Document:

ex1016a.htm

Exhibit 10.16(a)

 

 

AGREEMENT

THIS AGREEMENT (“Agreement”), dated October 4, 2011, is made by COMPUCREDIT HOLDINGS CORPORATION (“CompuCredit”), in favor of WELLS FARGO PREFERRED CAPITAL, INC., in its capacity as agent for Lenders (defined below) (“Agent”), an Iowa corporation with offices at 800 Walnut Street, Des Moines, Iowa.

BACKGROUND

A.           Agent, as agent and lender, and certain other financial institutions from time to time a party thereto as lenders (collectively, with Agent, the “Lenders”), are contemporaneously herewith entering into a Loan and Security Agreement dated as of the date hereof (as may be amended, supplemented, modified or otherwise restated from time to time, the “Loan Agreement”), with CARS ACQUISITION LLC, CAR FINANCIAL SERVICES, INC., CAR FUNDING II, INC. and CONSUMER AUTO RECEIVABLES SERVICING, LLC (collectively, the “Borrower”) under which Agent and Lenders have agreed to make loans and advances to Borrower from time to time;

B.           It is a condition precedent to Agent and Lenders entering into the Loan Agreement that CompuCredit shall have executed and delivered to Agent this Agreement.

NOW, THEREFORE, in order to induce Agent and Lenders to enter into the Loan Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, CompuCredit does hereby covenant and agree with Agent and Lenders as follows:

1.           Definitions and Construction.  Reference is hereby made to the Loan Agreement for a statement of the terms thereof.  All terms used in this Agreement which are defined in the Loan Agreement and not defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement.

2.           Agreement.  CompuCredit hereby agrees to indemnify, defend and hold harmless Agent and Lenders from any and all losses, suits, claims, damages, liabilities, deficiencies, judgments, costs or expenses (including, without limitation, reasonable fees and disbursements of attorneys) incurred by any of them as result of a Trigger Event (as defined in Section 22 of this Agreement) other than such loss, damage, cost or expense which has been caused by the gross negligence or willful misconduct of Agent or a Lender (the “Loss Amount”).  For the avoidance of doubt, CompuCredit’s liability to the Agent and Lenders under this Agreement shall not include any loss or deficiency that is independent of or unrelated to any Trigger Event, regardless of whether such loss or deficiency occurred before or after such Trigger Event, including an decrease in or impairment to the value of the Collateral independent of or unrelated to any Trigger Event.  Upon demand for payment by Agent under this Section 2, Agent and CompuCredit agree to negotiate in good faith to agree upon the Loss Amount.  To the extent Agent and CompuCredit cannot agree on the Loss Amount within sixty (60) days following Agent’s demand for payment (or such later date agreed to in writing by Agent and CompuCredit), Agent and CompuCredit agree to promptly submit such dispute to binding arbitration pursuant to Section 21 of this Agreement.

3.           Nature and Term.

(a)           The obligations and liability of CompuCredit under this Agreement shall be independent, absolute, primary and direct, irrevocable and unconditional, regardless of any non-perfection of any collateral security for the Obligations; any lack of validity or enforceability of the Loan Agreement or any Note or any of the Obligations; the voluntary or involuntary liquidation, dissolution, sale or other disposition of all, or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings affecting Borrower, CompuCredit or any guarantor of any or all of the Obligations or any of the assets of any of them, or any contest of the validity of this Agreement in any such proceeding; or any law, regulation or decree now or hereafter in effect in any jurisdiction which might in any manner affect any of such terms or provisions or any of the rights of Agent and Lenders with respect thereto or which might cause or permit Borrower or any guarantor of the Obligations to invoke any defense to, or any alteration in the time, amount or manner of payment of any or all of the Obligations or performance of this Agreement.

(b)           The adjudication of bankruptcy of CompuCredit shall not revoke this Agreement.

(c)           This Agreement shall remain in full force and effect until the Obligations and any and all other amounts payable hereunder shall have been paid in full and no further loans or advances are available under the Loan Agreement and the period during which any payment by Borrower or CompuCredit is or may be subject to rescission, avoidance or refund under the Bankruptcy Code (or any similar state statute) shall have expired.

