimed by the Participant, his Beneficiary, or
other person entitled thereto within three years after becoming
payable shall be forfeited and canceled and shall remain with the
Company, and no other person shall have any right thereto or
interest therein. The Company shall not have any duty to give
notice that amounts are payable under this Plan to any person
other than the Participant and his Beneficiary (or contingent
Beneficiary) in the event there are benefits payable after the
Participant's death.
5. Method and Time of Payment of Benefits. Upon the termination
of a Participant's service, the vested portion of his Account
shall be paid to him in fifteen (15) annual installments, during
which time his Account shall continue to be credited with
interest as specified in paragraph 1(i) above. The Committee, in
its sole discretion, may determine to offer a Participant a
single sum payment in lieu of other benefits under this Plan.
Such offer may be made at (or after) the time of the
Participant's retirement with benefits under the La-Z-Boy Chair
Company Profit Sharing Plan, if the Committee believes such offer
is warranted by convenience in Plan administration or by the
interest of the Company in securing the Participant's commitment
to be available for consulting services or in meeting a
substantial hardship faced by the Participant. If the
Participant accepts such offer, the payment amount shall be the
full vested amount of the Participant's Account under this Plan.
Notwithstanding the above, a lump sum distribution will be
made to, or on behalf of, a Participant if his vested Account
balance does not exceed $5,000.
6. Designation of Beneficiaries.
(a) Each Participant shall file with the Committee a
written designation of one or more persons as the Beneficiary who
shall be entitled to receive the amount, if any, payable under
the Plan upon his death. A Participant may, from time to time,
revoke or change his Beneficiary designation without the consent
of any prior Beneficiary by filing a new designation with the
Committee. The last such valid designation received by the
Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective
unless received by the Committee prior to the Participant's
death, and in no event shall it be effective as of a date prior
to such receipt.
(b) If no such Beneficiary designation is in effect at the
time of a Participant's death, or if no designated Beneficiary
survives the Participant, or if such designation conflicts with
law, the payment of the amount, if any, payable under the Plan
upon his death shall be made to the Participant's estate. If the
Committee is in doubt as to the right of any person to receive
such amount, the Committee may retain such amount, without
liability for any interest thereon, until the rights thereon are
determined, or the Committee may pay such amount into any court
of appropriate jurisdiction and such payment shall be a complete
discharge of the liability of the Plan, the Company and the
Committee therefor.
7. Administration.
(a) The Committee shall have full power and authority to
construe, interpret and administer the Plan and its provisions,
including but not limited to the power to construe and interpret
all provisions of this Plan relating to eligibility for benefits
and the amount, manner, and time of payment of benefits. The
Committee shall also have power to correct any defect, supply any
omission, or reconcile any inconsistency in such manner and to
such extent as the Committee shall deem proper to carry out and
put into effect this Plan. All decisions, actions or
interpretations of the Committee shall be final, conclusive and
binding upon all parties. If any person objects to any such
interpretation or action, formally or informally, the expenses of
the Committee and its agents and counsel shall be chargeable
against the Account of the relevant Participant if the Committee
determines that such objections were frivolous or not made in
good faith.
(b) The Committee shall consist of at least three members,
each of whom shall be appointed by, shall remain in office at the
will of, and may be removed, with or without cause, by the Board
of Directors. Any member of the Committee may resign at any
time. No member of the Committee shall be entitled to act on or
decide any matter relating solely to himself or any of his rights
or benefits under the Plan. The members of the Committee shall
not receive any special compensation for serving in their
capacities as members of the Committee but shall be reimbursed
for any reasonable expenses incurred in connection therewith. No
bond or other security need be required of the Committee or any
member thereof in any jurisdiction.
(c) The Committee shall elect or designate its own
Chairman, establish its own procedures and the time and place for
its meetings, and provide for the keeping of minutes of all
meetings. A majority of the members of the Committee shall
constitute a quorum for the transaction of business at a meeting
of the Committee. Any action of the Committee may be taken upon
the affirmative vote of a majority of the members of the
Committee at a meeting or, at the direction of its Chairman,
without a meeting by mail, telegraph or telephone; provided that
all of the members of the Committee are informed by mail or
telegraph of their right to vote on the proposal and of the
outcome of the vote thereon.
(d) No member of the Committee shall be personally liable
by reason of any contract or other instrument executed by him or
on his behalf in his capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the Company
shall indemnify and hold harmless each member of the Committee
and each other officer, employee, or director of the Company to
whom any duty or power relating to the administration or
interpretation of the Plan has been delegated, against any cost
or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the
Committee) arising out of any act or omission to act in
connection with the Plan unless arising out of such person's own
fraud or bad faith.
