Professional Veterinary Products,
Ltd .
Supplemental Executive Retirement Plan
The
Professional Veterinary Products, Ltd. Supplemental Executive
Retirement Plan (the “Plan”), established
January 1, 2003, and as amended and restated effective
January 1, 2006, by Professional Veterinary Products, Ltd.
(the “Company”), to provide supplemental retirement
benefits to key employees of the Company, is hereby further amended
and restated effective January 1, 2009.
The following
terms shall have the meanings set forth below:
1.1
“Actuarial Equivalent” means the equality in value of
the aggregate amount of benefit payments expected to be received
under different forms or at different times computed on the basis
of the mortality assumptions of the 94 GAM and an interest rate
equal to eight percent (8%) per annum. The calculation of any
actuarial equivalent benefit amount required by the Plan shall be
made under the foregoing assumptions by the actuary appointed by
the Committee, and such calculation shall be final and
conclusive.
1.2
“Board” means the Board of Directors of the
Company.
1.3 “Change
in Control” means a qualifying change in the ownership of the
Company’s capital stock or its assets, whether by reason of
purchase, merger or otherwise, as follows:
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(a)
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In
the case of a change in ownership involving the Company’s
capital stock, the acquisition by a person, or more than one person
acting as a group as defined in Income Tax Regulation §
1.409A-3(i)(5)(v)(B), of capital stock of the Company that,
together with the stock held at that time by such person or group,
constitutes more than fifty percent (50%) of the total fair market
value or total voting power of the capital stock of the Company;
provided , however , the acquisition of additional
capital stock by any one person, or more than one person acting as
a group, who is considered as owning more than fifty percent (50%)
of the total fair market value or total voting power of the
Company, shall not constitute or result in a qualifying change in
ownership of the Company’s capital stock as described in this
Section 1.3(a); provided , further , an increase
in the percentage of capital stock owned by any one person, or
persons acting as a group as a result of a transaction in which the
Company acquires its stock in exchange for property will be treated
as an acquisition of capital stock for
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purposes of this
Section 1.3(a). A transaction involving the transfer of the
Company’s capital stock shall be treated as resulting in a
qualifying change in ownership under this Section 1.3(a) only
if, after the transfer of stock, stock in the Company remains
outstanding after the transaction.
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(b)
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In
the case of a change in ownership involving the Company’s
assets, the acquisition of assets of the Company within a
12 month period ending on the date of the most recent asset
acquisition, by a person, or more than one person acting as a group
as defined in Income Tax Regulation § 1.409A-3(i)(5)(v)(B),
that have a total gross fair market value equal to eighty percent
(80%) or more of the total fair market value of all of the assets
of the Company, as determined without regard to any liabilities
associated with the assets being acquired or the total assets of
the Company; provided , however , a sale or transfer
of Company assets to: (1) a shareholder of the Company in
exchange for its stock; (2) an entity, fifty percent (50%) or
more of the total value or voting power of which is owned, directly
or indirectly by the Company; (3) any person, or more than one
person acting as a group, that owns, directly or indirectly, fifty
percent (50%) or more of the total value or voting power of the
outstanding capital stock of the Company; or (4) an entity, at
least fifty percent (50%) of the total value or voting power of
which is owned, directly or indirectly, by a person described in
the preceding clause (3), shall not constitute or result in a
qualifying change in ownership of the assets of the Company as
described in this Section 1.3(b).
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1.4
“Committee” means the Executive Committee of the
Board.
1.5 “Monthly
Benefit” means a benefit payable each month to a Participant
or the Participant’s designated beneficiary as determined
under the provisions of this Plan.
1.6 “Monthly
Pay” means the monthly average of the Participant’s
base salary that is paid by the Company for the final consecutive
36-month period of employment with the Company. Bonuses or
incentive compensation, fringe benefits, deferred compensation,
welfare plan benefits and noncash remuneration shall not be
considered as part of the Participant’s base salary for this
purpose. Any salary reduction contributions by the Participant to a
Section 401(k) plan or Section 125 plan maintained by the
Company shall be included in the Participant’s base
salary.
1.7 “Normal
Retirement Date” means the Social Security Full Retirement
Age.
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1.8
“Participant” means a highly compensated or management
employee designated by the Board as being eligible to participate
in the Plan. References herein to the “CEO-Participant”
shall mean and only include the Participant who served as the Chief
Executive Officer of the Company on January 1,
2006.
1.9
“Permanent Disability” or “Permanently
Disabled” shall be any medically determinable physical or
mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than twelve
months. A Participant shall be deemed to be Permanently Disabled if
determined to be totally disabled by the Social Security
Administration and entitled to receive disability benefits under
the federal Social Security Act.
1.10
“Plan” means this Supplemental Executive Retirement
Plan as amended from time to time.
1.11 “Plan
Year” means the calendar year.
