HNI CORPORATION DIRECTORS DEFERRED COMPENSATION PLANEmployee Benefits Plan Agreement |
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EXHIBIT
10.7
HNI CORPORATION
DIRECTORS DEFERRED COMPENSATION PLAN
As
Amended and Restated Effective January 1, 2005 to comply with
Section 409A
of
the Internal Revenue Code
TABLE OF CONTENTS
Page
| 1. Amendment and Restatement | 1 |
| 1.1. | Amendment and Restatement | 1 | |
| 1.2. | Purpose | 1 | |
| 1.3. | Application of the Plan | 1 |
| 2. Definitions | 1 |
| 2.1. | Definitions | 1 | |
| 2.2. | Gender and Number | 4 |
| 3. Eligibility and Participation | 4 |
| 3.1. | Eligibility | 4 | |
| 3.2. | Missing Persons | 5 |
| 4. Establishment and Entries to Accounts | 5 |
| 4.1. | Accounts | 5 | |
| 4.2. | Deferral Election Agreement | 5 | |
| 4.3. | Adjustments to Accounts | 7 | |
| 4.4. | Commencement of Distribution of Sub-Account | 7 | |
| 4.5. | Exceptions to Payment Terms | 8 | |
| 4.6. | Death Benefit | 11 | |
| 4.7. | Funding | 11 |
| 5. Administration | 11 |
| 5.1. | Administration | 11 | |
| 5.2. | Actions of the Committee | 11 | |
| 5.3. | Delegation | 12 | |
| 5.4. | Expenses | 12 | |
| 5.5. | Reports and Records | 12 | |
| 5.6. | Valuation of Accounts and Account Statements | 12 | |
| 5.7. | Indemnification and Exculpation | 12 |
| 6. Beneficiary Designation | 13 |
| 6.1. | Designation of Beneficiary | 13 | |
| 6.2. | Death of Beneficiary | 13 | |
| 6.3. | Ineffective Designation | 13 |
| 7. Amendment and Termination | 13 |
| 8. Claims Procedure | 13 |
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| 9. Miscellaneous | 14 |
| 9.1. | Unfunded, Non-ERISA Plan | 14 | |
| 9.2. | Nontransferability | 14 | |
| 9.3. | Successors | 14 | |
| 9.4. | Severability | 14 | |
| 9.5 . | Applicable Law | 15 | |
| 9.6 . | No Other Agreements | 15 | |
| 9.7 . | Incapacity | 15 | |
| 9.8 . | Counterparts | 15 | |
| 9.9 . | Electronic Media | 15 | |
| 9.10 . | Administratively Reasonable | 15 | |
| 9.11 . | Release | 15 | |
| 9.12 . | Notices | 15 | |
| 9.13 . | No Guaranty of Board Position | 16 |
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HNI Corporation
Directors Deferred Compensation Plan
1.
Amendment and Restatement
1.1.
Amendment and Restatement . HNI
Corporation, an Iowa corporation (the "Corporation"), hereby
amends and restates, effective as of January 1, 2005 (the
"Restatement Date"), the HNI Corporation Directors Deferred
Compensation Plan (the "Plan") to comply with Section 409A of
the Internal Revenue Code. The Plan first became
effective on August 9, 1999.
1.2.
Purpose . The purpose of the Plan is to give
Outside Directors the opportunity to defer the fees payable to
them by the Corporation to achieve their personal financial
planning goals.
1.3.
Application of the Plan . The terms of the
Plan, as set forth in this restatement, shall apply to amounts
deferred under the Plan on or after January 1, 2005, and to
the payment of amounts deferred under the Plan prior to, but
not yet distributed as of, January 1,
2005. Accordingly, amounts deferred under the
Plan prior to January 1, 2005, the effective date of Code
Section 409A, are not intended to be grandfathered under
Section 409A.
2.
Definitions
2.1.
Definitions . Whenever used in the Plan,
the following terms shall have the meaning set forth below
and, when the defined meaning is intended, the term is
capitalized:
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(a)
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"Account"
means the device used to measure and determine the amount of
benefits payable to a Participant or Beneficiary under the
Plan. The Corporation shall establish a Cash Account and
Stock Account for each Participant under the Plan, and the term
"Account," as used in the Plan, may refer to either such Account or
the aggregate of the two Accounts. In addition, the
Corporation shall establish a separate Sub-Account under each of
the Participant's Cash Account and Stock Account for each Deferral
Election Agreement entered into by the Participant pursuant to
Section 4.2.
