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                                  EXHIBIT 10(d)

                               DMI FURNITURE, INC.
                                 (the "Company")

                   NONEMPLOYEE DIRECTORS STOCK OPTION PROGRAM

1.       PURPOSE.

         The purpose of the Nonemployee Directors Stock Option Program (the
"Program") is to attract and retain highly qualified individuals to serve on the
Company's Board of Directors in light of the Company's difficulty in obtaining
directors and officers liability insurance coverage and the increasing
imposition of liability upon directors.

2.       SHARES SUBJECT TO THE PROGRAM.

         Shares of the Company's common stock, par value $.10 per share (the
"Shares"), to be issued under the Program shall be made available either from
authorized but unissued Shares or from Shares issued and reacquired by the
Company. The aggregate number of Shares that may be issued under the Program
shall not exceed 160,000 Shares, subject to adjustment pursuant to Section 6 of
the Program.

         If options are for any reason cancelled, or expire or terminate
unexercised, the Shares covered by such options shall again be available for the
grant of options within the limits provided by the preceding sentence.

3.       ELIGIBILITY.

         All directors who have been elected by the Company's stockholders and
who are not employees of the Company ("Nonemployee Directors") are entitled to
receive grants of options under the Program.

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4.       GRANT OF OPTIONS.

         Subject to the approval of this Program by the Company's stockholders
and to the terms and conditions below:

         a. Each Nonemployee Director serving on the Board on May 5, 1987 is
hereby automatically granted options for 5,000 Shares plus options for 1,000
Shares for any calendar year, commencing with 1977, during any part of which he
served as a Director.

         b. Each person elected for the first time as a Nonemployee Director
after approval of the Program by the Company's stockholders shall automatically
be granted an option for 5,000 Shares on the March 15th immediately succeeding
such election.

         c. Commencing in 1988, each Nonemployee Director in office on March 15
of any year shall automatically be granted an option for 1,000 Shares on such
date.

5.       TERMS AND CONDITIONS OF OPTIONS.

         As soon as practicable after each grant of options pursuant to the
Program, the Company and the Nonemployee Director shall enter into an option
agreement evidencing the options granted, which shall reflect and hot contain
any provision not consistent with the following terms and conditions:

         a. OPTION PRICE. The option price per share for options granted on May
5, 1987 shall be $2.25, which was the closing bid price for the Shares on the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
on May 5, 1987. The option price for options granted in years after 1987 shall
be the closing bid price for Shares on NASDAQ on March 15th of the year of the
grant of such options.

         b. PAYMENT. The option price shall be payable in cash. No Shares shall
be issued until full payment has been made. A holder of an option shall have
none of the rights of a stockholder until certificates for the Shares are
issued.

         c. PERIOD OF OPTIONS. Each option shall expire ten years from the date
of the grant of the option and shall be void and unexercisable thereafter,
unless earlier terminated as provided herein.

         d. EXERCISE OF OPTIONS. No option may be exercised before the later of
the date of approval of the Program by the Company's stockholders and the first
anniversary of the grant. Options for no more than 50% of the Shares subject to
the options may be exercised before the second anniversary of the grant. Options
for 100% of the Shares subject to the options may be exercised on or after the
second anniversary of the grant.

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         Not less than 25 Shares, and no fractional Shares, may be purchased at
any one time unless the number of Shares purchased is the total number remaining
unpurchased under the option.

         e. NONTRANSFERABILITY OF OPTIONS. An option granted under the Program
may not be transferred except by will or the laws of descent and distribution
and, during the lifetime of the Nonemployee Director to whom granted, may be
exercised only by such Nonemployee Director.

         f. TERMINATION OF SERVICE.

                  (i) If a Nonemployee Director ceases to serve as a director,
other than by reason of retirement with the permission of the Board or death,
the Nonemployee Director may exercise only those options that were exercisable
by him at the date of his termination of service as a director. Any option held
by such Nonemployee Director shall expire unless exercised within six months
from the date of termination of the Nonemployee Director's service.