8. The Effect of a Change in Control.
(a) Rights under this Plan shall be affected as hereinafter
described by a Change in Control. A Change in Control, for the
sole purpose of this Plan, shall mean one or more of the
following events:
(i) The acquisition by any person (including a group,
within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934), other than a Participant,
the trustee of a Company-sponsored employee benefit plan,
the Company or any of its Subsidiaries, of actual or
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934) of
25% or more of the combined voting power of the Company's
then outstanding voting securities;
(ii) The first purchase under a tender offer or
exchange offer for 25% or more of the combined voting power
of the Company's then outstanding voting securities, other
than an offer by a Participant, the Company or any of its
Subsidiaries, pursuant to which shares of the common stock
of the Company have been purchased;
(iii) The first day on which less than a majority of
the total membership of the Board of Directors shall be
Continuing Directors; or
(iv) The event that more than fifty percent (50%) in
value of the assets of the Company, or of the particular
Subsidiary for which a given Employee's services are
principally performed, are disposed of by the Company or
particular Subsidiary pursuant to a partial or complete
liquidation, a sale of assets or otherwise. In the event
this provision applies to a particular Subsidiary, only
those Employees whose services are principally performed for
that Subsidiary shall be deemed to be affected by a Change
in Control.
For purposes of this paragraph 8(a), "Continuing Director" shall
mean any director of the Company who either (i) is a member of
the Board on the date this Plan is adopted by the Board, or (ii)
is recommended or elected to the Company's Board of Directors by
at least three-quarters of the Continuing Directors.
(b) At the time a Change in Control takes effect with
respect to the Company or a Subsidiary, an affected Employee's
Account shall become fully vested and immediately payable in a
single sum.
(c) If payments resulting solely from the operation of this
paragraph 8 would be "excess parachute payments" as defined in
Section 280G of the Internal Revenue Code of 1986, as amended,
such payments shall be reduced by the smallest amount required
(but not below zero) so that no payments are non-deductible under
Section 280G of the Code. If any payments previously made to or
for the benefit of an Employee from this Plan or any other plan
or agreement are subsequently determined to be non-deductible
because of Section 280G of the Code, such Employee shall be
required to promptly repay the Company, at its request, the
smallest amount necessary so that, after giving effect to such
repayments to the Company, no payments to or for the benefit of
the Employee (or the smallest amount possible) will be
non-deductible under said Section 280G; provided, however, that
any such repayments, adjusted for the time value of such amounts
under the principles of Section 1274(b)(4) of the Code, may not
exceed the amount of payments originally made from this Plan or
any other plan or agreement, nor may they reduce the amount that
would otherwise be non-deductible to the Company.
Notwithstanding the above, if the Company's independent certified
public accountants determine that it is in the best interests of
an Employee that the reduction in benefits otherwise provided in
this paragraph 8(c) not be effective, said accountants shall
notify the Committee thereof and the Committee shall waive any
reduction in benefits otherwise applicable to such Employee. The
Committee may establish procedures to carry out the provisions of
this paragraph.
(d) The terms and provisions of this paragraph 8 shall only
become effective in the event of a Change in Control as defined
in paragraph 8(a) of the Plan.
9. Amendment or Termination.
(a) The Board of Directors reserves the right at any time
to amend, suspend, or terminate the Plan in whole or in part and
for any reason and without the consent of any Participant or
Beneficiary; provided that no such amendment shall adversely
affect the rights of Participants or Beneficiaries with respect
to amounts credited to Accounts prior to such amendment.
(b) Subject to paragraphs 8(b) and 9(a) above, any
amendment, modification, suspension or termination of any
provisions of the Plan may be made retroactively.
10. General Limitations and Provisions.
(a) Nothing contained in the Plan shall give any Employee
the right to be retained in the employment of the Company or a
Subsidiary, or affect the right of the Company or its
Subsidiaries to dismiss any Employee. The adoption of the Plan
shall not constitute a contract between the Company or its
Subsidiaries and any Employee. No Employee shall receive any
right to be granted an award hereunder nor shall any such award
be considered as compensation under any employee benefit plan of
the Company except as otherwise determined by the Committee.
(b) If the Committee shall find that any person to whom any
amount is payable under the Plan is unable to care for his
affairs because of illness or accident, or is a minor, or has
died, then any payment due him or his estate (unless a prior
claim therefor has been made by a duly appointed legal
representative), may, if the Committee so directs the Company, be
paid to his spouse, a child, a relative, an institution
maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of
such person otherwise entitled to payment. Any such payment
shall be a complete discharge of the liability of the Plan, the
Company, and the Committee therefor.
