THIS EMPLOYMENT
AGREEMENT (the
“Agreement”) is made and entered into as of the
1 st
day of July, 2008 by and between
CHROMCRAFT REVINGTON, INC. (the “Company”), a Delaware
corporation, and RONALD H. BUTLER (the “Executive”),
currently a resident of the State of Arizona,
WHEREAS,
the Company desires to employ the
Executive as its Chairman and Chief Executive Officer, and the
Executive desires to be employed by the Company in such capacities,
in accordance with the provisions of this Agreement; and
WHEREAS,
in addition to the employment
provisions contained herein, the Company and the Executive have
agreed to certain restrictions, covenants, agreements and severance
payments, as set forth in this Agreement;
NOW, THEREFORE,
in consideration of the foregoing
recitals, the respective covenants, agreements and obligations
contained herein, the employment of the Executive by the Company
pursuant to this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive hereby agree as
follows:
Section 1 . Employment; Term .
(a) Employment . Unless the
Executive’s employment with the Company is terminated earlier
as provided in this Agreement, the Company hereby agrees to employ
the Executive, and the Executive hereby agrees to be employed by
the Company, during the Term (as hereinafter defined), on a
full-time basis in accordance with the provisions of this
Agreement.
(b) Term . (i) Unless the
Executive’s employment with the Company is terminated earlier
in accordance with Section 4 hereof, the initial term of the
Executive’s employment with the Company under this Agreement
shall begin on July 1, 2008 and shall end on December 31,
2011 (the “Initial Term”); provided, however, that upon
the expiration of the Initial Term, the Executive’s
employment under this Agreement shall thereafter be automatically
extended upon the same terms and conditions as set forth herein for
successive one year terms (each, a “Renewal Term”),
unless the Company or the Executive shall have delivered to the
other a written notice not less than ninety (90) days prior to
the expiration of the Initial Term or any Renewal Term stating that
the term of this Agreement shall not be so extended, in which case
the Executive’s employment hereunder shall terminate at the
end of the Initial Term or a Renewal Term, as the case may be.
During the Initial Term and any Renewal Term, the Executive’s
employment hereunder is subject to early termination in accordance
with Section 4 hereof. The Initial Term and a Renewal Term may
be referred to in this Agreement individually or collectively as
the “Term.”
Section 2 . Position; Duties; Responsibilities
.
(a) During
the Term, the Executive:
(i) shall serve as the Chairman of the
Board and the Chief Executive Officer of the Company and, as such,
shall have general responsibility for and oversight of the business
and affairs of the Company, subject to the control and direction of
the Company’s Board of Directors (the “Board of
Directors”);
(ii) shall have such authority, duties and
responsibilities as set forth in the By-Laws of the Company as now
or hereafter in effect or as the Board of Directors may from time
to time prescribe that are consistent with the Executive’s
position as the Chief Executive Officer of the Company;
(iii) shall perform diligently and
faithfully, and use his reasonable best efforts in the performance
of, his duties and responsibilities under this
Agreement;
(iv) shall devote all of his working time,
attention, energies and skills to his duties and responsibilities
under this Agreement and to the furtherance of the business and
interests of the Company; provided, however, that the Executive
shall be permitted to engage in civic and charitable activities and
to serve on boards of directors of other for-profit and non-profit
entities so long as such civic and charitable activities and board
positions do not affect the Executive’s performance of his
duties and responsibilities for the Company, do not adversely
affect the reputation of the Company and have been approved in
advance by resolution of the Board of Directors or a committee
thereof; and
(v) shall maintain his business office at
and be based out of an office of the Company or one of its
subsidiaries as determined from time to time by the Board of
Directors.
(b) During the Term, the Board of Directors
shall nominate the Executive as one of the Company’s director
nominees for election at each annual meeting of stockholders of the
Company. If the Executive is so nominated but not elected by
stockholders as a director of the Company, then the Company may
continue to employ the Executive under this Agreement as its Chief
Executive Officer but not as its Chairman (without constituting a
breach or Good Reason under this Agreement) or may terminate the
Executive’s employment with the Company, in which latter
event the Company shall compensate the Executive in the same manner
as under Section 5(e) as if the Company had determined not to
extend the Term.
Section 3 . Compensation and Employee Benefits
.
(a) Base Salary . During the Term,
for all services rendered in all capacities by the Executive to or
on behalf of the Company or any of the Company’s subsidiaries
or affiliates (including service as a director of the Company or
any of its subsidiaries or affiliates), the Company shall pay to
the Executive an annual base salary equal to $400,000 per calendar
year, as may be increased from time to time by the Board of
Directors or a committee thereof (the “Base Salary”).
