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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Chromcraft Revington, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
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CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
CHROMCRAFT REVINGTON, INC.
1100 NORTH WASHINGTON STREET
DELPHI, INDIANA 46923
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, MAY 9, 2006
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To the Stockholders of Chromcraft Revington, Inc.:
The annual meeting of stockholders of Chromcraft Revington, Inc. (the
"Company") will be held on Tuesday, May 9, 2006 at 10:30 a.m., Indianapolis
time, at the Conrad Hotel, 50 West Washington Street, Indianapolis, Indiana, for
the following purposes:
1. To elect eight directors of the Company, each of whom will serve a
term expiring at the 2007 annual meeting of stockholders and until his
successor is duly elected and qualified.
2. To approve the 2006 Executive Incentive Plan of the Company.
3. To approve the amended and restated Directors' Stock Plan of the
Company.
4. To transact such other business as may properly come before the annual
meeting of stockholders and any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 10, 2006 as
the record date for determining stockholders entitled to notice of and to vote
at the annual meeting of stockholders.
Whether or not you plan to attend the annual meeting, you are urged to
complete, date and sign the enclosed proxy and return it promptly in the
envelope provided so that your shares are represented and voted at the annual
meeting.
By Order of the Board of Directors,
Frank T. Kane
Vice President-Finance,
Chief Financial Officer
and Secretary
April 6, 2006
CHROMCRAFT REVINGTON, INC.
1100 NORTH WASHINGTON STREET
DELPHI, INDIANA 46923
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PROXY STATEMENT
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GENERAL INFORMATION
This proxy statement is furnished to the stockholders of Chromcraft
Revington, Inc. (the "Company") in connection with the solicitation by the Board
of Directors of the Company of proxies to be voted at the annual meeting of
stockholders of the Company to be held on Tuesday, May 9, 2006 at 10:30 a.m.,
Indianapolis time, at the Conrad Hotel, 50 West Washington Street, Indianapolis,
Indiana, and at any and all adjournments or postponements of the meeting. This
proxy statement and accompanying form of proxy were first mailed to stockholders
of the Company on or about April 6, 2006.
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mail, proxies may be solicited personally or by telephone by
directors, officers and certain employees of the Company who will not be
specially compensated for such solicitation. The Company also will request
brokerage firms, nominees, custodians and fiduciaries to forward the proxy
solicitation materials relating to the annual meeting to the beneficial owners
of common stock and will reimburse such institutions for the cost of forwarding
these materials.
Any stockholder giving a proxy has the right to revoke it at any time
before the proxy is exercised. Revocation may be made by written notice
delivered to the Secretary of the Company, by executing and delivering to the
Company a proxy bearing a later date or by attending and voting in person at the
annual meeting.
The shares represented by proxies received by the Company will be voted as
instructed by the stockholders giving the proxies. In the absence of specific
instructions, proxies will be voted as follows:
- FOR the election as directors of the eight persons named as nominees
in this proxy statement, each of whom will serve for a term expiring
at the 2007 annual meeting of stockholders and until his successor is
duly elected and qualified;
- FOR the approval of the 2006 Executive Incentive Plan of the Company;
and
- FOR the approval of the amended and restated Directors' Stock Plan of
the Company.
If for any reason any director nominee named in this proxy statement
becomes unable or unwilling to serve, the persons named as proxies in the
accompanying form of proxy will have authority to vote for a substitute nominee
should the Board of Directors determine to nominate another person. The
accompanying form of proxy gives discretionary authority to the persons named as
proxies to vote in accordance with the directions of the Board of Directors on
any other matters that may properly come before the annual meeting.
The principal executive office of the Company is located at 1100 North
Washington Street, Delphi, Indiana 46923.
VOTING SECURITIES
The Company has one class of capital stock outstanding consisting of common
stock. The close of business on March 10, 2006 has been fixed as the record date
(the "Record Date") for determining stockholders of the Company entitled to
notice of and to vote at the annual meeting of stockholders and any adjournments
or postponements thereof. On the Record Date, the Company had 6,147,276 shares
of common stock outstanding and entitled to vote. There are no other outstanding
securities of the Company entitled to vote.
Each share of common stock of the Company is entitled to one vote,
exercisable in person or by proxy. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of common stock is necessary to
constitute a quorum in order for business to be conducted at the annual meeting.
Shares voting, abstaining or withholding authority to vote on any matter at the
annual meeting will be counted as present for purposes of determining a quorum.
Assuming a quorum is present at the annual meeting, the election of directors
will be determined by a plurality of the votes cast, and approval of the other
items set forth in the Notice for this meeting as well as any other matters that
may properly come before the meeting will be approved by the affirmative vote of
the holders of at least a majority of the shares present, in person or by proxy,
at the annual meeting.
Instructions on the accompanying proxy to withhold authority to vote for
one or more of the director nominees will result in those nominees receiving
fewer votes. In counting the votes with respect to the approval of the other
items set forth in the Notice for this meeting as well as any other matters that
may properly come before the meeting, abstentions will have the same effect as
votes against the matter. Shares that are the subject of a broker non-vote will
be deemed to be not voted.
Each participant in the Employee Stock Ownership Plan (the "ESOP") of the
Company will receive a voting instruction card to use to provide voting
instructions to First Bankers Trust Services, Inc., the trustee for the ESOP,
for the shares allocated to the participant's account under the ESOP as of the
Record Date. Voting instructions to the trustee should be completed, dated,
signed and returned in the envelope provided by May 3, 2006. Voting instructions
of individual participants will be kept confidential by the ESOP trustee and
will not be disclosed to any director, officer or other person at the Company.
Unless the ESOP or the fiduciary duties of the ESOP trustee require
otherwise, the trustee will vote (i) the shares allocated to participants'
accounts under the ESOP in accordance with the instructions received in a timely
manner from participants, and (ii) the shares that have not been allocated to
participants' accounts in accordance with the directions of the Benefit Plans
Administrative Committee of the Company (the "Benefits Committee"). If a
participant does not return his or her voting instruction card in a timely
manner or if the voting instruction card is returned unsigned or without
indicating how the participant desires to vote, the Benefits Committee will
direct the ESOP trustee how to vote the shares allocated to the participant's
account.
Each participant in the Savings Plan of the Company will receive a voting
instruction card to use to provide voting instructions to T. Rowe Price Trust
Company, Inc., the trustee for the Savings Plan, for the shares credited to the
participant's account under the Savings Plan as of the Record Date. Voting
instructions to the trustee should be completed, dated, signed and returned in
the envelope provided by May 3, 2006. Voting instructions of individual
participants will be kept confidential by the Savings Plan trustee and will not
be disclosed to any director, officer or other person at the Company.
Unless the Savings Plan or the fiduciary duties of the Savings Plan trustee
require otherwise, the trustee will vote the shares credited to participants'
accounts under the Savings Plan in accordance with
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the instructions received in a timely manner from participants. If a participant
does not return his or her voting instruction card in a timely manner or if the
voting instruction card is returned unsigned or without indicating how the
participant desires to vote, the Benefits Committee will direct the Savings Plan
trustee how to vote the shares credited to the participant's account.
The Benefits Committee is comprised of two members, namely Benjamin M.
Anderson-Ray, who is the Company's Chairman and Chief Executive Officer, and
Frank T. Kane, who is the Company's Vice President-Finance and Chief Financial
Officer. The members of the Benefits Committee are appointed by the Board of
Directors and may be changed by the Board at any time.
ITEM 1 - ELECTION OF DIRECTORS
The first item to be acted upon at the annual meeting of stockholders will
be the election of eight directors of the Company, each of whom will serve a
term expiring at the 2007 annual meeting of stockholders and until his successor
is duly elected and qualified.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE ELECTION
AS DIRECTORS OF EACH OF THE NOMINEES NAMED BELOW.
The Nominating and Corporate Governance Committee first considered and then
recommended to the Board of Directors that each of the director nominees named
in this proxy statement be nominated to serve as a director of the Company. The
Board of Directors has accepted the recommendation of the Nominating and
Corporate Governance Committee and has nominated these individuals to serve as
directors of the Company.
The Company expects each nominee for election as a director named in this
proxy statement to be able to serve if elected. If any nominee is not able to
serve, proxies will be voted in favor of the remainder of those nominated and
may be voted for substitute nominees if selected by the Board of Directors,
unless the Board chooses to reduce the number of directors of the Company. The
persons named on the enclosed proxy intend to vote each proxy, if properly
signed and returned, FOR the election of each of the eight director nominees
identified in this proxy statement, unless indicated on the proxy that the
stockholder's vote should be withheld from any or all of the nominees.
Set forth below are the name and age of each director nominee, his
principal occupation and his directorships with other companies. All of the
nominees currently are members of the Board of Directors of the Company.
BENJAMIN M. ANDERSON-RAY, age 51, was appointed to the Board of Directors
and as Chief Executive Officer of the Company on June 22, 2005. He was named
Chairman of the Board as of August 1, 2005. From 2004 to 2005, Mr. Anderson-Ray
served as a Managing Partner of Spring Garden Corporate Advisors, Inc., an
investment advisory firm serving the horticultural industry. He is also a
co-founder and member of the board of directors of PALCO Systems, a medical
equipment developer. From 2002 to 2004, he served as the Chief Executive Officer
of Gravograph New Hermes Holdings, LLC, a manufacturer and marketer of
equipment, software, consumables and related services in the durable marking
industry. Prior to Gravograph, Mr. Anderson-Ray held various senior management
positions, including President of the Global Business Group at Sunrise Medical,
Inc., a durable medical equipment company. Earlier in his career, he held senior
marketing, sales and general management positions at Newell Rubbermaid, Inc.,
Black & Decker Corporation and General Electric Company. Mr. Anderson-Ray is a
member of the Company's Strategy Committee, which he chairs.
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RONALD H. BUTLER, age 56, is a director and the President and Chief
Executive Officer of Pet Resorts, Inc., a privately-held company that builds
premium pet boarding, daycare, pet training and grooming facilities. Previously,
Mr. Butler served as the Chief Executive Officer of Three Dog Bakery, Inc., a
manufacturer of pet foods. Mr. Butler also serves as a director of ARXX Building
Products (Ontario, Canada) and has held senior management positions at various
companies, including PETsMART and Payless Cashways, Inc. Mr. Butler has served
as a director of the Company since 2004. He is a member of the Company's
Compensation Committee, which he chairs, and Strategy Committee.
JOHN R. HESSE, age 72, was appointed to the Board of Directors on December
9, 2005. Mr. Hesse is the President of Spring Garden Corporate Advisors, Inc.,
an investment advisory firm serving the horticultural industry. From 1997 until
2002, Mr. Hesse served as the Chairman and Chief Executive Officer of
International Garden Products, Inc., a consolidator of horticultural production
companies. Mr. Hesse is a member of the Company's Audit Committee, Nominating
and Corporate Governance Committee and Strategy Committee.
DAVID L. KOLB, age 67, served as the Chairman of the Board of Directors of
Mohawk Industries, Inc., a worldwide producer and distributor of flooring
products, from 1988 until his retirement in 2004 and as Chief Executive Officer
from 1988 until 2000. From 1980 until 1988, Mr. Kolb served as the President of
Mohawk Carpet Corporation. Mr. Kolb currently serves as a director of Mohawk
Industries, Inc., Aaron Rents, Inc. and Paxar Corp. Aaron Rents, Inc. is a
retailer specializing in the rental and sale of residential and office
furniture, consumer electronics and home appliances and accessories. Paxar Corp.
is a provider of identification and tracking solutions for retailers and apparel
manufacturers. Mr. Kolb is a member of the Company's Compensation Committee. He
has served as a director of the Company since 1992.
LARRY P. KUNZ, age 71, served as the President and Chief Operating Officer
of Payless Cashways, Inc., a retailer of building materials and home improvement
products, from 1986 until his retirement in 1993. Mr. Kunz is a member of the
Company's Nominating and Corporate Governance Committee, which he chairs. He has
served as a director of the Company since 1992.
THEODORE L. MULLETT, age 64, has been a management consultant since 1998.
From 1965 until his retirement in 1998, Mr. Mullett was a certified public
accountant with KPMG LLP and was a partner with that firm from 1973 until 1998.
