Incentive Share Award Agreement - Herman Miller Inc. and Michael A. Volkema
INCENTIVE SHARE AWARD AGREEMENT
AGREEMENT Made as of May 15, 1996, by HERMAN MILLER, INC., a Michigan
corporation (the 'Company'), and MICHAEL A. VOLKEMA (herein called 'Mr.
A. Mr. Volkema is the president, chief executive officer, and a director
of the Company.
B. To provide an incentive to Mr. Volkema, the Company's Board of
Directors has elected to award Mr. Volkema shares of common stock of the
Company under the terms of the Company's Long-Term Incentive Plan (the 'Plan').
C. The award of Restricted Stock (as defined in the Plan) to Mr. Volkema
is subject to the terms and restrictions of the Plan and this Agreement,
including the automatic reversion to the Company of some or all of the shares
if Mr. Volkema does not continue to serve the Company as an officer or director
for the period specified herein.
D. Mr. Volkema has accepted the grant of shares upon the terms,
restrictions and conditions of this Agreement.
E. The parties desire to confirm in this Agreement the terms, conditions
and restrictions applicable to the grant of shares.
NOW, THEREFORES the parties agree as follows:
1.1 'Affiliated Employer' means any entity controlling, controlled by or
under common control with the Company.
1.2 'Board' means the Board of Directors of the Company.
1.3 'Bonus Payout Percentage' means the percentage which results from
dividing the actual bonus earned by Mr. Volkema in a particular fiscal year
under the Company's Executive Incentive Plan for that year by his Bonus
Potential (at 100 percent, as defined in such plan) for such year.
1.4 'Cornmon Stock' means the common stock of the Company, par value $.20
1.5 'Company' means Herman Miller, Inc., a Michigan corporation, its
successors and assigns.
1.6 'Executive Incentive Plan' means the Company's officers' executive
incentive plan approved and adopted by the Board with respect to each fiscal
year of the Company.
1.7 'Fiscal year' means the year ending the Saturday nearest the end of
May of each year, or such other fiscal year as may be adopted for the Company
by the Board.
1.8 'Plan' means the Company's Long-Term Incentive Plan, as approved by
the Company's shareholders on October 6, 1994.
1.9 'Restricted Share' means a Share which is subject to the restriction
on sale, pledge or other transfer imposed by Section 3.1. An 'Unrestricted
Share' is a Share which is no longer a Restricted Share.
1.10 'Reverted Shares' means Unvested Shares which have reverted to the
Company pursuant to Sections 5.7 and 5.8.
1.11 'Shares' means the shares of Common Stock awarded, issued and
delivered to Mr. Volkema under this Agreement. If, as a result of a stock
split, stock dividend, combination of stock, or any other change or exchange of
securities, by reclassification, reorganization, recapitalization or otherwise,
the Shares shall be increased or decreased, or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or another corporation, the term 'Shares' shall mean and include the shares of
stock or other securities issued with respect to the Shares.
1.12 'Silver Parachute Plan' means the Herman Miller, Inc., Plan for
Severance Compensation After Hostile Takeover, as amended and restated as of
January 17, 1990, and as it may thereafter be amended.
1.13 'Vested Percentage' means the percentage of Shares which have become
Vested Shares pursuant to Section 5.4.
1.14 'Vested Shares' and 'Unvested Shares' shall have the meanings
expressed in Section 5.3.
2. GRANT AND ACCEPTANCE OF AWARD
2.1 Grant. The Company confirms that on May 15, 1996, as authorized by the
Board, Mr. Volkema was awarded twenty thousand (20,000) shares of Common Stock
(the 'Shares') pursuant to the Plan.
2.2 Acceptance. Mr. Volkema confirms that he has accepted the award of
Shares and agrees to hold them subject to the terms, conditions and limitations
of the Plan and this Agreement.
2.3 Tax Election. Mr. Volkema agrees to elect to be taxed in 1996 on the
fair market value of the Shares awarded to him, and agrees to sign an election
to be so taxed under Section 83(b) of the Internal Revenue Code. Mr. Volkema
agrees to file such election on or before thirty (30) days from the date
Mr. Volkema confirms his understanding that, having made the election
under Section 83(b) to be taxed in 1996 on the value of the Shares, if any of
the Shares shall revert to the Company pursuant to Sections 5.7 and 5.8, the
effect will be that he will have paid tax as if he had retained such Shares but
will have been denied the right to retain them.
2.4 Withholding. Mr. Volkema recognizes that the Company is required by
federal regulations to deduct and withhold income taxes at the rate of 28
percent of the market value of the Shares, and to pay the tax in money at the
time or times the payroll deposit is due with respect to such income. The
Company has offered to withhold 28 percent of the Shares (5,600 shares) and
the amount to be withheld. Mr. Volkema has accepted such offer rather than pay
to the Company in cash the full amount to be withheld. Accordingly, Mr.
