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EXHIBIT
10.6
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
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1. Amendment and Restatement
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1
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1.1.
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Amendment and Restatement
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1
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1.2.
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Purpose
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1
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1.3.
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Application of the Plan
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1
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2.1.
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Definitions
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1
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2.2.
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Gender and Number
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5
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3. Eligibility and
Participation
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5
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3.1.
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Eligibility
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5
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3.2.
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Missing Persons
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5
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4. Establishment and Entries to
Accounts
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5
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4.1.
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Accounts
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5
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4.2.
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Deferral Election Agreement
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6
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4.3.
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Adjustments to Accounts
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7
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4.4.
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Commencement of Distribution of
Sub-Account
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7
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4.5.
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Exceptions to Payment Terms
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8
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4.6.
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Death Benefit
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11
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4.7.
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Funding
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11
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5.1.
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Administration
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11
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5.2.
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Actions of the Committee
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11
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5.3.
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Delegation
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12
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5.4.
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Expenses
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12
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5.5.
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Reports and Records
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12
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5.6.
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Valuation of Accounts and Account
Statements
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12
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5.7.
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Indemnification and Exculpation
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12
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6. Beneficiary
Designation
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12
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6.1.
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Designation of Beneficiary
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12
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6.2.
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Death of Beneficiary
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13
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6.3.
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Ineffective Designation
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13
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7. Amendment and
Termination
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13
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9.1.
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Unfunded, Non-ERISA Plan
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14
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9.2.
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Nontransferability
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14
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9.3.
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Successors
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14
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9.4.
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Severability
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14
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9.5 .
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Applicable Law
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15
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9.6 .
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No Other Agreements
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15
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9.7 .
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Incapacity
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15
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9.8 .
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Counterparts
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15
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9.9 .
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Electronic Media
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15
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9.10 .
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Administratively Reasonable
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15
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9.11 .
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Release
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15
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9.12 .
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Notices
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15
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9.13 .
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No Guaranty of Board Position
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15
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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) or an employee. In the event a Participant becomes an
employee while participating in the Plan, "Separation from
Service," with respect to that Participant, means the Participant's
separation from service with the Corporation and all of its
affiliates, within the meaning of Section 409A(a)(2)(A)(i) of the
Code and the regulations thereunder. Solely for these purposes, a
Participant will be considered to have a Separation from Service
when the Participant dies, retires, or otherwise has a termination
of employment with all affiliates. The employment relationship is
treated as continuing intact while the Participant is on military
leave, sick leave, or other bona fide leave of absence (such as
temporary employment by the government) if the period of such leave
does not exceed six months, or if longer, so long as the
individual's rights to reemployment with the Corporation or any
affiliate is provided either by statute or by contract. If the
period of leave exceeds six months and the individual's right to
reemployment is not provided either by statute or contract, the
employment relationship is deemed to terminate on the first date
immediately following such six-month period. Whether a termination
of employment has occurred is based on the facts and
circumstances.
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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.
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.
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.
(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 num
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