Unassociated Document


    EXHIBIT
10.4

     

    
    

     

    
      
        
          
            	 	 	 
	
                    JAMES W.
      JOHNSTON 

                    Chairman of the
      Board

                  	 	
                    1284 N.
      TELEGRAPH ROAD

                    MONROE,
      MICHIGAN 48162-3390

                    PHONE:
      (734) 242-1444

                  


          

        

      

    

     

    


    June 11,
2010

     

    Kurt L.
Darrow

    


    


    La-Z-Boy
Incorporated (the “Company”) considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its shareholders. In this connection, the Company
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control may arise and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the Company
and its shareholders. The Company further recognizes that it is absolutely vital
to the Company to retain well-qualified executives and to assure itself of
continuity of management in considering any actual or threatened change of
control of the Company.

    


    For the
above reasons, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's management to
their assigned duties without distraction in circumstances arising from the
possibility of a change in control of the Company. In particular, the Board
believes that it is important, should the Company or its shareholders receive a
proposal for transfer of control of the Company, that you be able to assess and
advise the Company and its shareholders and to take such other action regarding
such proposal as the Board might determine to be appropriate, without being
influenced by the uncertainties of your own situation.

    


    In order
to induce you to remain in the employ of the Company, this letter agreement
(sometimes called the “Agreement”), which has been approved by the Board, sets
forth the severance benefits which the Company agrees will be provided to you in
the event your employment with the Company is terminated subsequent to a "change
in control" of the Company under the circumstances described below.

    


    
      	
              1.  

            	
              Agreement to Provide
      Services; Right to
Terminate.

            


    

    


    
      	
              (i)  

            	
              Except
      as otherwise provided in paragraph (ii) below, the Company or you may
      terminate your employment at any time, subject to the Company's providing
      the benefits hereinafter specified in accordance with the terms
      hereof.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              (ii)  

            	
              In
      the event a tender offer or exchange offer is made by a Person (as
      hereinafter defined) for more than 30% of the combined voting power of the
      Company's outstanding common stock, you agree that you will not leave the
      employ of the Company (other than as a result of Disability, as that term
      is hereinafter defined) and will continue to render your employment
      services until such tender offer or exchange offer has been abandoned or
      terminated or a change in control of the Company, as defined in Section 3
      hereof, has occurred. For purposes of this Agreement, the term "Person"
      shall mean and include any individual, corporation, partnership, group,
      association or other "person", as such term is used in Section 14(d) of
      the Securities Exchange Act of 1934 (the "Exchange Act"), other than the
      Company, a wholly-owned subsidiary of the Company or any employee benefit
      plan(s) sponsored by the Company. 

            


    

    


    
      	
              2.  

            	
              Term of
      Agreement.

            


    

    


    This
Agreement shall commence on June 11, 2010, and shall continue in effect until
December 31, 2010; provided, however, that commencing on January 1, 2011 and
each January 1 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless at least 90 days prior to such January
1st date, the Company or you shall have given notice that this Agreement shall
not be extended; and provided, further, that this Agreement shall continue in
effect for a period of thirty-six (36) months beyond the term provided herein if
a change in control of the Company, as defined in Section 3 hereof, shall have
occurred during such term. Notwithstanding anything in this Section 2 to the
contrary, this Agreement shall terminate if you or the Company terminates your
employment prior to a change in control of the Company, as defined in Section 3
hereof.

    


    
      	
              3.  

            	
              Change in
      control.

            


    

    For
purposes of this Agreement, a "change in control" of the Company shall mean a
change in the ownership or effective control of the Company or in the ownership
of a substantial portion of the assets of the Company, as more fully described
in attached Exhibit A, which shall be interpreted in accordance with Code
§409A(a)(2)(A)(v) and regulations and other guidance thereunder.

    Notwithstanding
anything in the foregoing to the contrary, no change in control shall be deemed
to have occurred for purposes of this Agreement by virtue of any transaction
which results in you, or a group of Persons which includes you acquiring,
directly or indirectly, 30% or more of the combined voting power of the
Company's Voting Securities.