4.           RESERVED.

5.           Rights and Remedies of Agent.  Agent, in its sole discretion, may proceed to exercise any right or remedy which it may have under this Agreement against CompuCredit upon the occurrence of a Trigger Event without first pursuing or exhausting any rights or remedies which it may have against Borrower or against any other Person or any collateral security, and may proceed to exercise any right or remedy which it may have under this Agreement without regard to any actions or omissions of any other Person, in any manner or order, without any obligation to marshal in favor of CompuCredit or other Persons and without releasing CompuCredit’s obligations hereunder with respect to any unpaid Obligations.  No remedy herein conferred upon or reserved to Agent or Lenders are intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity.

6.           Actions Not Affecting this Agreement.  Agent and Lenders, at any time or from time to time, in such manner and upon such terms as it may deem proper, may extend or change the time of payment or the manner or place of payment of, or otherwise modify or waive any of the terms of, or release, exchange, settle or compromise any or all of the Obligations or any collateral security therefor, or subordinate payment of the same, or any part thereof, to the payment of any other indebtedness, liabilities or obligations of Borrower which may at any time be due or owing to Agent and Lenders, or elect not to enforce any of Agent’s or Lenders’ rights with respect to any or all of the Obligations or any collateral security therefor, all without notice to, or further assent of CompuCredit and without releasing or affecting CompuCredit’s obligations hereunder.

  

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7.           Payments.  All payments by CompuCredit hereunder shall be made in immediately available funds and in lawful money of the United States of America to Agent at its office at 800 Walnut Street, Des Moines, Iowa 50309, or at such other location as Agent shall specify by notice to CompuCredit.  All payments by CompuCredit under this Agreement shall be made by CompuCredit solely from CompuCredit’s own funds and not from any funds of Borrower.

8.           Modifications and Waivers.  No failure or delay on the part of Agent in exercising any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power preclude any other or further exercise thereof or the exercise of any other right or power under this Agreement.  No modification or waiver of any provision of this Agreement nor consent to any departure therefrom shall, in any event, be effective unless the same is in writing signed by Agent and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice to, or demand on CompuCredit, in any case, shall entitle CompuCredit to any other or further notice or demand in similar or other circumstances.

9.           CompuCredit’s Waiver.  CompuCredit hereby waives promptness, diligence, presentment, demand, notice of acceptance and any other notice with respect to any of the Obligations.

10.           Subordination of Subrogation.  CompuCredit hereby expressly agrees that it shall not exercise against Borrower or any other Person (a) any right which CompuCredit may now have or hereafter acquire by way of subrogation under this Agreement, by law or otherwise or by way of reimbursement, indemnity, exoneration, or contribution; (b) any right to assert defenses as the primary obligor of the Obligations; (c) any other claim which it now has or may hereafter acquire against Borrower or any other person or against or with respect to Borrower’s property (including, without limitation, any property which has been pledged to secure the Obligations); or (d) any right to enforce any remedy which CompuCredit may now have or hereafter acquire against Borrower or any other Person; in any case, whether any of the foregoing claims, remedies and rights may arise in equity, under contract, by payment, statute, common law or otherwise until all Obligations have been indefeasibly paid in full.  If in violation of the foregoing any amount shall be paid to CompuCredit on account of any such rights at any time, such amount shall be held in trust for the benefit of Agent, for the benefit of Lenders, and shall forthwith be paid to Agent to be credited and applied against the Obligations, whether matured or unmatured, in accordance with the terms of the Notes and the Loan Agreement.

11.           No Setoff.  No setoff, counterclaim, deduction, reduction, or diminution of any obligation, or any defense of any kind or nature which CompuCredit has or may have against Borrower or Agent or Lenders shall be available hereunder to CompuCredit.

12.           Representations and Warranties.  CompuCredit hereby represents and warrants as follows:

(a)           This Agreement has been duly executed and delivered by CompuCredit and constitutes his lawful, binding and legally enforceable obligation.

(b)           There is no pending or threatened action or proceeding affecting CompuCredit before any court, governmental agency or arbitrator which may materially adversely affect the financial condition of CompuCredit.

13.           Covenants.  CompuCredit covenants and agrees that, so long as any part of the Obligations shall remain unpaid:

(a)           CompuCredit shall furnish Agent, in accordance with Section 6.2 of the Loan Agreement, annual financial statements for CompuCredit.