                  (ii) If a Nonemployee Director retires from service as a
director with the permission of the Board, his options will become immediately
exercisable to the extent of the remaining Shares covered by the option whether
or not such Shares had become exercisable by the Nonemployee Director at the
date of his retirement. The retired Nonemployee Director may exercise these
options at any time during their remaining term.

                  (iii) If a Nonemployee Director dies while serving as a
director of the Company or after retirement with the permission of the Board,
his legal representatives or beneficiaries may exercise his options at any time
during the remaining term of the options to the extent of the number of Shares
covered by the options.

                  (iv) If a Nonemployee Director dies during the six months
after the date of his termination of service as a director other than by reason
of retirement with the permission of the Board, his options may be exercised by
his legal representatives or beneficiaries at any time within one year after the
date of his death, to the extent of the number of options exercisable at the
date of termination of his service as a director.

6.       ADJUSTMENT IN THE EVENT OF RECAPITALIZATION OF THE COMPANY. In the
event of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure of the Company that results in an increase or
decrease in the number of outstanding Shares without receipt of consideration by
the Company, the number of Shares subject to any option and the option price
will be automatically adjusted in proportion to any increase or decrease in the
number of outstanding Shares. If the stated par value of the Shares is changed
or eliminated, the class of shares resulting from such event will be deemed to
be the Shares within the meaning of the Program.

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         The Company's issuance of shares of its capital stock for consideration
will not affect the number of Shares subject to an option or the option price,
and neither the number of Shares subject to an option nor the option price under
this Program will be adjusted upon such issuance.

7.       CHANGE IN CONTROL.

         Upon a Change in Control in the Company, all options previously granted
and not exercised shall become immediately exercisable to the same extent and in
the same manner as if they had become exercisable in accordance with the
provisions of the Program relating to the period of options and to termination
of service.

         For purposes of the Program, a "Change in Control" of the Company shall
be deemed to have occurred if:

         a. Any "person" (as that term is used in Sections 13(d) and 14(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding capital
stock;

         b. During any period of two consecutive years individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
a majority of the Board, unless the nomination of each new director for election
by the Company's stockholders was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning of the
period;

         c. Upon the consummation of (a) any merger or consolidation of the
Company in which the Company would not be the surviving corporation, or pursuant
to which Shares are converted to cash, securities or other property, other than
a merger of the Company in which holders of Shares have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger, or (b) any sale, lease, exchange or transfer (in one transaction or
series of related transactions) of all, or substantially all, of the assets of
the Company, provided the Company shall deliver written notice of the date of
consummation of any transaction described in (a) or (b) to each Nonemployee
Director at least ten days prior to consummation;

         d. Any person (other than the Company or any Nonemployee Director)
publicly announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control of the Company.

8.       ADMINISTRATION OF THE PROGRAM.

         The program will be administered by the Board of Directors. Under no
circumstances, however, will the Board of Directors have discretion to determine
which Nonemployee Directors

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will receive grants of options, the number of Shares subject to such options, or
the terms or conditions upon which options may be granted or exercised.

9.       PERMITTED ISSUANCE TO PERSONS NOT NONEMPLOYEE DIRECTORS.

         From time to time, an incorporated or unincorporated firm, e.g.. a
partnership, professional service corporation, or business corporation (a
"Firm"), may furnish one or more of the Firm's partners, associates, or
employees to serve as a Nonemployee Director. In those circumstances, by the
terms of the partnership or employment agreement between the Firm and the
furnished Nonemployee Director, all remuneration payable in any form to the
Nonemployee Director as compensation for his services as a director may be
properly payable to the Firm instead of to the Nonemployee Director. Without
regard to any other provision of this Program, the Company shall, at the
direction of the Nonemployee Director and in reliance upon the Nonemployee
Director's interpretation of the agreement between himself and his Firm, issue
to the Firm any or all of the options automatically granted to the Nonemployee
Director under this Program. As a condition to the issuance of any such options
to the Firm, the Company and the Firm shall enter into the option agreement
contemplated by paragraph 5 of this Program. That option agreement between the
Company and the Firm shall provide, among other things, that the Firm's rights
to exercise the options shall be determined with reference to the Nonemployee
Director's service as a director. For example, if the Nonemployee Director
ceases to serve as a director, other than by reason of retirement with the
permission of the Board or death, then, in accordance with paragraph 5f of this
Program, the Firm may exercise only those options that were exercisable by it at
the date of the Nonemployee Director's termination of service as a director.

