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EXHIBIT 10.1
LADD FURNITURE, INC.
AMENDED AND RESTATED
EXECUTIVE RETIREMENT PLAN
Effective January 1, 1998, LADD Furniture, Inc. established the LADD
Furniture, Inc. Executive Retirement Plan (the "Plan" or the "ERP") to provide
retirement benefits to eligible executives of the Company. This Plan replaced
the Supplemental Retirement Income Plan for Salaried Employees of LADD
Furniture, Inc. originally adopted effective January 1, 1990, for all
executives covered under the ERP. The Board of Directors approved the First
Amendment to the Plan on March 10, 1999, and the subsequent amendment and
restatement of the Plan on August 19, 1999, to reflect the incorporation of the
First Amendment into the Plan. The Plan is now amended and restated in its
entirety pursuant to the terms and provisions set forth below, as approved by
the Board of Directors on September 28, 1999.
ARTICLE 1
DEFINITIONS
Wherever used herein the following terms shall have the meanings
hereinafter set forth:
1.1 "Actuarial Equivalent" means a benefit that is equal in value
to the aggregate amounts expected to be received under the normal form of
benefit payment under Section 3.2 of the Plan. Such equality in value shall be
based on assumptions as to the occurrence of future events. The future events
to be taken into account are mortality for Participants, mortality for
Beneficiaries, and an interest discount for the time value of money. For this
Plan, the actuarial assumptions are as follows:
(a) For benefits other than benefits to be paid in a lump
sum, actuarial equivalency will be based on the 1984 Unisex Mortality Table
with a 7 percent interest assumption adjusted for a 20 percent female content
in the participant group and an 80 percent female content in the beneficiary
group.
(b) For benefits to be paid as a lump sum, actuarial
equivalency will be based upon the GAM 1983 Mortality Table and based on an
interest rate assumption equal to the annual rate of interest on 30-year
Treasury securities in effect as of the month that is two months before the
date benefit payments commence.
1.2 "Average Final Compensation" means a Participant's average
total gross compensation (including only gross base salary and gross incentive
pay under the Management Incentive Plan and the Long-Term Incentive Plan and
excluding compensation from stock options, restricted stock and any other
benefit or compensation program) during the three consecutive calendar Years of
Service resulting in the highest such average. If a participant has less than
three Years of Service, "Average Final Compensation" shall mean the
Participant's average total compensation, computed on an annual basis, for all
of his completed months of service as an Employee.
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1.3 "Change in Control" means the date on which the earlier of the
following events occur:
(a) The acquisition by any entity, person or group of
beneficial ownership, as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, of more than 30% of the outstanding capital
stock of the Company entitled to vote for the election of directors ("Voting
Stock");
(b) The merger or consolidation of the Company with one or
more corporations as a result of which the holders of the outstanding Voting
Stock of the Company immediately prior to such a merger or consolidation hold
less than 60% of the Voting Stock of the surviving or resulting corporation;
(c) The transfer of substantially all of the property of the
Company other than to an entity of which the Company owns at least 80% of the
Voting Stock; or
(d) The election to the Board of Directors of the Company of
three directors without the recommendation or approval of the incumbent Board
of Directors of the Company.
Notwithstanding the above, for purposes of Section 3.7 below only, a
Change in Control shall not be considered to have occurred if the event that
would otherwise have constituted a Change in Control involves the acquisition,
merger, or sale of the assets of LADD Furniture, Inc. to, with or into La-Z-Boy
Incorporated or an entity controlled by La-Z-Boy Incorporated.
1.4 "Committee" means the Compensation Committee of the Board of
Directors of the Company.
1.5 "Company" means LADD Furniture, Inc., a North Carolina
corporation, or, to the extent provided in Section 8.9 below, any successor
corporation or other entity resulting from a merger or consolidation into or
with the Company or a transfer or sale of substantially all of the stock or
assets of the Company.
