Document:

exv4w2

Exhibit 4.2

FURNITURE BRANDS INTERNATIONAL, INC.

AMENDMENT

DATED AS OF AUGUST 3, 2009

TO

RIGHTS AGREEMENT

DATED AS OF JULY 30, 1998,

AS AMENDED AS OF JULY 10, 2008

 

          This AMENDMENT, dated as of August 3, 2009 (the “Amendment”), to the Rights Agreement, dated
as of July 30, 1998, as amended as of July 10, 2008 (the “Rights Agreement”), by and between
Furniture Brands International, Inc., a Delaware corporation (the “Company”), and American Stock
Transfer and Trust Company, a New York limited liability trust company, as Rights Agent (the
“Rights Agent”).

RECITALS

     WHEREAS, the Company and the Rights Agent have heretofore executed and entered into the Rights
Agreement;

     WHEREAS, the Company and the Rights Agent are entering into a new stockholders rights
agreement (the “2009 Rights Agreement”);

     WHEREAS, the Board of Directors of the Company has determined that it is advisable and in the
best interests of the Company and its stockholders that the 2009 Rights Agreement supersede the
Rights Agreement;

     WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may from time to time
supplement or amend the Rights Agreement in order to shorten or lengthen any time period thereunder
or to change or supplement the provisions thereunder in any manner which the Company may deem
necessary or desirable;

     WHEREAS, pursuant to resolutions adopted on August 2, 2009, the Board of Directors of the
Company has determined that an amendment to the Rights Agreement as set forth herein is necessary
and desirable in connection with the foregoing and the Company desires to evidence such amendment
in writing;

          NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:

 

 

     1. Amendment of Section 1.

     (a) Section 1 of the Rights Agreement is supplemented and amended by adding the following
definition in the appropriate location therein:

     “2009 Rights Agreement” shall mean the Stockholders Rights Agreement to be
entered into by the Company and the Rights Agent, as may be amended from time to
time, which is intended to continue the protections of this Rights Agreement and to
protect certain tax attributes of the Company such as the Company’s ability to carry
forward net operating losses.

     2. Amendment of Section 7(a). Section 7(a) of the Rights Agreement is amended to read
in its entirety as follows:

     (a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at any
time after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the stockholder services office of the Rights Agent or such office
designated for such purpose, together with payment of the Purchase Price for each
one one-hundredth of a share of Preferred Stock as to which the Rights are
exercised, at or prior to the close of business on the Expiration Date. The
“Expiration Date”, as used in this Rights Agreement, shall be the earliest of (i)
the time at which the Rights are redeemed as provided in Section 23 hereof, (ii) the
time at which the Rights are exchanged as provided in Section 24 hereof, or (iii)
August 3, 2009 (which is the Rights Dividend Declaration Date under the 2009 Rights
Agreement). The “Final Expiration Date”, as used in this Rights Agreement, shall be
August 3, 2009.

     3. Amendment of Section 29. Section 29 of the Rights Agreement is amended by adding
the following sentence at the end thereof:

Nothing in this Rights Agreement shall be construed to give any holder of Rights or
any other Person any legal or equitable rights, remedies or claims under this Rights
Agreement by virtue of the execution, delivery or approval of the 2009 Rights
Agreement.

     4. Effectiveness. This Amendment shall be deemed effective as of the date first
written above, as if executed on such date. Except as amended hereby, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected hereby.

     5. Miscellaneous. This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware and for all purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and performed entirely within such State.
This Amendment may be executed in any number of counterparts, each of

2

 

such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument. If any provision, covenant
or restriction of this Amendment is held by a court of competent jurisdiction or other authority to
be invalid, illegal or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall in no way be
effected, impaired or invalidated.

[Remainder of page intentionally left blank]

3

 

     IN WITNESS WHEREOF, the undersigned have caused this amendment to be duly executed, all as of
the date first above written.

	 	 	 	 	 
	 	FURNITURE BRANDS INTERNATIONAL, INC.

