1
EXHIBIT 10B
EXHIBIT 10B - BASSETT FURNITURE INDUSTRIES, INC.
EXECUTIVE EMPLOYEE DEFERRED COMPENSATION PLAN
Bassett Furniture Industries, Inc., a Virginia corporation (the
"Company"), hereby establishes this Executive Employee Deferred Compensation
Plan (the "Plan"), effective as of November 1, 1984, for the purpose of
promoting in its Executive Employees the strongest interest in the successful
operation of the Company and increased efficiency in their work and to provide
benefits upon retirement, death, disability or other termination of employment.
1. Definitions.
a. Administrative Committee. "Administrative Committee" shall mean
the committee appointed pursuant to Section 5 of the Plan.
b. Age. "Age" shall mean the age of the person as of his last
birthdate.
c. Compensation - "Compensation" shall mean a Participant's base
salary, and bonus payments for personal services rendered by a
Participant to the Company during a Plan year.
d. Deferred Compensation Agreement. "Deferred Compensation
Agreement" shall mean a written agreement between a Participant and
the Company, whereby a Participant agrees to defer a portion of his
Compensation pursuant to the provisions of the Plan, and the Company
agrees to make benefit payments in accordance with the provisions of
the Plan.
e. Deferral Period. "Deferral Period" shall mean a forty-eight (48)
month period designated in Section 4 of the Executive Employee
Deferred Compensation Agreement.
f. Disability. "Disability" shall mean the Participant's total
disability as determined by the Company in its complete and sole
discretion.
g. Disability Benefit. "Disability Benefit" shall mean the amount of
disability benefit set forth in the Deferred Compensation Agreement.
h. Executive Employees. "Executive Employees" shall mean all
employees of the Company who are designated as executive employees by
the Administrative Committee. A person designated as an Executive
Employee shall remain so until such designation is revoked by the
Administrative Committee in its sole discretion.
i. Normal Benefit. "Normal Benefit" under this Plan shall mean the
normal benefit amount specified in the Deferred Compensation
Agreement.
j. Normal Retirement Date. "Normal Retirement Date" shall mean the
first day of the month following the month in which a Participant
reaches age 65.
k. Participant. "Participant" shall mean an Executive Employee of
the Company who has entered into a Deferred Compensation Agreement
with the Company.
l. Plan Year. "Plan Year" shall mean the twelve (12) month period
commencing November 1 and ending the following October 31.
m. Stated Deferral. "Stated Deferral" shall mean the amount of
Compensation the Participant agrees to defer in the Deferred
Compensation Agreement.
n. Survivor's Benefit. "Survivor's Benefit" shall be the amount of
survivor's benefit set forth in the Deferred Compensation Agreement.
2
o. Termination of Employment. "Termination of Employment" shall mean
the Participant's ceasing to be employed by the Company for any reason
whatsoever, voluntary or involuntary, including by reason of death or
disability.
2. Eligibility All of the initial Executive Employees in this Plan
shall be entitled to participate as of November 1, 1984, following their
execution of a Deferred Compensation Agreement and upon the Company's execution
of the Deferred Compensation Agreement. All subsequent Executive Employees
shall be entitled to participate hereunder as of the first day of the Plan Year
following their execution of a Deferred Compensation Agreement and upon the
Company's execution of the Deferred Compensation Agreement.
A Participant shall cease to be a Participant at Termination of
Employment or upon revocation by the Administrative Committee of the
Participant's status as an Executive Employee. However, the employment of a
Participant shall not be deemed to be terminated by reason of an approved leave
of absence granted by the Company. If a Participant terminates his employment
and is subsequently re-employed by the Company, he may become a Participant in
the same manner as if his re-employment constituted his first employment with
the Company.