Mr. Mullett is a member of the Company's Audit Committee, which he chairs, and
the Compensation Committee. He has served as a director of the Company since
2002.
CRAIG R. STOKELY, age 60, was appointed to the Board of Directors on
December 9, 2005. Since 1992, Mr. Stokely has served as the President of The
Stokely Partnership, Inc., a management consulting firm. Previously, he served
as Senior Vice President of Corporate Development at Fellowes, Inc., a worldwide
manufacturer of office products. Earlier in his career, Mr. Stokely held senior
management positions with the LeeWards and Kenner Toy divisions of General
Mills, Inc. Mr. Stokely currently serves as a director of Showingtime, Inc., a
privately-held technology company serving the residential real estate industry.
He is a member of the Company's Compensation Committee, Nominating and Corporate
Governance Committee and Strategy Committee.
JOHN D. SWIFT, age 64, was appointed to the Board of Directors on December
9, 2005. Mr. Swift served as the Vice President-Finance and Chief Financial
Officer of Mohawk Industries, Inc., a worldwide producer and distributor of
flooring products, from 1987 until his retirement in 2004. Earlier in his
career, he held various finance and accounting positions at General Electric
Company and Firestone Tire and Rubber Company. Mr. Swift is a member of the
Company's Audit Committee and Strategy Committee.
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ITEM 2 - APPROVAL OF THE COMPANY'S EXECUTIVE INCENTIVE PLAN
The second item to be acted upon at the annual meeting of stockholders will
be the approval of the 2006 Executive Incentive Plan of the Company.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR
APPROVAL OF THE EXECUTIVE INCENTIVE PLAN
BACKGROUND
The Board of Directors of the Company approved a new Executive Incentive
Plan effective as of January 1, 2006. The Board will submit the plan to
stockholders for approval at the annual meeting of stockholders. Awards made
under the Executive Incentive Plan are subject to stockholder approval of the
plan.
If approved by stockholders, the new plan will supersede and replace the
Company's existing Short Term Executive Incentive Plan and Long Term Executive
Incentive Plan (both of which were approved by stockholders in 2002). The Board
of Directors determined that it would be desirable to approve a new plan that
will provide for long and short term awards under a single plan and that will
provide the Compensation Committee with the flexibility to use various types of
equity-based compensation awards.
The principal differences between the new Executive Incentive Plan and the
current Long Term Executive Incentive Plan are that the new plan (i) allows the
Compensation Committee to award long-term incentive compensation in the form of
nonqualified stock options, stock appreciation rights, restricted stock or
performance shares (payable in the discretion of the Committee 50% in stock
options or shares and 50% in cash), whereas the current plan permits long-term
awards to be paid only 50% in stock options and 50% in cash, and (ii) allows for
a maximum aggregate of one million shares subject to stock options, stock
appreciation rights, shares of restricted stock and performance shares, whereas
the current plan's limit on the maximum number of awards is derived by virtue of
the maximum number of stock options that may be issued under the Company's 1992
Stock Option Plan. The principal differences between the new Executive Incentive
Plan and both the current Short Term and Long Term Executive Plans are that the
new plan (i) provides for different business criteria upon which performance
measures are based, (ii) provides for different limitations on maximum payouts
of awards, and (iii) allows for the payment to a participant of excise and
certain other taxes relating to an excess parachute payment.
In addition to granting stock options under the new plan, stock options may
continue to be granted under the Company's 1992 Stock Option Plan (as amended
and restated effective March 15, 2002) until the maximum number of shares under
the 1992 Stock Option Plan has been issued. As of the date of this proxy
statement, there are 265,543 shares available for issuance pursuant to stock
options under the 1992 plan.
If stockholders approve the new Executive Incentive Plan, no new awards
will be made under the Short Term Executive Incentive Plan or the Long Term
Executive Incentive Plan. All outstanding awards (whether vested or unvested)
under these plans, however, will remain valid, outstanding and subject to the
terms and conditions of these plans. If stockholders do not approve the new
Executive Incentive Plan, then awards will continue to be made under the Short
Term Executive Incentive Plan and the Long Term Executive Incentive Plan.
The purposes of the new Executive Incentive Plan are (i) to provide key
employees of the Company and its affiliates with an incentive for making
outstanding contributions to the financial success
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of the Company and its affiliates, (b) to provide key employees with an
incentive to achieve certain short-term objectives of the Company and its
affiliates, (c) to promote the long-term financial success of the Company and
its affiliates by further aligning the interests of key employees with the
interests of the Company's stockholders, and (d) to provide the Company with an
ability to attract, motivate and retain the services of key employees who make
significant contributions to the financial success of the Company and upon whose
judgment, initiative, effort and performance the successful conduct of the
Company's business is largely dependent.
The Executive Incentive Plan also is intended to provide performance-based
compensation to certain key employees within the meaning of Section 162(m) of
the Internal Revenue Code ("Code Section 162(m)"). Code Section 162(m) and the
regulations under this section place a $1,000,000 limit on the federal income
tax deduction that may be taken by the Company for compensation paid to its
chief executive officer and each of its four other most highly compensated
officers (these five individuals are referred to as covered employees).
Compensation that is performance-based, however, is not subject to this tax
deduction limitation. In general, compensation is treated as performance-based
if it is payable on the attainment of objective performance goals established in
advance by a committee of outside directors and the material terms of the plan
under which the compensation is paid are disclosed to and approved by
stockholders.
Accordingly, stockholders are being asked to approve this plan so that
awards under the plan will not be subject to the federal income tax deduction
limit described above.
A summary of the material terms of the Executive Incentive Plan is set
forth below. A copy of the plan is attached as Appendix A to this proxy
statement, and the summary below is qualified in its entirety by reference to
this Appendix.
SUMMARY OF MATERIAL PROVISIONS OF THE EXECUTIVE INCENTIVE PLAN
Eligibility. Any current or future officer or key employee of the Company
or any of its affiliates designated by the Compensation Committee of the Board
of Directors is eligible to participate in the Executive Incentive Plan and to
receive an award under the plan.
No employee will have the right to be selected to be a participant in the
plan, to receive an award under the plan or, after having been selected to be a
participant for a particular performance period, to be selected to be a
participant for another performance period or to receive any future awards
(whether or not on the same terms and conditions or with similar performance
measures or otherwise). In addition, participation in the plan will not confer
upon any participant any right to continued employment by the Company or any of
its affiliates and will not interfere with or affect in any way the right of the
Company or an affiliate to terminate any participant's employment at any time or
to change the terms and conditions of such employment unless expressly provided
otherwise in a written employment agreement between the participant and the
Company or an affiliate.
Types of Awards. The Executive Incentive Plan permits the award of
nonqualified stock options, stock appreciation rights, restricted stock,
performance shares and cash. Awards under the plan will be subject to
performance measures, continued service with the Company or an affiliate and/or
other criteria established by the Compensation Committee.
Maximum Number of Shares Subject to the Plan. Subject to certain
adjustments, a maximum aggregate of one million shares subject to nonqualified
stock options, stock appreciation rights, shares of restricted stock and
performance shares may be granted under the plan. If an equity-based award does
not vest or is not earned and is forfeited, the shares subject to that award
will be available for new grants
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under the plan. The one million shares available under the new plan are in
addition to the 265,543 options available for grant under the Company's 1992
Stock Option Plan.
Performance Measures. The Compensation Committee will determine the
performance measures (if applicable) with respect to an award for each
participant and for each performance period. The performance measures will be
based on business criteria against which a participant's performance will be
measured to determine whether a cash award will be earned or an equity-based
award will vest or become earned or exercisable. These business criteria will
consist of one or more of the following as they relate to the Company or one of
its affiliates:
(i) earnings before interest and taxes;
(ii) earnings before interest, taxes, depreciation and amortization;
(iii) earnings before interest, taxes, depreciation and amortization and
non-cash ESOP compensation expenses;
(iv) return on net assets;
(v) return on equity;
(vi) return on invested capital;
(vii) sales or revenues;
(viii) net income;
(ix) earnings per share on a diluted basis; and
(x) such other measures, metrics or strategic actions as may be
determined by the Compensation Committee that will apply to a
participant who is not a covered employee.
The Compensation Committee is not required to establish performance
measures for all awards under the new Executive Incentive Plan but must
establish performance measures based on one or more of the above criteria for
awards intended to qualify as "performance-based compensation" under Section
162(m) of the Internal Revenue Code.
The performance measures also will include an award rate and will provide
for a targeted level or levels of achievement relating to one or more of the
foregoing business criteria. Performance measures will have "threshold,"
"target" and "maximum" levels. The performance measures may differ among
participants, awards and performance periods. Achievement of the performance
measures will be determined based upon the audited financial statements of the
Company prepared in accordance with generally accepted accounting principles (or
as may otherwise be determined by the Board of Directors) and may exclude any
one-time, non-recurring charges or credits as determined by the Board of
Directors or the Compensation Committee.
Performance Periods. The Compensation Committee will determine the
performance periods within which a participant must achieve the applicable
performance measures. With respect to equity-based awards, the performance
periods normally will consist of three year periods. Cash awards normally will
involve performance periods of one year.
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Limitations on Awards. Potential awards will be based upon (i) the extent
to which the participant has met or exceeded the performance measures for the
applicable performance period and/or satisfied continued service requirements
with the Company or an affiliate or other requirements, and (ii) the
participant's position at the Company or one of its affiliates. In addition, the
following limitations will apply to awards under the plan:
(i) The maximum amount of all cash awards paid under the plan to any one
participant in any fiscal year will not exceed (a) with respect to
each officer of the Company, the lesser of two times such officer's
base salary paid in the fiscal year prior to the year in which the
award is paid or $850,000, and (b) with respect to each other
participant, the lesser of such participant's base salary paid in the
fiscal year prior to the year in which the award is paid or $300,000;
(ii) The maximum amount of all equity-based awards granted under the plan
to any one participant in any fiscal year for performance periods in
excess of one year will not exceed (i) with respect to each officer
of the Company, the lesser of two times such officer's base salary
paid in the fiscal year prior to the year in which the award is
granted or $850,000 (except that the maximum amount of equity-based
awards that may be granted to Mr. Anderson-Ray in 2006 will be
$850,000), and (ii) with respect to each other participant, the
lesser of such participant's base salary paid in the fiscal year
prior to the year in which the award is granted or $300,000;
(iii) In the event any award exceeds either or both of the above
limitations, then the Compensation Committee will adjust and reduce
the dollar value of the award to the applicable limitation in such
amounts and on such basis as the Committee, in its sole discretion,
deems appropriate; and
(iv) The amount of an equity-based award will be determined based upon the
fair market value of a share of Company common stock on the date that
the award is granted to the participant.
The base salaries paid to the executive officers of the Company are set
forth in the Summary Compensation Table appearing on page 21 of this proxy
statement and will be set forth in future proxy statements relating to each
annual meeting of stockholders of the Company.
Payment of Awards. After a cash award has vested or been earned, the award
will be paid within ninety days following the end of the applicable performance
period. After an equity-based award has vested or been earned, the award will be
paid, issued or become exercisable on the day following the date on which the
award has vested or been earned. All awards will be paid net of any applicable
tax withholding obligations. The Committee may, in its discretion, determine to
pay one-half of any equity-based awards in cash.
Administration. The Compensation Committee will administer the Executive
Incentive Plan. The Board of Directors intends the Compensation Committee to be
comprised solely of directors who are (i) independent under the director
independence requirements of the principal securities exchange or market on
which shares of the Company's common stock are traded, (ii) non-employee
directors under Rule 16b-3 of the Securities Exchange Act of 1934, and (iii)
outside directors for purposes of Code Section 162(m). Failure of the Committee
to be comprised in this manner will not result in the cancellation, termination
or lapse of any award.