(c) Except insofar as may otherwise be required by law, no
amount payable at any time under the Plan shall be subject in any
manner to alienation by anticipation, sale, transfer, assignment,
bankruptcy, pledge, attachment, charge, or encumbrance of any
kind nor in any manner be subject to the debts or liabilities of
any person and any attempt to so alienate or subject any such
amount, whether presently or thereafter payable, shall be void.
If any person shall attempt to, or shall, alienate, sell,
transfer, assign, pledge, attach, charge, or otherwise encumber
any amount payable under the Plan, or any part thereof, or if by
reason of his bankruptcy or other event happening at any such
time such amount would be made subject to his debts or
liabilities or would otherwise not be enjoyed by him, then the
Committee, if it so elects, may direct that such amount be
withheld and that the same or any part thereof be paid or applied
to or for the benefit of such person, his spouse, children or
other dependents, or any of them, in such manner and proportion
as the Committee may deem proper.
Notwithstanding the above, the Company shall have the right
to deduct from all amounts paid to, or on behalf of, a
Participant any taxes required by law to be withheld in respect
of Accounts under this Plan or any reductions under paragraph
4(c) of this Plan.
(d) The Participant shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to
aid it in meeting its obligations hereunder. Nothing contained
in the Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and the Employee or
any other person. To the extent that any person acquires a right
to receive payments from the Company under this Plan, such right
shall be no greater than the right of an unsecured general
creditor of the Company. All payments to be made hereunder shall
be paid in cash from the general funds of the Company and no
special or separate fund shall be established and no segregation
of assets shall be made to assure payments of such amounts.
(e) It is the Company's intention that the Plan not be
qualified under Section 401(a) of the Code but that the Plan be
an "unfunded" deferred compensation agreement for a select group
of management or highly compensated personnel under 29 U.S.C.
Section 1051(2), 1081(a)(3) and 1101(a)(1) or 29 U.S.C. Section 1003(b)(5).
Furthermore, the Committee may authorize the creation of trusts
or other arrangements to facilitate or ensure payment of the
Company's obligations, provided that such trusts and arrangements
are consistent with the "unfunded" status of the Plan (unless the
Committee otherwise determines).
(f) Title and headings to the Articles of this Plan are
included for convenience only and shall not control the meaning
or interpretation of any provision of this Plan. Wherever
reasonably necessary in this Plan, pronouns of any gender shall
be deemed synonymous, as shall singular and plural pronouns.
(g) In the event any provision of this Plan is held
invalid, void, or unenforceable, the same shall not affect, in
any respect whatsoever, the validity of any other provision of
this Plan.
(h) Any notice of filing required or permitted to be given
to the Company under this Plan shall be sufficient if in writing
and hand delivered, or sent by registered or certified mail, to
the principal office of the Company, directed to the attention of
the President of the Company. Such notice shall be deemed given
as of the date of delivery or, if delivery is made by mail, as of
the date shown on the postmark on the receipt for registration or
certification.
(i) Except to the extent Federal law is applicable, all
rights under the Plan shall be governed by and construed in
accordance with the laws of Michigan, and the Company, its
Subsidiaries and the Committee shall be liable to account only in
courts located in the State of Michigan.
(j) Employees and Participants shall cooperate with the
Committee by furnishing any and all information requested by the
Committee, taking such physical examinations as the Committee may
deem necessary, and taking such other relevant action as may be
required by the Committee. If a Participant or Employee neglects
or refuses so to cooperate, the Company shall have no further
obligation to such person under this Plan.
11. Claims and Disputes.
(a) Claims for benefits under the Plan shall, subject to
paragraph 12, be made in writing to the Committee. If a claim
for benefits is wholly or partially denied, the Committee shall,
within a reasonable period of time but not later than ninety (90)
days after receipt of the claim, provide the claimant who was
denied a benefit written notice setting forth in a manner
calculated to be understood by the claimant:
(i) The specific reason or reasons for denial;
(ii) Specific reference to the pertinent provisions
of the Plan on which the denial is based;
(iii) A description of any additional material or
information necessary for the claimant to
perfect the claim and an explanation of why such
material or information is necessary; and
(iv) An explanation of the Plan's claim review
procedure.