1.12
“Separation from Service” or “Separate from
Service” means the death, retirement or other termination of
the Participant’s employment with the Company and any
affiliate of the Company; provided , however , an
employment relationship with the Company is not terminated when the
Participant is on military leave, sick leave or an approved leave
of absence if the period of such leave does not exceed six
(6) months or, if longer, the period that the Participant
retains a right to reemployment with the Company under applicable
law or any employment contract. For this purpose, a Participant
shall be deemed to have a Separation from Service on the date that
the level of services the Participant would perform after such date
would permanently decrease to a level that is less than fifty
percent (50%) of the average level of bona fide services performed
by the Participant for the Company during the immediately preceding
thirty-six (36) month period.
1.13 “Years
of Service” means the 12-consecutive month period commencing
on the Participant’s employment commencement date with the
Company and each 12-month anniversary thereof in which the
Participant remains in continuous service as an employee of the
Company. Continuous service as an employee of the Company shall not
be considered interrupted in the case of sick leave, military leave
or any other leave of absence approved by the Board provided such
leave does not exceed ninety (90) days unless employment upon
the expiration of such leave is guaranteed by contract or
statute.
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The Board of
Directors shall designate from time to time the key employees who
shall be added as Participants in this Plan. Participation of a
designated key employee shall be effective on the January 1 or
other date determined by the Board of Directors following such
designation.
Section 3. Administration
The Committee
shall administer the Plan and shall have all discretionary
authority as may be necessary or appropriate to administer the
Plan.
3.1 Actions of
Committee . The Committee shall act by a majority of its
members at the time in office, and such action may be taken either
by a vote at a meeting or in writing without a meeting. The
Committee shall authorize any one or more of its members to execute
any document or documents on behalf of the Committee. The
Committee, by written instrument signed by it, may designate other
persons to carry out any of its duties and responsibilities.
However, the duties and responsibilities of such position shall be
carried out only by appropriate officers and employees of the
Company.
3.2 Authority
of Committee . The Committee shall exercise such discretionary
authority and responsibility as it deems appropriate in order to
administer the Plan and to comply with the Internal Revenue Code
and other applicable laws, including any documents and
notifications required to be given to Participants and
beneficiaries.
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(a)
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The
Committee shall, in carrying out the Committee’s
administration hereunder, have absolute discretion, and any
decision by the Committee shall be final and bind all parties to
the Plan. The Committee’s discretionary duties and powers
shall include, but not be limited to the following:
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i.
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To
construe and interpret the Plan, decide all questions of
eligibility and determine the amount, manner and time of payment of
any benefits hereunder;
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ii.
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To
prescribe procedures to be followed by Participants or
beneficiaries filing applications for benefits and to establish
claims procedures for the Plan;
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iii.
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To
prepare and distribute information explaining the Plan;
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iv.
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To
receive from the Participants such information as shall be
necessary for the proper administration of the Plan;
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v.
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To
receive, review and keep on file (as it deems convenient or proper)
reports of the financial condition, and of the receipts and
disbursements; and
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vi.
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To
appoint advisors, claims administrators and legal counsel, to
render advice with regard to any responsibility of the Committee
under the Plan or to assist in the administration of the
Plan.
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3.3 Adoption of
Rules . The Committee may adopt such rules as it deems
necessary, desirable or appropriate in the administration of the
Plan, including the establishment and administration of the
Plan’s claims procedures.
4.1 Retirement
Benefit. For each Participant other than the CEO-Participant,
upon Separation from Service at or after the Participant’s
Normal Retirement Date, the Participant shall receive a Monthly
Benefit commencing on the first day of the month following the
Participant’s Normal Retirement Date and payable for life,
with a period of 10 years certain, equal to 35% of the
Participant’s Monthly Pay. For the CEO-Participant, upon
Separation from Service at or after his Normal Retirement Date, the
CEO-Participant shall receive a Monthly Benefit commencing on the
first day of the month following the CEO-Participant’s Normal
Retirement Date and payable for life, with a period of
15 years certain, equal to 60% of his Monthly Pay If a
Participant continues employment and does not Separate from Service
until after the Participant’s Normal Retirement Date: a) the
provisions of Section 4.3 herein shall apply and b) the period
of 10 years certain (15 years certain in the case of the
CEO-Participant) shall be reduced by the number of years which
Participant works for the Company after his Normal Retirement Date.
Thus, for example purposes only, if a Participant other than the
CEO-Participant works 4 years after the Normal Retirement
Date, the Monthly Benefit calculated according to Section 4.3
shall commence on the first day of the month following
Participant’s actual retirement date and payable for life,
with a period of 6 years certain. If the Participant has less than
10 Years of Service upon his Separation from Service at or after
the Participant’s Normal Retirement Date, the Monthly Benefit
will be reduced by 10% for each Year of Service less than
10.
4.2 Separation
from Service Prior to Normal Retirement Date. A Participant who
Separates from Service at
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