 	 
	 	By  	           /s/ Jon D. Botsford
 	 
	 	 	     Name:  	Jon D. Botsford 	 
	 	 	     Title:  	Senior Vice President, General Counsel
& Corporate Secretary 	 
	 
	 	AMERICAN STOCK TRANSFER AND TRUST

COMPANY, LLC,

          as Rights Agent

 	 
	 	By  	            /s/ Herbert J. Lemmer
 	 
	 	 	     Name:  	Herbert J. Lemmer 	 
	 	 	     Title:  	Vice President 	 

4Exhibit 10.01

Exhibit 10.01

Description of Annual Incentive Bonus Plan for Fiscal 2010

On May 14, 2009, the Board approved the Company’s annual incentive bonus plan for fiscal 2010.
The plan provides its executive officers with the opportunity to earn quarterly cash bonuses based
upon the achievement of pre-established performance goals. Bonus opportunities will be based on
achievement of quarterly targets, provided that the free cash flow performance metric will be
measured solely on an annual basis. 50% of the quarterly payouts (if any) will be held back and
will not be payable until after the fiscal year end. In addition, payout levels not achieved based
on quarterly results may be recouped based on annual results. Performance goals under the plan
will be: quarterly earnings per share, operating profit (as a percentage of sales), return on
invested capital and SG&A targets, and annual free cash flow targets, at the Company level; and
quarterly, operating profit (as a percentage of sales), inventory turnover, cash conversion cycle
and vertical integration targets at the business unit level for certain executives. The plan
allows awards to provide for different metrics, target levels and weightings for different
executives.

Under the annual incentive bonus plan, target award opportunities are set at various
percentages of base salary, which will be: 150% of base salary in the case of the Chief Executive
Officer; 100% of base salary in the case of the Chief Financial Officer; and between 60% and 80% of
base salary in the cases of other officers. Actual payout opportunities for each bonus component
will range from 50% of target to a maximum of 300% of target (200% in the cases of the CEO and CFO)
based on achievement of the performance measures. If the Company fails to achieve the threshold
level for any performance measure, no payout is awarded for that measure. For purposes of
determining achievement of award opportunities, the annual bonus plan uses adjusted, non-GAAP
measures.EX-10.1

    Exhibit
    10.1

 

    Execution
    Version
    

 

    ASPEN
    INSURANCE HOLDINGS LIMITED

 

    PERFORMANCE
    SHARE AWARD AGREEMENT

 

    THIS AGREEMENT (the “Agreement”), is made effective as
    of the 1st day of May, 2009 (hereinafter called the
    “Date of Grant”), between Aspen Insurance Holdings
    Limited, a Bermuda corporation (hereinafter called the
    “Company”),
    and          
    (hereinafter called the “Participant”):

 

    R E C I T
    A L
    S:
    

 

    WHEREAS, the Company has adopted the Aspen Insurance Holdings
    2003 Share Incentive Plan, as amended from time to time
    (the “Plan”), which Plan is incorporated herein by
    reference and made a part of this Agreement. Capitalized terms
    not otherwise defined herein shall have the same meanings as in
    the Plan; and

 

    WHEREAS, the Committee has determined that it would be in the
    best interests of the Company and its shareholders to grant the
    performance shares provided for herein to the Participant
    pursuant to the Plan and the terms set forth herein.

 

    NOW THEREFORE, in consideration of the mutual covenants
    hereinafter set forth, the parties agree as follows:

 

    1. Grant of Performance Shares. The Company hereby
    awards to the
    Participant           Shares,
    payment of which is dependent upon the performance of the
    Company as described in Section 2 of this Agreement (the
    “Performance Shares”).

 

    2. Vesting. The Performance Shares shall vest and
    become payable only to the extent that the Return on Equity
    (calculated as described in Section 2(a) below, the
    “ROE”) and the service requirements described below
    are achieved.

