Exhibit 10.87
SUPPLEMENT A
TO EMPLOYMENT AGREEMENT AND
TO SUPPLEMENTAL RETIREMENT BENEFITS AGREEMENT
This document constitutes Supplement A to both the Employment Agreement dated
March 31, 1992, as amended, between Chromcraft Revington, Inc. and Xxxxxxx X.
Xxxxxx and the Supplemental Retirement Benefits Agreement dated August 21, 1992,
as amended, between Chromcraft Revington, Inc. and Xxxxxxx X. Xxxxxx.
THIS SUPPLEMENT A TO THE EMPLOYMENT AGREEMENT AND TO THE SUPPLEMENTAL
RETIREMENT BENEFITS AGREEMENT (the "Supplement"), both of such agreements being
between Chromcraft Revington, Inc. and Xxxxxxx X. Xxxxxx, is made and entered
into as of the 3rd day of March, 2004 by and between CHROMCRAFT REVINGTON, INC.
(the "Company"), a Delaware corporation, and XXXXXXX X. XXXXXX (the
"Executive"), a resident of the State of Indiana,
WITNESSETH:
WHEREAS, the Executive is currently employed by the Company in accordance
with an Employment Agreement dated March 31, 1992 (the "Original Employment
Agreement"), as amended by Amendment No. 1 to Employment Agreement dated March
15, 2002 between the Company and the Executive; this Supplement, upon execution
and delivery by the parties, shall be attached to the Original Employment
Agreement and shall supplement and further amend the Original Employment
Agreement as provided herein (the Original Employment Agreement, as amended by
Amendment No. 1 thereto and as supplemented and amended hereby is referred to
herein as the "Employment Agreement"); and
WHEREAS, Section 4 of the Employment Agreement includes a provision for a
supplemental retirement benefit per year for the Executive upon his retirement
on or after attaining age sixty-five (65), which shall be funded by the Company
and which shall be offset by certain employer-provided benefits as provided in
this Supplement (the "SERP Benefit"); and
WHEREAS, the Company and the Executive also entered into a Supplemental
Retirement Benefits Agreement dated August 21, 1992, as amended by the First
Amendment to Supplemental Retirement Benefits Agreement dated March 15, 2002;
this Supplement, upon execution and delivery by the parties, shall be attached
to the Supplemental Retirement Benefits Agreement and shall supplement and
further amend the Supplemental Retirement Benefits Agreement as provided herein
(the Supplemental Retirement Benefits Agreement, as amended by the First
Amendment thereto and as supplemented and amended hereby is referred to herein
as the "SERP Agreement"); and
WHEREAS, the SERP Agreement provides for the purchase by the Company of a
life insurance policy to fund supplemental retirement (including the SERP
Benefit) and death benefits for the Executive, which policy is owned by the
Executive and, in connection therewith, the premiums on such policy are paid by
the Company; and
WHEREAS, the Employment Agreement and the SERP Agreement are collectively
referred to herein as the "Agreements"; and
WHEREAS, the Company and the Executive have determined that the retirement
benefit and certain other provisions of the Agreements are inconsistent and
outdated, lack clarity and/or are inadequate to enable them to determine the
form, time of payment, amount and funding status of the retirement benefits
provided for in the Agreements without supplementing and amending such
Agreements with this Supplement; and
WHEREAS, the Company and the Executive have determined that it is in their
mutual best interests to supplement and amend the Agreements as provided in this
Supplement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants, agreements and obligations contained herein, the continued employment
of the Executive by the Company pursuant to the Employment Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Executive, each intending to be legally
bound, hereby agree as follows:
Section 1. Form and Time of Payment of SERP Benefit. Subject to the terms
and limitations of this Supplement, the SERP Benefit payable to the Executive
shall be an annual annuity for the Executive's lifetime commencing on the first
day of the sixth month following the first month in which (a) the Executive is
age sixty-five (65) (his "Normal Retirement Age") or older, and (b) the
Executive's employment with the Company is terminated, or has previously been
terminated, for any reason other than termination by the Company with cause (as
defined in the Employment Agreement). If the Executive's employment is
terminated by the Company with cause (as defined in the Employment Agreement),
whether before or after his Normal Retirement Age, then no SERP Benefit shall be
paid to the Executive as provided in Section 9 of this Supplement. If the
Executive's employment is terminated for any reason other than by the Company
with cause (including, without limitation, by death) prior to the time that
payment of the SERP Benefit commences, then the SERP Benefit shall be
calculated, funded and paid in accordance with the provisions of Sections 5, 6,
7 or 8 hereof, whichever may be applicable. The SERP Benefit shall be paid to
the Executive in equal semi-annual installments of one-half (-1/2) of the annual
SERP Benefit commencing as provided in the first sentence of this Section 1 and
continuing every six (6) months thereafter until the Executive's death. In all
cases, the SERP Benefit shall end on the date of the Executive's death, at which
time the SERP Benefit shall immediately cease and no further SERP Benefit shall
be paid.
Example:
Assuming that the Executive attained age 65 in January of a particular year,
that the Executive retired from the Company on March 7 of the same year and that
the annual SERP Benefit was $200,000, then the first installment equal to
$100,000 would be payable on September 1 of that year. The second installment
equal to $100,000 would be payable on March 1 of the following year. Subsequent
installments of $100,000 each would be payable on each September 1 and March 1
thereafter until the Executive's death, at which time the SERP Benefit shall
immediately cease.