10.      AMENDMENT OF THE PROGRAM.

         The Program may be amended by the Board of Directors, except that
stockholder approval is required for any amendment that would change (i) the
total number of Shares as to which options may be granted, (ii) persons eligible
to receive grants of options under the Program, (iii) the option price, (iv) the
period during which options may be granted or exercised, or (v) the requirement
that the Program be administered by the Board of Directors. The Board of
Directors shall not amend the Program to confer any discretion on the Board as
to persons eligible to receive grants of options, the number of Shares subject
to such options, or the terms and conditions upon which such options may be
granted or exercised.

11.      APPROVAL OF STOCKHOLDERS; TERMINATION.

         The Program will not take effect until adopted by the Board and
approved by holders of a majority of the outstanding Shares. The Program shall
terminate on May 5, 1997, but the termination of the Program shall not affect
the period of any option that has not been exercised.

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                                  EXHIBIT 10(e)

          Form of Indemnification Agreement between DMI Furniture, Inc.
                           and each of its directors

                            INDEMNIFICATION AGREEMENT

         This is an Indemnification Agreement dated as of _____________________,
1987, between (a) DMI FURNITURE, INC., a Delaware corporation ("DMI"), and (b)
___________________________________ (the "Indemnitee").

         1. RECITALS. The Indemnitee is [AN OFFICER OR DIRECTOR, AS APPROPRIATE]
of DMI. Section 7 of DMI's Bylaws, as currently amended, obligates DMI to
indemnify its directors, officers, employees, and agents to the fullest extent
permitted by Section 145 ("Section 145") of the General Corporation Law of the
State of Delaware, as amended (the "DGCL"). In accordance with Section 145 and
in consideration of the Indemnitee's continuing services on DMI's behalf, DMI
and the Indemnitee desire to enter into this Agreement.

         2. INDEMNITEE'S SERVICES. The Indemnitee shall diligently administer
DMI's affairs in the position or positions described in paragraph 1. Subject to
any obligation imposed by contract or by operation of law, (a) the Indemnitee
may at any time and for any reason resign from such position or positions, and
(b) DMI may at any time and for any reason (or for no reason) terminate the
Indemnitee's employment in such position or positions.

         3. INDEMNIFICATION. DMI shall indemnify the Indemnitee and hold the
Indemnitee harmless against any loss or liability related to or arising from the
Indemnitee's service as a director, officer, employee, or agent of DMI, or of
any subsidiary or affiliate of DMI (a "Subsidiary"), upon the following terms
and conditions:

                  (a) DMI shall, to the fullest extent permitted by Section 145
as now in effect - and to such greater extent as Section 145 or any other
provision of the DGCL (or of any successor codification of the Delaware
corporation laws) may hereafter from time to time permit - hold the Indemnitee
harmless and indemnify the Indemnitee against all judgments rendered, fines
levied, and other assessments (including amounts paid in settlement of any
claims, if approved by DMI), plus all reasonable costs and expenses (including,
without limitation, attorneys' fees, retainers, court costs, transcript costs,
experts' fees, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, and delivery service fees), incurred
in connection with the defense of any threatened, pending, or completed action
or proceeding, whether civil, criminal, administrative, or investigative (an
"Action"), related to or arising from (1) any actual or alleged act or omission
of the Indemnitee at any time as a director, officer, employee, or agent of DMI
or of any Subsidiary, or (2) the Indemnitee's past, present, or future status as
a director, officer, employee, or agent of DMI or of any Subsidiary.

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                  (b) Upon presentation from time to time of such invoices,
statements for services rendered, or other similar documentation as DMI may
reasonably request, DMI shall reimburse the Indemnitee for all reasonable costs
and expenses incurred in the defense of any threatened, pending, or completed
Action, as and when such costs are incurred.