1.6 "Designated Beneficiary" means the individual or entity
designated by a Participant to receive a Survivor Benefit pursuant to Article
4. If a Participant does not designate a beneficiary in writing, his Designated
Beneficiary shall be (a) his spouse, if any; (b) if there is no surviving
spouse, his children, per stirpes; or (c) if none, his estate.
1.7 "Normal Retirement Date" means the date a Participant retires
or reaches age 55, whichever occurs later.
1.8 "Participant" means a salaried employee or former employee of
the Company who is designated by the Committee as being eligible to participate
in the Plan.
1.9 "Plan" or "ERP" means the LADD Furniture, Inc. Executive
Retirement Plan.
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1.10 "Primary Social Security Benefit" means an amount that is the
monthly old-age benefit to which a Participant is or would be entitled
commencing immediately following his Normal Retirement Date, or his actual
retirement date, if later. Such amount shall be estimated based on the
compensation records of the Company and shall be based on the provisions of the
Social Security Act in effect on the December 31 immediately preceding, or
coincident with, the Participant's separation from service with the Company. If
a Participant retires after his Normal Retirement Date, the amount of the
Primary Social Security Benefit shall reflect those increases, if any,
authorized under such Act because of increases in the wage base or benefit
levels occurring after his Normal Retirement Date, but shall not reflect any
increase authorized under such Act resulting from the delayed commencement of
Social Security benefits beyond age 65. If it is necessary to estimate earnings
for years for which no wage history is available, it will be assumed that an
employee received a six percent increase in wages each year. If a Participant
separates from service prior to his Normal Retirement Date, the Participant's
Primary Social Security Benefit shall be determined by assuming that the
Participant's Compensation continues unchanged until his Normal Retirement
Date.
Notwithstanding the above, a Participant may provide the
Company with an actual earnings history, prepared by the Social Security
Administration. If such a history is provided, the Primary Social Security
Benefit shall be calculated using the actual earnings for any years for which
actual wage history was previously unavailable. If the use of actual wage
history results in a lower Primary Social Security Benefit, it shall be used.
The actual wage history must be supplied within 180 days after a Participant's
separation from service, or the date of notification of this right, if later.
1.11 "Qualified Plan" means the Retirement Plan for Employees of
LADD Furniture, Inc.
1.12 "Qualified Plan Retirement Benefit" means the total benefit
(including a Participant's share of surplus assets) earned by a Participant
under the Qualified Plan and all predecessor plans, calculated as a ten-year
certain and life thereafter annuity payable at age 65, in the amount set forth
on the attached Appendix A.
1.13 "Retirement Benefit" means the benefit payable to a
Participant pursuant to the Plan by reason of his termination of employment
with the Company and all affiliates for any reason other than death.
1.14 "Survivor Benefit" means the benefit payable to a Designated
Beneficiary pursuant to the Plan.
1.15 "Surviving Spouse" means a person who is married to a
Participant at the date of his death and for at least one year prior thereto.
1.16 "Year of Service" means a calendar year in which a Participant
is employed on a full-time basis by the Company or by a predecessor employer
acquired by the Company.
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Participants shall be given credit for partial Years of Service on a pro rata
basis. If a Participant's employment is terminated by the Company without cause
or if the Participant terminates employment with "good reason" under the
provisions of Section 12 of a Participant's employment agreement with the
Company before the Participant attains age 55, the determination of how many
Years of Service the Participant has for purposes of calculating the benefit
due the Participant under Section 3.1 shall be made by assuming that the
Participant remained employed and continued to earn Years of Service credit
until his 55th birthday.
1.17 Words in the masculine gender shall include the feminine and
the singular shall include the plural, and vice versa, unless qualified by the
context. Any headings used herein are included for ease of reference only, and
are not to be construed so as to alter the terms hereof.
ARTICLE 2
ELIGIBILITY
2.1 Selection of Participants. The Committee shall select certain
executives of the Company who have contributed to the success of the Company in
an extraordinary way to be Participants in the Plan. A Participant shall be
eligible to receive the Retirement Benefit provided for in Article 3. The
Designated Beneficiary of a Participant who dies prior to complete payment of
his Retirement Benefit shall be eligible to receive the Survivor Benefit
provided for in Article 4. The list of Participants is set forth on Appendix A.