 

    (a) For purposes of this Agreement, “ROE” shall
    be equal to net income determined under United States Generally
    Accepted Accounting Principles (“US GAAP”) after
    deduction of the cost of all Awards granted under the Plan as a
    percentage of weighted average shareholders’ equity, which
    shall be determined by the Board based on the Company’s
    audited financials under US GAAP.

 

    (b) For purposes of this Agreement, “2009 ROE”
    shall be equal to the Company’s actual ROE for the fiscal
    year ended December 31, 2009 (the “2009 Fiscal
    Year”).

 

    (c) For purposes of this Agreement, “2010 ROE”
    shall be equal to the Company’s actual ROE for the fiscal
    year ended December 31, 2010 (the “2010 Fiscal
    Year”).

 

    (d) For purposes of this Agreement, “2011 ROE”
    shall be equal to the Company’s actual ROE for the fiscal
    year ended December 31, 2011 (the “2011 Fiscal
    Year”).

 

    (e) Subject to the Participant’s continued Employment
    with the Company (which Employment shall not include the
    performance of services under a notice of termination or
    resignation), a maximum of one-third (1/3) of the Performance
    Shares awarded hereunder (the “2009 ROE Award”) shall
    be eligible for vesting (“Eligible Shares”) upon the
    later of (i) the date the Company’s outside auditors
    complete the audit of the Company’s financial statements
    containing the information necessary to compute the
    Company’s ROE for the 2009 Fiscal Year or (ii) the
    date such ROE is

 

    approved by the Board of Directors or an authorized committee
    thereof, but only to the extent provided below:

 

	 	 	 
	

    2009 ROE

	
 
	

    Percentage of Eligible Shares

	 

	

    < 7%

	
 
	
    0%

	

    7%

	
 
	
    10%

	

    12%

	
 
	
    100%

	

    3
    22%

	
 
	
    200%

	

    Interim percentages to be pro-rated.

 

    Notwithstanding the foregoing, if the Company’s actual ROE
    for the 2009 Fiscal Year is (i) less than 7%, then none of
    the Performance Shares subject to the 2009 ROE Award shall be
    Eligible Shares, (ii) greater than 12% and the average ROE
    over the 2009 Fiscal Year and the immediately preceding fiscal
    year is less than 7%, then the Percentage of Eligible Shares
    shall be 100%; or (iii) greater than 12% and the average
    ROE over the 2009 Fiscal Year and the immediately preceding
    fiscal year is 7% or greater, then the Percentage of Eligible
    Shares shall be in accordance with the table above.

 

    (f) Subject to the Participant’s continued Employment
    with the Company (which Employment shall not include the
    performance of services under a notice of termination or
    resignation), a maximum of one-third (1/3) of the Performance
    Shares awarded hereunder (the “2010 ROE Award”) shall
    become Eligible Shares upon the later of (i) the date the
    Company’s outside auditors complete the audit of the
    Company’s financial statements containing the information
    necessary to compute the Company’s ROE for the 2010 Fiscal
    Year or (ii) the date such ROE is approved by the Board of
    Directors or an authorized committee thereof, but only to the
    extent provided below:

 

	 	 	 
	

    2010 ROE

	
 
	

    Percentage of Eligible Shares

	 

	

    < 7%

	
 
	
    0%

	

    7%

	
 
	
    10%

	

    12%

	
 
	
    100%

	

    3
    22%

	
 
	
    200%

	

    Interim percentages to be pro-rated.

 

    Notwithstanding the foregoing, if the Company’s actual ROE
    for the 2010 Fiscal Year is (i) less than 7%, then none of
    the Performance Shares subject to the 2010 ROE Award shall be
    Eligible Shares, (ii) greater than 12% and the average ROE
    over the 2010 Fiscal Year and the 2009 Fiscal Year is less than
    7%, then the Percentage of Eligible Shares shall be 100%; or
    (iii) greater than 12% and the average ROE over the 2010
    Fiscal Year and the 2009 Fiscal Year is 7% or greater, then the
    Percentage of Eligible Shares shall be in accordance with the
    table above.