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The Compensation Committee will have full power and discretion to determine
the amounts, sizes, types, vesting requirements, restrictions, pay-outs,
exercise or other prices and all other attributes of awards under the plan;
determine the performance measures, performance periods, award rates and all
other targets, terms and conditions of awards in a manner consistent with the
plan; amend or modify the plan subject to limitations imposed by applicable law
and the plan; interpret the plan and all award or other agreements entered into
under the plan; establish, amend or waive rules and regulations for the plan's
administration; and make all other determinations which may be necessary or
advisable for the administration of the plan. All determinations of the
Committee will be final. The material actions of the Committee with respect to
the administration of the plan will be presented to the Board of Directors for
ratification or confirmation before such actions are taken or implemented.
Termination of Employment. If a participant's employment with the Company
or one of its affiliates is terminated due to voluntary resignation or if the
participant's employment is terminated by the Company or an affiliate without
cause, the all unvested or unearned awards will be forfeited, but all vested or
earned awards will be paid to or exercisable by the participant in accordance
with the applicable award agreement. If a participant's employment with the
Company or one of its affiliates is terminated with cause, then all vested or
earned but unexercised or unpaid awards, and all outstanding and unvested or
unearned awards, will be forfeited.
If a participant's employment is terminated due to death or disability,
then all unvested or unearned awards will be paid, earned or exercisable (i) on
a prorated basis based on the length of time the participant was employed by the
Company or an affiliate during the applicable performance period, and (ii) only
if the performance measures and other targets, metrics, measures, terms and
conditions to which the award relates are ultimately satisfied or fulfilled. In
the case of a participant's retirement on or after attaining age 65, the
participant's awards will be treated in the same manner as if he or she had died
or become disabled, unless the participant's retirement occurs during the first
six months of a performance period, in which case all awards will be forfeited.
Change in Control. Upon a change in control of the Company and unless
provided otherwise in a participant's employment or award agreement, (i) a
participant's unearned or unvested equity-based awards will be treated as earned
or exercisable at the target award rate immediately prior to the effectiveness
of the change in control, and (ii) a participant's unearned cash awards will be
treated as earned at the target award rate immediately prior to the
effectiveness of the change in control on a prorated basis based on the ratio
that the number of days in the performance period bears to the total number of
days in the performance period.
Excess Parachute Payments. If a participant incurs an excise tax with
respect to any payment under the plan that constitutes an excess parachute
payment under Section 280G of the Internal Revenue Code, then the payment will
be grossed up in an amount equal to the excise tax on the excess parachute
payment plus the income and employment taxes on the gross up amount. The effect
of this is that the participant will receive a payment under the plan as if
Section 280G had not been applicable. The participant will be responsible for
paying all income and employment taxes on all vested or earned awards under the
plan and any excess parachute payments.
Amendment and Termination. Subject to the terms of the plan and applicable
law, the Board of Directors or the Compensation Committee may amend, terminate,
discontinue or suspend the plan at any time. In addition, the Compensation
Committee may make adjustments to awards, award rates, performance measures,
performance periods and other terms and conditions of the plan but may not,
without the consent of the participant to whom an award has been made, make any
alteration that would adversely affect the award. The total number of awards
that may be granted under the plan may not be increased without prior
stockholder approval.
9
Transferability. Certain awards are transferable to a limited extent to a
participant's family members or a family trust or partnership, as well as by the
participant's will or the laws of descent and distribution. No award, however,
can be otherwise transferred, assigned or pledged nor can a lien, security
interest, option or right to acquire be placed on an award.
Deferral of Payments. Participants are not permitted to defer the receipt
of the payment of cash awards that have been earned unless the Compensation
Committee should determine in the future to allow deferrals to occur.
SUMMARY OF TAX TREATMENT OF AWARDS
Nonqualified Stock Options. A nonqualified stock option results in no
taxable income to the optionee or deduction to the Company at the time it is
granted. An optionee exercising such an option will, at that time, recognize
taxable compensation in the amount of the difference between the exercise price
and the then fair market value of the shares. Subject to the applicable
provisions of the Internal Revenue Code, a deduction for federal income tax
purposes will be allowable to the Company in the year of exercise in an amount
equal to the taxable compensation recognized by the optionee.
If, however, a nonqualified stock option is exercised by tendering
previously owned shares of the Company's common stock in payment of the exercise
price, then the optionee will recognize compensation income equal to the fair
market value on the date of exercise of the total number of shares subject to
the option less the fair market value on the date of exercise of the shares
tendered in payment of the exercise price.
Stock Appreciation Rights. Generally, the recipient of a stand-alone stock
appreciation right will not recognize taxable income at the time the stand-alone
stock appreciation right is granted. If an employee receives the appreciation
inherent in the stock appreciation right in cash, the cash will be taxed as
compensation income to the employee at the time it is received. If the
appreciation is paid in the form of the Company's common stock, the fair market
value of the shares will also be taxed as compensation income to the employee at
the time it is received. In general, there will be no federal income tax
deduction allowed to the Company upon the grant or termination of stock
appreciation rights. However, upon the settlement of a stock appreciation right,
the Company will be entitled to a deduction equal to the amount of compensation
income the recipient is required to recognize as a result of the settlement.
Restricted Stock, Performance Shares and Cash. Restricted stock is
generally taxed as compensation income at the time the restrictions imposed on
the shares lapse, unless the recipient elects to be taxed on the value of the
shares as of the date of grant. Performance shares and cash awards are generally
taxed as compensation income to the participant at the time of payment. In each
of the foregoing cases, the Company will generally be entitled to a
corresponding federal income tax deduction at the same time the participant
recognizes the compensation income.
Section 162(m) of the Internal Revenue Code. Compensation of persons who
are "covered employees" of the Company (the Chief Executive Officer and the four
next most highly compensated officers of the Company) is subject to the tax
deduction limits of Section 162(m) of the Internal Revenue Code. Awards that
qualify as "performance-based compensation" are exempt from Section 162(m), thus
allowing the Company the full federal tax deduction otherwise permitted for such
compensation. If approved by the Company's stockholders, the new Executive
Incentive Plan will enable the Compensation Committee to grant awards that will
be exempt from the deduction limits of Section 162(m).
10
EXECUTIVE INCENTIVE PLAN BENEFITS
The future benefits to be received by any individual or group of
individuals under the plan are not determinable at this time and will depend on
future financial performance of the Company and its affiliates.
ITEM 3 - APPROVAL OF THE AMENDED AND RESTATED
DIRECTORS' STOCK PLAN
The third item to be acted upon at the annual meeting of stockholders will
be the approval of the amended and restated Directors' Stock Plan of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" APPROVAL OF THE
AMENDED AND RESTATED DIRECTORS' STOCK PLAN
BACKGROUND
The Directors' Stock Option Plan of the Company was approved by the Board
of Directors and the stockholders effective as of January 1, 2002. The Board has
approved several amendments to the plan effective as of December 1, 2005 and
will submit the plan, as amended and restated, to stockholders for approval at
the 2006 annual meeting of stockholders. Any awards made under the amended and
restated plan are subject to stockholder approval of the plan.
The three principal changes to the Directors' Stock Option Plan are to (i)
rename the plan as the Directors' Stock Plan, (ii) increase the number of shares
subject to the plan from 75,000 to 150,000 shares, and (iii) permit grants of
restricted stock in addition to nonqualified stock options already authorized by
the plan. The amended and restated plan is designed to promote the interests of
the Company and its stockholders through the granting of shares of common stock
subject to a vesting schedule or options to acquire shares of Company common
stock to non-employee directors, and thereby continuing to encourage their focus
on enhancing long-term stockholder value of the Company.
A summary of the material terms of the amended and restated Directors'
Stock Plan is set forth below. A copy of the plan is attached as Appendix B to
this proxy statement, and the summary below is qualified in its entirety by
reference to this Appendix.
SUMMARY OF MATERIAL PROVISIONS OF THE DIRECTORS' STOCK PLAN
Eligibility. All non-employee directors are eligible to receive grants of
restricted stock or stock options under the Directors' Stock Plan.
Grants under the Plan. Only shares of restricted common stock and options
to purchase shares of common stock of the Company are permitted to be granted
under the plan. Each non-employee director will receive an award of either 3,000
shares of restricted common stock or an option to purchase 10,000 shares of
common stock at the time he or she is first elected or appointed to the Board of
Directors. Thereafter, each non-employee director will receive an award of
either 800 shares of restricted common stock or an option to purchase 2,500
shares of common stock on the day following his or her re-election at an annual
meeting of stockholders. The Compensation Committee will determine whether the
awards will be made in restricted stock, in stock options or in a combination
thereof.
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With respect to stock options, only nonqualified stock options will be
awarded under the plan. A nonqualified stock option is an option that does not
meet the requirements of Section 422 of the Internal Revenue Code applicable to
incentive stock options.
No restricted stock or options will be granted under the plan after
December 1, 2016.
Vesting. Shares of restricted common stock granted to directors under the
plan will vest one year following the date of grant of the shares. Stock options
granted to directors under the plan will vest and be exercisable immediately at
the time of the grant. The awards of restricted stock will vest immediately upon
the death or disability of a director or immediately prior to a change in
control of the Company.
Shares Subject to the Plan. Subject to certain adjustments, a maximum of
150,000 shares of common stock is available for issuance under the amended and
restated plan. If restricted stock does not vest or if an option expires or
terminates without being exercised in full, the shares subject to that award
will be available for new grants under the plan.
Certain Option Provisions. The exercise price of all options will be not
less than 100% of the fair market value (as defined in the amended and restated
plan) of the shares on the day the option is granted. All options will be
exercisable for a period of up to 10 years. If a director ceases to be a
director for any reason other than his death or disability, the option will
expire 90 days following the date the director is no longer serving as such,
unless the option would expire earlier under its terms. In the case of a
director's death or disability, the option will expire one year from the date
his status as a director terminates, unless the option would expire earlier
under its terms.
Administration. The Compensation Committee will administer the Directors'
Stock Plan. The Committee will interpret the plan and all award or other
agreements entered into under the plan; establish, amend or waive rules and
regulations for the plan's administration; and make all other determinations
which may be necessary or advisable for the administration of the plan.
The Board of Directors intends the Compensation Committee to be comprised
solely of directors who are (i) independent under the director independence
requirements of the principal securities exchange or market on which the Shares
are traded, and (ii) non-employee directors under Rule 16b-3 of the Securities
Exchange Act of 1934. Failure of the Committee to be comprised in this manner
will not result in the cancellation, termination, expiration or lapse of any
award.
Amendment and Termination. Subject to the terms of the plan and applicable
law, the Board of Directors may amend, terminate, discontinue or suspend the
plan at any time but may not, without the consent of a director to whom an award
of restricted stock or options has been granted, make any alteration that would
adversely affect the award. The Board of Directors has the authority to amend
the plan to change the number of shares of restricted stock or the number of
stock options that may be awarded upon the initial election or annual
re-election as a director. The total number of shares that may be granted under
the plan, however, may not be increased without prior stockholder approval.
Transferability. Certain awards are transferable to a limited extent to a
director's family members or a family trust or partnership, as well as by the
director's will or the laws of descent and distribution. No award, however, can
be otherwise transferred, assigned or pledged nor can a lien, security interest,
option or right to acquire be placed on an award.
12
SUMMARY OF TAX TREATMENT OF AWARDS
For a discussion of the tax treatment of restricted stock and nonqualified
stock option awards under the plan, see the discussion of these awards under
Item 2 above on page 10.
PLAN BENEFITS
The future benefits to be received by any individual or group of
individuals under the plan are not determinable at this time.
EXECUTIVE OFFICERS OF THE COMPANY
Benjamin M. Anderson-Ray and Frank T. Kane are the only executive officers
of the Company, and each serves a term of office of one year and until his
successor is duly elected and qualified.
BENJAMIN M. ANDERSON-RAY, age 51, has served as the Chief Executive Officer
of the Company since June, 2005 and as its Chairman of the Board since August,
2005.
FRANK T. KANE, age 52, has served as the Vice President-Finance, Chief
Financial Officer, Secretary and Treasurer of the Company since its organization
in 1992.
STOCK OWNERSHIP INFORMATION
OWNERS OF MORE THAN FIVE PERCENT OF COMMON STOCK
The stockholders listed in the following table are known by management to
beneficially own more than 5% of the outstanding shares of the Company's common
stock as of the Record Date.