2.2 Inactive Participants. If an Employee who has previously been
designated by the Committee as a Participant ceases to serve the Company in an
executive capacity that would normally result in the Employee being a
Participant in the Plan, but the Employee remains employed by the Company, the
Committee shall designate the Employee as an "Inactive Participant." The
determination of whether a Participant should be designated an Inactive
Participant shall be made by the Committee in its sole discretion. Any
Participant designated by the Committee as an Inactive Participant pursuant to
this paragraph shall have his Retirement Benefit and Survivor Benefit provided
for under the Plan computed in accordance with Article 3 and, particularly,
Section 3.3.
ARTICLE 3
RETIREMENT BENEFITS
3.1 Benefit Amount. The Retirement Benefit payable to Participant
in the form of a ten-year certain and life thereafter annuity commencing on his
Normal Retirement Date, shall be a monthly amount equal to the difference
between (a) and (b) below:
(a) two percent (2%) of Average Final Compensation,
multiplied by a Participant's Years of Service
(maximum 25 years of service);
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LESS
(b) the sum of a Participant's:
(i) Qualified Plan Retirement Benefit; and
(ii) Primary Social Security benefit.
3.2 Form of Retirement Benefit. The Retirement Benefit earned by a
Participant normally shall be paid in the form of a ten-year certain and life
thereafter annuity. A Participant may elect one of the following alternate
methods of annuity payment no later than one year prior to when the Participant
becomes entitled to receive his Retirement Benefit:
(a) straight life annuity
(b) 50% joint and spousal survivor annuity
(c) 75% joint and spousal survivor annuity
(d) 100% joint and spousal survivor annuity
A Retirement Benefit which is payable to a Participant in any
form other than a ten-year certain and life thereafter annuity shall be the
Actuarial Equivalent of the Retirement Benefit set forth in Section 3.1. above.
3.3 Commencement of Retirement Benefit Payments. Payment of the
Retirement Benefit to a Participant shall commence on the first day of the
calendar quarter beginning after the later of the Participant's (a) termination
of employment; or (b) attainment of age 55.
3.4 Early Retirement Benefit. If a Participant terminates
employment and begins receiving Retirement Benefits prior to his Normal
Retirement Date, the amount of his Retirement Benefit shall not be reduced.
3.5 Inactive Participants. If a Participant is designated as an
Inactive Participant by the Committee pursuant to Article 2, such Participant
shall cease to accrue additional benefits under the Plan. The Retirement
Benefit for an Inactive Participant shall be computed based on the Years of
Service credited to such Participant as of the date he became an Inactive
Participant. An Inactive Participant shall continue to be subject to all of the
remaining provisions of the Plan, including, without limitation, the vesting
provisions of Article 5.
3.6 Participants in Prior Plan. Any employee who was a participant
in the Supplemental Retirement Income Plan for Salaried Employees of LADD
Furniture, Inc. (the "Prior Plan") and who is not a Participant in this Plan
shall receive retirement benefit payments in accordance with the terms of the
Prior Plan.
3.7 Effect of Change in Control. If a Change in Control occurs,
the Actuarial Equivalent of all benefits accrued under the Plan and not yet
distributed shall become immediately due and payable to each Participant in a
lump sum; provided that such Actuarial Equivalent shall be computed without any
reduction by reason of payment being made before a Participant attains his
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Normal Retirement Date. This means that the Actuarial Equivalent shall be
computed by determining the present value of an immediate annuity commencing as
of the Participant's age as of the date of the Change in Control and continuing
for the life expectancy of the Participant.