Volkema will receive a certificate for 14,400 Shares and the Company will pay
the requisite withholding tax. Mr. Volkema is responsible to pay when due all
income taxes on the fair market value of the Shares in excess of the amount
which is withheld.
3. RESTRICTIONS ON TRANSFER OF SHARES: LAPSE OF RESTRICTIONS
3.1 Transfer Prohibition. Mr. Volkema shall not sell any Share, pledge any
Share or otherwise transfer any Share or any interest in any Share if such
Share is a Restricted Share.
3.2 Restricted Shares. Every Share shall be a Restricted Share until the
Share shall no longer be deemed to be a Restricted Share as provided in Section
3.3 Securities Law Compliance. Mr. Volkema shall not sell or transfer any
Share or any interest in any Share, whether such Share is or is not a
Restricted Share, unless either (a) the Company shall consent in writing to
such transfer, or (b) the Company shall have received an opinion of counsel
reasonably satisfactory to the Company to the effect that such transfer will
not violate the registration requirements imposed by the Securities Act of 1933
or any other provision of law which the Company shall desire such opinion to
3.4 Legend. Every certificate representing a Share shall at all times bear
the following legend:
'The Shares represented by this certificate are subject to certain
restrictions and prohibitions and to the rights of Herman Miller, Inc. (the
'Company'), as set forth in an Incentive Share Grant Agreement dated May 15,
1996 ('Agreement'), between the Company and Michael A. Volkema, including but
not limited to: ( 1) the Company's right to acquire absolute ownership of some
or all of these Shares upon their reversion to the Company; (2) a prohibition
against any transfer of any interest in these Shares without the Company's
consent while these Shares remain Restricted Shares under the Agreement; and
(3) a prohibition against transfer of any interest in these Shares except in
compliance with requirements imposed by the Securities Act of 1933. No interest
in these Shares may be transferred without compliance with the requirements in
3.5 Stop Transfer Instructions. The Company shall have the right to issue
instructions to the transfer agent for the shares of the Company, prohibiting
transfer of any Shares except in accordance with the requirements of this
3.6 Unrestricted Shares. A Share shall no longer be deemed to be a
Restricted Share if:
a. The Company stipulates in writing that the Share is no longer a
b. The Share is or becomes a Vested Share as of the end of the Company's
fiscal year ending in the year 2001.
c. The Share becomes a Vested Share as of the end of the Company's fiscal
year ending in the year 2002.
d. The Share becomes a Vested Share pursuant to Section 5.6(c), (d), or
A Share which is no longer deemed to be a Restricted Share shall be an
3.7 New Certificate for Unrestricted Shares. If Mr. Volkema holds
certificates representing Shares which are no longer Restricted Shares, Mr.
Volkema shall be entitled to receive from the Company, in exchange therefor, a
certificate representing such Unrestricted Shares, bearing a legend, if the
Company shall deem such a legend to be appropriate, only to the effect that the
transfer of such Shares is prohibited if it would violate the Securities Act of
1933. If the certificate held by Mr. Volkema represents both Restricted and
Unrestricted Shares, he shall be entitled to receive two certificates in
exchange therefor, one of which shall represent the Restricted Shares and one
of which shall represent Unrestricted Shares.
3.8 Rights as Stockholder. Except for the restrictions imposed in this
Article 3, and unless the Shares have reverted to the Company pursuant to
Sections 5.7 and 5.8, Mr. Volkema shall have all the rights as a stockholder
with respect to the Restricted Shares, including the right to vote and to
receive the dividends declared and paid thereon.
4. ACQUISITION WARRANTIES
In order to induce the Company to issue and deliver the Shares on the
terms of this Agreement, Mr. Volkema warrants to and agrees with the Company as
4.1 No Participating Interest. Mr. Volkema is acquiring the Shares for his
own account. He has not made any arrangement or commitment to convey any
interest in the Shares to any person, other than to transfer Reverted Shares to
the Company pursuant to Section 5.8 of this Agreement.
4.2 Ability to Evaluate. Because of his knowledge and experience in
financial and business matters, Mr. Volkema is capable of evaluating the merits
and risks of acquiring the Shares under the arrangements prescribed by this
4.3 Familiarity with Company . Mr. Volkema is familiar with the business,
properties, financial condition, liabilities, shares, earnings, prospects and
operations of the Company. He confirms that the Company has not made any
representation, warranty or agreement regarding the foregoing matters, the
merits of the arrangements made pursuant to this Agreement, or any other matter
except as expressly indicated in this Agreement.