    


    
      	
              4.  

            	
              Termination Following
      change in control.

            


    

    


    If any of
the events described in Section 3 hereof constituting a change in control of the
Company shall have occurred, you shall be entitled to the benefits provided in
paragraphs (iii) and (iv) of Section 5 hereof upon the termination of your
employment within thirty-six (36) months after such event, unless such
termination is (a) because of your death, (b) by the Company for Cause or
Disability (c) by you other than for Good Reason (as all capitalized terms are
hereinafter defined) or unless (d) such termination does not constitute a
“Separation from Service” as described in attached Exhibit B.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              (i)  

            	
              Disability.
      Termination by the Company of your employment based on "Disability" shall
      mean termination due to the fact that you (i) are unable to engage in any
      substantial gainful activity by reason of any medically determinable
      physical or mental impairment which can be expected to result in death or
      can be expected to last for a continuous period of not less than 12
      months, or (ii) is by reason of any medically determinable physical or
      mental impairment which can be expected to result in death or can be
      expected to last for a continuous period of not less than 12 months,
      receiving income replacement benefits for a period of not less than 3
      months under an accident and health plan covering Employees of the
      Company, provided that this definition shall be interpreted in accordance
      with Code §409A(a)(2)(A)(v) and regulations and other guidance
      thereunder.  Notwithstanding (i) and (ii), you shall be deemed
      to have a Disability when determined to be totally disabled by the Social
      Security Administration. 

            


    

    


    
      	
              (ii)  

            	
              Cause.
      Termination by the Company of your employment for "Cause" shall mean
      termination upon (a) the willful and continued failure by you to perform
      substantially your duties with the Company (other than any such failure
      resulting from your incapacity due to physical or mental illness) after a
      demand for substantial performance is delivered to you by the duly
      authorized representative of the Compensation Committee of the Board which
      specifically identifies the manner in which such executive believes that
      you have not substantially performed your duties, or (b) the willful
      engaging by you in illegal conduct which is materially and demonstrably
      injurious to the Company. For purposes of this paragraph (ii), no act, or
      failure to act, on your part shall be considered "willful" unless done, or
      omitted to be done, by you in bad faith and without reasonable belief that
      your action or omission was in, or not opposed to, the best interests of
      the Company. Any act, or failure to act, based upon authority given
      pursuant to a resolution duly adopted by the Board or based upon the
      advice of counsel for the Company shall be conclusively presumed to be
      done, or omitted to be done, by you in good faith and in the best
      interests of the corporation. Notwithstanding the foregoing, you shall not
      be deemed to have been terminated for Cause unless and until there shall
      have been delivered to you a copy of a resolution duly adopted by the
      affirmative vote of not less than three-quarters of the entire membership
      of the Board at a meeting of the Board called and held for the purpose
      (after reasonable notice to you and an opportunity for you, together with
      your counsel, to be heard before the Board), finding that in the good
      faith opinion of the Board you were guilty of the conduct set forth above
      in (a) or (b) of this paragraph (ii) and specifying the particulars
      thereof in detail.

            


    

    


    
      	
              (iii)  

            	
              Good Reason.
      Termination by you of your employment for "Good Reason" shall mean
      termination based on: 

            


    

    


    
      	
              (A)  

            	
              an
      adverse change in your status or position(s) as a corporate officer of the
      Company as in effect immediately prior to the change in control,
      including, without limitation, any adverse change in your status or
      position as a result of a material diminution in your duties or
      responsibilities (other than, if applicable, any such change directly
      attributable to the fact that the Company is no longer publicly-owned) or
      the assignment to you of any duties or responsibilities which, in your
      reasonable judgment, are inconsistent with such status or position(s), or
      any removal of you from or any failure to reappoint or reelect you to such
      position(s) (except in connection with the termination of your employment
      for Cause or Disability or as a result of your death or by you other than
      for Good Reason);

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (B)  

            	
              a
      reduction by the Company in your compensation as in effect immediately
      prior to the change in control;

            


    

    


    
      	
              (C)  