Section 2. Amount of SERP Benefit. Subject to the last sentence of this
Section 2, the amount of the "SERP Benefit" is the amount, if greater than zero,
equal to sixty percent (60%) of the Executive's SERP Compensation (as
hereinafter defined) reduced by (a) the Preliminary Annuity Amount (as
hereinafter defined), and (b) the annualized benefit payable to the Executive
under the Mohasco Plan (as hereinafter defined) in the year that the Executive's
employment with the Company is terminated. The SERP Benefit shall be calculated
within ninety (90) days following the Applicable Calculation Date (as
hereinafter defined).
For purposes of this Supplement, "SERP Compensation" is equal to the
average of (y) the Executive's annual Base Salary (as defined in the Employment
Agreement), without any reduction for any pre-tax deferrals under any
tax-qualified or non-qualified Company-sponsored plan, plus (z) any annual cash
bonus under the Company's Short Term Executive Incentive Plan, as amended, and
any successor to such plan (the "STIP"), regardless of the payment level
thereunder, earned by the Executive during the three (3) full consecutive
calendar years immediately preceding the calendar year in which the Executive's
employment with the Company is terminated. Any cash bonus paid to the Executive
under the STIP in a particular calendar year that is attributable to the
preceding calendar year shall be considered to be earned only in such preceding
year and not in the year in which the bonus is paid. (For example, a cash bonus
under the STIP paid to the Executive in 2003 that is based upon performance
factors, standards and/or targets established for 2002 shall be deemed to be
earned in 2002 and not in 2003.) SERP Compensation shall not include any
payments from the Company to the Executive pursuant to Section 6 or Section 8 of
the Employment Agreement.
For purposes of this Supplement, the "Mohasco Plan" is the Mohasco
Corporation Retirement Plan. Because the Executive's accrued benefit under the
Mohasco Plan is paid as a lifetime monthly annuity, the amount of the
Executive's annualized benefit payable under the Mohasco Plan shall be as
follows: (i) if the Executive's employment is
terminated in 2004, the annualized benefit shall be Twenty-Eight Thousand
Dollars ($28,000), (ii) if the Executive's employment is terminated in 2005, the
annualized benefit shall be Twenty-Nine Thousand Dollars ($29,000), and (iii) if
the Executive's employment is terminated in 2006 or later, the annualized
benefit shall be Thirty Thousand Dollars ($30,000).
Any benefits or amounts paid to the Executive under any other compensation
plan, program, arrangement or agreement (including without limitation the
Company's Long Term Executive Incentive Plan, as amended, and any successor to
such plan (the "LTIP"), any income recognized by the Executive on the exercise
of stock options and any reimbursement or gross-up for taxes of the Executive)
shall not be included in SERP Compensation.
Notwithstanding the foregoing provisions of this Section 2, the
Executive's SERP Benefit prior to the reduction for the Preliminary Annuity
Amount and for the annualized benefit payable under the Mohasco Plan shall be
not less than Four Hundred Thousand Dollars ($400,000) per year.
Section 3. Preliminary Annuity Amount; Applicable Calculation Date; Total
Offset Amount. The "Preliminary Annuity Amount" is the amount of the life
annuity (assuming payments to the Executive of equal semi-annual installments
commencing on the first day of the sixth month following the Applicable
Calculation Date and continuing every six (6) months thereafter until the
Executive's death) that can be purchased using the Total Offset Amount (as
hereinafter defined). The Preliminary Annuity Amount shall be calculated (a) by
the Company within ninety (90) days following the Applicable Calculation Date
using information reasonably available to it, and (b) by the Company selecting,
in its sole discretion, at least three (3) insurance or financial services
companies from which to obtain quotes for the Preliminary Annuity Amount, with
the lowest of such quotes being used when calculating the Preliminary Annuity
Amount. Each such insurance or financial services company shall have an insurer
financial strength rating from A.M. Best of "A," "A+" or "A++".
The "Applicable Calculation Date" is the last day of the month in which
the later of the following occurs: (a) the date on which the Executive's
employment with the Company is terminated, or (b) if payments are made by the
Company (or its successors or assigns) to the Executive pursuant to Section 6 of
the Employment Agreement, then the date on which the last such payment is made.
The "Total Offset Amount" is the total of all amounts paid or payable as
described in subsections (a) through (h) of this Section 3 (collectively, the
"Total Offset Amount") attributable to Company contributions or accruals,
whether made before or after the date of this Supplement.
(a) Chromcraft Revington Savings Plan. The account balance of the
Executive as of the Applicable Calculation Date under the Chromcraft Revington
Savings Plan (the "Savings Plan") attributable to the following: (i) Company
matching contributions, including matching contributions made under the Mohasco
Corporation 401(k) Plan, (ii) assets transferred from the Chromcraft Revington
Retirement Plan, and (iii) any other employer contributions. Such account
balance shall not include any portion of the Executive's account balance under
the Savings Plan attributable to his pre-tax and after-tax deferrals and
contributions.
(b) Predecessor Plans. The amount of Seven Hundred Eighty Thousand Three
Hundred Sixty-Two Dollars ($780,362) (the "Predecessor Plan Amount") plus all
investment earnings on such amount from December, 2002 through the Applicable
Calculation Date. The Predecessor Plan Amount constitutes the Executive's
aggregate account balance under various former benefit plans of the Company or
its predecessors.
(c) Chromcraft Revington Employee Stock Ownership Plan. The account
balance of the Executive as of the Applicable Calculation Date under the
Chromcraft Revington Employee Stock Ownership Plan.