3. Participant Compensation Deferral.
3.1 Deferral and Reduction of Compensation.
a. Initial Deferral. Any Executive Employee wishing to become a
Participant hereunder as of the effective date of this plan shall,
prior to November 1, 1984, elect to defer a portion of his
Compensation earned and payable on or after November 1, 1984 and prior
to October 31, 1988.
b. Subsequent Deferrals. Subsequent to the initial deferral provided
for in subparagraph a. above, any election to defer Compensation
hereunder shall be made no later than the end of the Plan Year prior
to the first Plan Year in which services are to be rendered for the
Compensation which is to be deferred.
c. Procedure for Deferral. The Executive Employee shall make the
election provided for in subparagraphs a. and b. above by
executing a Deferred Compensation Agreement in the form provided by
the Company. In no event shall a Participant be permitted to defer
more than that amount of his Compensation for any Plan Year as may be
permitted by the Administrative Committee in its sole discretion, and
as set forth in the Deferred Compensation Agreement. The Deferred
Compensation Agreement shall set forth the Compensation which the
Executive Employee elects to defer (the "Stated Deferral"). The
amount deferred in each Plan Year during the Deferral Period shall
first be subtracted from any bonus which would have otherwise been
payable to the Participant during the Plan Year; the balance, if any,
shall be subtracted in equal monthly installments from the
Participant's salary payable during said Plan Year. Unless otherwise
permitted by the Company under Section 3.3 of the
3
Plan, the deferral specified in the Deferred Compensation Agreement
shall be deferred, and the Participant'' compensation shall be
correspondingly reduced.
3.2 New Executive Employees. An Executive Employee who is first employed
by the Company or who is first designated an Executive Employee subsequent to
October 31, 1984, shall be entitled to participate in the Plan commencing with
the first day of the Plan Year immediately following such Executive Employee's
designation as an Executive Employee. Upon execution of a Deferred
Compensation Agreement, such new Executive Employee shall be bound by all the
terms and conditions of the Plan.
3.3 Election to Defer Irrevocable; Exceptions. Except as otherwise
provided herein, a Participant's election to defer Compensation shall be
irrevocable. The Administrative Committee, in its sole discretion, upon
demonstration of substantial hardship by the Participant, may permit subsequent
alteration of a Participant's deferral election. A request to alter the amount
of Compensation deferred shall be submitted by a Participant in writing to the
Administrative Committee prior to November 1 of the year in which such
reduction is to take effect. The application shall set forth in detail the
reasons for the requested reduction. If a modification of the deferral is
granted by the Administrative Committee, such reduced deferral shall be
effective for all future periods of deferral. The Participant's benefits under
the Plan shall be adjusted to reflect the reduced deferral and also to reflect
any costs incurred by the Company to effect the adjusted benefits payable to
the Participant.
4. Payment of Benefits.
4.1 Benefits upon Normal Retirement. Upon a Participant's Termination of
Employment on the Normal Retirement Date, the Company shall pay to the
Participant, as compensation for services rendered prior to such date, the
Normal Benefit in 180 equal monthly installments commencing on the Normal
Retirement Date and continuing on the first day of each month thereafter.
4.2 Benefits upon Late Retirement. Upon a Participant's Termination of
Employment after the Normal Retirement Date, the Company shall pay to the
Participant as compensation for services rendered prior to such date, the
Normal Benefit, in 180 equal monthly installments commencing on the first day
of the month coincident with or next following the date of Termination of
Employment and continuing on the first day of each month thereafter. The
amount of Normal Benefit payable to the Participant shall be actuarially
increased according to the Participant's actual age upon Termination of
Employment.
4.3 Benefits upon Disability. Upon a Participant's Termination of
Employment prior to the Normal Retirement Date due to Disability, and upon the
continuation of the Participant's disability for a period of six (6)
consecutive months, the Company shall pay to the Participant the Disability
Benefit in monthly installments commencing on the later of (i) the first day of
the year following the deferral period specified in the Deferred Compensation
Agreement, or (ii) the first day of the seventh consecutive month following the
Participant's Disability (in which case the first payment to the Participant
shall include the Disability Benefit for each of the initial six (6) months of
the Participant's Disability).
4
The Company shall continue to pay the Disability Benefit as follows:
a. In the event a Participant becomes disabled prior to attaining age
60, until the Participant is no longer disabled or until the
Participant's death; or
b. In the event a Participant becomes disabled after attaining age
60, until the earlier of (i) termination of the disability; (ii) death
of Participant, or (iii) the Participant's Normal Retirement Date.
A participant who reaches his Normal Retirement Date while disabled
shall receive, commencing upon such normal Retirement Date, the Normal Benefit
in 180 equal monthly installments commencing on the Normal Retirement Date and
continuing on the first day of each month thereafter. Such Normal Benefit
payments shall be in addition to the Disability Benefit, if any, which the
Participant is receiving under this Section 4.3.