(b)           CompuCredit shall prepare and timely file all federal, state, and local tax returns required to be filed by CompuCredit.

14.           Addresses for Notices.  All requests, consents, notices and other communications required or permitted hereunder or in connection herewith shall be deemed satisfactorily given if in writing and delivered personally or by registered or certified mail, postage pre-paid, by reliable overnight courier, or by telecopier to the parties at their respective addresses set forth below or at such other address as may be given by any party to the other in writing in accordance with this Section 14:

	
If to CompuCredit:

	
CompuCredit Holdings Corp.

	
  

	
Five Concourse Parkway, Suite 400

	
  

	
Atlanta, Georgia 30328

	
  

	
Attn: Rohit Kirpalani, General Counsel

	
  

	
Facsimile: (770) 870-5110

 

  

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If to Borrower:                                           CAR Financial Services, Inc.

Five Concourse Parkway, Suite 400

Atlanta, Georgia 30328

Attn: Mr. Rick Potter, President and Chief Executive Officer

Facsimile: (678)-593-1385

With a copy to:                                                      CompuCredit Holdings Corp.

Five Concourse Parkway, Suite 400

Atlanta, Georgia 30328

Attn: Rohit Kirpalani, General Counsel

Facsimile: (770) 870-5110

If to Agent:                                Wells Fargo Preferred Capital, Inc.

800 Walnut Street

Des Moines, Iowa 50309

       Attn: Mr. Casey P. Johnson, Senior Vice President

Facsimile: (515) 557-5035

15.           Continuing Agreement; Transfer of Notes.  This Agreement shall (a) remain in full force and effect until the Obligations shall have been paid in full and the period during which any payment by Borrower or CompuCredit is or may be subject to avoidance or refund under the United States Bankruptcy Code (or any similar statute) shall have expired, (b) be binding upon CompuCredit and its successors and assigns, and (c) inure to the benefit of, and be enforceable by Agent, Lenders and their successors, transferees and assigns.  Without limiting the generality of the foregoing clause (c), Lenders may endorse, assign or otherwise transfer the Notes to any other Person and such other Person shall thereupon become vested with all the rights in respect thereof granted to Agent herein or otherwise.

16.           Entire Agreement.  This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

17.           Severability.

(a)           The invalidity or unenforceability of any one or more portions of this Agreement shall not affect the validity or enforceability of the remaining portions of this Agreement.

(b)           CompuCredit and Agent agree that in an action or proceeding involving any state or federal Bankruptcy, insolvency or other law affecting the rights of creditors generally:

(i)           If any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Agreement in any jurisdiction.

(ii)           If the agreements hereunder by CompuCredit would be held or determined to be void, invalid or unenforceable on account of the amount of its aggregate liability under this Agreement, then, notwithstanding any other provision of this Agreement to the contrary, the aggregate amount of such liability shall, without any further action by CompuCredit, Agent or any other person, be automatically limited and reduced to the highest amount which is valid and enforceable as determined in such action or proceeding.

18.           Counterparts.  This Agreement may be executed by CompuCredit in several separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Signature by facsimile or electronic transmission shall bind the parties hereto.

19.           Governing Law.  This Agreement shall be deemed to be a contract under the laws of the State of Iowa and for all purposes, together with all matters arising hereunder or related hereto, shall be governed by and construed in accordance with such laws.

 

  

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20.           Arbitration.

(a)           Any arbitration proceeding will (i) proceed in a location in Iowa selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration as required by this Agreement shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

(b)           The arbitration requirement does not limit the right of Agent to (i) exercise any rights and remedies against Borrowers, the Collateral or any Person guarantying the Obligations; (ii) exercise self-help remedies relating to Collateral or proceeds of Collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. 

(c)           Any arbitration proceeding in which the amount in controversy is $5,000,000 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.  Any dispute in which the amount in controversy exceeds $5,000,000 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State of Iowa or a neutral retired judge of the state or federal judiciary of Iowa, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of Iowa and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Iowa Rules of Civil Procedure or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. 

(d)           In any arbitration proceeding, discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.