            	
              the
      failure by the Company to continue in effect any Plan (as hereinafter
      defined) in which you are participating at the time of the change in
      control of the Company (or Plans providing you with at least substantially
      similar benefits) other than as a result of the normal expiration of any
      such Plan in accordance with its terms as in effect at the time of the
      change in control, or the taking of any action, or the failure to act, by
      the Company which would adversely affect your continued participation in
      any of such Plans on at least as favorable a basis to you as is the case
      on the date of the change in control or which would materially reduce your
      benefits in the future under any of such Plans or deprive you of any
      material benefit enjoyed by you at the time of the change in
      control;

            


    

    


    
      	
              (D)  

            	
              the
      failure by the Company to provide and credit you with the number of paid
      vacation days to which you are then entitled in accordance with the
      Company's normal vacation policy as in effect immediately prior to the
      change in control;

            


    

    


    
      	
              (E)  

            	
              the
      Company's requiring you to be based anywhere other than where your office
      is located immediately prior to the change in control except for required
      travel on the Company's business to an extent substantially consistent
      with the business travel obligations which you undertook on behalf of the
      Company prior to the change in
control;

            


    

    


    
      	
              (F)  

            	
              the
      failure by the Company to obtain from any Successor (as hereinafter
      defined) the assent to this Agreement contemplated by Section 6
      hereof;

            


    

    


    
      	
              (G)  

            	
              any
      purported termination by the Company of your employment which is not
      effected pursuant to a Notice of Termination satisfying the requirements
      of paragraph (iv) below (and, if applicable, paragraph (ii) above); and
      for purposes of this Agreement, no such purported termination shall be
      effective or

            


    

    


    
      	
              (H)  

            	
              any
      refusal by the Company to continue to allow you to attend to matters or
      engage in activities not directly related to the business of the Company
      which, prior to the change in control, you were permitted by the Board to
      attend to or engage in, including without limiting the foregoing, serving
      on the Boards of Directors of other companies or
  entities.

            


    

    


    For
purposes of this Agreement, "Plan" shall mean any compensation plan such as an
incentive, stock option or restricted stock plan or any employee benefit plan
such as a savings, pension, profit sharing, medical, disability, accident, life
insurance plan or a relocation plan or policy or any other plan, program or
policy of the Company intended to benefit employees.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (iv)  

            	
              Notice of
      Termination. Any purported termination by the Company or by you
      following a change in control shall be communicated by written Notice of
      Termination to the other party hereto. For purposes of this Agreement, a
      "Notice of Termination" shall mean a notice which shall indicate the
      specific termination provision in this Agreement relied upon.
    

            


    

    


    
      	
              (v)  

            	
              Date of
      Termination. "Date of Termination" following a change in control
      shall mean (a) if your employment is to be terminated for Disability,
      thirty (30) days after Notice of Termination is given (provided that you
      shall not have returned to the performance of your duties on a full-time
      basis during such thirty (30) day period), (b) if your employment is to be
      terminated by the Company for Cause or by you pursuant to Sections
      4(iii)(F) and 6 hereof or for any other Good Reason, the date specified in
      the Notice of Termination, or (c) if your employment is to be terminated
      by the Company for any reason other than Cause, the date specified in the
      Notice of Termination, which is no event shall be a date earlier than
      ninety (90) days after the date on which a Notice of Termination is given,
      unless an earlier date has been expressly agreed to by you in writing
      either in advance of, or after, receiving such Notice of Termination. In
      the case of termination by the Company of your employment for Cause, if
      you have not previously expressly agreed in writing to the termination,
      then within thirty (30) days after receipt by you of the Notice of
      Termination with respect thereto, you may notify the Company that a
      dispute exists concerning the termination, in which event the Date of
      Termination shall be the date set either by mutual written agreement of
      the parties or by the arbitrators in a proceeding as provided in Section
      15 hereof. During the pendency of any such dispute, the Company will
      continue to pay you your full compensation in effect just prior to the
      time the Notice of Termination is given and until the dispute is resolved
      in accordance with Section 15. 