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK
------------------- ------------------ ------------
Chromcraft Revington Employee 1,982,764 32.3%
Stock Ownership Plan Trust (1)
1100 North Washington Street
Delphi, Indiana 46923
FMR Corp. (2) 957,300 15.6%
82 Devonshire Street
Boston, Massachusetts 02109
T. Rowe Price Associates, Inc. (3) 555,400 9.0%
100 East Pratt Street
Baltimore, Maryland 21202
Royce & Associates, LLC (4) 419,700 6.8%
1414 Avenue of the Americas
New York, New York 10019
13
Daniel Zeff (5) 389,295 6.3%
c/o Zeff Holding Company, LLC
50 California Street, Suite 1500
San Francisco, California 94111
----------
(1) Unless the trust or the fiduciary duties of the trustee require otherwise,
the trustee of the ESOP trust will vote (i) the shares allocated to
participants' accounts under the ESOP in accordance with the instructions
received in a timely manner from participants, and (ii) the shares that
have not been allocated to participants' accounts in accordance with the
directions of the Benefits Committee. Any shares allocated to a
participant's account for which the trustee has not received voting
instructions in a timely manner will be voted by the trustee in accordance
with the directions of the Benefits Committee. The Benefits Committee
consists of Benjamin M. Anderson-Ray, Chairman and Chief Executive Officer
of the Company, and Frank T. Kane, Vice President-Finance and Chief
Financial Officer of the Company. The members of the Benefits Committee are
appointed by the Board of Directors and can be changed by the Board at any
time.
(2) Based solely on information provided by FMR Corp. in a Schedule 13G filed
with the Securities and Exchange Commission on May 10, 2002. Included as
reporting persons in the Schedule 13G are FMR Corp., Edward C. Johnson 3d,
Chairman of FMR Corp., and Abigail P. Johnson, a director of FMR Corp. The
reporting persons have sole power to dispose of 957,300 shares. Fidelity
Management & Research Company, a wholly-owned subsidiary of FMR Corp., also
is reported as a beneficial owner of the 957,300 shares.
(3) Based solely on information provided by T. Rowe Price Associates, Inc.
("Price Associates") in a Schedule 13G filed with the Securities and
Exchange Commission on February 14, 2006. These securities are owned by T.
Rowe Price Small-Cap Value Fund, Inc., which owns 555,400 shares,
representing 9.0% of the outstanding shares of common stock, and which
Price Associates serves as investment advisor with power to direct
investments and/or sole power to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities. However,
Price Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities.
(4) Based solely on information provided by Royce & Associates, LLC in a
Schedule 13G filed with the Securities and Exchange Commission on January
12, 2006. Royce & Associates, LLC is the only reporting person identified
in the Schedule 13G and it has sole power to vote and dispose of 419,700
shares.
(5) Based solely on information provided by Mr. Zeff in a Schedule 13G filed
with the Securities and Exchange Commission on February 9, 2006. Mr. Zeff
is the only reporting person identified in the Schedule 13G and he has sole
power to vote and dispose of 389,295 shares.
The ESOP trust, which forms a part of the ESOP, initially purchased
2,000,000 shares of common stock of the Company in 2002. Under a term loan and
security agreement, the Company loaned $20,000,000 to the ESOP trust to finance
the ESOP trust's purchase of the stock. Under the term loan and security
agreement, the ESOP trust will repay the loan to the Company over a 30-year term
at a fixed
14
rate of interest of 5.48% per annum and pledges the shares of common stock owned
by it to the Company as security for repayment of its obligations thereunder.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of common stock of the
Company beneficially owned as of the Record Date by each director and executive
officer of the Company, as well as the number of shares beneficially owned by
all directors and executive officers as a group.
NUMBER OF SHARES PERCENT OF
NAME OF PERSON BENEFICIALLY OWNED (1) COMMON STOCK
-------------- ---------------------- ------------
Benjamin M. Anderson-Ray 42,000(2) *
Ronald H. Butler 12,500 *
John R. Hesse 10,000 *
Frank T. Kane 142,528(3) 2.3%
David L. Kolb 28,500 *
Larry P. Kunz 16,500 *
Theodore L. Mullett 17,700 *
Craig R. Stokely 10,000 *
John D. Swift 10,000 *
*
Directors and Executive
Officers as a Group
(9 Persons) 289,728 4.5%
----------
* Represents less than 1% of the outstanding common stock of the Company.
(1) Includes 224,362 shares which directors and executive officers have the
right to acquire pursuant to stock options exercisable within sixty days of
the Record Date as follows: Benjamin M. Anderson-Ray, -0-; Ronald H.
Butler, 12,500; John R. Hesse, 10,000; Frank T. Kane, 139,362; David L.
Kolb, 12,500; Larry P. Kunz, 12,500; Theodore L. Mullett, 17,500; Craig R.
Stokely, 10,000; and John D. Swift, 10,000.
(2) Includes 28,000 shares of restricted common stock of the Company. One-half
of these shares will vest on December 31, 2006 and December 31, 2007,
respectively, if Mr. Anderson-Ray is employed by the Company under his
employment agreement on these dates.
(3) Includes 200 shares held directly by Mr. Kane, 1,324 shares and 1,642
shares held for the benefit of Mr. Kane under the Chromcraft Revington
Savings Plan and the Chromcraft Revington Employee Stock Ownership Plan,
respectively, and 139,362 shares subject to options to purchase common
stock of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the Company's directors and executive
officers, and any persons beneficially owning more than 10% of the Company's
common stock, are required to report their initial ownership of the Company's
common stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
by the
15
Securities and Exchange Commission, and the Company is required to disclose in
this proxy statement any failure to file timely the required reports by
directors, executive officers and 10% stockholders of the Company. During 2005,
no director or executive officer was late in filing the required reports with
the Securities and Exchange Commission. In making this disclosure, the Company
has relied solely upon written representations of directors and executive
officers of the Company and copies of reports that those persons have filed with
the Securities and Exchange Commission and provided to the Company.
CERTAIN STOCK REPURCHASES BY THE COMPANY
The Company repurchased 65,987 shares of its common stock in 2005.
CORPORATE GOVERNANCE AND BOARD MATTERS
INDEPENDENCE AND GOVERNANCE
The Board of Directors has determined that each of the directors standing
for re-election at the 2006 annual meeting, with the exception of Mr.
Anderson-Ray, has no material relationship with the Company that would interfere
with the exercise of his independent judgment and, accordingly, is independent
under the Company's director independence standards. Mr. Anderson-Ray is not
independent because he serves as the Chairman and Chief Executive Officer of the
Company. The Company's director independence standards are the same as the
director independence criteria adopted by the American Stock Exchange as set
forth in Section 121 of the Exchange's Company Guide.
The Board of Directors has adopted a Code of Ethics applicable to its chief
executive officer and senior financial managers, a Code of Business Conduct and
Ethics applicable to its directors, officers and employees and a set of
Corporate Governance Guidelines. Copies of these items are available, without
charge, upon request in writing to Mr. Frank T. Kane, Corporate Secretary,
Chromcraft Revington, Inc., at 1100 North Washington Street, Delphi, Indiana
46923, or by telephone at (765) 564-3500.
BOARD COMMITTEES
The Board of Directors has four committees: the Audit Committee, the
Compensation Committee, the Nominating and Corporate Governance Committee and
the Strategy Committee. All members of each of the Committees are non-employee
directors who are independent under the criteria adopted by the American Stock
Exchange, other than Mr. Anderson-Ray who is a member of and chairs the Strategy
Committee.
Audit Committee. The members of the Audit Committee are Messrs. Mullett
(Chairman), Hesse and Swift. The committee held four meetings in 2005. As
specified in its charter, the Audit Committee's primary objectives are to assist
the Board of Directors in its oversight of (i) the integrity of the financial
statements of the Company, (ii) the qualifications and independence of the
Company's independent auditors, (iii) the performance of the Company's internal
audit function, and (iv) the Company's compliance with applicable legal and
regulatory requirements. The Audit Committee's charter was attached to the
Company's proxy statement relating to the 2004 annual meeting of stockholders
and is available upon written request to the Secretary of the Company.
In addition, among other responsibilities, the Audit Committee appoints,
oversees the performance of and approves the fees of the Company's independent
auditors; reviews and discusses with management and the independent auditors the
Company's annual audited and quarterly financial statements; reviews with
management and the independent auditors the adequacy and effectiveness of the
Company's internal controls; discusses with management the Company's major
financial risk exposures;
16
assures that the Company maintains an internal audit function; reviews and
recommends any changes to the Company's Code of Ethics applicable to its chief
executive officer and senior financial managers; annually reviews the Audit
Committee's charter and evaluates the Committee's performance; and prepares the
Audit Committee report for inclusion in the Company's annual meeting proxy
statement.
The report of the Audit Committee is included in this proxy statement
beginning on page 29.
Compensation Committee. The members of the Compensation Committee are
Messrs. Butler (Chairman), Kolb, Mullett and Stokely. The committee held five
meetings in 2005. As specified in its charter, the Compensation Committee's
primary objective is to assist the Board of Directors in fulfilling its
responsibilities relating to the compensation of the executive officers of the
Company. The Compensation Committee's charter was attached to the Company's
proxy statement relating to the 2004 annual meeting of stockholders and is
available upon written request to the Secretary of the Company.
In addition, among other responsibilities, the Compensation Committee
determines the compensation of the Company's chief executive officer and other
executive officers; reviews and approves the Company's goals and objectives
relevant to compensation of the chief executive officer; develops the
philosophies, policies and practices relating to compensation and benefits for
executive management of the Company and its subsidiaries; administers the
Company's stock option plans for key employees and directors; administers the
Company's executive incentive plans; reviews and makes recommendations to the
Board of Directors regarding any employment agreements for executive management
of the Company and its subsidiaries; reviews and makes recommendations to the
Board of Directors regarding director compensation; approves a succession plan
developed by management for the Company's chief executive officer and other
executive officers; annually reviews the Compensation Committee's charter and
evaluates the Committee's performance; and prepares the Compensation Committee
report for inclusion in the Company's annual meeting proxy statement.
The report of the Compensation Committee is included in this proxy
statement beginning on page 26.
Nominating and Corporate Governance Committee. The members of the
Nominating and Corporate Governance Committee are Messrs. Kunz (Chairman),
Stokely and Hesse. The committee met two times in 2005. As specified in its
charter, the primary objectives of the Nominating and Corporate Governance
Committee are to assist the Board of Directors by (i) identifying individuals
who are qualified to serve as directors of the Company, (ii) recommending to the
Board the director nominees for election at each annual meeting of stockholders,
(iii) recommending to the Board any matters relating to the structure, authority
and membership of the Board's committees, (iv) developing and recommending to
the Board a set of Corporate Governance Guidelines applicable to the Company,
and (v) overseeing the evaluation of the Board of Directors. The Nominating and
Corporate Governance Committee's charter was attached to the Company's proxy
statement relating to the 2004 annual meeting of stockholders and is available
upon written request to the Secretary of the Company.
In addition, among other responsibilities, the Nominating and Corporate
Governance Committee reviews possible candidates for election to the Company's
Board of Directors; determines the qualifications that the Committee will
consider when evaluating potential director nominees; reviews and recommends to
the Board of Directors any changes in the Company's Code of Business Conduct and
Ethics for its directors, officers and employees and its Corporate Governance
Guidelines; oversees the evaluations of executive management of the Company; and
annually reviews the Nominating and Corporate Governance Committee's charter and
evaluates the committee's performance.
17
Strategy Committee. The members of the Strategy Committee are Messrs.
Anderson-Ray (Chairman), Butler, Hesse, Stokely and Swift. The primary
responsibility of the committee is to assist senior management with overall
corporate strategy of the Company.
BOARD MEETINGS
The Board of Directors held ten meetings during 2005. Each director
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and of all Board committees of which he is a member.
DIRECTOR COMPENSATION
Directors who are not employees of the Company are paid an annual retainer
of $20,000. Non-employee directors also receive a fee of $1,500 per day on each
day that they attend in person a Board of Directors or a Board committee meeting
and a fee of $750 per day on each day that they participate in a telephonic
meeting of the Board or a committee, regardless of the number of Board or
committee meetings held on a given day. In addition, the chair of the Audit
Committee receives an annual retainer of $4,500, and the chairs of the
Compensation Committee and the Nominating and Corporate Governance Committee
each receive an annual retainer of $3,000. Non-employee directors also are
reimbursed for their expenses incurred while traveling on behalf of the Company.