If a Change in Control occurs, the three consecutive Years of
Service used to calculate a Participant's Average Final Compensation under
Section 1.2 may, at a Participant's election, include the Plan Year in which
the Change in Control occurs. The Participant's compensation for the Plan Year
in which a Change in Control occurs shall be equal to (1) the gross base salary
that would have been paid to the Participant during the Plan Year had the
Participant been employed for the full Plan Year at the base salary rate in
effect as of the Change in Control, plus (2) the gross incentive pay under the
Management Incentive Plan and the Long-Term Incentive Plan actually paid to the
Participant in the Plan Year in which the Change in Control occurs.
ARTICLE 4
SURVIVOR BENEFITS
4.1 Pre-Retirement Survivor Benefit. If a Participant dies prior
to the commencement of Retirement Benefit payments, his Designated Beneficiary
shall be entitled to receive a Survivor Benefit equal to 100% of the Actuarial
Equivalent of the Retirement Benefit accrued at the date of death. Such benefit
shall be paid in the form of level installment payments over a ten-year period.
4.2 Post-Retirement Survivor Benefit. If a Participant dies after
the commencement of Retirement Benefit payments, the right of his Designated
Beneficiary to receive a Survivor Benefit shall depend on the form in which
Retirement Benefits were being paid to the Participant pursuant to Section 3.2.
ARTICLE 5
VESTING
Each Participant shall always be 100% vested in his Retirement Benefit
under the Plan.
ARTICLE 6
ADMINISTRATION OF THE PLAN
6.1 Administration by the Company. The Company shall be
responsible for the general operation and administration of the Plan and for
carrying out the provisions thereof.
6.2 General Powers of Administration. All provisions set forth in
the Qualified Plan with respect to the administrative powers and duties of the
Company, expenses of administration, and procedures for filing claims shall
also be applicable with respect to the Plan. The Company shall be entitled to
rely conclusively upon all tables, valuations, certificates, opinions and
reports furnished by any actuary, accountant, controller, counsel or other
person employed or engaged by the Company with respect to the Plan.
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ARTICLE 7
AMENDMENT OR TERMINATION
7.1 Amendment or Termination. The Company intends the Plan to be
permanent but reserves the right to amend or terminate the Plan; provided,
however, that no such amendment or termination shall be effective with respect
to a Participant unless the Participant has given his written consent to such
amendment or termination.
7.2 Effect of Amendment or Termination. No amendment or
termination of the Plan shall directly or indirectly deprive any current or
former Participant or Surviving Spouse of all or any portion of any Retirement
Benefit or Survivor Benefit which has been accrued under Section 3.1 as of the
date of such amendment or termination. If the Plan is terminated, Retirement
Benefits and Survivor Benefits accrued as of the date the Plan is terminated
shall be paid to Participants and Surviving Spouses in accordance with the
terms of the Plan in effect immediately prior to the termination of the Plan.
ARTICLE 8
GENERAL PROVISIONS
8.1 Funding. The Plan at all times shall be entirely unfunded as
such term is defined for purposes of the Employee Retirement Income Security
Act ("ERISA"). The Committee will make provision for segregating assets of the
Company for payment of all benefits hereunder and shall establish a "Rabbi
Trust" to hold such assets. No later than January 1, 2002, the Company shall
contribute sufficient assets to such trust as are necessary to enable the trust
to pay 100% of the Retirement Benefits due under the Plan and shall continue to
make supplemental contributions as are necessary to maintain the 100% funding
level annually thereafter. No Participant, Surviving Spouse or any other person
shall have any interest in any particular assets of the Company by reason of
the right to receive a benefit under the Plan and any such Participant,
Surviving Spouse or other person shall have only the rights of a general
unsecured creditor of the Company with respect to any rights under the Plan.
8.2 Qualified Plan Retirement Benefit. Any Qualified Plan
Retirement Benefit or any other benefit payable under the Qualified Plan, shall
be paid solely in accordance with the terms and conditions of the Qualified
Plan and nothing in this Plan shall operate or be construed in any way to
modify, amend or affect the terms and provisions of the Qualified Plan.
