Exhibit 10.4
May 23, 2005
Mr. Thomas S. McHugh
939 Castle Pines Drive
Ballwin, MO 63012
Dear Tom:
This is to confirm your resignation, effective
as of June 30, 2005, from your employment with Huttig Building
Products, Inc. (the “Company”) as its Vice President
– Chief Financial Officer, from all positions as an employee,
officer and director of any direct or indirect subsidiary of the
company and from all capacities as member of the plan
administration committee or trustee of any of the Company’s
or its unions’ benefit plans. In accordance with our prior
discussions, you will be entitled to the following (subject to all
applicable tax withholdings):
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(a)
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You will be
entitled to receive payment in full promptly after the date of this
letter of (i) any accrued but unpaid salary and payment for any
accrued vacation, (ii) reimbursement for any previously
unreimbursed Company-related business expenses (subject to
presentation of adequate supporting documentation therefor and
compliance with other Company policies regarding expense
reimbursement), and (iii) the entire balance of your EVA bank
account under the Company’s EVA Incentive Compensation Plan,
as of December 31, 2004, after crediting the bonus paid subsequent
to December 31, 2004, and accruing interest through June 30, 2005,
on the remaining unpaid balance.
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(b)
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During the
period beginning on the date of this letter and ending June 30,
2006 (the “Severance Period”), you will be entitled to
receive severance pay in the form of salary continuation, at a rate
equal to your current rate of base salary, payable in accordance
with the Company’s regular payroll practices. In addition,
you will be entitled to continue to participate in the
Company’s health, life and disability insurance plans, and
the Company will pay the portion of the plan costs that the Company
would pay if you continued to be an active employee, until the
earliest of (i) the expiration of the Severance Period or (ii) the
date you commence other employment.
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(c)
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Except as provided in (a) above,
or as may otherwise be approved by the Management Organization and
Compensation Committee (the “Committee”) or the Board
of Directors of the Company, all of your compensation and benefits,
to the extent accrued and vested through but not after the date of
this letter, under the Company’s benefit plans and programs
shall be paid to you in accordance with the terms of such plans and
programs. Without limiting the generality of the foregoing, (i)
subject to the approval of the Committee, your vested stock options
will expire one year after the date of this letter, and otherwise
in accordance with the terms of the 1999 Stock Incentive Plan and
the Amended and Restated 2001 Stock Incentive Plan; provided,
however, that the Company will seek the approval of the Committee
of the vesting of shares of restricted stock and stock options that
were not vested as of the date of this letter; and (ii) you will be
entitled to continued use of a company car, cell phone and laptop
computer until the earliest of (A) the expiration of the Severance
Period, (B) the date you commence other
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Mr. Thomas S. McHugh
May 23, 2005
Page 2 of 3
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employment or
(C) your relocation from the St. Louis, Missouri area, at which
time your right to use such property shall terminate and you will
be responsible for returning such property to the
Company.
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(d)
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It is expressly
understood, acknowledged and agreed that all compensation described
in paragraphs (b) and (c) above shall be subject to the duty to use
your reasonable efforts to mitigate damages by seeking other
employment and shall be offset by any compensation which you
receive from such other employment or which you could have received
with reasonable effort
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