A director who is an employee of the Company does not receive a retainer or
director or committee fees for his service on the Board of Directors but is
reimbursed for his expenses incurred while traveling on behalf of the Company.
Directors who are not employees of the Company currently are eligible to
participate in the Directors' Stock Option Plan of the Company. Under this plan,
each non-employee director receives an option to purchase 10,000 shares of
common stock at the time he or she is first elected or appointed to the Board of
Directors. Thereafter, each non-employee director receives an option to purchase
2,500 shares of common stock on the day following his or her re-election at an
annual meeting of stockholders.
Stock options granted to directors under the plan vest and are exercisable
immediately at the time of the grant, have an exercise price equal to the fair
market value of the underlying shares on the date of the grant and are
exercisable for ten years following the date of each grant.
In 2005, Messrs. Butler, Kolb, Kunz and Mullett each received an option to
purchase 2,500 shares of common stock, and Messrs. Hesse, Stokely and Swift each
received his initial option to purchase 10,000 shares of common stock, under the
Directors' Stock Option Plan.
The Board of Directors has amended and restated, subject to stockholder
approval, the Directors' Stock Option Plan (to be renamed the Directors' Stock
Plan) primarily to increase the total number of shares permitted to be issued
under the plan from 75,000 shares to 150,000 shares and to allow for the
automatic grant of either shares of restricted common stock or options to
purchase shares of Company common stock. The amended and restated plan is
summarized beginning on page 11 of this proxy statement and will be voted upon
at the annual meeting of stockholders.
EXECUTIVE SESSIONS OF THE BOARD OF DIRECTORS AND PRESIDING DIRECTOR
Executive sessions of the Board of Directors are those at which only
non-employee directors are present. There were ten executive sessions of the
Board of Directors in 2005. Any non-employee director can request that an
executive session of the Board be scheduled.
18
The presiding director is the director who presides over an executive
session of the Board of Directors. The Board of Directors has not designated a
specific director to serve as the presiding director at all executive sessions
of the Board. Instead, the independent directors rotate the presiding director
position among themselves, and a rotation occurs after a director has presided
over an executive session.
CONSIDERATION OF DIRECTOR CANDIDATES
Role of the Nominating and Corporate Governance Committee. The Nominating
and Corporate Governance Committee will consider candidates for Board membership
suggested by the Committee's members, by other members of the Board of Directors
and by stockholders. For existing directors to be nominated for re-election at
an annual meeting, the Nominating and Corporate Governance Committee will
consider the director's performance on the Board, his attendance record at Board
and committee meetings, the needs of the Company and the ability of the director
to continue to satisfy the established director qualifications set forth in the
Company's Corporate Governance Guidelines.
With respect to new members of the Board, the Nominating and Corporate
Governance Committee will consider the needs of the Company and whether the
director satisfies the Committee's established director qualifications. When the
Committee determines a need exists, the Committee will recommend new directors
to replace directors who do not seek re-election, to fill vacancies or to add
members to the Board of Directors in the event the size of the Board is
increased. Once the Committee has identified a prospective director nominee and
has conducted an initial evaluation of the candidate, the Committee will
interview the candidate. If the Committee believes the candidate would be an
appropriate addition to the Board of Directors, it will recommend to the full
Board of Directors that the individual be nominated for election at an annual
meeting of stockholders or be elected to fill a vacancy on the Board. The Board
of Directors determines the director nominees after considering the
recommendation of the Nominating and Corporate Governance Committee.
Suggestions by Stockholders. The Nominating and Corporate Governance
Committee will consider suggestions by stockholders of individuals to serve on
the Board of Directors when it makes its recommendations to the full Board of
Directors of persons to be nominated as directors. Director candidates suggested
by a stockholder will be considered by the Nominating and Corporate Governance
Committee in a manner similar to the way that candidates suggested by a
Committee member or by a member of the Board of Directors are considered. Any
stockholder desiring to make a suggestion to the Nominating and Corporate
Governance Committee of a director nominee should submit to the Committee the
candidate's name and address; a statement of the candidate's business
experience; an identification of other boards of directors and board committees
on which the candidate serves; a statement indicating any relationship between
the candidate and the Company itself, any customer, supplier or competitor of
the Company or the stockholder making the suggestion; a statement that the
candidate would be willing to serve if nominated and elected; an evaluation of
the candidate in light of the Committee's established director qualifications;
and any other information requested by the Committee. These suggestions should
be made in writing and received no later than October 31, 2006 by:
Chair, Nominating and Corporate Governance Committee
Chromcraft Revington, Inc.
1100 North Washington Street
Delphi, Indiana 46923
Stockholders can also nominate individuals for election as directors at any
annual meeting of stockholders in addition to making suggestions to the
Nominating and Corporate Governance Committee as provided above. To make such a
nomination, a stockholder must comply with the procedures set forth in the
Company's By-Laws. Those procedures are contained in Article IX of the By-Laws
and are
19
summarized under the heading "STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS"
beginning on page 31 of this proxy statement.
Qualifications of Directors. When evaluating a prospective director
nominee, the Nominating and Corporate Governance Committee will consider, among
other qualifications, the prospective nominee's:
- level of integrity;
- ability to make sound decisions and to exercise appropriate business
judgment;
- overall business experience;
- knowledge of the Company's industry;
- ability to devote sufficient time and attention to the performance of
his duties as a director;
- independence from the Company and its customers, suppliers and
competitors;
- potential contribution to the range of talent, skill and expertise
needed or appropriate for the Board of Directors;
- ability to represent the interests of the Company's stockholders; and
- background or experience in financial, accounting or compensation
matters.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders or other interested parties who desire to communicate with the
full Board of Directors, the non-employee directors or an individual director
may write to:
Chair, Nominating and Corporate Governance Committee
Chromcraft Revington, Inc.
1100 North Washington Street
Delphi, Indiana 46923
A letter from a stockholder should state the stockholder's name and, if the
stockholder's shares are held in street name, evidence of the stockholder's
ownership of Company common stock. Depending on the subject matter of the
letter, the Chairman of the Nominating and Corporate Governance Committee will:
- forward the letter to the appropriate director;
- request an officer of the Company to handle the inquiry directly such
as, for example, where the letter contains a request for routine
information about the Company or stock transfer matters or is
primarily commercial in nature; or
- not forward the letter to any director if it relates to an improper or
irrelevant topic.
At each Board meeting, the Chairman will present a summary of all letters
received since the last Board meeting that were not forwarded to all directors
and will make those letters available to any director.
ATTENDANCE AT ANNUAL MEETINGS
The Board of Directors has adopted a policy that it expects all Board
members to attend the Company's annual meeting of stockholders. All incumbent
directors of the Company who were serving as directors at the time of 2005
annual meeting (Messrs. Butler, Kolb, Kunz and Mullett) attended that meeting.
20
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the annual and long term compensation paid
by the Company to the executive officers of the Company for the years ended
December 31, 2005, 2004 and 2003.
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------- ---------------------------------------
OTHER SHARES RESTRICTED
NAME AND PRINCIPAL ANNUAL UNDERLYING STOCK LTIP ALL OTHER
POSITION YEAR SALARY BONUS (1) COMPENSATION STOCK OPTIONS AWARDS PAYOUTS(2) COMPENSATION
-------------------- ---- -------- --------- ------------ ------------- ---------- ---------- ------------
Benjamin M. 2005 $198,958 $250,000(4) $ 14,676(5) -0- $366,800(6) $183,050(7) $ -0-
Anderson-Ray (3)
Chairman
and Chief Executive
Officer of the
Company
Frank T. Kane 2005 $223,333 $ 42,944 $ -0- 4,932 $ 26,340 $ 15,548(8)
Vice President- 2004 218,333 13,267 -0- 7,260 50,112 21,199(8)
Finance, Chief 2003 209,167 34,137 -0- 12,946 66,933 16,475(8)
Financial Officer,
Secretary and
Treasurer of the
Company
Stephen D. Healy (9) 2005 $227,000 $ -0- $ -0- -0- $ -0- $ 9,337(10)
President of 2004 223,000 -0- -0- -0- -0- 19,877(10)
Cochrane Furniture 2003 215,000 -0- -0- -0- -0- 10,034(10)
Company, Inc. (a
wholly-owned
subsidiary of the
Company)
Michael E. Thomas 2005 $146,089 $ -0- $ 27,338(12) -0- $ -0- $ 91,313(13)
(11) 2004 418,000 38,099 136,326(12) 26,464 179,883 246,652(13)
Retired Chairman, 2003 406,667 99,555 47,610(12) 46,567 244,000 97,411(13)
President
and Chief Executive
Officer of the
Company
----------
(1) The amounts included in this column for Messrs. Thomas and Kane were earned
under the Company's Short Term Executive Incentive Plan for the years
indicated.
(2) The awards under the Company's Long Term Executive Incentive Plan were paid
to Messrs. Thomas and Kane for the years indicated in two components: 50%
in a single lump sum cash amount and 50% in options to acquire shares of
the Company's common stock. The cash and stock option components of the
awards for 2005, 2004 and 2003 were paid or granted in 2006, 2005 and 2004,
respectively.
(3) Mr. Anderson-Ray was appointed as the Chief Executive Officer of the
Company on June 22, 2005.
(4) Includes the amount Mr. Anderson-Ray earned under the Company's Short Term
Executive Incentive Plan ($175,000) and one-half of Mr. Anderson-Ray's
sign-on bonus ($75,000). Unless Mr. Anderson-Ray's employment is terminated
by the Company for cause or by Mr. Anderson-
21
Ray without good reason, the remaining one-half of the sign-on bonus will
be paid on June 20, 2006.
(5) Represents a tax gross-up on relocation expenses paid to Mr. Anderson-Ray.
(6) Represents 28,000 shares of restricted common stock of the Company awarded
to Mr. Anderson-Ray in connection with his employment as the Chief
Executive Officer of the Company. These shares will vest in two equal
increments on December 31, 2006 and December 31, 2007, respectively, if Mr.
Anderson-Ray continues to be employed by the Company under his employment
agreement on those dates. The restricted stock was valued based on the
closing price of the Company's common stock on December 31, 2005. Mr.
Anderson-Ray has the right to vote and to receive dividends on the shares
of restricted common stock prior to vesting.
(7) Represents 14,000 shares of restricted common stock of the Company awarded
to Mr. Anderson-Ray that vested on December 31, 2005. The shares were
valued based upon the average of the high and low prices of the Company's
common stock on December 31, 2005.
(8) Represents Company contributions to tax qualified retirement plans of
$9,261, $8,200 and $9,985 for 2005, 2004 and 2003, respectively, and
payments for retirement benefits reduced under Internal Revenue Code
restrictions of $6,287, $12,999 and $6,490 for 2005, 2004 and 2003,
respectively.
(9) Mr. Healy was not an executive officer of the Company as of December 31,
2005 but is included in the Summary Compensation Table under Item
402(a)(3)(iii) of Regulation SK.
(10) Represents Company contributions to tax qualified retirement plans of
$9,261, $8,200 and $10,034 for 2005, 2004 and 2003, respectively, and
payments for retirement benefits reduced under Internal Revenue Code
restrictions of $76, $11,677 and $-0- for 2005, 2004 and 2003,
respectively.
(11) Mr. Thomas retired as Chairman, President and Chief Executive Officer of
the Company on May 4, 2005.
(12) Includes amounts reimbursed to Mr. Thomas for taxes in connection with
Company contributions to Mr. Thomas' supplemental executive retirement plan
of $-0-, $109,280 and $37,705 for 2005, 2004 and 2003, respectively. In
addition, the amounts for 2005 and 2004 include reimbursed premiums and the
related tax gross-up of $23,578 paid in each year for certain life
insurance provided to Mr. Thomas.