(d) Value of Insurance. The greater of the (i) Cash Surrender Value (as
hereinafter defined) or (ii) Policy Account Value (as hereinafter defined), as
of the Applicable Calculation Date, of the variable life insurance policy (the
greater of (i) or (ii) being the "Policy Value") issued by The Equitable
Variable Life Insurance Company or any successor thereto ("Equitable") (Policy
Number 42-324-430) in the face amount of $1.5 million (the "Policy") paid for by
the Company and owned by the Executive under the Agreements plus the Tax
Effected Amount (as hereinafter defined). For purposes of this Supplement, the
(i) "Cash Surrender Value" is the cash surrender value of the Policy, as
calculated by Equitable, on the Applicable Calculation Date, (ii) "Policy
Account Value" is the policy account value of the Policy, as
calculated by Equitable, on the Applicable Calculation Date, and (iii) "Tax
Effected Amount" is the amount of federal income and employment taxes and state
and local income taxes that the Executive would have been obligated to pay on
the Policy Value if the entire Policy Value were includible in his gross income
as compensation, for income and employment tax purposes, calculated based on the
highest marginal federal income tax rate, the Executive's share of any Medicare
tax and other applicable employment tax, and the highest Indiana and applicable
local income tax rates, all in effect on the Applicable Calculation Date.
(e) Other Employer-Provided Retirement Benefits. The Executive's vested
benefit, if any, as of the Applicable Calculation Date attributable to Company
contributions or accruals under any employee benefit plan, program, arrangement
or agreement which the Company adopts, funds or sponsors after the date of this
Supplement.
(f) Pre-Retirement Funding Amounts. The aggregate of all amounts paid by
the Company in satisfaction of its pre-retirement funding obligation pursuant to
Section 4(a) hereof to the extent that such amounts are not included in the
Policy Value.
(g) Make-Whole Payments for 2002 Calendar Year and Subsequent Years. The
aggregate of all "make-whole" payments paid by the Company to the Executive
attributable to the 2002 calendar year and all subsequent years. Such
"make-whole" payments are the amounts that the Company could not contribute to
any of the Company's tax-qualified retirement plans on behalf of the Executive
because of the limits on retirement plan contributions imposed by the Internal
Revenue Code of 1986, as amended (the "Code"), and are included in the
Executive's Form W-2s provided by the Company each year.
(h) Add-Back of Plan Payments and Withdrawals. The aggregate amount of all
loans, withdrawals, benefit distributions and payments (including, without
limitation, any amount of the Policy Value used to fund or purchase an annuity
providing survivor benefits pursuant to Section 5 hereof and any surrender or
cashing in of the Policy) to the Executive under the plans, programs,
agreements, insurance and payments described in subsections (a) through (g) of
this Section 3 which are made on or prior to the date that the SERP Benefit is
scheduled to commence shall be taken into account and included in the Total
Offset Amount. Any such amounts shall be calculated as of the date on which the
loans, withdrawals, benefit distributions and payments were made and shall be
adjusted for post-payment imputed interest, at a six percent (6%) per annum
interest rate, from the date of the loan, withdrawal, benefit distribution or
payment through the Applicable Calculation Date.
(i) Direction of Investment. The Executive understands and agrees that the
Company's liability under the Agreements is directly related to the performance
of the investments held under the plans, programs, arrangements, agreements and
insurance described in subsections (a), (b), (c), (d), (e) and (f) of this
Section 3. The Executive also acknowledges that he contemplates retirement from
the Company on or before the date he attains age sixty-five (65) and that, in
view of his anticipated retirement, the Executive believes that the amounts
referred to in the preceding sentence should be invested, to the extent
possible, in income producing investments to preserve the principal of such
investments. The Executive therefore agrees to take all actions necessary to
invest (i) his directed account balance under the Savings Plan in either shares
of common stock of the Company or in the X. Xxxx Price stable value fund offered
under the Savings Plan, (ii) the Predecessor Plan Amount plus all investment
earnings thereon in the American Century short-term government bond fund, (iii)
the Policy Value in the "guaranteed fund" offered under the Policy, and (iv) all
other items which comprise the Total Offset Amount or any of the Executive's
account balances under the plans, programs, arrangements, agreements and
insurance described in subsections (a), (b), (c), (d), (e) and (f) of this
Section 3 which cannot be invested as provided above and over which the
Executive can exercise investment control in income producing investments which
have as their respective purposes the preservation of principal, with a
preference for mutual funds or other investments comprised primarily of
short-term securities of the U.S. government and its agencies and
instrumentalities. The Executive shall take such actions and make such
investments within thirty (30) days of the date on which this Agreement is
executed.
In consideration of the Company executing this Supplement and the
Company's obligations to fund any SERP Benefit, the Executive, for himself and
his heirs, personal representatives, successors and assigns, hereby forever
releases and discharges the Company, the Compensation Committee of the Company's
Board of Directors and the Company's directors, officers, employees, attorneys,
consultants and agents, from and against any reduction in value, loss, damage,
liability or other claim which may arise out of the investments made by the
Executive as a result of and in accordance with the requirements of this
subsection (i). The investment direction referred to in this subsection (i)
shall not apply to
any amounts that are not included in the Total Offset Amount, such as the
Executive's pre-tax deferrals under the Top-Hat and Savings Plans. The Executive
agrees to execute any agreement or other document and to provide to the Company
with any information which the Company determines is necessary to the agreement
and intent of this subsection (i).
Section 4. Funding of the SERP Benefit. The Company shall fund the SERP
Benefit in accordance with the provisions of this Section 4.