 

    (g) Subject to the Participant’s continued Employment
    with the Company (which Employment shall not include the
    performance of services under a notice of termination or
    resignation), a maximum of one-third (1/3) of the Performance
    Shares awarded hereunder (the “2011 ROE Award”) shall
    become Eligible Shares upon the later of (i) the date the
    Company’s outside auditors complete the audit of the
    Company’s financial statements containing the information
    necessary to compute the Company’s ROE for the 2011 Fiscal
    Year or (ii) the date such ROE is approved by the Board of
    Directors or an authorized committee thereof, but only to the
    extent provided below:

 

	 	 	 
	

    2011 ROE

	
 
	

    Percentage of Eligible Shares

	 

	

    < 7%

	
 
	
    0%

	

    7%

	
 
	
    10%

	

    12%

	
 
	
    100%

	

    3
    22%

	
 
	
    200%

	

    Interim percentages to be pro-rated.

 

    Notwithstanding the foregoing, if the Company’s actual ROE
    for the 2011 Fiscal Year is (i) less than 7%, then none of
    the Performance Shares subject to the 2011 ROE Award shall be
    Eligible Shares, (ii) greater than 12% and the average ROE
    over the 2011 Fiscal Year and the 2010 Fiscal

 

    Year is less than 7%, then the Percentage of Eligible Shares
    shall be 100%; or (iii) greater than 12% and the average
    ROE over the 2011 Fiscal Year and the 2010 Fiscal Year is 7% or
    greater, then the Percentage of Eligible Shares shall be in
    accordance with the table above.

 

    (h) Subject to the Participant’s continued Employment
    with the Company (which Employment shall not include the
    performance of services under a notice of termination or
    resignation), all Eligible Shares shall become vested upon the
    later of (i) the date the Company’s outside auditors
    complete the audit of the Company’s financial statements
    containing the information necessary to compute the
    Company’s ROE for the 2011 Fiscal Year or (ii) the
    date such ROE is approved by the Board of Directors or an
    authorized committee thereof.

 

    (i) In connection with any event described in
    Section 10(a) of the Plan or in the event of a change in
    applicable accounting rules, the Committee shall make such
    adjustments in the terms of the Performance Shares as it shall
    determine shall be necessary to equitably reflect such event in
    order to prevent dilution or enlargement of the potential
    benefits of the Performance Shares. The Committee’s
    determination as to any such adjustment shall be final.

 

    (j) If the Participant’s Employment with the Company
    is terminated for any reason, the Performance Shares shall, to
    the extent not then vested, be canceled by the Company without
    consideration.

 

    (k) Any Performance Shares that do not become Eligible
    Shares by reason of the Company’s failure to achieve an ROE
    as set forth above shall immediately be forfeited without
    consideration.

 

    3. Payment.

 

    (a) The Company shall deliver to the Participant one Share
    for each vested Performance Share. Any fractional share will be
    rounded down to the nearest whole Share and the remainder
    forfeited.

 

    (b) Except as otherwise provided in the Plan, vested
    Performance Shares shall be paid to the Participant as soon as
    practicable after the date such Performance Shares become
    vested, but in no event later than the fifteenth (15th) day of
    the third (3rd) month following the end of the fiscal year in
    which the Performance Shares become vested.

 

    (c) When Performance Shares are paid, the Company shall
    issue certificates in the Participant’s name for such.
    However, the Company shall not be liable to the Participant for
    damages relating to any delays in issuing the certificates to
    him, any loss of the certificates, or any mistakes or errors in
    the issuance of the certificates or in the certificates
    themselves.

 

    4. No Right to Continued Employment. The granting of
    the Performance Shares evidenced hereby and this Agreement shall
    impose no obligation on the Company or any Affiliate to continue
    the Employment of the Participant and shall not lessen or affect
    the Company’s or its Affiliate’s right to terminate
    the Employment of such Participant.