(13) Includes Company contributions to tax qualified retirement plans of $9,261,
$8,200 and $10,034 for 2005, 2004 and 2003, respectively; Company
contributions pursuant to Mr. Thomas' supplemental executive retirement
plan of $-0-, $172,528 and $59,528 for 2005, 2004 and 2003, respectively; a
payment under the supplemental executive retirement plan of $82,052 for
2005; and payments for retirement benefits reduced under Internal Revenue
Code restrictions of $65,924 and $27,850 for 2004 and 2003, respectively.
Under applicable U.S. federal income tax laws, the Company generally cannot
take a tax deduction for certain compensation paid to the individuals named in
the Summary Compensation Table in excess of $1 million. However, certain
performance-based compensation is fully deductible by the Company if certain
requirements, including stockholder approval, are met.
22
STOCK OPTION GRANTS IN 2005
The following table summarizes certain information concerning stock options
granted in 2005 to the persons named in the Summary Compensation Table, and the
value of the options held by such persons at December 31, 2005. The exercise
price of the stock options equaled the average of the high and low selling
prices of the Company's common stock, as reported by the American Stock Exchange
on the date of grant.
PERCENT OF POTENTIAL REALIZABLE VALUE
NUMBER OF TOTAL AT ASSUMED ANNUAL RATES OF
SHARES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM (1)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ----------------------------
NAME GRANTED 2005 PRICE DATE 5% 10%
---- ---------- ------------ -------- ---------- -------- --------
Benjamin M.
Anderson-Ray -0- -0- N/A N/A -0- -0-
Frank T. Kane 4,932 18.7% $12.73 2/8/15 $ 39,469 $100,023
Michael E. Thomas 17,705 67.1% $12.73 2/8/15 $141,686 $359,063
Stephen D. Healy -0- -0- N/A N/A -0- -0-
----------
(1) These dollar amounts represent a hypothetical increase in the price of the
common stock, less the exercise price, from the date of option grant until
the expiration date of the option at the rate of 5% and 10% per annum
compounded. The actual value, if any, of stock options is dependent on the
future performance of the Company's common stock. There can be no assurance
that the amounts assumed in these columns will be achieved or that higher
amounts will not be achieved.
AGGREGATED OPTION EXERCISES IN 2005 AND YEAR END OPTION VALUES
The following table summarizes certain information concerning stock options
exercised in 2005 by the persons named in the Summary Compensation Table, and
the value of the unexercised options held by such persons at December 31, 2005.
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2005 DECEMBER 31, 2005(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Benjamin M.
Anderson-Ray -0- -0- -0- -0- -0- -0-
Frank T. Kane 8,000 $ 11,224 116,844 40,000 $193,070 $104,400
Michael E. Thomas 95,687 $259,745 215,736 -0- $374,799 -0-
Stephen D. Healy 10,000 $ 51,063 89,796 40,000 $172,411 $104,400
23
----------
(1) Value per share is calculated by subtracting the exercise price from the
closing price of the Company's common stock of $13.10 per share on December
31, 2005, as reported on the American Stock Exchange.
EMPLOYMENT AGREEMENTS
Benjamin M. Anderson-Ray. The Company has entered into an employment
agreement with Mr. Anderson-Ray. The initial term of Mr. Anderson-Ray's
employment under his employment agreement began on June 20, 2005 and will end on
June 20, 2010. Upon the expiration of the initial term, the employment agreement
will be automatically renewed on the same terms and conditions for successive
one-year terms, unless Mr. Anderson-Ray's employment has been terminated earlier
or either the Company or Mr. Anderson-Ray provides to the other a written
non-renewal notice.
Under his employment agreement, Mr. Anderson-Ray will serve as the
Company's Chairman and Chief Executive Officer and will have such other
authority, duties and responsibilities as the Company's Board of Directors may
from time to time prescribe that are consistent with his position as Chief
Executive Officer of the Company. The Board of Directors is required to nominate
Mr. Anderson-Ray as one of its director nominees to be considered for election
at each annual meeting of stockholders during such period of time that Mr.
Anderson-Ray is serving as the Company's Chief Executive Officer.
Mr. Anderson-Ray's base salary will be not less than $375,000 per fiscal
year (pro-rated for any partial year of employment), and he will be entitled to
participate in all incentive compensation plans and programs generally available
to executive officers of the Company and its subsidiaries. He also will be
reimbursed for certain relocation expenses and will receive an automobile
allowance of $1,500 per month.
In addition to a non-renewal of his employment agreement as described
above, Mr. Anderson-Ray's employment may be terminated (i) by the Company with
or without cause, (ii) by Mr. Anderson-Ray with or without good reason, (iii)
upon Mr. Anderson-Ray's death or disability, or (iv) by Mr. Anderson-Ray in the
event of a change in control of the Company. If Mr. Anderson-Ray's employment is
terminated by the Company for cause or by Mr. Anderson-Ray without good reason,
the Company will pay Mr. Anderson-Ray a lump sum equal to his monthly base
salary for three months. If his employment is terminated by the Company without
cause or by Mr. Anderson-Ray for good reason, the Company will pay Mr.
Anderson-Ray (i) an amount (payable in twelve equal monthly installments) equal
to $550,000 if his last day of employment is on or prior to December 31, 2006,
or (ii) an amount (payable in twenty-four equal monthly installments) equal to
two times his base salary plus two times the average of the awards paid to him
under the Company's short term incentive plan in the two fiscal years ended
immediately preceding his last day of employment (but in no event greater than
two times the average of the target award amounts under the short term incentive
plan for such two year period) if his last day of employment is after December
31, 2006. If Mr. Anderson-Ray terminates his employment under certain
circumstances upon a change in control of the Company, the Company will pay Mr.
Anderson-Ray an amount (payable in twenty-four equal monthly installments) equal
to two times his base salary plus two times the average of the awards paid to
him under the short term incentive plan in the two fiscal years ended
immediately preceding his last day of employment (but in no event greater than
two times the average of the target award amounts under the short term incentive
plan for such two year period).
If the Company determines not to renew the employment agreement, it will
pay Mr. Anderson-Ray an amount (payable in twenty-four equal monthly
installments) equal to two times his base salary plus two times the average of
the awards paid to him under the short term incentive plan in the two fiscal
years ended immediately preceding his last day of employment (but in no event
greater than two times the average of the target award amounts under the short
term incentive plan for such two year period). If Mr. Anderson-Ray determines
not to renew the Employment Agreement, the Company will pay him an
24
amount (payable in twelve equal monthly installments) equal to his base salary
plus the average of the awards paid to him under the short term incentive plan
in the two fiscal years ended immediately preceding his last day of employment
(but in no event greater than the average of the target award amounts under the
short term incentive plan for such two year period).
In addition, the monthly severance payments described above which are
payable over a period of time that is twelve months or longer could be reduced
or eliminated entirely if Mr. Anderson-Ray obtains a position with an unrelated
entity prior to or during the period of time that severance payments are being
paid or if Mr. Anderson-Ray breaches any of his covenants in the employment
agreement. Upon any termination of Mr. Anderson-Ray's employment, his vested and
unvested incentive compensation awards will be distributed, paid or exercisable
as provided in the employment agreement, unless expressly provided otherwise in
the Company's short term incentive plan or its long term incentive plan, or in a
written agreement between the Company and Mr. Anderson-Ray relating to awards
under the short term incentive plan or the long term incentive plan.
While Mr. Anderson-Ray is employed by the Company and for a period of two
years thereafter, the employment agreement prohibits Mr. Anderson-Ray from
competing against the Company or its subsidiaries, from soliciting any customers
or employees and from requesting any customer, supplier, vendor or others doing
business with the Company or its subsidiaries to change their relationship with
the Company or its subsidiaries.
Frank T. Kane. The Company also has entered into an employment agreement
with Mr. Kane which provides, among other items, for the employment by the
Company of Mr. Kane as the Company's Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer through March 15, 2007. The employment
agreement provides for automatic extensions for successive one-year periods upon
expiration of the initial term, or any renewal term, unless the Company or Mr.
Kane gives notice of termination at least 180 days before the termination date.
Under his employment agreement, Mr. Kane receives a base salary of not less
than $205,000 during each year that the employment agreement is in effect and
will be entitled to participate in the incentive compensation plans and programs
generally available to executives of the Company.
The Company may terminate the employment of Mr. Kane with or without cause
(as defined in the employment agreement) or in the event of the disability of
Mr. Kane. Mr. Kane may terminate his employment with or without good reason (as
defined in the employment agreement). If the Company terminates Mr. Kane's
employment with cause or if Mr. Kane terminates his employment without good
reason, then the Company is required to pay him, in a lump sum, his monthly base
salary for a three-month period following his termination. If the Company
terminates Mr. Kane's employment without cause or if Mr. Kane terminates his
employment with good reason, then the Company is required to pay him in 24 equal
monthly installments an amount equal to twice the sum of his then-current annual
base salary and the higher cash bonus under the short term incentive plan (up to
the target award rate) paid to him in the two fiscal years preceding
termination. In the event of termination due to disability, Mr. Kane will
receive his then-current annual base salary earned through the date of
termination.
If the Company determines not to renew Mr. Kane's employment agreement, it
will pay Mr. Kane an amount (payable in twelve equal monthly installments) equal
to his base salary plus the greater of the annual cash bonus paid to him under
the short term incentive plan (up to the target award rate) in the two years
preceding his last day of employment.
If Mr. Kane terminates his employment following a change in control of the
Company (as defined in the employment agreement) and, in addition, a reduction
in his duties, a diminution in his salary or
25
benefits or a relocation of his principal place of employment occurs, then the
Company will be required to pay him, as severance pay, a lump sum amount equal
to twice the sum of his then-current annual base salary and the higher cash
bonus under the short term incentive plan (up to the target award rate) paid to
him in the two fiscal years preceding termination.
Under his employment agreement, Mr. Kane may not compete against the
Company during his employment by the Company and during the two-year period
following termination of his employment. However, if the Company elects not to
extend the term of Mr. Kane's employment agreement, then Mr. Kane may not
compete against the Company for a one-year period following termination of his
employment.
The foregoing brief description of the material terms of the employment
agreements of Messrs. Anderson-Ray and Kane do not purport to be complete and
are qualified in their entirety by reference to each employment agreement, as
filed with the Securities and Exchange Commission.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of four non-employee directors:
Messrs. Butler, Kolb, Mullett and Stokely. No member of the Compensation
Committee is or was formerly an officer or employee of the Company or any of its
subsidiaries. No executive officer of the Company serves as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers of that entity serving as a member of the Board of Directors
or Compensation Committee of the Company.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
A primary objective of the Compensation Committee is to develop and
maintain executive compensation guidelines and programs for the executive
management of the Company and its subsidiaries. The Committee also sets the
salary and incentive compensation of the chief executive and other executive
officers of the Company, as well as discusses with the chief executive officer
the compensation of the executive management of the Company's subsidiaries.
The Compensation Committee currently uses the following guidelines when
establishing the overall executive compensation programs and the compensation
package for the Company's chief executive and other executive officers:
- Provide executive compensation that enables the Company and its
subsidiaries to attract and retain appropriate executives.
- Reward executives for achievement of corporate, subsidiary and
individual short- and long-term business objectives and strategies.
- Align the interests of executives with the long-term interests of
stockholders through ownership of common stock of the Company.
- Foster a corporate environment that rewards successful performance and
increased stockholder value of the Company over time.
26
The Compensation Committee periodically reviews information relating to
what it believes are comparable companies (including certain companies that the
Company has included in its peer group for purposes of the stock performance
graph appearing on page 29 of this proxy statement) in order to establish
general guidelines for executive compensation. In addition, the Compensation
Committee has retained an independent compensation consultant to assist it with
various compensation matters.
In determining compensation programs and amounts, the Committee takes into
account the limit on the deduction for federal income tax purposes of annual
compensation exceeding $1 million that is paid to the chief executive officer or
to any of the other four most highly compensated executive officers of the
Company. In this regard, the Committee strives to use performance-based
compensation that is not subject to the $1 million deduction limit as a
component of executive compensation.
COMPONENTS OF EXECUTIVE OFFICER COMPENSATION FOR 2005
Base Salary. The Compensation Committee annually reviews the base salaries
for the Company's executive officers. In determining individual salaries for
2005, the Committee considered a variety of factors, including level of
responsibility, individual performance, prior experience and a general
comparison of base salaries paid for similar positions at comparable companies.