(a) Pre-retirement Funding. During each calendar year prior to the
calendar year in which the Executive's employment with the Company is
terminated, the Company shall (i) pay into the Cash Surrender Value of the
Policy an amount equal to Two Hundred Thousand Dollars ($200,000) per year, but
only so long as and to the extent that (A) any such payment does not affect the
status of the Policy as a "life insurance contract" as described in Section
7702(a) of the Code, and (B) the Company reasonably believes that the SERP
Benefit shall, at the time of the Executive's retirement at his Normal
Retirement Age, be underfunded, and (ii) reimburse the Executive for the amount
of his taxes attributed to such payment into the Cash Surrender Value of the
Policy. All such payments into the Cash Surrender Value shall be in addition to
the Company's payment of the annual premium on the Policy and the gross-up for
taxes of the Executive related to such premium payment and shall be included in
the Policy Value. Notwithstanding the foregoing provisions of this Section 4(a),
any such payment into the Cash Surrender Value of the Policy, any such payment
of the premium on the Policy and any such gross-up for taxes of the Executive
shall be made only to the extent that the Company is not prohibited from
deducting the amount of any such payment and any related tax gross-up as
expenses of the Company for federal income tax purposes by virtue of Section
162(m) of the Code.
(b) Post-retirement Funding. Subject to Section 4(e) hereof, during each
of the three (3) years following the Applicable Calculation Date, the Company
shall fund the SERP Benefit by purchasing a life annuity contract (payable to
the Executive in equal semi-annual installments commencing on the first day of
the sixth month following the month in which such later event occurs and
continuing every six (6) months thereafter until the Executive's death) equal in
each such year to one-third (-1/3) of the SERP Benefit from one of the insurance
or financial services companies which provided a quote for the Preliminary
Annuity Amount; provided, however, that instead of purchasing such life annuity
contract, the Company may, in its sole discretion, either pay into the Cash
Surrender Value of the Policy or pay in immediately available funds to the
Executive an amount equal to the lump sum required to purchase such life annuity
contract; and provided further, however, that the Company may, in its sole
discretion, accelerate the post-retirement funding of the SERP Benefit so long
as at least one-third of the SERP Benefit, two-thirds of the SERP Benefit and
the entire SERP Benefit is funded by the end of the first, second and third
anniversaries, respectively, of the Applicable Calculation Date. The Company
shall have no further funding obligation during any of such three (3) years once
the Company has fully funded the SERP Benefit by purchasing one or more annuity
contracts, by paying into the Cash Surrender Value of the Policy or by making
the payment to the Executive in accordance with this Section 4(b) and, in no
event, shall the Company be obligated to fund an amount in excess of the SERP
Benefit. During each of such three (3) years, the Company shall pay from its
general assets directly to the Executive the amount of the SERP Benefit payable
during any of such three (3) years that has not been funded as provided above.
The distribution of any annuity contract to the Executive, the payment by
the Company into the Cash Surrender Value of the Policy or the payment of
immediately available funds to the Executive, as contemplated by this Section
4(b), shall constitute the payment of the SERP Benefit by the Company to the
Executive and, upon the SERP Benefit being fully funded as provided in this
Section 4(b), the Company's obligation to provide the SERP Benefit to the
Executive shall be fully satisfied and discharged.
Notwithstanding the foregoing provisions of this Section 4(b), the
Company's obligation to complete the funding of the SERP Benefit shall
immediately terminate if the Executive dies (i) while employed by the Company,
(ii) during any period that the Executive is receiving payments from the Company
pursuant to Section 6 of the Employment Agreement, or (iii) during the
three-year funding period contemplated by this Section 4(b), the agreement of
the parties being that upon the Executive's death the SERP Benefit shall be
fully funded by the term life insurance contemplated by Section 4(f) hereof.
Notwithstanding the foregoing provisions of this Section 4(b), the Company
shall pay into the Cash Surrender Value of the Policy only if such payments do
not affect the status of the Policy as a "life insurance contract" as described
in Section 7702(a) of the Code. All payments into the Cash Surrender Value, all
purchases of annuity contracts and all
payments of immediately available funds to the Executive following the
termination of the Executive's employment with the Company (regardless of
whether any amounts under Section 6 of the Employment Agreement are paid to the
Executive) shall be made without any gross-up for taxes of the Executive.
(c) Investment of Premiums and Additional Payments. All premiums on, and
all payments into the Cash Surrender Value of, the Policy paid by the Company
shall be invested by the Executive in accordance with Section 3(i) hereof.
(d) Funding and SERP Benefit upon a Change in Control. Notwithstanding the
foregoing provisions of this Section 4, in the event the Executive terminates
his employment with the Company for Good Reason (as defined in the Employment
Agreement) after a Change in Control (as defined in the Employment Agreement),
the Company shall, within one hundred eighty (180) days following such
termination and subject to Section 4(e) hereof, fully fund the SERP Benefit
through (i) a purchase of a life annuity contract (using an insurance or
financial services company selected by the Company, in its sole discretion,
having an insurer financial strength rating from A.M. Best of "A", "A+," or
"A++") payable to the Executive in equal semi-annual installments of one-half
(-1/2) the annual SERP Benefit commencing on the first day of the sixth month
following the termination of the Executive's employment with the Company and
continuing every six (6) months thereafter until the Executive's death, or (ii)
either a payment into the Cash Surrender Value of the Policy or a payment in
immediately available funds to the Executive of an amount equal to the lump sum
required to purchase such annuity contract. If the Executive's last day of
employment with the Company is on a date that precedes the Executive's Normal
Retirement Age, then the SERP Benefit shall be calculated as provided in
Sections 2, 3 and 7 hereof. If the Executive's last day of employment with the
Company is on a date that follows the Executive's Normal Retirement Age, then
the SERP Benefit shall be calculated as provided in Sections 1, 2 and 3 hereof.