(f)           No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

(g)           To the extent that the arbitrator has determined that:

(i)           CompuCredit is obligated to Agent and Lenders pursuant to Section 2 of this Agreement in an amount equal to or greater than fifty percent (50%) of the amount demanded by Agent and Lenders upon commencement of the arbitration proceeding, CompuCredit shall be responsible for all costs and expenses of the arbitration proceeding, including all costs and expenses incurred by Agent and Lenders in connection with the arbitration proceeding (other than attorneys’ fees and disbursements).

(ii)           CompuCredit is not obligated to Agent and Lenders pursuant to Section 2 of this Agreement in an amount less than fifty percent (50%) of the amount demanded by Agent and Lenders upon commencement of the arbitration proceeding, Lenders shall be responsible for all costs and expenses of the arbitration proceeding, including all costs and expenses incurred by CompuCredit in connection with the arbitration proceeding (other than attorneys’ fees and disbursements).

Notwithstanding the foregoing and regardless of the determination of the arbitrator, CompuCredit, Agent and Lenders shall each be responsible for the attorneys’ fees and disbursements of their respective counsel in connection with the arbitration proceeding.

                (h)          To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  This arbitration provision shall survive termination, amendment or expiration of any of this Agreement or any relationship between the parties.

21. Acknowledgement of Receipt.  CompuCredit acknowledges receipt of a copy of this Agreement, each Credit Document and each other document and agreement executed by the Borrower in connection with the Obligations.

22. Trigger Events.  For purposes hereof, each of the following shall constitute a trigger event (each a “Trigger Event”): (a) any Borrower, any employee of any Borrower at the direction of an officer or director of any Borrower or any officer or director of any Borrower commits a fraudulent or criminal act in their dealings with Agent and/or any Lender, (b) any Borrower, any employee of any Borrower at the direction of an officer or director of any Borrower or any officer or director of any Borrower knowingly and intentionally makes a material misrepresentation or fails to disclose a material fact to Agent which would in either case reflect a material adverse change in the business, operations, Receivables or financial condition of any Borrower, (c) any Borrower, any employee of any Borrower at the direction of an officer or director of any Borrower or any officer or director of any Borrower knowingly and intentionally impedes or interferes with Agent in a material manner in connection with the enforcement of Agent’s security interest in and Lien upon the Receivables and Books and Records relating thereto, (d) any Borrower knowingly and intentionally fails to comply in any material respect with any provision contained in Article 7 of the Loan Agreement, or (e) any Borrower, any employee of any Borrower at the direction of an officer or director of any Borrower or any officer or director of any Borrower misapplies (in contravention of the Credit Documents), misappropriates or converts any proceeds of Receivables (including Collections).

 

 

  

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SIGNATURE ON FOLLOWING PAGE

Dated the date and year first set forth above

IMPORTANT:  READ BEFORE SIGNING.  THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.  NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.  YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

COMPUCREDIT HOLDINGS CORPORATION

By:           /s/J Paul Whitehead, III

Name:           J Paul Whitehead, III

Title:           Chief Financial Officer

 

 

 

5FBN-EX.10.22_2011.12.31_Q4 (1)

Exhibit 10.22

FURNITURE BRANDS INTERNATIONAL, INC.
SHORT-TERM INCENTIVE PLAN
(Executive Leadership Team)

1.    Purpose.  The Furniture Brands International, Inc. Short-Term Incentive Plan (the “STIP”) is a performance-based incentive program. The purpose of the STIP is to reward eligible employees of Furniture Brands International, Inc. and its participating wholly-owned subsidiaries (collectively, the “Company”) for sustained Company financial performance. The STIP is established under, and constitutes a part of, the 2010 Omnibus Incentive Plan (the “Plan”), which Plan was previously approved by stockholders. 

2.    Performance Period.  The Company's 20__ fiscal year shall constitute the performance period (the “Performance Period”) for the purpose of determining Awards payable to Participants in the STIP. 

3.    Eligible Employee.  Executive Leadership Team members (ELT) that are designated by the Administrator for participation in the STIP (“Participants”).  Designation of an individual as eligible for participation in the STIP does not guarantee the right to receive any incentive award at the end of the Performance Period, the right to continued employment, nor the assurance of participation in future incentive plans. 