Annual Incentives. The Company provides annual incentive compensation
opportunities to its executive officers under the Short Term Executive Incentive
Plan (this plan is proposed to be replaced by the 2006 Executive Incentive
Plan). Awards under this plan are based on the achievement of corporate,
subsidiary and/or individual objectives that are established annually, with
awards paid in cash.
The Committee determines the performance measures for the year and the
level of performance required for threshold, target and maximum annual payouts.
Threshold performance measures must be satisfied before any payout under the
plan will occur.
Long-Term Incentives. The Company provides long-term incentive compensation
opportunities to its executive officers under the Long Term Executive Incentive
Plan (this plan is proposed to be replaced by the 2006 Executive Incentive
Plan). Awards under this plan are based on the achievement of corporate,
subsidiary and/or individual objectives that are established annually for future
three-year performance periods, except that vesting of the award of restricted
stock to Mr. Anderson-Ray made in 2005 is based only on his continued service
with the Company.
The Committee determines the performance measures for each three-year
performance period and the level of performance required for threshold, target
and maximum payouts. Threshold performance measures must be satisfied before any
payout under the plan will occur.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR 2005
The Board of Directors of the Company appointed Mr. Anderson-Ray as the
Company's chairman and chief executive officer in 2005. The Company also entered
into an employment agreement with Mr. Anderson-Ray. Under his employment
agreement, Mr. Anderson-Ray will receive a minimum annual base salary of
$375,000 (pro-rated for any partial year).
Mr. Anderson-Ray was paid a short-term cash incentive award of $175,000 in
2005. In order for Mr. Anderson-Ray to have earned this award, he was required
to make a presentation acceptable to the Company's Board of Directors relating
to a proposed strategic plan for the Company, an assessment of the key employees
of the Company and its subsidiaries and an assessment of the competition
affecting the
27
Company's business. Mr. Anderson-Ray also was paid one-half of his $150,000
sign-on bonus (or, $75,000) in 2005.
In 2005, Mr. Anderson-Ray received a grant of 42,000 shares of restricted
common stock of the Company. At the time of grant, these shares were eligible to
vest in equal increments on December 31, 2005, 2006 and 2007 so long as Mr.
Anderson-Ray was serving as the Company's chairman and chief executive officer
on these dates. Accordingly, 14,000 shares vested on December 31, 2005.
Because of the importance attributed to selecting and establishing the
total compensation of the Company's new chief executive officer, the entire
Board of Directors, based on a recommendation of its Search Committee, set the
base salary and the short-term and long-term incentive compensation
opportunities for Mr. Anderson-Ray. The amount of Mr. Anderson-Ray's base salary
and his short-term and long-term incentive compensation award opportunities for
2005 were set at a level that the Company believed was appropriate for it to be
able to attract and retain Mr. Anderson-Ray as the Company's chief executive
officer.
Mr. Thomas, who retired as the Company's chairman, president and chief
executive officer on May 4, 2005, was paid his 2005 base salary on a pro-rated
basis through his retirement date. Mr. Thomas did not receive a short-term or
long-term incentive compensation award or payout in 2005.
MEMBERS OF THE COMPENSATION COMMITTEE
Ronald H. Butler, Chairman
David L. Kolb
Theodore L. Mullett
Craig R. Stokely
STOCK PERFORMANCE GRAPH
The graph set forth below compares the five-year cumulative total
stockholder return of the Company's common stock with the cumulative total
stockholder return of (i) the Russell 3000(R) Index, (ii) the Russell 2000(R)
Index, (iii) companies in a new industry peer group compiled by the Company, and
(iv) the peer group utilized by the Company in last year's annual meeting proxy
statement. The graph assumes $100 was invested on January 1, 2001 in the
Company's common stock, the Russell 2000(R) Index, the Russell 3000(R) Index and
companies in the new and prior peer groups, and also assumes the reinvestment of
dividends, if any.
The Company has included the Russell 3000(R) Index in the graph because its
common stock is now included in that index rather than the Russell 2000(R)
Index. The Company has determined to use a different peer group because it
believes the companies included in the new peer group are more reflective of the
Company's peers than those included in the peer group utilized last year.
The new peer group includes Bassett Furniture Industries, Inc., Flexsteel
Industries, Inc., Furniture Brands International, Hooker Furniture Corporation,
Kimball International, Inc., La-Z-Boy Incorporated, Rowe Furniture Corporation
and Stanley Furniture Company, Inc. The peer group utilized in last year's proxy
statement included Bassett Furniture Industries, Inc., Flexsteel Industries,
Inc., Kimball International, Inc., La-Z-Boy Incorporated, Rowe Furniture
Corporation and Stanley Furniture Company, Inc. Calculations for this graph were
prepared by Hemscott, Inc.
28
FISCAL YEAR ENDING
---------------------------------------------------------------------------
COMPANY/INDEX/MARKET 12/29/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/30/2005
-------------------- ---------- ---------- ---------- ---------- ---------- ----------
CHROMCRAFT REVINGTON INC 100.00 107.80 130.50 113.40 123.00 131.00
OLD PEER GROUP 100.00 126.17 138.05 141.48 130.15 116.05
RUSSELL 2000 INDEX 100.00 101.02 79.22 115.16 135.31 139.81
NEW PEER GROUP 100.00 135.99 128.63 146.33 134.33 119.48
RUSSELL 3000 INDEX 100.00 87.36 67.44 86.82 95.56 99.65
OLD PEER GROUP NEW PEER GROUP
-------------- --------------
BASSETT FURNITURE IND BASSETT FURNITURE IND
FLEXSTEEL INDUSTRIES INC FLEXSTEEL INDUSTRIES INC
KIMBALL INTERNAT B FURNITURE BRANDS INTL
LA-Z-BOY INCORPORATED HOOKER FURNITURE CORP
ROWE COMPANIES THE KIMBALL INTERNAT B
STANLEY FURNITURE INC LA-Z-BOY INCORPORATED
ROWE COMPANIES
STANLEY FURNITURE INC
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has furnished the report set forth below on the
Company's audited financial statements for the year ended December 31, 2005. The
functions of the Audit Committee are described above under the heading
"CORPORATE GOVERNANCE AND BOARD MATTERS."
The Audit Committee reviewed and discussed with management and the
independent auditors the Company's audited financial statements as of and for
the year ended December 31, 2005. Management has the primary responsibility for
the Company's financial statements and the reporting process, including the
Company's system of internal controls. The Company's independent auditors, KPMG
LLP, audited the Company's financial statements as of and for the year ended
December 31, 2005 and expressed an opinion that the financial statements present
fairly, in all material respects, the consolidated financial position, results
of operations and cash flows of the Company and its subsidiaries as of and for
such year in conformity with accounting principles generally accepted in the
United States of America.
The Audit Committee discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61.
Additionally, the Committee has received from the independent auditors the
written disclosures and the letter required by Independence Standards Board
Standard No. 1 and has discussed with the independent auditors their
independence. The Committee relies on the information and representations
provided to it by management and the independent auditors.
29
Based on these reviews and discussions, the Audit Committee recommended to
the Board of Directors, and the Board has approved, that the audited financial
statements of the Company be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2005 filed with the Securities and Exchange
Commission.
MEMBERS OF THE AUDIT COMMITTEE
Theodore L. Mullett, Chairman
John R. Hesse
John D. Swift
INDEPENDENT AUDITORS
GENERAL
KPMG LLP audited the financial statements of the Company for the year ended
December 31, 2005. A representative of KPMG LLP will be present at the annual
meeting, will have an opportunity to make a statement, if he or she desires, and
will be available to respond to appropriate questions.
FEES TO INDEPENDENT AUDITORS
The following table sets forth the fees billed or to be billed by KPMG LLP
to the Company for services performed in connection with the years ended
December 31, 2005 and 2004.
2005 2004
-------- --------
Audit fees (1) $232,550 $221,300
Audit-related fees (2) 23,000 18,000
Tax fees -0- -0-
All other fees (3) -0- 161,076
-------- --------
Total $255,550 $400,376
======== ========
(1) Audit fees represented fees for professional services rendered in
connection with the audit of the Company's financial statements for the
years ended December 31, 2005 and 2004 and the review of the Company's
financial statements included in its Quarterly Reports on Form 10-Q filed
in 2005 and 2004.
(2) Audit-related fees represented fees for professional services rendered in
connection with audits of the Company's employee benefit plans.
(3) All other fees consisted of non-audit services primarily related to
compliance with Section 404 of the Sarbanes-Oxley Act of 2002.
KPMG LLP is permitted to provide only services to the Company that have
been pre-approved by the Audit Committee.
ANNUAL REPORT AND PROXY STATEMENT
A copy of the Company's 2005 annual report to stockholders, including the
audited consolidated financial statements as of and for the year ended December
31, 2005, is enclosed with this proxy statement. The 2005 annual report to
stockholders does not constitute proxy soliciting material.
30
In an effort to reduce printing costs and postage fees, the Company has
adopted a practice whereby stockholders who have the same address and last name
and who do not participate in electronic delivery of proxy materials will
receive only one copy of this proxy statement and the 2005 annual report unless
one or more of these stockholders notifies the Company that they wish to receive
individual copies of these materials. The Company will deliver promptly upon
written or oral request a separate copy of this proxy statement and its 2005
annual report to any stockholder at a shared address to which a single copy of
those materials was sent.
If a stockholder shares an address with another stockholder and received
only one copy of this proxy statement and the 2005 annual report this year but
would like to receive a separate copy of these materials in the future, or if a
stockholder received multiple copies of this proxy statement and the 2005 annual
report but would like to receive a single copy of the Company's proxy statement
and annual report in the future, please contact the Company.
Stockholders may contact the Company by mail at 1100 North Washington
Street, Delphi, Indiana 46923 or by telephone at (765) 564-3500. In either case,
you should direct your communication to Mr. Frank T. Kane, Corporate Secretary
of the Company.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
In addition to the notice requirements described below, stockholder
proposals desired to be considered for inclusion in the Company's proxy
soliciting materials relating to the 2007 annual meeting of stockholders must be
received by the Company at its principal executive office no later than December
1, 2006 and must be submitted in accordance with the rules and regulations under
the Securities Exchange Act of 1934.
Stockholders desiring to make a director nomination or a proposal for any
business or matter at any annual or special meeting of stockholders of the
Company must comply with the notice procedures provided in the Company's
By-Laws. Those procedures are summarized below. A complete copy of the Company's
By-Laws was included as an exhibit to the Company's Form 8-K filed on December
12, 2005 and is available on the Internet website of the Securities and Exchange
Commission at www.sec.gov.
Nominations for the election as directors and proposals for any business or
matter to be presented at any annual or special meeting of stockholders may be
made by any stockholder of record of the Company entitled to vote in the
election of directors or on the business or matter to be presented, as the case
may be, or by the Board of Directors of the Company. In order for a stockholder
to make any such nomination or proposal, the stockholder must give notice
thereof in writing by certified first class United States mail, return receipt
requested, or by receipted overnight delivery to the Corporate Secretary of the
Company. Such notice must be received by the Company not later than the
following date: (i) with respect to any annual meeting of stockholders, not less
than 120 days or more than 180 days prior to the first anniversary of the date
of the notice for the previous year's annual meeting of stockholders, or (ii)
with respect to any special meeting of stockholders, not more than 15 days
following the date of the notice for such special meeting. No notice of any kind
under this procedure is required for any nominations for the election as
directors or any proposals for any business or matter made by the Board of
Directors of the Company.
Each such notice given by a stockholder with respect to nominations for the
election of directors must set forth as to each nominee: (i) the name, age,
address and telephone number of the nominee, (ii) the principal occupation or
employment of the nominee, (iii) the number of shares of stock of the Company
beneficially owned by the nominee, and (iv) any arrangement pursuant to which
the nomination is made or the nominee will serve or may be elected. The
stockholder making such nominations must
31
also promptly provide any other information relating to his nominees as may be
reasonably requested by the Company.