If an increase in the Executive’s Base Salary is approved by
the Board of Directors or a committee thereof, the new salary shall
become the applicable Base Salary under this Agreement. The Base
Salary shall be paid to the Executive in accordance with the
Company’s usual and customary payroll practices applicable to
its employees generally (including, but not limited to,
withholdings for taxes and other amounts) and shall be pro-rated
for any partial year of employment.
(b) Incentive Compensation . During
the Term, the Executive shall be entitled to participate in all
incentive compensation plans and programs of the Company that are
generally available to its executive officers (as currently in
effect or as may hereafter be established, amended or in effect),
subject to the terms and conditions of such plans and programs. The
performance factors, measures, goals or targets, the award levels,
the amounts and the other terms and conditions of any award shall
be determined in the discretion of the Board of Directors or a
committee thereof; provided, however, that during the Term other
than the initial stock-based award described in the next paragraph,
the maximum award level of each cash incentive compensation award
granted to the Executive shall be 100% of his Base Salary and the
maximum award level of each stock-based incentive compensation
award granted to the Executive also shall be 100% of his Base
Salary.
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The Company shall grant a cash incentive
compensation award opportunity of $100,000 to the Executive under
the Company’s 2007 Executive Incentive Plan, as currently in
effect or as may be hereafter amended (the “2007 Incentive
Plan”), for the performance period ending on
December 31, 2008. In addition, the Company shall grant to the
Executive a stock-based incentive compensation award opportunity of
240,000 shares of restricted common stock of the Company under the
2007 Incentive Plan for the 2008-2010 performance period. The
Executive’s ability to earn each of such awards shall be
conditioned upon and subject to the Company satisfying the
performance measures, goals or targets and other terms and
conditions for the awards established by the Board of Directors or
a committee thereof and the Executive being employed by the Company
at the end of each performance period and on the date of payment of
each award. As a condition to the issuance of such award of
restricted common stock, the Executive must execute a restricted
stock award agreement relating to such shares.
The performance factors, measures, goals or
targets, the award levels, the amounts and the other terms and
conditions of any award to the Executive under the 2007 Incentive
Plan for future performance periods shall be determined in the
discretion of the Board of Directors or a committee thereof,
subject to a maximum award of 100% of the Executive’s Base
Salary for each cash award and each stock-based award.
(c) Employee Benefits . During the
Term, the Executive shall be entitled to participate in all
employee benefit plans and programs sponsored or maintained by the
Company and that are generally available to its executive officers
(as currently in effect or as may hereafter be established, amended
or in effect), subject to the terms, conditions and eligibility
requirements of such plans and programs. The employee’s cost
of participation in such plans and programs shall be as determined
by the Board of Directors or a committee thereof, if not set forth
in the plans and programs.
(d) Other Policies . All other
matters relating to the employment of the Executive by the Company
not specifically addressed in this Agreement or in the plans and
programs referenced in this Section (including, but not limited to,
vacation, sick and other paid time off) shall be subject to the
employee handbooks, rules, policies, procedures, corporate
governance guidelines and codes of conduct and ethics of the
Company, as are currently in effect or as may hereafter be in
effect from time to time. The Executive shall be entitled to paid
vacation in accordance with Company policy, but in no event shall
he be entitled to fewer than twenty-five (25) days of paid
vacation per calendar year (pro-rated for any partial
years).
(e) Automobile Allowance . During
the Term, the Company shall provide to the Executive an automobile
allowance of $1,500 per month. The insurance, maintenance, fuel,
license plates and other costs relating to this automobile shall be
the responsibility of and paid by the Executive. The Executive
shall not be entitled to any reimbursement for mileage relating to
the use of such automobile.
