EMPLOYMENT AGREEMENTEmployee Retention Agreement |
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Exhibit 10.94
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the Agreement) is made and entered into as of the
1st 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,
W I T N E S S E T H:
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 Executives 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 Executives employment with the Company is terminated
earlier in accordance with Section 4 hereof, the initial term of the
Executives 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
Executives 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 Executives 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 Executives 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 Companys 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 Executives 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
Executives 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
Companys 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 Executives 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 Companys 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 Executives 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 Companys 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 Companys 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 Executives
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 Executives 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 employees 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 Executives 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 Executives
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 Executives
purchase of a residence within 50 miles of a Company Office or
December 31, 2009. |
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 Companys 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 Companys 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 Executives 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 Companys 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 Executives
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 Executives employment upon a determination by
the Company or the Executive not to extend the Term (as provided in Section
1(b) hereof), the Executives 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 Executives 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 Executives 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 employees 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 Companys 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 Companys 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
Companys 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 Executives 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
Executives 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 Executives employment with the
Company shall terminate immediately upon the death of the Executive. The
Executives 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 Executives 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 Companys 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
Executives 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 Executives 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 Executives 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 Executives 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 Executives employment with the Company pursuant to
Section 1(b) or Section 4 hereof, the Company shall pay to the Executive
that portion of the Executives 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 payable to the Executive by the Company that have not
been paid to him on or before his last day of employment. In addition, the
Company shall pay severance to the Executive in accordance with the appropriate
subsection below, subject to termination or reduction in accordance with
Section 5(h) and suspension in accordance with Section 5(j).
(a) Termination
by the Company for Cause or by the Executive without Good Reason. Upon the
termination of the Executives employment by the Company for Cause pursuant to
Section 4(a) hereof or by the Executive without Good Reason pursuant to Section
4(d) hereof, the Company shall pay no severance to the Executive; provided,
however, that in the event the Executive retires from the Company after
reaching 65 years of age, he shall receive a severance payment, payable in
a lump sum, equal to the Executives Base Salary (calculated as a monthly
amount) for three (3) months.
(b) Termination
by the Company Without Cause or by the Executive for Good Reason. Upon the
termination of the Executives employment by the Company without Cause pursuant
to Section 4(b) hereof or by the Executive for Good Reason pursuant to Section
4(c) hereof, the Company shall pay to the Executive (i) if his last day of
employment is on or prior to December 31, 2009, a severance payment equal
to his Base Salary (calculated as a monthly amount) for twelve
(12) months, or (ii) if his last day of employment is subsequent to
December 31, 2009, a severance payment equal to two (2) times his
Base Salary (calculated as a monthly amount) for twenty-four (24) months.
(c) T