4.4 All Ouestions Answered.. Mr. Volkema thoroughly understands all the
terms of this Agreement, the actions which may be taken under this Agreement,
and the consequences such actions might have for him. He confirms there are no
questions relating to any such matters which have not been answered to his
4.5 Agreement Binding and Enforceable. Mr. Volkema intends and agrees that
every provision in this Agreement shall be binding upon and enforceable against
him in accordance with its terms.
5. VESTING AND REVERSION
5.1 General. In general, Shares shall vest in accordance with Section 5.4
and the table of vesting set forth in that section. Shares may also become
vested in accordance with Sections 5.5 and 5.6.
5.1 Vested Percentage. The 'Vested Percentage' of the Shares at any time
is the percentage of the Shares which have become vested pursuant to Section
5.3 Vested Shares. The number of vested shares ('Vested Shares') at any
time shall be the greater of (a) the number derived by multiplying the Vested
Percentage at that time by the number of Shares issued hereunder, or (b) the
number which have become vested pursuant to Sections 5.5 or 5.6.
5.4 Table of Vesting. The vesting of Shares shall be based upon the Bonus
Payout Percentage earned by Mr. Volkema under the Company's Executive Incentive
Plan for each of the fiscal years designated in the following table. The Vested
Percentage for the fiscal years ending in 1998, 1999, 2000, and 2001,
respectively, shall be based upon the sum of the bonus Payout Percentages
earned by Mr. Volkema for that year and for each of the fiscal years ended
prior to that date ('Cumulative Bonus Payout Percentage'), in accordance with
the following table of vesting:
Fiscal Year Bonus Payout The Vested
Ending In Percentage is Percentage is
------------- ------------- -------------
1997 100 or more 20
1998 200 or more 40
1999 300 or more 60
2000 400 or more 80
2001 500 or more 100
In any fiscal year ending in the years 1997 to 2001 inclusive, in which
Mr. Volkema's Vested Percentage does not increase by at least twenty (20)
percentage points in accordance with the foregoing table of vesting, his Vested
Percentage in that fiscal year shall increase by ten (10) percentage points.
No Shares shall be Vested Shares prior to the end of the Company's fiscal
year ending in 1997.
If the Shares are not 100 percent vested by the end of the Company's
fiscal year ending in the year 2001, the remainder of the Shares shall vest at
the end of the Company's fiscal year ending in the year 2002.
5.5 Acceleration of Vested Percentage. The Board shall have the right at
any time (but shall not be obligated) to increase the Vested Percentage under
this Agreement to 100 percent, or to any other percentage greater than would
otherwise apply under this Agreement. After any such action by the Board:
a. The Vested Percentage shall never be less than the percentage
designated by the Board; and
b. If the Vested Percentage is less than 100 percent, the Vested
Percentage shall increase at the end of each of the Company's fiscal years
thereafter in accordance with Section 5.4.
5.6 One Hundred Percent Vesting. All Shares issued hereunder shall become
a. If the Shares are 100 percent vested pursuant to Section 5.4.
b. If the Company so stipulates in writing.
c. Upon Mr. Volkema's death.
d. If Mr. Volkema's service to the Company both as an officer and as a
director ends at a time when he is permanently disabled, as determined by a
physician approved by the Board.
e. If Mr. Volkema's employment is voluntarily or involuntarily
terminated at a time when he is entitled to receive a severance benefit under
the Company's Silver Parachute Plan.
5.7 Reversion. All Unvested Shares shall automatically revert to the
Company at any time Mr. Volkema shall no longer be employed by the Company or
an Affiliated Employer for any reason whatsoever, including involuntary
termination without the consent of Mr. Volkema. Except as provided in Section
5.9, no compensation shall be payable to Mr. Volkema for shares which revert to
5.8 Effect of Reversion. Upon reversion of any Unvested Shares (a)
absolute ownership thereof shall automatically revert to the Company at that
time, (b) such Unvested Shares shall be deemed to be 'Reverted Shares' for
purposes of this Agreements (c) all Mr. Volkema's rights and interests in the
Reverted Shares shall cease at that time, and (d) Mr. Volkema shall be
obligated immediately to surrender to the Company the certificates representing
the Reverted Shares, but the failure to do so shall not impair the immediate
effect of clauses (a), (b) and (c) above.
5.9 Payment on Reversion. If Mr. Volkema's employment is terminated
involuntarily and without his consent, so that he is no longer employed by the
Company or an Affiliated Employer, and if Unvested Shares thereby revert to the
Company pursuant to Section 5.7, the Company shall pay Mr. Volkema $8.00 per
Reverted Share in full payment therefor. (This price is equal to 25 percent of
the fair market value of the Shares at the date (May 15, 1996) on which the
Shares were awarded to Mr. Volkema.) If, prior to the termination of Mr.