 

    5. Legend on Certificates. The certificates
    representing the Shares paid in settlement of Performance Shares
    shall be subject to such stop transfer orders and other
    restrictions as the Committee may deem advisable under the Plan
    or the rules, regulations, and other requirements of the
    U.S. Securities and Exchange Commission, any stock exchange
    upon which such Shares are listed, and any applicable laws, and
    the Committee may cause a legend or legends to be put on any
    such certificates to make appropriate reference to such
    restrictions.

 

    6. Transferability. The Performance Shares may not
    be assigned, alienated, pledged, attached, sold or otherwise
    transferred or encumbered by the Participant otherwise than by
    will or by the laws of descent and distribution, and any such
    purported assignment, alienation, pledge, attachment, sale,
    transfer or encumbrance shall be void and unenforceable against
    the Company or any Affiliate; provided that the designation of a
    beneficiary shall not constitute an assignment, alienation,
    pledge, attachment, sale, transfer or encumbrance. For avoidance
    of doubt, Shares issued to the Participant in payment of vested
    Performance Shares pursuant to Section 3 hereof shall not
    be subject to any of the foregoing transferability restrictions.

 

    7. Withholding. The Participant may be required to
    pay to the Company or any Affiliate and the Company shall have
    the right and is hereby authorized to withhold, any applicable
    withholding taxes in respect of Performance Shares and to take
    such other action as may be necessary in the opinion of the
    Committee to satisfy all obligations for the payment of such
    withholding taxes.

 

    8. Securities Laws. Upon the acquisition of any
    Shares pursuant to settlement of Performance Shares, the
    Participant will make or enter into such written
    representations, warranties and agreements as the Committee may
    reasonably request in order to comply with applicable securities
    laws or with this Agreement.

 

    9. Bermuda Government Regulations. No Shares shall
    be issued pursuant to this Agreement unless and until all
    relevant licenses, permissions and authorizations required to be
    granted by the Government of Bermuda, or by any authority or
    agency thereof, shall have been duly received.

 

    10. Notices. Any notice necessary under this
    Agreement shall be addressed to the Company in care of its
    Secretary at the principal executive office of the Company and
    to the Participant at the address appearing in the personnel
    records of the Company for the Participant or to either party at
    such other address as either party hereto may hereafter
    designate in writing to the other. Any such notice shall be
    deemed effective upon receipt thereof by the addressee.

 

    11. Choice of Law. THIS AGREEMENT SHALL BE
    GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
    BERMUDA, without regard to conflicts of laws principles.

 

    12. Performance Shares Subject to the Plan. By
    entering into this Agreement the Participant agrees and
    acknowledges that the Participant has received and read a copy
    of the Plan. The Performance Shares are subject to the Plan
    (including without limitation the arbitration provision), and
    the terms and provisions of the Plan, as it may be amended from
    time to time, are hereby incorporated herein by reference. In
    the event of a conflict between any term or provision contained
    herein and a term or provision of the Plan, the applicable terms
    and provisions of the Plan will govern and prevail.

 

    13. Rights as a Shareholder. The Participant shall
    have no rights as a shareholder, and shall not receive
    dividends, with respect to any Performance Shares until the
    Performance Shares have been paid out and Share certificates
    have been issued to the Participant.

 

    14. Fiscal Year. If the Company’s fiscal year
    is changed to other than a calendar year, the references to
    calendar year in this Agreement shall be adjusted to
    appropriately reflect the change.

 

    15. Signature in Counterparts. This Agreement may be
    signed in counterparts, each of which shall be an original, with
    the same effect as if the signatures thereto and hereto were
    upon the same instrument.

 

    IN WITNESS
    WHEREOF, the parties hereto have executed this Agreement.
    

 

    ASPEN INSURANCE HOLDINGS LIMITED

 

			
	 	    By: 
	
        

 

 

    AGREED AND ACKNOWLEDGED AS

    OF THE DATE FIRST ABOVE WRITTEN:

 

    Participant

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