                  (c) DMI shall indemnify the Indemnitee under paragraph 3(a)
only as authorized in a specific case upon a determination that indemnification
of the Indemnitee is proper in the circumstances because the Indemnitee has met
the applicable standard of conduct set forth in Section 145 or in any other
applicable provision of Delaware law. Such determination shall be made, as the
Indemnitee chooses, either (1) by a majority vote of a quorum of DMI's
disinterested directors as contemplated by sub-section (d) of Section 145, as
currently amended, or (2) by independent legal counsel in a written opinion. For
purposes of this paragraph 3(c), "independent legal counsel" shall mean a law
firm (or a member of a law firm) chosen by the Indemnitee that (1) is
experienced in matters of corporation law, and (2) has received a rating of
"a-v" in the most recently published edition of the Martindale-Hubbell Law
Directory. DMI shall pay the fees and expenses of any independent legal counsel
chosen by the Indemnitee to make the determination contemplated by this
paragraph 3(c).

                  (d) The indemnification provided by this Agreement shall apply
only to (1) actual or alleged acts or omissions that occur during the
Indemnitee's service as a director, officer, employee, or agent of DMI or of any
Subsidiary, and (2) actual or threatened Actions in which the Indemnitee is
joined or named as a party, but which relate to or arise from alleged acts or
omissions that occurred before the Indemnitee's service as a director, officer,
employee, or agent of DMI or of any Subsidiary, or which relate to acts or
omissions alleged against any former directors, officers, employees, or agents
of DMI or of any Subsidiary.

                  (e) Nothing in this Agreement shall be deemed or construed to
create any liability of DMI (1) to former directors, officers, employees, or
agents or their predecessors, or to any other person not a party to this
Agreement, or (2) exceeding the liability that DMI may lawfully incur in
accordance with applicable Delaware law.

         4. CONDUCT OF LITIGATION.

                  (a) If any Action is made, brought, or threatened against the
Indemnitee for which the Indemnitee may be indemnified under this Agreement, the
Indemnitee shall, to the extent not inconsistent with any private insurance
coverage obtained by DMI:

                           (1) Permit DMI to conduct the Indemnitee's defense of
the Action at DMI's expense and with the use of counsel selected by DMI; or

                           (2) Retain counsel acceptable to the Indemnitee and
DMI to defend or counsel the Indemnitee with respect to the Action, and permit
DMI to monitor and direct the Indemnitee's defense.

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                  (b) DMI shall at all times have the option to undertake the
Indemnitee's defense of any Action for which the Indemnitee may be indemnified
under this Agreement. If DMI elects to conduct the Indemnitee's defense, the
Indemnitee shall cooperate fully with DMI in the defense of the Action. If DMI
elects to conduct the Indemnitee's defense after the Indemnitee proceeds under
paragraph 4(a)(2), DMI shall reimburse the Indemnitee for the reasonable costs,
including attorneys' fees, incurred by the Indemnitee in enabling DMI to
undertake the Indemnitee's defense.

         5. REIMBURSEMENT OF EXPENSES. If DMI makes any payment to the
Indemnitee under this Agreement, and if it is ultimately determined that the
Indemnitee was not entitled to be indemnified by DMI as authorized by Section
145 or any other applicable provision of Delaware law, the Indemnitee shall
promptly repay DMI for all amounts paid to the Indemnitee under this Agreement.

         6. ENFORCEMENT OF AGREEMENT. If the Indemnitee makes a claim for
indemnification under this Agreement and DMI refuses to indemnify the
Indemnitee, and if the Indemnitee then prevails in an action or proceeding
brought to enforce this Agreement, DMI shall pay all reasonable costs and
expenses (including attorneys' fees) incurred by the Indemnitee in connection
with the action or proceeding in addition to any other indemnification required
under this Agreement.