(f) Relocation Expenses . The
Executive currently maintains his principal residence in
Scottsdale, Arizona. The Executive shall relocate his principal
residence from Scottsdale, Arizona to a location within 50 miles of
an office of the Company acceptable to the Board of Directors
(“Company Office”) by December 31, 2009. The
Company shall pay the following relocation expenses of the
Executive:
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(i)
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Reasonable temporary housing and
living expenses of the Executive for a temporary residence located
within 50 miles of a Company Office until the earlier of the
Executive’s purchase of a permanent residence located within
50 miles of a Company Office or December 31, 2009;
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(ii)
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Reimbursement for roundtrip airfare
for the Executive between Phoenix, Arizona and the city in which
the Company Office is located for up to four (4) roundtrips
per month until the earlier of the Executive’s purchase of a
residence within 50 miles of a Company Office or December 31,
2009;
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(iii)
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Reasonable moving expenses of the
Executive in connection with the relocation of the Executive from
Scottsdale, Arizona to within 50 miles of a Company Office by
December 31, 2009;
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(iv)
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Reasonable real estate brokerage
commission and reasonable attorneys’ fees incurred by the
Executive relating to the sale of his principal residence in
Scottsdale, Arizona;
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(v)
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Reasonable closing costs (but not
any points) and reasonable attorneys’ fees incurred by the
Executive relating to the purchase of his residence within 50 miles
of a Company Office by December 31, 2009; and
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(vi)
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Rent not to exceed $1,200 per month
for a business office for the Executive in Scottsdale, Arizona
until the earlier of the Executive’s purchase of a residence
within 50 miles of a Company Office or December 31,
2009.
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The Executive shall be entitled to receive an
additional payment from the Company attributable to any income and
employment taxes payable by the Executive as a result of receiving
any of the payments specified in the forgoing provisions of this
Section 3(f) (the “Gross-Up Payment”) in an amount such
that, after payment by the Executive of any income and employment
taxes imposed upon the Gross-Up Payment, the Executive shall retain
an amount of the Gross-Up Payment equal to such taxes.
(g) Expense Reimbursements . The
Company shall reimburse the Executive for all reasonable and
customary out-of-pocket expenses incurred by the Executive related
to the performance of his duties and responsibilities for the
Company. The Executive shall comply with the Company’s
standard expense reimbursement policies and procedures in effect
from time to time; provided, however, that in no event shall an
amount be reimbursed later than December 31 of the year
following the year in which the expense is incurred.
(h) Taxes . All taxes (other than
the Company’s portion of any FICA or other employment taxes)
on the Base Salary and other amounts (including, but not limited
to, severance) payable to the Executive under this Agreement or any
plan or program shall be the responsibility of and paid by the
Executive. The Company shall be entitled to withhold from the
Executive’s Base Salary and all other amounts payable to him
under this Agreement or any plan or program (i) applicable income,
FICA, employment and other taxes, (ii) such amounts authorized
by the Executive, and (iii) other appropriate and customary
amounts.
(i) Insurance and Indemnification .
At all times during the Term, the Company shall provide to the
Executive the same coverage that it provides to its other directors
and executive officers under the Company’s directors and
officers liability insurance policy or policies as are currently in
effect or as may hereafter be in effect from time to time. At all
times during the Term, the Company shall indemnify the Executive
with respect to claims brought by Persons other than the Company
against the Executive arising from the Executive’s service as
an employee, officer or director of the Company in accordance with
the Certificate of Incorporation of the Company as is currently in
effect or as may hereafter be amended from time to time.
(j) Acknowledgment by the Executive
. Notwithstanding anything in this Agreement to the contrary, the
Executive understands, acknowledges and agrees that the Company
may, in its sole discretion, amend, modify, replace, freeze,
suspend or terminate any or all of the incentive compensation,
employee benefit, retirement and other plans, programs or
arrangements available, as well as any other rules, policies or
procedures applicable, to the Executive from time to time, but only
so long as any such actions are not designed to affect solely the
Executive.
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Section 4 . Termination of Employment .