4.4 Benefits upon Other Termination of Employment. Upon a Participant's
Termination of Employment prior to reaching the Normal Retirement Date, for
reasons other than death or disability, the Company shall pay to the
Participant, as compensation for services rendered prior to the date of
Termination of Employment, the Normal benefit, in 180 equal monthly
installments commencing on the Normal Retirement Date and continuing on the
first day of each month thereafter.
4.5 Survivorship Benefits.
a. Prior to Commencement of Normal Benefits. If a Participant dies
prior to commencement of the Normal Benefit payments under the Plan,
the Company shall pay to the Participant's beneficiary, in 180 equal
monthly installments commencing on the first day of the month after
the Participant's death and continuing on the first day of each month
thereafter, the Survivor's Benefit specified in the Deferred
Compensation Agreement. In the event a beneficiary dies before
receiving all the Survivor's Benefit payments, the remaining payments
shall be paid to the legal representatives of the beneficiary's
estate. Payment of the Survivor's Benefit shall relieve the Company
of the obligation to pay the Normal Benefit which the Participant
would have otherwise received.
b. After Commencement of Benefits. If a Participant dies after
Normal Benefit payments have commenced, but prior to receiving all of
the scheduled monthly payments, the Company shall pay the remaining
monthly payments to the Participant's beneficiary. In the event a
beneficiary dies before receiving all the remaining payments, the
then-remaining payments shall be paid to the legal representatives of
the beneficiary's estate.
4.6 Vesting of Benefits. All Normal Benefits and Survivor's Benefits
payable under this Article 4 shall be proportionately adjusted by a fraction,
the numerator of which is the actual amount of compensation deferred by the
Participant and the denominator of which is the
5
Stated Deferral, provided, however, that no such reduction shall occur in the
event that the difference between the actual amount deferred and the Stated
Deferral occurs as a result of the Participant's death or Disability.
4.7 Recipients of Payments: Designation of Beneficiary. All payments to
be made by the Company shall be made to the Participant, if living. Upon the
death of a Participant, survivorship benefits will be paid to the Participant's
beneficiary. In the event a beneficiary dies before receiving all the payments
to such beneficiaries pursuant to this Plan, the then-remaining payments shall
be to the legal representatives of the beneficiary's estate. The Participant
shall designate a beneficiary by filing a written notice of such designation
with the Administrative Committee on such form as the Administrative Committee
may prescribe. The Participant may revoke or modify said designation at any
time by a further written designation. The Participant's beneficiary
designation shall be deemed automatically revoked in the event of the death of
the beneficiary or, if the beneficiary is the Participant's spouse, in the
event of dissolution of marriage. If the Participant's Compensation
constitutes community property, then any beneficiary designation made by the
Participant other than a designation of such Participant's spouse shall not be
effective if any such beneficiary or beneficiaries are to receive more than
fifty percent (50%) of the aggregate benefits payable hereunder unless such
spouse shall approve designation in writing. If no designation shall be in
effect at the time when any benefits payable under this Plan shall become due,
the beneficiary shall be the spouse of the Participant, or if no spouse is then
living, the legal representatives of the Participant's estate.
In the event a benefit is payable to a minor or person declared
incompetent or to a person incapable of handling the disposition of his
property, the Administrative Committee may pay such benefit to the guardian,
legal representative or person having the care or custody of such minor,
incompetent or person. The Administrative Committee may require proof of
incompetency, minority, or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Administrative Committee and the Company from all liability with respect to
such benefit.
5. Administration and Interpretation of the Plan. The Board of Directors
shall appoint an Administrative Committee consisting of three (3) or more
persons to administer and interpret the Plan. Interpretation by the
Administrative Committee shall be final and binding upon a Participant. The
Administrative Committee may adopt rules and regulations relating to the Plan
as it may deem necessary or advisable for the administration of the Plan.