(e) Certain Funding Suggestions of the Executive. The Company shall
provide the Executive with written notice at least thirty (30) days prior to any
purchase of an annuity, any payment into the Cash Surrender Value of the Policy
or any payment in immediately funds to the Executive as permitted under Section
4(b) or Section 4(d) hereof. For a period of thirty (30) days thereafter, the
Executive shall have the right to make suggestions to the Company as to whether
the Company shall make such a purchase of an annuity, such a payment into the
Cash Surrender Value of the Policy or such a payment in immediately available
funds to the Executive. The Company shall use its reasonable efforts to
implement such suggestions of the Executive only so long as the Executive's
suggestions have no actual or potential adverse financial, tax or other effect
on the Company; provided, however, that the Company shall have the right to make
the final decision with respect to any purchase of an annuity, any payment into
the Cash Surrender Value of the Policy or any payment in immediately available
funds to the Executive under Section 4(b) or Section 4(d) hereof in the event of
any disagreement as to any actual or potential adverse financial, tax or other
effect on the Company.
(f) Certain Additional Life Insurance. From the date that this Supplement
is executed by the parties hereto until the SERP Benefit is fully funded as
provided in Section 4(b) or Section 4(d) hereof, the Company shall reimburse the
Executive for the actual premiums paid by him up to an amount not to exceed
Fifteen Thousand Dollars ($15,000) per calendar year for the purchase of term
life insurance covering the Executive's life. The Company shall also pay to the
Executive during each such calendar year an amount equal to the gross-up of his
taxes related to such premium reimbursement. The Executive shall own such term
life insurance policy and shall be responsible for paying all premiums thereon.
As soon as the SERP Benefit is fully funded in accordance with Section 4(b) or
Section 4(d) hereof, the Company shall have no further obligation to reimburse
the Executive for the cost of the premiums on such policy, but the Executive
may, at his sole cost and expense, continue such policy in effect upon the terms
and conditions thereof. Notwithstanding the foregoing provisions of this
subsection 4(f), the Company's obligation to reimburse the Executive for the
term life insurance contemplated by this subsection shall immediately cease upon
termination by the Company of the Executive's employment with cause (as defined
in the Employment Agreement).
Section 5. Death. If the Executive dies while he is employed by the
Company or while he is receiving payments from the Company pursuant to Section 6
of the Employment Agreement, then no SERP Benefit shall be paid to the
Executive. Rather, the Executive shall be entitled to receive only (a) the
benefits or amounts under the plans, programs, agreements or insurance specified
in Section 3 hereof in accordance with the provisions of such plans, programs,
agreements and insurance, (b) the proceeds from the term life insurance policy
specified in Section 4(f) hereof, and (c) and any other amounts payable on
account of the Executive's death by virtue of his employment by the Company. If
the Executive dies while receiving his SERP Benefit, then the SERP Benefit shall
immediately cease upon the Executive's death and no survivor benefits thereunder
shall be payable.
Notwithstanding any other provision of this Supplement, the Executive may,
at any time after his termination of employment with the Company and at his sole
cost and expense, elect any form of annuity available under the Policy,
including without limitation an annuity which provides survivor benefits. If the
Executive makes such an election and the election results in the utilization by
Equitable of any portion of the Policy Value to fund such an annuity having
survivor benefits, the Company shall adjust its calculation of the Total Offset
Amount as provided in the following two sentences. First, the Company shall
treat the amount of the Policy Value used by Equitable to fund the annuity
having survivor benefits as still being invested in the "guaranteed fund" under
the Policy and still earning interest at the rate applicable to the "guaranteed
fund." Second, the Company shall treat all premiums on, and all additional
payments into the Cash Surrender Value of, the Policy paid by the Company as
being invested by the Executive in the "guaranteed fund" under the Policy.
Section 6. Disability. If the Executive's employment with the Company is
terminated due to his Disability (as defined in the Employment Agreement), then
the SERP Benefit shall be paid as a life annuity to the Executive in equal
semi-annual installments of one-half (-1/2) the annual SERP Benefit commencing
on the first day of the sixth month following the month in which the Executive's
employment is so terminated and continuing every six (6) months thereafter until
the Executive's death. Except as provided in the preceding sentence, the SERP
Benefit shall be calculated in the same manner specified in Sections 2 and 3
hereof (but with no reduction for early retirement in the event that the
Executive's employment with the Company is terminated prior to his Normal
Retirement Age due to his Disability) and shall be funded in accordance with
Section 4(b) hereof.
Section 7. Early Retirement. If the Executive's employment with the
Company is terminated prior to his Normal Retirement Age for any reason other
than by the Company without cause (as defined in the Employment Agreement), by
the Company with cause (as defined in the Employment Agreement), by the
Executive for Good Reason after a Change in Control (as defined in the
Employment Agreement) or due to his death or Disability (i.e., the Executive
voluntarily terminates his employment with the Company prior to reaching his
Normal Retirement Age), then the following adjustments to the calculation and
timing of the SERP Benefit and the payment and funding thereof shall apply:
(a) The amount of the SERP Benefit shall be calculated by the Company
within ninety (90) days following the Applicable Calculation Date using
information reasonably available to it. The annuity amounts referenced in this
Section 7 shall be determined by the Company, which shall select, in its sole
discretion, at least three (3) insurance or financial services companies having
an insurer financial strength rating from A.M. Best of "A," "A+" or "A++" from
which to obtain quotes for such annuity amounts, and the lowest quote shall be
used for the calculations required by this Section 7.