4.    STIP Structure

4.1.Company Goals. The STIP financial performance goals are approved by the Committee and designed to reward participants for the achievement of Net Earnings and Net Sales targets.  The financial components of STIP will only payout if the Company's Net Earnings threshold is met or exceeded.  If threshold Net Earnings is not achieved, no payout of the financial components will occur to any individual under the STIP, regardless of performance in other areas.  Payout of the Individual Objectives Component may be earned based on employee performance on individual objectives.

4.2.Funding

(a)If threshold Net Earnings is achieved, the Committee will determine funding of the financial component of the award pool based on the achievement of the performance goals. The weighting of the financial performance measures for ELT are described below. If the Net Earnings threshold is not met, the Individual Objectives component may be paid based on employee performance on individual objectives. For funding of each financial performance component, the relationship between results achieved and payout is linear between a threshold and 100% plan target, and again between 100% plan target and the performance maximum.  Below the threshold, payout is zero.  Above the performance maximum, payout is 200%.  For actual results within the performance range, the payout factor will be interpolated.  Below is the payout factor for each financial performance component depending on whether threshold, target or maximum performance goals are achieved. STIP funding will be determined by the Committee following completion of the Performance Period. 

	
							
	 
	 
	Threshold
	 
	Target
	 
	Maximum

	Financial Performance Component:
	 
	Payout Factor
	 
	Payout Factor
	 
	Payout Factor

	Net Earnings
	 
	___%
	 
	100%
	 
	200%

	Net Sales
	 
	___%
	 
	100%
	 
	200%

Once funding has been determined, management, in its sole discretion, will recommend for Committee approval an allocation to the business units on the basis of relative contribution to overall Company results. 

Corporate Executives Measures/Weighting:  The performance measures for Corporate Executives are Net Earnings (___%), Net Sales (___%) and Individual Objectives (___%).  If the Company's Net Earnings threshold is met, below is the Corporate Executives payout factor for each financial performance component depending on whether threshold, target or maximum performance goals are achieved.

	
							
	 
	 
	Threshold
	 
	Target
	 
	Maximum

	Financial Performance Component:
	Weight
	Payout Factor
	 
	Payout Factor
	 
	Payout Factor

	Company Net Earnings
	___%
	___%
	 
	100%
	 
	200%

	Company Net Sales
	___%
	___%
	 
	100%
	 
	200%

Brand Executives Measures/Weighting:  The performance measures for Brand Executives are Company Net Earnings (___%), Company Net Sales (___%), Brand Pretax Earnings (___%) and Individual Objectives (___%).  If the Company's Net Earnings threshold is met, below is the payout factor for each performance component depending on whether threshold, target or maximum performance goals are achieved. 

	
							
	 
	 
	Threshold
	 
	Target
	 
	Maximum

	Financial Performance Component:
	Weight
	Payout Factor
	 
	Payout Factor
	 
	Payout Factor

	Company Net Earnings
	___%
	___%
	 
	100%
	 
	200%

	Company Net Sales
	___%
	___%
	 
	100%
	 
	200%

	Brand Pretax Earnings
	___%
	___%
	 
	100%
	 
	200%

 
4.3.Payout Formula.  Subject to the attainment of the Company's Net Earnings threshold for the financial components, the amount of the Award that each Participant shall be eligible to receive shall be based on the following formula: 

Corporate Executive

Annual Base Salary x Annual Incentive Target = Target Award
(Target Award x ___% (weighting)) x Company Net Earnings Payout Factor = Net Earnings Award 
(Target Award x ___% (weighting)) x Company Net Sales Payout Factor = Net Sales Award 
(Target Award x ___% (weighting)) x Individual Objectives = Individual Objectives Award 

Net Earnings Award + Net Sales Award + Individual Objectives Award = Award 

Brand Executive

Annual Base Salary x Annual Incentive Target = Target Award 
(Target Award x ___% (weighting)) x Company Net Earnings Payout Factor = Net Earnings Award 
(Target Award x ___% (weighting)) x Company Net Sales Payout Factor = Net Sales Award 
(Target Award x ___% (weighting)) x Brand Pretax Earnings = Brand Pretax Earnings Award
(Target Award x ___% (weighting)) x Individual Objectives = Individual Objectives Award 

Net Earnings Award + Net Sales Award + Brand Pretax Earnings Award + Individual Objectives Award = Award

4.4.Administrator Discretion. The Administrator shall have the sole discretion to establish the amount of any Award payable to any Participant and whether to make any Awards even if financial performance goals and specific Individual Objectives are achieved.  In no event may the Administrator increase any Award for a Participant beyond the maximum award payable; and provided further that in no event will positive discretion be applied to any Award made to a “covered employee” (as defined unde

r Code Section 162(m) and the regulations issued thereunder). Achievement of the performance goals is not a guarantee of payment of any Award.