6. Claims Procedure. If the Participant or the Participant's beneficiary
(hereinafter referred to as a "Claimant") is denied all or a portion of an
expected benefit under this Plan for any reason, he or she may file a claim
with the Administrative Committee. The Administrative Committee shall notify
the Claimant within sixty (60) days of allowance or denial of the claim, unless
the Claimant receives written notice from the Administrative Committee prior to
the end of the sixty (60) day period stating that special circumstances require
an extension of the time for decision, in which event the Administrative
Committee shall notify the Claimant of its decision within sixty (60) days
following the end of the initial sixty (60) day period. The notice of the
Administrative Committee's decision shall be in
6
writing, sent by mail to the Claimant's last known address, and, if a denial of
the claim, must contain the following information:
a. the specific reasons for the denial;
b. specific reference to pertinent provisions of the Plan on which
the denial is based; and
c. if applicable, a description of any additional information or
material necessary to perfect the claim, an explanation of why such
information or material is necessary, and an explanation of the claims
review procedure.
7. Review Procedure.
a. A Claimant is entitled to request a review of any denial of his
claim by the Administrative Committee. The request for review must be
submitted in writing within 60 days of mailing of notice of the
denial. Absent a request for review within the 60-day period, the
claim will be deemed to be conclusively denied. The Claimant or his
representative shall be entitled to review all pertinent documents,
and to submit issues and comments orally and in writing.
b. If the request for review by a Claimant concerns the
interpretation and application of the provisions of this Plan and the
Company's obligations, then the review shall be conducted by a
separate committee consisting of three persons designated or appointed
by the Administrative Committee. The separate committee shall afford
the Claimant a hearing and the opportunity to review all pertinent
documents and submit issues and comments orally and in writing and
shall render a review decision in writing, all within sixty (60) days
after receipt of a request for a review, provided that, in special
circumstances (such as the necessity of holding a hearing) the
separate committee may extend the time for decision by not more than
sixty (60) days upon written notice to the Claimant. The Claimant
shall receive written notice of the separate committee's review
decision, together with specific reasons for the decision and
reference to the pertinent provisions of the Plan.
8. Life Insurance and Funding. The Company in its discretion may apply
for and procure as owner and for its own benefit, insurance on the life of the
Participant, in such amounts and in such forms as the Company may choose. The
Participant shall have no interest whatsoever in any such policy or policies,
but at the request of the Company he shall submit to medical examinations and
supply such information and execute such documents as may be required by the
insurance company or companies to whom the Company has applied for insurance.
The rights of the Participant, or his beneficiary, or estate, to
benefits under the Plan shall be solely those of an unsecured creditor of the
Company. Any insurance policy or other assets acquired by or held by the
Company in connection with the liabilities assumed by it pursuant to the Plan
shall not be deemed to be held under any trust for the benefit of the
Participant, his beneficiary, or his estate, or to be security for the
performance of the obligations of the Company but shall be, and remain, a
general, unpledged, and unrestricted asset of the Company.
7
9. Assignment of Benefits. Neither the Participant nor any beneficiary
under the Plan shall have any right to assign the right to receive any benefits
hereunder, and in the event of any attempted assignment or transfer, the
Company shall have no further liability hereunder.
10. Employment Not Guaranteed by Plan. Neither this Plan nor any action
taken hereunder shall be construed as giving a Participant the right to be
retained as an Executive Employee or as an employee of the Company for any
period.
11. Taxes. The Company shall deduct from all payments made hereunder all
applicable federal or state taxes required by law to be withheld from such
payments.
12. Amendment and Termination. The Board of Directors may, at any time,
amend or terminate the Plan, provided that the Board may not reduce or modify
any benefit payable to a Participant and based on deferrals already made,
without the prior consent of the Participant.
13. Construction. The Plan shall be construed according to the laws of
the Commonwealth of Virginia.
14. Form of Communication. Any election, application, claim, notice or
other communication required or permitted to be made by a Participant to the
Company shall be made in writing and in such form as the Company shall
prescribe. Such communication shall be effective upon mailing, if sent by
first class mail, postage prepaid, and addressed to the Company's office at
Bassett, Virginia.
15. Captions. The captions at the head of a section or a paragraph of
this Plan are designed for convenience of reference only and are not to be
resorted to for the purpose of interpreting any provision of this Plan.
16. Severability. The invalidity of any portion of this Plan shall not
invalidate the remainder thereof, and said remainder shall continue in full
force and effect.
17. Binding Upon Successors and Assigns. The provisions of this Plan
shall be binding upon the Participant and the Company and their successors,
assigns, heirs, executors and beneficiaries.
ADOPTED pursuant to resolution of the Board of Directors of the Company this
_______ day of ___________, 19_____.