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(b)
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"Beneficiary"
means the persons or entities designated by a Participant in
writing pursuant to Article 6 of the Plan as being entitled to
receive any benefit payable under the Plan by reason of the death
of the Participant, or, in the absence of such designation, the
Participant's estate pursuant to the rules specified in Article
6.
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(c)
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"Board
of Directors" or "Board" means the Board of Directors of the
Corporation.
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(d)
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"Change
in Control" means:
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(i) the
acquisition by any individual, entity or group (with the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 35% or more of
either (A) the then outstanding shares of common stock of the
Corporation (the "Outstanding Corporation Common Stock") or
(B) the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in
the election of Directors (the "Outstanding Corporation Voting
Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not
constitute a Change in Control: (I) any acquisition
directly from the Corporation; (II) any acquisition by the
Corporation; (III) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation;
or (IV) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this paragraph; or
(ii) individuals
who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute a
majority of the Board; provided, however, that any individual
becoming a Director subsequent to the date hereof whose
election, or nomination for election by the Corporation's
shareholders, was approved by a vote of a majority of the
Directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of Directors or other
actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board; or
(iii) consummation
of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Corporation (a "Business Combination"), in each case, unless,
following such Business Combination: (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, 50% or more of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
Directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation,
a corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be; (B) no
Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Corporation or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 35% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed
prior to the Business Combination; and (C) at least a majority
of the members of the board of directors of the corporation
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination.
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(e)
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"Code"
means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
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(f)
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"Committee"
means the Committee established by the Chairman of the Board to
administer the Plan.
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(g)
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"Corporation"
means HNI Corporation, an Iowa corporation.
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(h)
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"Compensation,"
of a Participant, means the Participant's annual retainer, meeting
fees, and any other amounts payable to the Participant by the
Corporation for services performed as an Outside Director, in cash
or Stock, excluding any amounts distributable under the
Plan.
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(i)
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"Deferral
Election Agreement" means the agreement described in Section 4.2
and attached hereto as Exhibit A, in which the Participant
designates the amount of his or her Compensation, if any, that he
or she wishes to contribute to the Plan and acknowledges and agrees
to the terms of the Plan.
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(j)
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"Elective
Deferral" means a contribution to the Plan made by a Participant
pursuant to a Deferral Election Agreement that the Participant
enters into with the Corporation. Elective Deferrals
shall be made according to the terms of the Plan set forth in
Section 4.2.
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(k)
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"Enrollment
Period" means the period designated by the Corporation during which
a Deferral Election Agreement may be entered into with respect to a
Participant's future Compensation as described in Section
4.2. Generally, the Enrollment Period must end no later
than the end of the calendar year before the calendar year in which
the services giving rise to the Compensation to be deferred are
performed. As described in Section 4.2, an exception may
be made to this requirement for individuals who first become
eligible to participate in the Plan.
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(l)
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"Fair
Market Value" means the average of the high and low transaction
prices of a share of Stock on the New York Stock Exchange on the
date as of which such value is being determined, or, if there shall
be no reported transactions for such date, on the next preceding
date for which transactions were reported; provided, however, that
if Fair Market Value for any date cannot be so determined, Fair
Market Value shall be determined
by the Committee by whatever means or method as the Committee, in
the good faith exercise of its discretion, shall at such time deem
appropriate.
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(m)
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"Outside
Director" means a non-employee member of the Board of
Directors.
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(n)
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"Participant"
means an Outside Director who has entered into a Deferral Election
Agreement.
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(o)
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"Plan
Year" means the consecutive 12-month period beginning each January
1 and ending December 31.
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(p)
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"Qualified
Domestic Relations Order" has the same meaning as in Section 414(p)
of the Code.
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(q)
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"Separation
from Service," of a Participant, means the Participant's cessation
of services for the Corporation as an Outside Director, provided
that the Corporation does not then anticipate that the Outside
Director will perform future services for the Corporation as an
Outside Director (or other independent
contractor). .