            


    

    


    
      	
              5.  

            	
              Compensation Upon
      Termination or During Disability; Other
  Agreements.

            


    

    


    During
any period following a change in control that you fail to perform your duties as
a result of incapacity due to physical or mental illness, you shall continue to
receive your salary at the rate then in effect and any benefits or awards under
any Plans shall continue to accrue during such period, to the extent not
inconsistent with such Plans, until your employment is terminated pursuant to
and in accordance with paragraphs 4(i) and 4(v) hereof.  Thereafter,
your benefits shall be determined in accordance with the Plans then in
effect.

    


    
      	
              (i)  

            	
              If
      your employment shall be terminated for Cause following a change in
      control of the Company, the Company shall pay you your salary through the
      Date of Termination at the rate in effect just prior to the time a Notice
      of Termination is given plus any benefits or awards (including both the
      cash and stock components) which pursuant to the terms of any Plans have
      been earned or become payable, but which have not yet been paid to you.
      Thereupon the Company shall have no further obligations to you under this
      Agreement.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              (ii)  

            	
              Subject
      to Section 8 hereof, if, within thirty-six (36) months after a change in
      control of the Company shall have occurred as defined in Section 3 above,
      your employment by the Company shall be terminated (a) by the Company
      other than for Cause, Disability, or death or (b) by you for Good Reason,
      then, by no later than the fifth day following the Date of Termination
      (except as otherwise provided), you shall be entitled, without regard to
      any contrary provision of any Plan, to the benefits provided
      below:

            


    

    


    
      	
              (A)  

            	
              the Company shall pay your
      salary through the Date of Termination at the rate in effect just prior to
      the time a Notice of Termination is given plus any benefits or awards
      (including both the cash and stock components) which pursuant to the terms
      of any Plans have been earned or become payable, but which have not yet
      been paid by you; and

            


    

    


    
      	
              (B)  

            	
              as severance pay and in lieu of
      any further salary for periods subsequent to the Date of Termination, the
      Company shall pay to you an amount in cash equal to three (3) times the
      sum of (i) your annualized salary at the rate in effect at the Date of
      Termination and (ii) an amount equal to the average bonus paid you in the
      previous three (3) years.

            


    

    


    
      	
              (iii)  

            	
              Following
      a change in control of the Company, unless you are terminated for Cause,
      Disability, or death or you terminate your employment other than for Good
      Reason, the Company shall maintain in full force and effect, for the
      continued benefit of you and your dependents for a period terminating on
      the earliest of (a) thirty-six (36) months after the Date of Termination,
      (b) the commencement date of equivalent benefits from a new employer or
      (c) your normal retirement date under the terms of the La-Z-Boy
      Incorporated Retirement Contribution and Profit Sharing Plan (or any
      successor or substitute plan or plans of the Company put into effect prior
      to a change in control), all insured and self-insured employee welfare
      benefits plans in which you were entitled to participate immediately prior
      to the Date of Termination, provided that your continued participation is
      possible under the general terms and provisions of such Plans (and any
      applicable funding media) and you continue to pay an amount equal to your
      regular contribution under such Plans for such
      participation.  If permitted by applicable law, right to
      continuation coverage pursuant to COBRA will run concurrently with such
      continued participation provided by the Company.  If the terms
      of the Company’s medical and dental plans do not permit your continued
      participation after the termination of your employment and you elect to
      continue medical or dental coverage as provided for by COBRA, the Company
      will, for the lesser of 36 months or the period during which you maintain
      such COBRA continuation coverage, pay the difference between the cost of
      your COBRA premiums for medical and dental insurance and the normal
      employee contribution for such coverage.  Such payments will be
      made by the Company in accordance with its normal schedule for premium
      payments in accordance with the applicable plan.  (You may
      thereafter have the right under COBRA to continue such insurance at your
      expense for the remaining months of your eligibility.)  You will
      be responsible for any tax on such benefits or payments made by the
      Company. If, at the end of thirty-six (36) months after the Termination
      Date, you have not reached your normal retirement date and you have not
      previously received or are not then receiving equivalent benefits from a
      new employer, the Company shall arrange to enable you to convert your and
      your dependents' coverage under such Plans to individual policies or
      programs upon the same terms as employees of the Company may apply for
      such conversions.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              (iv)  

            	
              Except
      as specifically provided herein, the amount of any payment provided for in
      this Section 5 shall not be reduced, offset or subject to recovery by the
      Company by reason of any compensation earned by you as the result of
      employment by another employer after the Date of Termination, or
      otherwise.