In addition to a termination of the
Executive’s employment upon a determination by the Company or
the Executive not to extend the Term (as provided in Section 1(b)
hereof), the Executive’s employment with the Company may be
terminated during the Term in any of the following ways:
(a) Termination by the Company for
Cause . The Company, upon written notice to the Executive, may
terminate the Executive’s employment with the Company
immediately for Cause. For purposes of this Agreement,
“Cause” is defined as any of the following:
(i) any refusal by the Executive to follow
the lawful directions of the Board of Directors that are consistent
with the Executive’s duties and responsibilities under this
Agreement; or
(ii) any gross negligence by the Executive
in managing the business or affairs of the Company or any of its
subsidiaries or affiliates or in carrying out his duties and
responsibilities under this Agreement (or any gross negligence by
any employee of the Company who reports to the Executive in
managing the business or affairs of the Company or any of its
subsidiaries or affiliates or in performing such employee’s
duties and responsibilities with the knowledge of the Executive and
where the Executive allows or fails to prevent such negligent acts
or omissions); or
(iii) any dishonesty, fraud, theft or
embezzlement by the Executive (or by any employee of the Company or
any of its subsidiaries or affiliates who reports to the Executive
with the knowledge of the Executive and where the Executive allows
or fails to prevent such dishonesty, fraud, theft or embezzlement
by such employee) upon or against the Company, any of the
Company’s subsidiaries or affiliates or any their respective
customers; or
(iv) any conviction of, or the entering of
any plea of guilty or nolo contendere by, the
Executive for any felony; or
(v) any intentional or negligent violation
by the Executive (or by any employee of the Company or any of its
subsidiaries or affiliates who reports to the Executive with the
knowledge of the Executive and where the Executive allows or fails
to prevent such violation by such employee) of any law, statute,
rule, regulation or governmental requirement that has or may have a
material adverse effect on the Company or any of the
Company’s subsidiaries or affiliates; or
(vi) any material noncompliance by the
Executive (or by any employee of the Company or any of its
subsidiaries or affiliates who reports to the Executive with the
knowledge of the Executive and where the Executive allows or fails
to prevent such noncompliance by such employee) with any provision
of any employee handbook, code of business conduct and ethics or
corporate governance guidelines, or any rule, policy or procedure,
of the Company or any of the Company’s subsidiaries or
affiliates as are applicable to the Executive or such employee and
currently in effect or as may hereafter be in effect from time to
time; or
(vii) any breach by the Executive of any
provision of this Agreement; or
(viii) any inaccuracy in or breach of the
Executive’s representation and warranty contained in Section
13(p) hereof.
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(b) Termination by the Company without
Cause . The Company, upon not less than thirty
(30) days’ prior written notice to the Executive, may
terminate the Executive’s employment with the Company without
Cause.
(c) Termination by the Executive for
Good Reason . The Executive, upon not less than thirty
(30) days’ prior written notice to the Company, may
terminate his employment with the Company for Good Reason. For
purposes of this Agreement, “Good Reason” is defined as
any material breach by the Company of any provision of this
Agreement.
(d) Termination by the Executive
without Good Reason . The Executive, upon not less than thirty
(30) days’ prior written notice to the Company, may
terminate his employment with the Company without Good
Reason.
(e) Termination in the Event of Death
or Disability . The Executive’s employment with the
Company shall terminate immediately upon the death of the
Executive. The Executive’s employment with the Company may be
terminated immediately by the Company in the event of the
occurrence of a Disability of the Executive. For purposes of this
Agreement, a “Disability” shall be defined as an
illness or a physical or mental disability or incapacity of the
Executive such that the Executive has not been able to perform the
essential functions of his duties and responsibilities under this
Agreement (as reasonably determined by the Company), with or
without reasonable accommodation, for at least ninety
(90) days (whether consecutive or non-consecutive days) during
any one (1) year period. A Disability may, but is not required
to, be evidenced by a signed, written opinion of an independent,
qualified medical doctor selected by the Board of Directors or a
committee thereof and paid for by the Company. The Executive hereby
agrees to make himself promptly available for examination by such
medical doctor upon reasonable request by the Board of Directors or
a committee thereof and consents to provide promptly the results of
such examination and any diagnosis to the Company. Nothing in this
Section is intended to be in violation of the Americans with
Disabilities Act.
(f) Termination by the Executive in the
Event of a Change in Control . Following a Change in Control
(as hereinafter defined), the Executive, upon not less than thirty
(30) days’ prior written notice to the Company, may
terminate his employment with the Company upon the occurrence of
any of the following events during the one (1) year period
immediately following a Change in Control (and any such termination
by the Executive shall not constitute a termination without Good
Reason under Section 4(d)):
(i) a material reduction in the
Executive’s duties or responsibilities from those in effect
on the day before the Change in Control,
(ii) a requirement that the Executive
maintain his principal office or otherwise be based out of an
office other than at the Company’s headquarters where located
on the day immediately before the Change in Control, or
(iii) a material breach of any provision of
this Agreement by the Company.
For purposes of this Agreement, a “Change
in Control” shall mean a transaction or series of related
transactions pursuant to which (A) at least fifty-one percent
(51%) of the outstanding shares of common stock of the Company, on
a fully diluted basis, shall subsequent to the date of this
Agreement be acquired by any Person (as hereinafter defined)
unrelated to or unaffiliated with the Company, (B) the Company
merges into, consolidates with or effects any plan of share
exchange or other combination with any Person unrelated to or
unaffiliated with the Company in a transaction where the holders of
voting shares of the Company immediately prior to the transaction
do not hold a majority of the voting shares of the surviving entity
immediately following such transaction, or (C) the Company
disposes of all or substantially all of its assets other than in
the ordinary course of business, to any Person unrelated to or
unaffiliated with the Company.