(b) The Company shall calculate (i) the SERP Benefit (as provided in
Sections 2 and 3 hereof) as a life annuity for the Executive with annual
benefits payable to him in equal semi-annual installments commencing on the
first day of the sixth month following the month in which the Executive
voluntarily terminates his employment prior to reaching his Normal Retirement
Age (the "Early Retirement Date") and ending on his death, (ii) the lump sum
needed on the Early Retirement Date to purchase a life annuity for the Executive
to fund the amount of the SERP Benefit determined in accordance with subsection
(b)(i), but with the semi-annual installments on this annuity commencing on the
first day of the sixth month following the date on which the Executive would
attain his Normal Retirement Age (rather than the Early Retirement Date) and
ending on his death, and (iii) the annual benefit amount under a life annuity
for the Executive that can be purchased on the Early Retirement Date using the
amount of the lump sum determined in accordance with subsection (b)(ii), but
with the semi-annual installments on this annuity commencing on the first day of
the sixth month following the Early Retirement Date and ending on his death (the
annual benefit amount calculated pursuant to this subsection (b)(iii) shall be
referred to in this Supplement as the "Early Retirement Annuity Amount").
The Early Retirement Annuity Amount shall be increased, if necessary, so
that the sum of (x) the Early Retirement Annuity Amount, (y) the Preliminary
Annuity Amount, and (z) the annualized benefit payable under the Mohasco Plan,
is equal to Four Hundred Thousand Dollars ($400,000).
The Early Retirement Annuity Amount shall be the SERP Benefit for purposes
of this Supplement and the Agreements and shall be the amount that the Executive
shall receive under this Supplement and the Agreements as his SERP Benefit in
the event that he voluntarily terminates his employment with the Company prior
to reaching his Normal
Retirement Age. The Company shall fund and pay the Early Retirement Annuity
Amount in the same manner required by Section 4(b) hereof.
Example:
Attached as Exhibit A hereto are sample calculations of the SERP Benefit
(assuming the Executive's employment with the Company is terminated other than
by the Company with cause after the Executive reaches his Normal Retirement Age)
and the Early Retirement Annuity Amount.
Section 8. Effect of Severance Pay on SERP Benefit; Calculation of
Severance Pay. If the Company terminates the Executive's employment without
cause (as defined in the Employment Agreement) and the Executive is receiving
payments from the Company pursuant to Section 6 of the Employment Agreement,
then the SERP Benefit shall be determined under the following provisions of this
Section 8. If the last monthly payment pursuant to Section 6 of the Employment
Agreement is made on a date that precedes the Executive's Normal Retirement Age,
then the SERP Benefit shall be calculated, funded and paid as provided in
Sections 2, 3 and 7 hereof (except that with respect to Section 7(b)(i), the
SERP Benefit shall be calculated as a life annuity for the Executive with annual
benefits payable to him in equal semi-annual installments commencing on the
first day of the sixth month following the Applicable Calculation Date and
ending on his death). If the last monthly payment pursuant to Section 6 of the
Employment Agreement is made on a date that follows the Executive's Normal
Retirement Age, then the SERP Benefit shall be calculated, funded and paid as
provided in Sections 1, 2, 3 and 4 hereof.
Notwithstanding the foregoing provisions of this Section 8, under no
circumstances shall the Executive receive payments pursuant to Section 6 of the
Employment Agreement and his SERP Benefit simultaneously. Rather, the Company
and the Executive agree that, if the Executive receives payments from the
Company pursuant to Section 6 of the Employment Agreement, then any SERP Benefit
shall not begin until after such payments end. If the Executive dies while
receiving payments pursuant to Section 6 of the Employment Agreement, then no
SERP Benefit shall be paid. Rather, the provisions of Section 5 of this
Supplement shall apply.
For purposes of the Agreements and this Supplement, the term "incentive
compensation" (including without limitation as used in Sections 6 and 8 of the
Employment Agreement) shall mean only any annual cash bonuses under the STIP
paid to the Executive and shall exclude, without limitation, all payments paid
to the Executive under any other incentive compensation plan, program,
arrangement or agreement (including without limitation the LTIP) and all income
recognized by the Executive on the exercise of stock options; and the Employment
Agreement is hereby amended accordingly.
Section 9. Termination for Cause. If the Executive's employment is
terminated by the Company with cause (as defined in the Employment Agreement),
then the Executive shall not be entitled to any SERP Benefit or any
compensation, payments or benefits under the Agreements or this Supplement,
except (a) as provided in Section 6 of the Employment Agreement in the event of
a termination of the Executive's employment with cause, (b) for the Policy and
the term life insurance policy contemplated by Section 4(f) hereof, the premiums
on both of such policies the Executive shall be responsible for paying following
termination of his employment, and (c) as provided in the Company's applicable
employee benefit plans, programs and agreements which cover the Executive on his
last day of employment with the Company.
Section 10. Life Insurance under the Employment Agreement. The Executive
understands and agrees that the Employment Agreement requires the Company to
provide the Executive with a term life insurance policy with a face amount of
$1,500,000 and that such requirement under the Employment Agreement is satisfied
in full by the Policy (as previously defined in this Supplement). The Executive
further understands and agrees that the only life insurance which the Company is
obligated to provide to him or on which the Company is obligated to pay or
reimburse any premiums, whether pursuant to the Agreements, this Supplement or
otherwise, are (a) the Policy, (b) the term life insurance specified in Section
4(f) hereof, and (c) any group term life insurance that is provided to all
employees of the Company; and the Employment Agreement is hereby amended
accordingly.
Section 11. Claims Procedure.
(a) Filing a Claim. The Executive may file a written claim for a benefit
under the Agreements with the Committee or with an individual named by the
Committee to receive claims under this Supplement.