5.    Distribution. Subject to termination of this STIP as set forth herein and termination of the Participant's employment, the Awards that are payable under the STIP, based on the payout formula described in Section 4, shall be distributed within two and one-half (2 1/2) months of the end of the fiscal year; provided, however, that no distribution, including any distribution that may be made pursuant to Section 6, shall be made hereunder until after the Committee has certified the attainment of the performance goals following the end of the Performance Period and the Administrator has determined the amount to be paid to each Participant. Notwithstanding anything herein to the contrary, such distributions shall be made no later than required by Code Section 409A to avoid treatment of the STIP as a deferred compensation plan under Code Section 409A. The date as of which payment is made in accordance with this Section is referred to herein as the “Payment Date.” 

6.    Changes in Employment Status. 

6.1.New Hires. The Administrator shall determine whether and when an employee who is a new hire is eligible to participate in the STIP. The terms and conditions of any Award for such an individual shall be (i) based on the Annual Incentive Target for the new hire's Assignment and (ii) subject to a fraction, the numerator of which is the number of full months on active payroll (except as otherwise provided herein) during the Performance Period that the Eligible Employee was a Participant in the STIP and the denominator of which is the number of full months in the Performance Period.

6.2.Promotions/Demotions. If a Participant is promoted or demoted during the Performance Period, the Award for such an individual shall be based on the Annual Incentive Target for the Assignment at the end of the Performance Period. The award will be determined on the basis of the number of full months during the Performance Period that the individual was a Participant in the STIP. Notwithstanding the foregoing, in no event will positive discretion be applied to any Award made to a “covered employee” (as defined under Code Section 162(m) and the regulations issued thereunder). 

6.3.Transfers.  If a Participant transfers during the Performance Period from an incentive-eligible position to another incentive-eligible position, the Participant's participation in the STIP will continue uninterrupted.  If such Participant transfers from one business unit to another business unit during the Performance Period and prior to the end of the Company's third quarter, the Award for such individual will be pro-rated, whereby the Award for the new Assignment at the new business unit will apply to the remainder of the Performance Period and will be paid by the new business unit based on such unit's funding level, and the Award for the immediately preceding incentive-eligible Assignment at the old business unit will apply to the portion of the Performance Period immediately preceding such transfer and will be paid by the old business unit based on such unit's funding level. In the event of a transfer to a new business unit after the end of the Company's third quarter, the performance of the old business unit will be applied for the full Performance Period.

6.4.Terminations.  If a Participant incurs a termination of employment before the Payment Date, the effect of termination of employment on a Participant's right to receive an Award under the STIP shall depend on the reason for the termination. Any Award payable under this Section 6.4 shall be payable in accordance with the Company's Executive Severance Plan or other applicable binding written agreement with the Company in effect at the time of the termination of employment. 

6.5.Leave of Absence.  In the event that a Participant is on an unpaid Company approved leave of absence any time during the Performance Period or at the time of the Payment Date, such Participant shall be entitled to a distribution of the Award, in accordance with Section 5, that would otherwise be payable to the Participant pro-rated based upon a fraction, the numerator of which is the number of full months worked on active payroll in a STIP eligible Assignment during the Performance Period and the denominator of which is the number of full months in the Performance Period. In the event that a Participant is on a leave of absence due to short-term disability any time during the Performance Period, th

e period of time on short-term disability shall be treated as time on active payroll and will be credited toward the determination of the Participant's Award and the Participant shall be entitled to payment of the Award in accordance with Section 5, even if the Participant is on the short-term disability leave of absence as of the Payment Date.

7.    Operation and Administration.

7.1    Plan Administration.  Except as otherwise expressly provided herein, full power and authority to interpret and administer the STIP is vested in the Committee. The Committee may from time to time make such decisions and adopt such rules and regulations for implementing the STIP as it deems appropriate for any Participant under the STIP. Any decision taken by the Committee arising out of or in connection with the construction, administration, interpretation and effect of the STIP shall be final, conclusive and binding upon all Participants and any person claiming under or through them.