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Notwithstanding the foregoing, for purposes of
the definition of “Change in Control,” (x) a
Person shall not include any subsidiary or affiliate of the
Company, the Chromcraft Revington, Inc. Employee Stock Ownership
Plan Trust which forms a part of the Chromcraft Revington, Inc.
Employee Stock Ownership Plan (collectively, the
“ESOP”), the Chromcraft Revington, Inc. Savings Plan
(the “401(k) Plan”) or any other employee benefit plan
currently or hereafter sponsored by the Company or any subsidiary
or affiliate of the Company, (y) the outstanding shares of
common stock of the Company, on a fully diluted basis, shall
include all shares owned by the ESOP, whether allocated or
unallocated to the accounts of participants, and (z) a
transaction or a series of transactions pursuant to which the
Company is taken private or no longer has shares of stock that are
listed for trading on any securities exchange or market shall not
constitute a Change in Control.
(g) Limited Right to Cure . In the
event that the Company desires to terminate the Executive’s
employment for Cause pursuant to Sections 4(a)(i), 4(a)(vi) or
4(a)(vii) hereof, the Company shall first deliver to the Executive
a written notice which shall (i) indicate the specific
provisions of this Agreement relied upon for such termination,
(ii) set forth in reasonable detail the facts and
circumstances claimed to provide the grounds for such termination,
and (iii) describe the steps, actions, events or other items
that must be taken, completed or followed by the Executive to
correct or cure the grounds for such termination. The Executive
shall then have thirty (30) days following the effective date
of such notice to fully correct and cure the grounds for the
termination of his employment to the reasonable satisfaction of the
Board of Directors of the Company. If the Executive does not fully
correct and cure such grounds within such thirty (30) day period,
then the Company shall have the right to terminate the
Executive’s employment with the Company immediately for Cause
upon delivering to the Executive written notice of such fact, and
the Executive shall have no further cure period with respect
thereto. Notwithstanding the foregoing and regardless of the
grounds for the termination, the Executive shall be entitled to so
correct and cure only one (1) time during the Term, unless the
Board of Directors has reasonably determined that the grounds for
termination were incorrect or inapplicable, in which case the
Executive shall still have the ability to correct and cure one
(1) time during the Term.
In the event that the Executive desires to
terminate his employment with the Company for Good Reason pursuant
to Section 4(c) hereof, the Executive shall first deliver to the
Company a written notice which shall (A) indicate the specific
provisions of this Agreement relied upon for such termination,
(B) set forth in reasonable detail the facts and circumstances
claimed to provide the grounds for such termination, and
(C) describe the steps, actions, events or other items that
must be taken, completed or followed by the Company to correct or
cure the grounds for such termination. The Company shall then have
thirty (30) days following the effective date of such notice
to fully correct and cure the grounds for the Executive’s
termination of his employment to the reasonable satisfaction of the
Executive. If the Company does not fully correct and cure such
grounds within such thirty (30) day period, then the Executive
shall have the right to terminate his employment with the Company
immediately for Good Reason upon delivering to the Company written
notice of such fact, and the Company shall have no further cure
period with respect thereto. Notwithstanding the foregoing and
regardless of the grounds for the termination, the Company shall be
entitled to so correct and cure only one (1) time during the
Term, unless the Board of Directors has reasonably determined that
the grounds for termination were incorrect or inapplicable, in
which case the Company shall still have the ability to correct and
cure one (1) time during the Term.
(h) Mandatory Resignation . If the
Executive’s employment with the Company is terminated
(whether by the Company or by the Executive), the Executive shall
immediately resign as a director of and from all other offices and
positions with the Company and each of its subsidiaries or
affiliates.
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Section 5 . Payment Upon Termination of Employment
. Upon the termination of the Executive’s employment with the
Company pursuant to Section 1(b) or Section 4 hereof, the
Company shall pay to the Executive that portion of the
Executive’s Base Salary earned through his last day of
employment with the Company, all amounts that are fully vested and
properly payable on or before his last day of employment with the
Company under the ESOP, the 401(k) Plan and all other retirement
plans sponsored or maintained by the Company in accordance with the
provisions of such plans, and all other amounts that are properly
payab
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