Volkema's employment, Shares of common stock of the Company are increased,
decreased or changed as a result of any event described in Section 1.11, the
stated price payable by the Company for the Reverted Shares shall be fairly
adjusted to reflect the effects of such an event.
6. MR. VOLKEMA'S UNDERSTANDINGS AND ACKNOWLEDGMENTS
6.1 Free Choice. Mr. Volkema understands, acknowledges and agrees that he
has no obligation to enter into this Agreement and that failure to do so will
not have any adverse consequences on his other compensation, position, job
responsibilities, or future prospects at the Company. Mr. Volkema has elected
to enter into this Agreement because he has concluded that the potential
benefits he could derive under this Agreement outweigh the risk of substantial
after-tax loss which could be realized if any Unvested Shares revert to the
Company or if the market value for the Shares declines substantially.
6.2 No Right to Employment. Neither the execution or delivery of this
Agreement nor any action taken by the Company under this Agreement nor any
course of dealing between the Company and Mr. Volkema, nor anything else,
shall limit or impair in any way the right of the Company to terminate Mr.
Volkema's employment at any time. He acknowledges that no one has
made any explicit or implicit promise that his employment relationship with the
Company will be continued for all or any part of the period required for all or
any part of the Shares to become Vested Shares.
7. INTERPRETATION OF THIS AGREEMENT
7.1 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be valid and enforceable, but if any
provision of this Agreement shall be held to be prohibited or unenforceable
under applicable law (a) such provision shall be deemed amended to accomplish
the objectives of the provision as originally written to the fullest extent
permitted by law, and (b) all other provisions of this Agreement shall remain
in full force and effect.
7.2 Captions. The captions used in this Agreement are for convenience
only, do not constitute a part of this Agreement and all of the provisions of
this Agreement shall be enforced and construed as if no captions had been
7.3 Complete Agreement. This Agreement contains the complete agreement
between the parties relating in any way to the subject matter of this Agreement
and supersedes any prior understandings, agreements or representations, written
or oral, which may have related to such subject matter in any way.
8. GENERAL PROVISIONS
a. Procedures Required. Each communication given or delivered under
this Agreement must be in writing and may be given by personal delivery or by
registered or certified mail. A written communication shall be deemed to have
been given on the date it shall be delivered to the address required by this
b. Communications to Company. Communications to the Company shall be
addressed to it at the principal corporate headquarters (which on the date
hereof were located at 855 East Main Avenue, Zeeland, Michigan) and marked to
the attention of the Company's chairman of the Board; or, if Mr. Volkema
becomes chairman of the Board, to the attention of the Company's general
counsel; if, prior to the issuance of such notice, the Company shall have
given notice to Mr. Volkema that communications to the Company should be
directed to a different address or to the attention of a different officer,
then such communication shall be addressed in the manner most recently
c. Communications to Mr. Volkema. Every communication to Mr. Volkema
shall be addressed to him at the address given immediately below his signature
to this Agreement, provided that, if, prior to the issuance of such notice, he
shall have given the Company notice that communications to him should be
directed to a different address, then such communication shall be addressed to
the address which shall most recently have been so specified.
8.2 Assignment. This Agreement is not assignable by Mr. Volkema during
his lifetime. This Agreement shall be binding upon and inure to the benefit of
(a) the successors and assigns of the Company, and (b) any person to whom Mr.
Volkema's rights under this Agreement may pass by reason of his death.
8.3 Amendment. This Agreement may be amended or modified in any manner
whatsoever or terminated by written agreement between the Company and Mr.
VoLlcema. No course of dealing between the parties shall be deemed effective
to modify, amend or terminate any part of this Agreement or any rights or
obligations of either party hereunder.
8.4 Waiver. No delay or omission in exercising any right hereunder
shall operate as a waiver of such right or of any other right hereunder. A
waiver upon any one occasion shall not be construed as a bar or waiver of any
right or remedy on any other occasion. All of the rights and remedies of the
parties hereto, whether evidenced hereby or granted by law, shall be
8.5 No Oral Commitments. No amendment, modification or termination of
this Agreement under Section 8.3 and no waiver under this Agreement under
Section 8.4 shall be effective or enforceable unless it is set forth in
writing and signed by both parties.
8.6 Counterparts. Two or more duplicate originals of this Agreement may
be signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same agreement.
8.7 Choice of Law. This Agreement shall be deemed to be a contract made
under the laws of the State of Michigan and for all purposes shall be
construed in accordance with and governed by the laws of the state of Michigan
or applicable federal law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HERMAN MILLER, INC.
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Michael A. Volkema David L. Nelson
Its Chairman of the Board
283 Whispering Way
Holland, Michigan 49424