            


    

    


    


    Certain
Section 409A Rules.

    


    (a)
Specified Employee. Notwithstanding any provision of this Agreement to the
contrary, if you are a Specified Employee, any payment or benefit under this
Agreement that constitutes deferred compensation subject to Section 409A of the
Code and for which the payment event is a Separation from Service shall not be
made or provided before the date that is six months after the date of your
Separation from Service. Any payment or benefit that is delayed pursuant to
these Rules shall be made or provided on the first business day of the seventh
month following the month in which the your Separation from Service occurs. With
respect to any cash payment delayed pursuant to these Rules, the first payment
shall include interest, at the Wall Street Journal Prime Rate published in the
Wall Street Journal on the Separation from Service date of (or the previous
business day if such date is not a business day), for the period from the date
the payment would have been made but for these Rules through the date payment is
made. These Rules shall apply to the extent required to avoid your incurrence of
any additional tax or interest under Section 409A of the Code.

    


    (b)
Reimbursement and In-Kind Benefits. Notwithstanding any provision of this
Agreement to the contrary, with respect to in-kind benefits provided or expenses
eligible for reimbursement under this Agreement which are subject to Section
409A of the Code, (i) the benefits provided or the amount of expenses eligible
for reimbursement during any calendar year shall not affect the benefits
provided or expenses eligible for reimbursement in any other calendar year,
except as otherwise provided in Treas. Reg. §1.409A-3(i)(1)(iv)(B), and (ii) the
reimbursement of an eligible expense shall be made as soon as practicable after
your request for such reimbursement (subject to (a), above), but not later than
the December 31 following the calendar year in which the expense was
incurred.

    


    (c)
“Specified Employee” shall mean a specified employee as defined in Section 409A
of the Code as of the date of a Separation from Service.

    


    (d)  Interpretation
and Construction. This Agreement is intended to comply with Section 409A of the
Code and shall be administered, interpreted and construed in accordance
therewith to avoid the imposition of additional tax under Section 409A of the
Code.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              6.  

            	
              Successors; Binding
      Agreement.

            


    

    


    
      	
              (i)  

            	
              Upon
      your written request, the Company will seek to have any Successor (as
      hereinafter defined), by agreement in form and substance satisfactory to
      you, assent to the fulfillment by the Company of its obligations under
      this Agreement. Failure of the Company to obtain such assent at least
      three (3) business days prior to the time a Person becomes a Successor (or
      where the Company does not have at least three (3) business days advance
      notice that a Person may become a Successor, within one (1) business day
      after having notice that such Person may become or has become a Successor)
      shall constitute Good Reason for termination by you of your employment
      and, if a change in control of the Company has occurred, shall entitle you
      immediately to the applicable benefits provided in Section 5 hereof upon
      delivery by you of a Notice of Termination. For purposes of this
      Agreement, "Successor" shall mean any Person that succeeds to, or has the
      practical ability to control (either immediately or with the passage of
      time), the Company's business directly, by merger or consolidation, or
      indirectly, by purchase of the Company's Voting Securities, all or
      substantially all of its assets or
otherwise.

            


    

    


    
      	
              (ii)  

            	
              This
      Agreement shall inure to the benefit of and be enforceable by your
      personal or legal representatives, executors, administrators, successors,
      heirs, distributees, devisees and legatees. If you should die while any
      amount would still be payable to you hereunder if you had continued to
      live, all such amounts, unless otherwise provided herein, shall be paid in
      accordance with the terms of this Agreement to your devisee, legatee or
      other designee or, if there be no such designee, to your
      estate.