(b) Notice of Denial of Claim. In the event of a denial or limitation of
any benefit or payment due to or requested by the Executive, the Executive shall
be given a written notification containing specific reasons for the denial or
limitation of his benefit. The written notification shall contain specific
reference to the pertinent provisions of the Supplement on which the denial or
limitation of his benefit is based. In addition, it shall contain a description
of any other material or information necessary for the Executive to perfect the
claim and an explanation of why such material or information is necessary. The
notification shall further provide appropriate information as to the steps to be
taken within ninety (90) days of such notification if the Executive wishes to
submit his claim for review. This written notification shall be given to the
Executive within ninety (90) days after receipt of his claim by the Committee
unless special circumstances require an extension of time for processing the
claim. If such an extension of time for processing is required, written notice
of the extension shall be furnished to the Executive prior to the termination of
such ninety (90) day period, and such notice shall indicate the special
circumstances which make the postponement appropriate and the date by which the
Committee expects to render its decision, which shall not be later than one
hundred fifty (150) days after receipt of the Executive's claim by the
Committee.
(c) Manner and Content of Notification of Benefit Determinations. All
notices given by the Committee shall be given to the Executive, or to his
authorized representative, in a manner that satisfies the standards of 29 CFR
2520.104b-1(b) as appropriate with respect to the particular material required
to be furnished or made available to that individual. The Committee may provide
the Executive with either a written or an electronic notice of its
determination. Any electronic notification shall comply with the standards
imposed by 29 CFR 2520.104b-1(c)(1)(i), (iii) and (iv). In the case of an
adverse benefit determination, the notice shall set forth, in a manner
calculated to be understood by the Executive:
(i) The specific reasons for the adverse determination;
(ii) Reference to the specific provisions of this Supplement (including
any internal rules, guidelines, protocols, criteria, etc.) on which
the determination is based;
(iii) A description of any additional material or information necessary
for the Executive to complete the claim and an explanation of why
such material or information is necessary; and
(iv) A description of the review procedures and the time limits
applicable to such procedures.
The term "adverse benefit determination" means a denial, reduction, or
termination of, or a failure to provide or make payment (in whole or in
part) for, any benefit payable under this Supplement.
(d) Appeal of Adverse Benefit Determinations. If the Executive receives an
adverse benefit determination and desires a review of that determination, he, or
his authorized representative, must file on his behalf, a written request for a
review of the adverse benefit determination, not later than sixty (60) days
after receiving the determination. The written request for a review must be
filed with the Committee. Upon receiving the written request for review, the
Committee shall advise the Executive, or his authorized representative, in
writing that:
(i) The Executive, or his authorized representative, may submit written
comments, documents, records, and any other information relating to
the claim for benefits; and
(ii) The Executive shall be provided, upon request of the Executive or
his authorized representative, reasonable access to, and copies of,
all documents, records, and other information relevant to the
Executive's benefit claim, without regard to whether those
documents, records, and information were considered or relied upon
in making the adverse benefit determination that is the subject of
the appeal.
(e) Benefit Determination on Review. All appeals by the Executive of an
adverse benefit determination shall receive a full and fair review by the
Committee.
(f) Notification of Benefit Determination on Review. The Committee shall
notify the Executive, in accordance with this subsection (f), of its benefit
determination on review within a reasonable period of time, but not later than
sixty (60) days after its receipt of the Executive's request for review of an
adverse benefit determination. If, however, special circumstances require an
extension of time for processing the review, the Executive shall be notified,
prior to the termination of the initial sixty (60) day period, of the special
circumstances requiring the extension and the date by which the Committee
expects to render its benefit determination on review, which shall not be later
than one hundred twenty (120) days after receipt of a request for review.
(g) Manner and Content of Notification of Benefit Determination on Review.
The Committee shall provide the Executive with notification of its benefit
determination on review in a method described in subsection (c). In the case of
an adverse benefit determination on review, the notification must set forth, in
a manner calculated to be understood by the Executive:
(i) The specific reasons for the adverse determination on review;
(ii) Reference to the specific provisions of this Supplement (including
any internal rules, guidelines, protocols, criteria, etc.) on which
the benefit determination on review is based; and
(iii) A statement that the Executive is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all
documents, records and other information relevant to the Executive's
benefit claim, without regard to whether those records were
considered or relied upon in making the adverse benefit
determination on review, including any reports, and the identities
of any experts whose advice was obtained.
(h) Right of Review. In the event of a denial or limitation of his
benefit, the Executive or his duly authorized representative shall be authorized
to review pertinent documents and to submit to the Committee issues and comments
in writing. In addition, the Executive or his duly authorized representative may
make a written request for a review of his claim and its denial by the Committee
after the Committee considers the issues and comments submitted in writing by
the Executive; provided, however, that such written request must be received by
the Committee (or its delegate to receive such request) within sixty (60) days
after receipt by the Executive of written notification of the denial or
limitation of the claim. The sixty (60) day requirement may be waived by the
Committee in its discretion.
(i) Decision on Review. A decision shall be made by the Committee within
sixty (60) days after the receipt of the request for review, provided that where
special circumstances require an extension of time for processing the decision,
it may be postponed on written notice to the Executive (prior the expiration of
the initial sixty (60) day period) for an additional sixty (60) days after the
receipt of such request for review. Any decision by the Committee shall be
furnished to the Executive in writing and shall set forth specific reasons for
the decision.
(j) Court Action. The Executive shall have no right to seek judicial
review of a denial or limitation of benefits or any decision of the Committee or
to bring any action in any court to enforce a claim for benefits prior to filing
a claim for benefits and exhausting his rights for review under this Section 11.