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(r)
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"Specified
Employee" means a "key employee" (as defined in Section 416(i) of
the Code without regard to Section 416(i)(5)) of the
Corporation. For purposes hereof, an employee is a key
employee if the employee meets the requirements of Section
416(1)(A)(i), (ii) or (iii) (applied in accordance with the
regulations thereunder and disregarding Section 416(i)(5)) at any
time during the 12-month period ending on December
31. If a person is a key employee as of such date, the
person is treated as a Specified Employee for the 12-month period
beginning on the first day of the fourth month following such
date.
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(s)
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"Stock"
means the Corporation's common stock, $1.00 par value.
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(t)
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"Stock
Unit" means the notational unit representing the right to receive
one share of Stock.
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(u)
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"Subsidiary"
means any corporation, joint venture, partnership, unincorporated
association or other entity in which the Corporation has a direct
or indirect ownership or other equity interest and directly or
indirectly owns or controls more than 50 percent of the total
combined voting or other decision-making power.
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2.2.
Gender and Number . Except when otherwise
indicated by the context, any masculine term used in the Plan
also shall include the feminine gender; and the definition of
any plural shall include the singular and the singular shall
include the plural.
3.
Eligibility and Participation
3.1.
Eligibility . Participation in the Plan
shall be limited to Outside Directors.
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3.2.
Missing Persons . Each Participant and
Beneficiary entitled to receive benefits under the Plan shall
be obligated to keep the Corporation informed of his or her
current address until all Plan benefits that are due to be
paid to the Participant or Beneficiary have been paid to him
or her. If the Corporation is unable to locate the
Participant or his or her Beneficiary for purposes of making
a distribution, the amount of a Participant's benefit under
the Plan that would otherwise be considered as
non-forfeitable shall be forfeited effective one year
after: (a) the last date a payment of said benefit
was made, if at least one such payment was made; or (b) the
first date a payment of said benefit was due to be made
pursuant to the terms of the Plan, if no payments have been
made. If such person is located after the date of
such forfeiture, the benefits for such Participant or
Beneficiary shall not be reinstated hereunder.
4 .
Establishment and Entries to Accounts
4.1.
Accounts . The Committee shall establish a
Cash Account, Stock Account or both for a Participant under
the Plan as follows:
(a)
Cash Account . A Participant's Cash Account,
as of any date, shall consist of the Compensation that the
Participant has elected to allocate to that Account under his
or her Deferral Election Agreement(s) pursuant to Section 4.2,
increased by earning thereon pursuant to Section 4.3(a), and
adjusted to reflect distributions from the Account pursuant to
Sections 4.4, 4.5 and 4.6.
(b)
Stock Account . A Participant's Stock
Account, as of any date, shall consist of the Compensation
that the Participant has elected to allocate to that Account
pursuant to Section 4.2, increased with earnings (including
dividend equivalents) thereon and converted to Stock Units
pursuant to Section 4.3(b), and adjusted to reflect
distributions from the Account pursuant to Sections 4.4, 4.5
and 4.6.
The Committee shall
establish a separate Sub-Account under each of these Accounts
for each Deferral Election Agreement entered into by the
Participant pursuant to Section 4.2. As specified
in Section 4.2, as part of a Participant's Deferral Election
Agreement, the Participant shall elect how amounts deferred
under each Deferral Election Agreement are to be distributed
to him or her from among the available distribution options
described in Section 4.4. The separate
Sub-Accounts are established to account for the different
distribution terms that may apply to each
Sub-Account. The Corporation may combine
Sub-Accounts that have identical distribution terms, or may
establish other Sub-Accounts for a Participant under the Plan
from time to time in its discretion, as it deems appropriate
or advisable. A Participant shall have a full and
immediate nonforfeitable interest in his or her Accounts at
all times.
4.2
Deferral Election Agreement . A Participant
wishing to make an Elective Deferral under the Plan for a
Plan Year shall enter into a Deferral Election Agreement
during the Enrollment Period immediately preceding the
beginning of the Plan Year. A separate Deferral
Election Agreement must be entered into for each Plan Year
that a Participant wishes to make Elective Deferrals under
the Plan. In order to be effective, the Deferral
Election Agreement must be completed and submitted to the
Corporation at the time and in the manner
specified by the Committee, which may be no later than the
last day of the Enrollment Period. The Corporation
shall not accept Deferral Election Agreements entered into
after the end of the Enrollment Period.