            


    

    


    
      	
              (iii)  

            	
              For
      purposes of this Agreement, the "Company" shall include any corporation or
      other entity which is the surviving or continuing entity in respect of any
      merger, consolidation or form of business combination in which the Company
      ceases to exist.

            


    

    


    
      	
              7.  

            	
              Fees and Expenses;
      Mitigation.

            


    

    


    
      	
              (i)  

            	
              The
      Company shall pay all reasonable legal fees and related expenses incurred
      by you in connection with this Agreement following a change in control of
      the Company, including, without limitation, (a) all such fees and
      expenses, if any, incurred in contesting or disputing any such termination
      or incurred by you in seeking advice with respect to the matters set forth
      in Section 8 hereof or (b) your seeking to obtain or enforce any right or
      benefit provided by this Agreement.

            


    

    


    
      	
              (ii)  

            	
              You
      shall not be required to mitigate the amount of any payment the Company
      becomes obligated to make to you in connection with this Agreement, by
      seeking other employment or
otherwise.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              8.  

            	
              Taxes.

            


    

    


    
      	
              (i)  

            	
              All
      payments to be made to you under this Agreement will be subject to
      required withholding of federal, state and local income and employment
      taxes.

            


    

    


    
      	
              (ii)  

            	
              Notwithstanding
      any other provision of this Agreement, if any of the payments or benefits
      received or to be received by you pursuant to this Agreement, when taken
      together with payments and benefits provided to you under any other plans,
      contracts, or arrangements with the Company or its subsidiaries (the
      “Total Payments”), will be subject to any excise tax imposed under Code
      Section 4999 (together with any interest or penalties, the “Excise Tax”),
      then such Total Payments shall be reduced to the extent necessary so that
      no portion thereof will be subject to the Excise Tax; provided, however,
      that if you would receive in the aggregate greater value (as determined
      under Code Section 280G and the regulations thereunder) on an after tax
      basis if the Total Payments were not subject to such reduction, then no
      such reduction shall be made.  In effectuating the reduction
      described above, if applicable, the Company will first reduce or eliminate
      the payments and benefits provided under this Agreement.  All
      calculations required to be made under this Section will be made by the
      Company’s independent public accountants, subject to the right of your
      representative to review the same.  If the Company’s independent
      public accountants refuse to make the required determinations, then such
      determinations will be made by an independent accounting firm with
      national reputation reasonably selected by the Company.  As a
      result of the uncertainty in the application of the Internal Revenue Code,
      it is possible that the Company will in good faith make payments to you
      that it should not make.  In the event of such overpayment, the
      Company shall have no further liability or obligation to you for any
      resulting excise taxes, interest, or penalty that you are required to
      pay.

            


    

    


    
      	
              9.  

            	
              Survival.
      

            


    

    


    The
respective obligations of, and benefits afforded to, the Company and you as
provided in Sections 5, 6(ii), 7, 8, 13, and 15 of this Agreement shall survive
termination of this Agreement.

    


    
      	
              10.  

            	
              Notice.

            


    

    


    For the
purposes of this Agreement, notices and all other communications provided for in
the Agreement shall be in writing and shall be deemed to have been duly given
when sent by electronic mail or when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid and addressed, in the
case of the Company, to the address set forth on the first page of this
Agreement or, in the case of the undersigned employee, to the most current
address he has provided to the Company on its records, provided that all notices
to the Company shall be directed to the attention of the duly authorized
representative of the Compensation Committee of the Board, with a copy to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              11.  

            	
              Miscellaneous.
      

            


    

    


    No
provision of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in a writing signed by you and
the duly authorized representative of the Compensation Committee of the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or of compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement.  The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Michigan.

    


    
      	
              12.  

            	
              Full
      Settlement. 

            


    

    


    The
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including without limitation any setoff, counterclaim,
recoupment, defense or other right which the Company may have against
you.

    


    
      	
              13.  

            	
              Confidential
      Information. 