7.2    Tax Withholding. All distributions under the STIP are subject to withholding of all applicable taxes. 

7.3.    Settlement of Awards. The obligation to make payments and distributions with respect to Awards shall be satisfied through delivery of cash. Satisfaction of any such obligations under an Award, which is sometimes referred to as the “settlement” of the Award, may be subject to such conditions, restrictions and contingencies as the Administrator shall determine. Each business unit shall be liable for payment of cash due under the STIP with respect to any Participant to the extent that such benefits are attributable to the services rendered for that business unit by the Participant. Any disputes relating to liability of a business unit for cash payments shall be resolved by the Administrator.
 
7.4.     Transferability. Awards under the STIP are not transferable except as designated by the Participant by will or by the laws of descent and distribution.
 
7.5.    Limitation of Implied Rights.  Neither a Participant nor any other person shall, by reason of participation in the STIP, acquire any right in or title to any assets, funds or property of the Company, including, without limitation, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability under the STIP. A Participant shall have only a contractual right to the cash, if any, payable under the STIP, unsecured by any assets of the Company, and nothing contained in the STIP shall constitute a guarantee that the assets of the Company shall be sufficient to pay any benefits to any person. The STIP does not constitute a contract of employment, and status as a Participant shall not give any individual the right to be retained in the employ of the Company, nor any right or claim to any benefit under the STIP, unless such right or claim has specifically accrued and vested under the terms of the STIP.
 
		
	8.
	Amendment.  The Committee may amend the STIP unilaterally if the Committee determines that amendment is necessary to assure that Awards paid to “covered employees” (as defined under Code Section 162(m) and the regulations issued thereunder) under the STIP constitutes qualified performance-based compensation under Code Section 162(m).  The Committee also may amend the STIP unilaterally in any way if the Committee determines that such amendment (i) is not contrary to the terms of the Plan, (ii) does not require shareholder approval, and (iii) would not jeopardize qualification of Awards to covered employees under the STIP as performance-based compensation under Code Section 162(m).

		
	9.
	Change in Control.  In the event of any Corporate Transaction (as defined in the Plan), the Committee can make any adjustments to the STIP that are deemed appropriate to reflect the Corporate Transaction, in its sole discretion, unless the Participant has a written agreement binding on the Company that provides otherwise. 

		
	10.
	Recoupment.  Any payouts under this STIP are subject to the Company's Incentive Recoupment Policy which was effective January 1, 2010, as such policy may be amended from time to time in the sole discretion of the Board.

		
	11.
	Definitions. In addition to the other definitions contained herein, the following definitions shall apply: 

  
(a)Administrator shall mean the Committee.
(b)Annual Incentive Target refers to the percentage of a Participant's rate of base pay during the Performance Period, which percentage shall be based on the Participant's Assignment, the competitive marketplace and shall be established by the Committee.
(c)Assignment refers to a Participant's position or location and/or business unit.  
(d)Award shall mean a cash payment made to a Participant pursuant to the STIP. 
(e)Board means the Board of Directors of the Furniture Brands International, Inc.
(f)Brand Executive means those Executives employed by a wholly-owned subsidiary of Furniture Brands International, Inc.  
(g)Committee refers to the Human Resources Committee of the Board of Directors of Furniture Brands International, Inc.
(h)Code means the Internal Revenue Code of 1986, as amended from time to time (and the regulations issued thereunder). A reference to any provision of the Code shall include reference to any successor provision of the Code (and the regulations issued thereunder).
(i)Corporate Executive means those Executives employed by Furniture Brands International, Inc.
(j)Executive refers to any member of the Company's Executive Leadership Team. 
(k)Individual Objectives shall mean the individual performance objectives established early each year by Participants and their managers.
(l)Net Earnings shall mean the Company's net earnings, inclusive of STIP and LTIP expenses, from the statement of operations filed with the SEC, adjusted for unusual or infrequent items as set forth in the Plan. 
(m)Net Sales shall mean the Company's net sales from the statement of operations filed with the SEC, adjusted for unusual or infrequent items as set forth in the Plan. 
(n)Participant shall mean any employee of the Company who is eligible to participate in the STIP in accordance with Section 3.

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