         7. NOTICE OF CLAIMS. If the Indemnitee receives a complaint, claim, or
other notice of any loss, claim, damage or liability giving rise to a claim for
indemnification under this Agreement, the Indemnitee shall promptly notify DMI
of the complaint, claim or other notice. Any failure to notify DMI, however,
shall not relieve DMI from any liability under this Agreement unless DMI (a) is
materially prejudiced by the failure (such as, for example, where the failure
results in the exclusion or denial of DMI's otherwise available insurance
coverage) and (b) had no actual knowledge of the complaint, claim, or other
notice. In no event shall DMI be obligated to indemnify the Indemnitee for any
settlement of any Action effected without DMI's prior consent.

         8. TERMINATION.

                  (a) This Agreement shall terminate (1) upon termination of the
Indemnitee's service as a director, officer, employee, or agent of DMI and of
any Subsidiary, or (2) upon DMI's written notice to the Indemnitee that, in the
reasonable opinion of DMI, the Indemnitee has not complied with paragraph 4 of
this Agreement. DMI shall not issue any such notice merely because it disagrees
with a business judgment or judgments of the Indemnitee.

                  (b) The termination of this Agreement shall not:

                           (1) Terminate DMI's liability to the Indemnitee for
(A) Actions against the Indemnitee related to or arising from acts or omissions
occurring or alleged to have occurred before termination of this Agreement, or
(B) Actions that name or join the Indemnitee as a party, but relate to or arise
from acts or omissions alleged to have occurred before the

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Indemnitee's service as a director, officer, employee, or agent, or acts or
omissions alleged against former directors, officers, employees, or agents.

                           (2) Render the terms and conditions of this Agreement
inapplicable to any Actions subject to paragraph 8(b)(1).

         9. SUBROGATION. If DMI makes any payment to the Indemnitee under this
Agreement, DMI shall be subrogated to the extent of such payment to all of the
Indemnitee's rights of recovery and the Indemnitee shall execute any documents
and take any actions necessary to secure such rights (including execution of any
documents necessary to enable DMI to bring suit to enforce such rights).

         10. INSURANCE REIMBURSEMENT. DMI shall not be required to make any
payment of amounts otherwise indemnifiable under this Agreement if and to the
extent that the Indemnitee has otherwise actually received such payment under
any insurance policy, contract, agreement or otherwise.

         11. NOTICES. Any notice or other communication required or permitted
under this Agreement shall be deemed given when hand-delivered or sent by
registered mail, postage prepaid and return-receipt requested, to the intended
recipient at the address set forth below or at such other address as the
recipient shall hereafter furnish the sender in writing:

         If to the Indemnitee:              ___________________________

                                            ___________________________

                                            ___________________________

                                            ___________________________

         If to DMI:                         DMI Furniture, Inc.
                                            10400 Linn Station Road
                                            Louisville, Kentucky 40222
                                            Attention:  Chief Executive Officer

         12. GOVERNING LAW. The laws of Delaware shall govern the validity,
interpretation, and construction of this Agreement. Nothing in this Agreement
shall require any unlawful action or inaction by any party.

         13. MODIFICATION. No modification of this Agreement shall be binding
unless executed in writing by the Indemnitee and DMI.

         14. HEADINGS. All "paragraph" references in this Agreement refer to
numbered paragraphs of this Agreement. Paragraph headings are not part of this
Agreement, but are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or any provision in it.

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         15. SOLE BENEFIT. Nothing expressed or referred to in this Agreement is
intended or shall be construed to give any person other than DMI, its successors
and assigns, and the Indemnitee and the Indemnitee's personal representatives,
heirs, or devisees, any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provisions contained herein. The assumption of
obligations and statements of responsibilities and all conditions and provisions
of this Agreement are for the sole benefit of DMI, its successors and assigns,
and the Indemnitee and the Indemnitee's personal representatives, heirs, or
devisees.
         IN WITNESS WHEREOF, the Indemnitee and DMI have executed several
originals of this Agreement as of the date first set forth above, but actually
on the dates set forth below.

THE "INDEMNITEE"                              DMI FURNITURE, INC.

_________________________________             By  ______________________________

Name: ___________________________             Title: ___________________________

Date: ___________________________             Date: ____________________________

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