            


    

    


    You agree
that you will hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective businesses, which shall
have been obtained by you during your employment by the Company or any of its
affiliated companies and which shall not be public knowledge. After termination
of your employment with the Company you shall not, without the prior written
consent of the Company, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 13 constitute a
basis for deferring or withholding any amounts otherwise payable to you under
this Agreement.

    


    
      	
              14.  

            	
              Validity.
      

            


    

    


    The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

    


    
      	
              15.  

            	
              Arbitration.
      

            


    

    


    You and
the Company agree that final and binding arbitration is and will be the sole and
exclusive remedy and forum for resolving any dispute or claim between you and
the Company arising out of this Agreement, including:

    


    
      	
              (i)  

            	
              The
      Company's termination of your employment;
and/or

            


    

    


    
      	
              (ii)  

            	
              Any
      dispute or claim concerning or arising out of whether your termination was
      for “Cause” or for
      “Good Reason.”

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    You have
a right to appeal your dispute to arbitration. The arbitrator will be selected
by mutual agreement. If the arbitrator is not selected by mutual agreement, then
the arbitrator will be selected from a panel of experienced labor and employment
arbitrators supplied by the American Arbitration Association (AAA). The parties
will alternatively strike names from the AAA panel until one name (the
Arbitrator) remains. The arbitrator will decide the time and place of a hearing,
which will be conducted according to AAA Rules. At the arbitration hearing, you
will have the opportunity to rebut the evidence presented by the Company and you
may present witnesses and evidence to support your case. The arbitrator will
decide, in writing, the resolution of the dispute.

    


    The
Company will be responsible for its and your own costs including attorney fees.
If you decide to be represented by an attorney, you must notify the Company at
least one month before the arbitration hearing. If you do not choose to be
represented by an attorney, then the Company will not be represented by an
attorney.

    


    This
arbitration procedure and the decision of the arbitrator is your exclusive
remedy in case of discharge, and is final and binding on both the Company and
you and is fully enforceable in court. If this letter correctly sets forth our
agreement on the subject matter hereof, kindly sign and return to the Company
the enclosed copy of this letter which will then constitute our agreement on
this subject.

    


    This
letter agreement replaces the letter agreement you and La-Z-Boy Incorporated
entered into on or about November 17, 2008 (“Prior Agreement”).  By
signing below, you acknowledge that the Prior Agreement is terminated as of the
date and time this Agreement takes effect.

    


    [Signatures
on next page]

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    Sincerely,

    


    LA-Z-BOY
INCORPORATED

    


    


    ______________________________

    By:  James
W. Johnston

    Chairman
of the Board

    


    


    


    Agreed to
June 11, 2010.

    


    


    


    ______________________________

    Kurt L.
Darrow

    President
and Chief Executive Officer

    La-Z-Boy Incorporated

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    Exhibit
A

    Change in
control

    


    “Change
in control” means any change required to be reported in Item 6(e) of Schedule
14A of Regulation 14A issued under the Securities Exchange Act of 1934 (the
“Exchange Act”) that qualifies as a change in control event pursuant to Code
§409A.  A “change in control event” pursuant to Code §409A includes
the occurrence of a change in the ownership of the Company (as defined in Reg.
§1.409A-3 (i)(5)(v)), a change in effective control of the Company (as defined
in Reg. §1.409A-3(i)(5)(vi)), or a change in the ownership of a substantial
portion of the assets of the Company (as defined in Reg. §1.409A-3(i)(5)(vii),
and, in particular, any one or more of the following events:

    


    a. A
change in ownership of the Company in which any one person, or more than one
person acting as a group acquires beneficial ownership of stock of the Company
that, together with stock held by such person or group, constitutes more than 50
percent of the total fair market value or total voting power of the stock of the
Company; provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition by the Company, or (ii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or by any corporation
controlled by the Company.

    


    b. A
change in the effective control of the Company, pursuant to which
either:

    


    (i)Any
one person, or more than one person acting as a group acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) beneficial ownership of stock of the Company possessing
30 percent or more of the total voting power of the stock of the
Company.

    


    (ii)A
majority of members of the Company’s board of directors is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Company’s board of directors before the date of
the appointment or election.