Section 12. Notice of Retirement. The Executive shall provide written
notice to the Chairman of the Compensation Committee and the Chairman of the
Audit Committee of the Company's Board of Directors at least one hundred eighty
(180) days prior to any voluntary termination by the Executive of his employment
with the Company other than a termination by the Executive for Good Reason (as
defined in the Employment Agreement) after a Change in Control (as defined in
the Employment Agreement). During such 180 day period, the Executive shall, upon
request of the Board of Directors of the Company, cooperate with and assist the
Board of Directors in the transition of the Executive's duties and
responsibilities to a chief executive officer selected to succeed the Executive.
Section 13. Miscellaneous.
(a) Conflict. If there is any conflict between a provision of either the
Employment Agreement or the SERP Agreement and this Supplement, the provisions
of this Supplement shall control. Accordingly, any supplemental
retirement plan or benefit contemplated by the Employment Agreement (including
without limitation Section 4 thereof) shall be provided by and controlled by
this Supplement.
(b) Binding Effect. This Supplement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
representatives, successors and assigns.
(c) Headings. The headings in this Supplement have been inserted solely
for ease of reference and shall not be considered in the interpretation or
construction of this Supplement.
(d) Severability. In case any one or more of the provisions (or any
portion thereof) contained in this Supplement shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Supplement, but
this Supplement shall be construed as if such invalid, illegal or unenforceable
provision or provisions (or portion thereof) had never been contained herein.
(e) Counterparts. This Supplement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same agreement.
(f) Construction. This Supplement shall be deemed to have been drafted by
both parties hereto. This Supplement shall be construed in accordance with the
fair meaning of its provisions and its language shall not be strictly construed
against, nor shall ambiguities be resolved against, either party.
(g) Review and Consultation. The Executive hereby acknowledges and agrees
that he (i) has read this Supplement in its entirety prior to executing it, (ii)
understands the provisions, effects and restrictions of this Supplement, (iii)
has consulted with such of his own attorneys, accountants and financial and
other advisors as he has deemed appropriate in connection with his execution of
this Supplement, and (iv) has executed this Supplement voluntarily. THE
EXECUTIVE HEREBY UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT HE HAS NOT RECEIVED
ANY ADVICE, COUNSEL OR RECOMMENDATION WITH RESPECT TO THIS SUPPLEMENT FROM ANY
DIRECTOR OR EMPLOYEE OF, OR ANY ATTORNEY, ACCOUNTANT OR ADVISOR FOR, THE
COMPANY.
(h) Entire Agreement; Amendment. This Supplement, the Agreements and the
employee benefit plans referenced herein or therein constitute the entire
agreement and understanding between the parties hereto relating to the subject
matter hereof. This Supplement may be amended or modified only by a writing
signed by both parties hereto.
(i) Certain References. Whenever in this Supplement a singular word is
used, it also shall include the plural wherever required by the context and
vice-versa. All references to the masculine, feminine or neuter genders herein
shall include any other gender, as the context requires. Unless expressly
provided otherwise, all references in this Supplement to days shall mean
calendar, not business, days. Unless otherwise defined herein, capitalized terms
used in this Supplement shall have the same meanings as those terms have in the
Employment Agreement or the SERP Agreement.
(j) Governing Law. This Supplement shall be governed by and construed in
accordance with the laws of the State of Indiana, without reference to any
choice of law provisions, principles or rules thereof (whether of the State of
Indiana or any other jurisdiction) that would cause the application of any laws
of any jurisdiction other than the State of Indiana.
(l) Recitals. The recitals, premises and "Whereas" clauses set forth on
pages 1 and 2 hereof are expressly incorporated into and made a part of this
Supplement.
(m) Notice. All notices, requests and other communications hereunder shall
be in writing (which shall include facsimile communication) and shall be deemed
to have been duly given if (i) delivered by hand and receipted for, (ii) sent by
certified United States Mail, return receipt requested, first class postage
pre-paid, (iii) delivered by receipted overnight delivery service, or (iv)
delivered by facsimile transmission if such fax is confirmed immediately
thereafter by also mailing a copy of such notice, request or other communication
by certified United States Mail, return receipt requested, first class postage
pre-paid, as follows:
If to the Executive: If to the Company:
Xxxxxxx X. Xxxxxx Chairman of the Compensation Committee and
Chromcraft Revington, Inc. Chairman of the Audit Committee
0000 Xxxxx Xxxxxxxxxx Xxxxxx (2 notices)
Xxxxxx, Xxxxxxx 00000 0000 Xxxxx Xxxxxxxxxx Xxxxxx
Fax: (000) 000-0000 Xxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
With a copy to (which shall not With a copy to (which shall not constitute notice):
constitute notice):
Xxxxx X. Xxxx, Vice President-Finance
and Secretary
Xxxxxxx X. XxxXxxx, Esq. Chromcraft Revington, Inc.
Xxxxx & Xxxxxxx 0000 Xxxxx Xxxxxxxxxx Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx Xxxxxx, Xxxxxxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000 Fax: (000) 000-0000
Fax: (000) 000-0000
or such substituted address or person as either party has given to the other in
writing.
All such notices, requests and other communications shall be effective (w)
if delivered by hand, when delivered, (x) if mailed in the manner provided
herein, two (2) business days after deposit with the United States Postal
Service, (y) if delivered by overnight express delivery service, on the next
business day after deposit with such service, and (z) if by facsimile
transmission, on the date indicated on the fax confirmation page of the sender
if such fax also is confirmed by mail in the manner provided herein.
* * *
IN WITNESS WHEREOF, the parties hereto have made, entered into,
executed and delivered this Supplement A as of the day and year first above
written.
/s/ Xxxxxxx X. Xxxxxx
----------------------------
Xxxxxxx X. Xxxxxx
CHROMCRAFT REVINGTON, INC.
By: /s/ Xxxxx X. Xxxx
----------------------
Xxxxx X. Xxxx
Vice President-Finance