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For
the Plan Year in which an individual first becomes a Director,
the Committee may, in its discretion, allow the Director to
enter into a Deferral Election Agreement within 30 days after
the date on which he or she becomes a Director. In
order to be effective, the Deferral Election Agreement must be
completed and submitted to the Committee on or before the
30-day period has elapsed. The Committee will not
accept Deferral Election Agreements entered into after the
30-day period has elapsed. If the Director fails to
complete a Deferral Election Agreement by such time, he or she
may enter into a Deferral Election Agreement during any
succeeding Enrollment Period in accordance with the rules
described in the preceding paragraph. For purposes
of the exception described in this paragraph, the term "Plan"
means the Plan and any other plan required to be aggregated
with the Plan pursuant to Code Section 409A, and the
regulations and other guidance
thereunder. Accordingly, if an Outside Director has
previously been eligible to participate in a plan required to
be aggregated with the Plan, then the 30-day exception
described in this paragraph shall not apply to him or
her.
For each Deferral Election
Agreement the Participant enters into, the Participant shall
specify:
(a) The
amount, by dollar amount or percentage, of Compensation
otherwise payable to the Participant in cash to be deferred
under the Plan, and the amount, by number of shares or
percentage, of Compensation otherwise payable to the
Participant in Stock to be deferred under the
Plan;
(b) The
manner in which the amount in (a), above, is to be allocated
between the Participant's Cash Account and Stock Account, by
dollar amount or percentage; provided, however, that in the
case of Compensation otherwise payable to the Participant in
Stock, the Compensation shall automatically be allocated to
the Stock Account; and
(c) The
time and manner of distribution (consistent with the
requirements of Section 4.4) of the Sub-Accounts established
with respect to the Deferral Election Agreement.
The Committee may from
time to time establish a minimum amount that may be deferred
by a Participant pursuant to this Section 4.2 for any Plan
Year.
Elective Deferrals shall
be credited to the Participant's Cash Account or Stock
Account, as the case may be, on, or as soon as
administratively reasonable after, the Compensation would
have been paid to the Participant had the Participant not
elected to defer it under the Plan.
In general, a Deferral
Election Agreement shall become irrevocable as of the last
day of the Enrollment Period applicable to
it. However, if a Participant incurs an
"unforeseeable emergency," as defined in Section 4.5(d)(ii)
after the Deferral Election Agreement otherwise becomes
irrevocable, the Deferral Election Agreement shall be
cancelled as of the date on which the Participant is
determined to have incurred the unforeseeable emergency and
no further Elective Deferrals will be made under
it.
4.3.
Adjustments to Accounts .
(a) A
Participant's Cash Account shall be credited with earnings on
a calendar monthly basis in an amount equal to the product
of: (1) the lowest Cash Account balance during the month; and
(2) the rate specified by the Committee for the month, which
rate may be changed by the Committee from time to time in its
discretion as it deems appropriate. The interest
so computed for a month shall be credited to the Cash Account
as of the first day of the immediately succeeding
month.
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(b) The
Elective Deferrals allocable to a Participant's Stock Account
under a Deferral Election Agreement shall be converted to
Stock Units on the date they are credited to the
Account. In the case of Elective Deferrals of
Compensation otherwise payable to the Participant in cash,
the number of whole and fractional Stock Units so credited
shall be equal to the dollar amount of the Elective Deferrals
allocated to the Stock Account as of such date divided by the
Fair Market Value per share of Stock on such
date. In the case of Elective Deferrals of
Compensation otherwise payable to the Participant in Stock,
the number of Stock Units so credited shall be equal to the
number of shares of Stock that the Participant has elected to
defer pursuant to the Deferral Election
Agreement. On each date on which the Corporation
pays a cash dividend (the "dividend date"), the Stock Account
shall be credited with an additional number of Stock Units
determined by dividing the dollar amount that the Corporation
would have paid as a dividend if the Stock Units held in the
Participant's Stock Account as of the record date for the
dividend were actual shares of Stock divided by the Fair
Market Value of a share of Stock on the dividend
date. Appropriate adjustments in the Stock Account
shall be made as equitably required to prevent dilution or
enlargement of the Account from any Stock dividend, Stock
split, reorganization or other such corporate transaction or
event.
4.4.
Commencement and Form of Distribution of Sub-Account
. As stated in Section 4.2(c), above, as part of
his or her Deferral Election Agreement, a Participant shall
elect: (a) the date on which distribution of the
Compensation deferred under the Deferral Election Agreement
(as adjusted pursuant to Section 4.3) is to commence, which
date may be no earlier than one