A person whose claim for benefits under the Plan has been
denied, or his duly authorized representative, may request a
review upon written application to the Committee, may review
pertinent documents, and may submit issues and comments in
writing. The claimant's written request for review must be
submitted to the Committee within sixty (60) days after the
Committee's receipt of a request for review, unless special
circumstances require an extension of time for proceeding, in
which cases a decision shall be rendered as soon as possible, but
not later than one hundred twenty (120) days after receipt of the
request for review. The decision on review shall be in writing
and shall include specific reasons for the decision, specific
reference to the pertinent provision of the Plan on which the
decision is based, and be written in a manner calculated to be
understood by the claimant.
(b) Subject to the limitations period specified in
paragraph 12, any controversy or claim arising out of or relating
to this Plan or the breach thereof, including in particular any
controversy relating to paragraphs 4(c) or 8, shall be settled by
arbitration in Monroe County, Michigan in accordance with the
laws of the State of Michigan by three arbitrators, one of whom
shall be appointed by the Company, one by the Employee (or in the
event of his prior death, his Beneficiary(s)), and the third of
whom shall be appointed by the first two arbitrators. The
arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association except
as hereinabove provided. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction
thereof. In the event the Employee or his Beneficiary shall
retain legal counsel and/or incur other costs and expenses in
connection with enforcement of any of the Employee's rights under
this Plan, the Employee or Beneficiary shall not be entitled to
recover from the Company any attorneys fees, costs or expenses in
connection with the enforcement of such rights (including
enforcement of any arbitration award in court) regardless of the
final outcome.
Any notice preliminary to or in conjunction with or incident
to such arbitration proceeding may be sent to an Employee or to
the President of the Company by registered or certified mail, and
personal service is hereby waived. An Employee or Beneficiary
shall not institute a civil action with regard to any claim or
controversy arising out of or relating to this Plan until such
time as the arbitration proceedings has been completed provided
that, if such action would otherwise be barred pursuant to
paragraph 12, such action shall not be barred if instituted
within fifteen (15) calendar days after completion of the
arbitration proceedings.
12. Limitations of Action. Every asserted right of action by or
on behalf of the Company or of any Subsidiary of the Company or
by or on behalf of any stockholder of the Company or any
Subsidiary of the Company against any past, present, or future
member of the Committee, member of any predecessor or successor
committee, member of any committee appointed by the foregoing
committee or its predecessor or successor committees, or
director, officer or employee of the Company or any Subsidiary
thereof, arising out of or in connection with this Plan, shall,
irrespective of the place where such right of action may arise or
be asserted and irrespective of the place of residence of any
such member, director, officer or employee, cease and be barred
upon the expiration of one year (a) from the date of the alleged
act or omission in respect of which such right of action first
arises in whole or in part; or (b) from the date upon which
information as to the amount of the credits to the Accounts and
the aggregate amount of the awards of supplemental or deferred
compensation to all or any part of which such action may relate
is made generally available to stockholders, whichever date is
sooner; and every asserted claim to benefits or right of action
by or on behalf of any Employee, past, present, or future, or any
spouse, child, Beneficiary or legal representative thereof,
against the Company or any Subsidiary thereof arising out of or
in connection with this Plan shall, irrespective of the place
where such right of action may arise or be asserted, cease and be
barred by the expiration of the earliest of: (i) one year from
the date of the alleged act or omission in respect of which such
right of action first arises in whole or in part, (ii) one year
after the Employee's termination of employment, or (iii) six
months after notice is given to or on behalf of the Employee of
the amount payable from the Employee's Account under this Plan,
unless a longer limitation period is specifically provided under
applicable Federal law.
Exhibit (99)(c)
LA-Z-BOY CHAIR COMPANY
EXECUTIVE INCENTIVE COMPENSATION PLAN
DESCRIPTION
The purpose of the Executive Incentive Compensation Plan is to
provide a cash award to key management employees for the
achievement of specific annual goals.
The Compensation Committee of the Board of Directors (the
Committee) annually establishes short-term performance criteria
covering areas such as sales growth and improved earnings. The
specific focus and weighting of the criteria is based on key
short-term priorities of the corporation. The performance criteria
are established at the start of the fiscal year or as shortly
thereafter as possible.
The target and maximum award opportunity for each participant is
established by the Committee. The target award for participants
ranges from 10% to 55% of base pay with a maximum award of 140% of
the target (i.e. 14% to 77% of base pay). The award paid is based
on actual results compared to the established performance targets.
Payment of the award occurs within 90 days after the end of the
fiscal year. A participant must be on the payroll at the time of
distribution to be eligible for an award.