    


    c. A
change in the ownership of a substantial portion of the Company’s assets
pursuant to which any one person, or more than one person acting as a group
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 40 percent of the
total gross fair market value of all of the assets of the Company immediately
before such acquisition or acquisitions.  As used herein, gross fair
market value means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets.  However, there is no change in control
event under this paragraph  when there is a transfer to a related
person as described in Reg. §1.409A-3(i)(5)(vii)(B)

    


    However,
a change in control shall not include a merger of the Company with another
entity, a consolidation involving the Company, or the sale of all or
substantially all of the assets or equity interests of the Company to another
entity if, in any such case, (a) the holders of equity securities of the Company
immediately prior to such event beneficially own immediately after such event
equity securities of the resulting entity entitled to more than fifty percent of
the votes then eligible to be cast in the election of directors (or comparable
governing body) of the resulting entity in substantially the same proportions
that they owned the equity securities of the Company immediately prior to such
event or (b) the persons who were members of the Board immediately prior to such
event constitute at least a majority of the board of directors of the resulting
entity immediately after such event.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    For
purposes of this definition:

    


    (A)
“Beneficial owner” (or “beneficial ownership”) includes ownership by attribution
as provided in Reg. §1.409A.

    


    (B) Where
applicable, “person” means a person as defined in Section 3(a)(9) of Securities
Exchange Act of 1934, as amended (the “Exchange Act”);

    


    (C)
“Acting as a group” means so acting within the meaning of the applicable portion
of Reg. §1.409A-3(i)(5).  Persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.  If a person, including an entity, owns stock in
both corporations that enter into a merger, consolidation, purchase or
acquisition of stock, or similar transaction, such shareholder is considered to
be acting as a group with other shareholders only with respect to the ownership
in that corporation before the transaction giving rise to the change and not
with respect to the ownership interest in the other
corporation.  Where applicable, “group” means a group as described in
Rule 13d-5 promulgated under the Exchange Act or any successor
regulation.

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
B

    Separation
From Service

    


    A
Separation From Service occurs on the date upon which a Participant is no longer
an Employee of the Company, as determined in accordance with Code §409A and
Treasury Regulations promulgated thereunder.

    


    For
purposes of this Plan, an Employee separates from service with the Company if
the Employee dies, retires or otherwise has a termination of employment with the
Company.  However, the employment relationship is treated as
continuing intact while the Employee 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 Employee’s right to reemployment with the Company is provided either by
statute or by contract. If the period of leave exceeds six months and the
Employee’s right to reemployment is not provided either by statute or by
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 determined based on the facts and
circumstances. Where an Employee either actually or purportedly continues in the
capacity as an Employee, such as through the execution of an employment
agreement under which the Employee agrees to be available to perform services if
requested, but the facts and circumstances indicate that neither the Company nor
the Employee intended for the Employee to provide more than insignificant
services to the Company, an Employee will be treated as having a Separation From
Service.  For purposes of the preceding sentence, the Company and
Employee will not be treated as having intended for the Employee to provide
insignificant services where the Employee continues to provide services at an
annual rate that is at least equal to 20 percent of the services rendered, on
average, during the immediately preceding three full calendar years of
employment (or, if employed less than three years, such lesser period) and the
annual remuneration for such services is at least equal to 20 percent of the
average annual remuneration earned during the final three full calendar years of
employment (or, if less, such lesser period). Where an Employee continues to
provide services to the Company in a capacity other than as an Employee, a
Separation From Service will not be deemed to have occurred if such former
Employee is providing services at an annual rate that is 50 percent or more of
the services rendered, on average, during the immediately preceding three full
calendar years of employment (or if employed less than three years, such lesser
period) and the annual remuneration for such services is 50 percent or more of
the annual remuneration earned during the final three full calendar years of
employment (or if less, such lesser period). For purposes of this paragraph, the
annual rate of providing services is determined based upon the measurement used
to determine the Company’s base compensation (for example, amounts of time
required to earn salary, hourly wages, or payments for specific
projects).