8.3 No Guaranty of Benefits. Nothing contained in the Plan shall
constitute a guaranty by the Company or any other entity or person that the
assets of the Company will be sufficient to pay any benefit hereunder.
8.4 No Enlargement of Employee Rights. No Participant or Surviving
Spouse shall have any right to a benefit under the Plan except in accordance
with the terms of the Plan.
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Establishment of the Plan shall not be construed to give any Participant the
right to be retained in the service of the Company.
8.5 Spendthrift Provision. No interest of any person or entity in,
or right to receive a benefit under, the Plan shall be subject in any manner to
sale, transfer, assignment, pledge, attachment, garnishment, or other
alienation or encumbrance of any kind; nor may such interest or right to
receive a benefit be taken, either voluntarily or involuntarily, for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.
8.6 Arbitration of Disputes. Any controversy or claim arising out
of, or in any way relating to this Plan shall be settled by arbitration in the
city of Greensboro, North Carolina, in accordance with the rules then in force
of the American Arbitration Association.
8.7 Small Benefits. If the actuarial value of any Retirement
Benefit or Survivor Benefit is less than $50,000, the Company may in its sole
discretion pay the actuarial value of such Benefit to the Participant or
Surviving Spouse in a single lump sum in lieu of any further benefit payments
hereunder.
8.8 Incapacity of Recipient. If any person entitled to a benefit
payment under the Plan is deemed by the Company to be incapable of personally
receiving and giving a valid receipt for such payment, then, unless and until
claim therefor shall have been made by a duly appointed guardian or other legal
representative of such person, the Company may provide for such payment or any
part thereof to be made to any other person or institution then contributing
toward or providing for the care and maintenance of such person. Any such
payment shall be a payment for the account of such person and a complete
discharge of any liability of the Company and the Plan therefor.
8.9 Corporate Successors. The Plan shall not be automatically
terminated by a transfer or sale of assets of the Company or by the merger or
consolidation of the Company into or with any other corporation or other
entity, but the Plan shall be continued after such sale, merger or
consolidation only if and to the extent that the transferee, purchaser or
successor entity agrees to continue the Plan. In the event that the Plan is not
continued by the transferee, purchaser or successor entity, then the Plan shall
terminate subject to the provisions of Sections 3.7 and 7.2.
8.10 Unclaimed Benefit. Each Participant shall keep the Company
informed of his current address and the current address of his spouse. The
Company shall not be obligated to search for the whereabouts of any person. If
the location of a Participant is not made known to the Company within three (3)
years after the date on which payment of the Participant's Retirement Benefit
may first be made, payment may be made as though the Participant had died at
the end of the three-year period. If, within one additional year after such
three-year period has elapsed, or, within three years after the actual death of
a Participant, the Company is unable to locate any Surviving Spouse of the
Participant, then the Company shall have no further obligation to pay any
benefit hereunder to such Participant or Surviving Spouse or any other person
and such benefit shall be irrevocable forfeited.
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8.11 Discharge of Obligations. Any payment made under this Plan in
good faith by the Company shall completely discharge the Company of any
liability to any other individual who asserts a claim to such payment.
8.12 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, neither the Company nor any individual acting as an
employee or agent of the Company shall be liable to any Participant, former
Participant, Surviving Spouse or any other person for any claim, loss,
liability or expense incurred in connection with the Plan.
8.13 Applicable Law. The Plan shall be construed and administered
under the laws of the State of North Carolina.
IN WITNESS WHEREOF, this Plan has been executed this the _____ day of
______________________, 19_____.
LADD FURNITURE, INC.
By:_________________________________
Chairman of the Board and
Chief Executive Officer
ATTEST:
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Secretary
[CORPORATE SEAL]
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APPENDIX A
PARTICIPANT QUALIFIED PLAN BENEFIT
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Kenneth Church 19,949.52
William Creekmuir 8,597.64
Victor Dyer 24,724.08
Michael Haley 6,418.08
Donald Mitchell 1,788.96
David Ogren 26,013.36
Fred Schuermann 20,445.12
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