Each such notice given by a stockholder with respect to proposals for any
business or other matter to be presented at any meeting of stockholders must set
forth as to each matter: (i) a brief description of the business or matter
desired to be presented at the meeting and the reasons for conducting such
business at the meeting, (ii) the name and address, as they appear on the
Company's list of stockholders for the meeting, of the stockholder making such
proposal, (iii) the class and number of shares of stock of the Company
beneficially owned by the stockholder, and (iv) any material interest of the
stockholder in such proposal. The stockholder making such proposal must also
promptly provide any other information relating to his proposal as may be
reasonably requested by the Company.
If any nomination or proposal is not made in accordance with the
requirements of this notice procedure, the chairman of the annual or special
meeting of stockholders at which such nomination or proposal is sought to be
presented may determine that the nomination or proposal was not made in
accordance with the notice procedure and, in such event, he may declare to the
meeting that the defective nomination or proposal is out of order and will be
disregarded and not presented for a vote of the stockholders. This notice
procedure does not require the Company to hold any meeting of stockholders for
the purpose of considering any nomination or proposal made by any stockholder.
DISCRETIONARY VOTING AND OTHER MATTERS
As of the date of this proxy statement, the Board of Directors knows of no
matters other than the items of business identified in the attached Notice of
Annual Meeting of Stockholders to come before the annual meeting. If other
matters properly come before the annual meeting, the persons named in the
enclosed proxy will have authority to vote pursuant to such proxy at the annual
meeting in accordance with the directions of the Company's Board of Directors.
The information under the headings "Compensation Committee Report on
Executive Compensation" and "Report of the Audit Committee" does not constitute
soliciting material and is not filed or incorporated by reference into any other
Company filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934.
By Order of the Board of Directors,
Frank T. Kane
Vice President-Finance,
Chief Financial Officer,
and Secretary
April 6, 2006
32
APPENDIX A
CHROMCRAFT REVINGTON, INC.
2006 EXECUTIVE INCENTIVE PLAN
(EFFECTIVE AS OF JANUARY 1, 2006)
ARTICLE I
EFFECTIVE DATE AND PURPOSE
SECTION 1.1. EFFECTIVE DATE. Chromcraft Revington, Inc. hereby establishes
the Chromcraft Revington 2006 Executive Incentive Plan, as set forth in this
document. The Plan permits the award of nonqualified stock options, stock
appreciation rights, restricted stock, performance shares and cash. The Plan and
all Awards hereunder are expressly conditioned on the approval of the Plan by
the stockholders of the Company. The Plan is effective January 1, 2006;
provided, however, that no Award can be exercised, earned or paid until the Plan
has been approved by stockholders at the Company's 2006 annual meeting of
stockholders.
The Plan supersedes and replaces the Company's Short Term Executive
Incentive Plan and the Long Term Executive Incentive Plan (both as amended and
restated effective January 1, 2002) and, subsequent to the Effective Date, no
new awards will be made under such plans; provided, however, that all
outstanding awards (whether vested or unvested) under such plans will remain
valid, outstanding and subject to the terms and conditions of such plans. In
addition to granting Options under this Plan, stock options may be granted under
the Company's 1992 Stock Option Plan (as amended and restated through March 15,
2002) until the maximum number of stock options under the 1992 Stock Option Plan
has been granted.
SECTION 1.2. PURPOSES OF THE PLAN. The purposes of the Plan are (a) to
provide key employees with an incentive for making outstanding contributions to
the financial success of the Company or its Affiliates; (b) to provide key
employees with an incentive to achieve certain short-term objectives of the
Company or its Affiliates; (c) to promote the long-term financial success of the
Company or its Affiliates by further aligning the interests of key employees
with the interests of the Company's stockholders; and (d) to provide the Company
with an ability to attract, motivate and retain the services of key employees
who make significant contributions to the financial success of the Company or
its Affiliates and upon whose judgment, initiative, effort and performance the
successful conduct of the Company's business is largely dependent. The Plan also
is intended to provide performance-based compensation to Covered Employees
within the meaning of Code Section 162(m).
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following words and phrases shall have the
following meanings unless a different meaning is plainly required by the
context:
SECTION 2.1. "1934 ACT" means the Securities Exchange Act of 1934, as
amended. Reference to a specific section of the 1934 Act or a regulation
thereunder shall include such section, any regulation promulgated under such
section and any comparable provision of any future law, legislation or
regulation amending, supplementing or superseding such section or regulation.
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SECTION 2.2. "AFFILIATE" means any Subsidiary and any corporation or any
other entity (including, but not limited to, partnerships, limited liability
companies and joint ventures) controlling, controlled by or under common control
with the Company.
SECTION 2.3. "AWARD" means an award of cash, Options, SARs, Restricted
Stock or Performance Shares under this Plan.
SECTION 2.4. "AWARD AGREEMENT" means the written agreement executed by the
Company and a Participant which sets forth the terms and provisions applicable
to each Award other than a cash Award.
SECTION 2.5. "AWARD DATE" means, with respect to any Award, the date on
which the Award is made by the Committee or such later date as the Committee may
specify to be the effective date of an Award.
SECTION 2.6. "AWARD RATE" means the performance/payout/position level
relationship with respect to an Award.
SECTION 2.7. "BENEFICIARY" means the person or persons designated by a
Participant to receive the benefits under the Plan, if any, which become payable
as a result of the Participant's death.
SECTION 2.8. "BOARD" OR "BOARD OF DIRECTORS" means the Board of Directors
of the Company serving on the Effective Date and thereafter.
SECTION 2.9. "CASHLESS EXERCISE" means, if there is a public market for the
Shares, the payment of the Exercise Price of Options (a) through a "same day
sale" commitment from the Participant and a NASD Dealer whereby the Participant
irrevocably elects to exercise the Option and to sell a portion of the Shares so
purchased in order to pay the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (b) through a "margin" commitment from the
Participant and a NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the Company.
SECTION 2.10. "CAUSE" means, for purposes of determining whether and when a
Participant has incurred a Termination of Service for Cause, a termination of a
Participant's employment by the Company or by any Subsidiary or Affiliate for
any of the following reasons, unless Cause is defined in a Participant's
employment agreement with the Company, Subsidiary or Affiliate in which case
such employment agreement shall control with respect to the definition of Cause
for that Participant:
(a) any refusal by the Participant to follow the directions of the Board
of Directors or the chairman of the Company or any Subsidiary or
Affiliate or the directions of the Participant's supervisor; or
(b) any negligence by the Participant (or, with the knowledge of the
Participant, by any employee of the Company, Subsidiary or Affiliate
who reports, directly or indirectly, to the Participant and where the
Participant allows or fails to prevent such negligence by such
employee) in managing the business, operations or affairs of the
Company or any Subsidiary or Affiliate; or
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(c) any dishonesty, fraud, theft or embezzlement by the Participant (or,
with the knowledge of the Participant, by any employee of the Company,
Subsidiary or Affiliate who reports, directly or indirectly, to the
Participant and where the Participant allows or fails to prevent such
dishonesty, fraud, theft or embezzlement by such employee) upon or
against the Company or any Subsidiary or Affiliate or upon or against
any customer of the Company or any Subsidiary or Affiliate; or
(d) any conviction of, or the entering of any plea of guilty or nolo
contendere by, the Participant for any felony; or
(e) any violation by the Participant (or, with the knowledge of the
Participant, by any employee of the Company, Subsidiary or Affiliate
who reports, directly or indirectly, to the Participant and where the
Participant allows or fails to prevent such violation by such
employee) of any law, statute, rule, regulation or governmental
requirement that has or will have a significant adverse effect on the
Company or any Subsidiary or Affiliate; or
(f) any noncompliance by the Participant (or, with the knowledge of the
Participant, by any employee of the Company, Subsidiary or Affiliate
who reports, directly or indirectly, to the Participant and where the
Participant allows or fails to prevent such noncompliance by such
employee) with any provision of any employee handbook or policy,
corporate governance guidelines or code of conduct or ethics of, or
any non-solicitation, confidentiality or other agreement with, the
Company or any Subsidiary or Affiliate; or
(g) any misappropriation, usurping or taking by the Participant (or, with
the knowledge of the Participant, by any employee of the Company,
Subsidiary or Affiliate who reports, directly or indirectly, to the
Participant and where the Participant allows or fails to prevent such
misappropriation, usurping or taking by such employee) of any
corporate opportunity of the Company or any Subsidiary or Affiliate;
or
(h) any alcoholism or unlawful drug, chemical or substance abuse or
addiction of the Participant to the extent that such alcoholism, abuse
or addiction adversely affects the ability of the Participant to
perform his duties and responsibilities to the Company or any
Subsidiary or Affiliate or adversely affects the business, operations
or affairs of the Company or any Subsidiary or Affiliate.
SECTION 2.11. "CHANGE IN CONTROL" means the effective date of a transaction
or series of related transactions whereby (a) at least fifty-one percent (51%)
of the Shares shall subsequent to the effective date be beneficially owned by
any person, entity or group (within the meaning of Section 13(d)(3) of the 1934
Act) unrelated to or unaffiliated with the Company, (b) the Company merges into
or with, consolidates with or effects any plan of share exchange or other
combination with any person or entity unrelated to or unaffiliated with the
Company and in which transaction the Company is not the survivor, or (c) the
Company disposes of all or substantially all of its assets other than in the
ordinary course of business to any person or entity unrelated to or unaffiliated
with the Company.
For purposes of the definition of a Change in Control, a person or entity
shall not include any Subsidiary or Affiliate, the ESOP or any other employee
benefit plan sponsored by the Company.
SECTION 2.12. "CODE" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code or a regulation thereunder shall
include such section, any regulation promulgated under such section and any
comparable provision of any future law, legislation or regulation amending,
supplementing or superseding such section or regulation.
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SECTION 2.13. "COMMITTEE" means the Compensation Committee of the Board of
Directors (or such other committee appointed by the Board to administer the
Plan) serving on the Effective Date and thereafter.
SECTION 2.14. "COMPANY" means Chromcraft Revington, Inc., a Delaware
corporation, and any successor thereto.
SECTION 2.15. "COVERED EMPLOYEE" means an Employee who is a covered
employee as defined in Code Section 162(m)(3).
SECTION 2.16. "DIRECTOR" means any individual who is a member of the Board
of Directors.
SECTION 2.17. "DISABILITY" means an illness or a physical or mental
disability or incapacity of the Participant such that the Participant has not
been able to perform his duties and responsibilities for the Company or any
Subsidiary or Affiliate (as determined by the Company, Subsidiary or Affiliate)
for a period of at least ninety (90) consecutive days. Notwithstanding the
foregoing, if Disability is defined in a Participant's employment agreement with
the Company, Subsidiary or Affiliate, then such employment agreement will
control with respect to the definition of Disability for that Participant.
SECTION 2.18. "EBIT" means the earnings before interest and income taxes of
the Company on a consolidated basis or of any Subsidiary or Affiliate. EBIT
shall be determined based upon the audited financial statements of the Company
prepared in accordance with generally accepted accounting principles and may
exclude any one-time, non-recurring charges or credits as determined by the
Board of Directors or the Committee.
SECTION 2.19. "EBITDA" means the earnings before interest, income taxes,
depreciation and amortization of the Company on a consolidated basis or of any
Subsidiary or Affiliate. EBITDA shall be determined based upon the audited
financial statements of the Company prepared in accordance with generally
accepted accounting principles and may exclude any one-time, non-recurring
charges or credits as determined by the Board of Directors or the Committee.
SECTION 2.20. "EBITDAE" means the earnings before interest, income taxes,
depreciation, amortization and non-cash ESOP compensation expenses of the
Company on a consolidated basis. EBITDAE shall be determined based upon the
audited financial statements of the Company prepared in accordance with
generally accepted accounting principles and may exclude any one-time,
non-recurring charges or credits as determined by the Board of Directors or the
Committee.
SECTION 2.21. "EFFECTIVE DATE" means January 1, 2006.
SECTION 2.22. "ELIGIBLE TRANSFEREES" has the meaning set forth in Section
14.7.
SECTION 2.23. "EMPLOYEE" means any officer or key employee of the Company
or any Subsidiary or Affiliate, whether such officer or key employee is so
employed on the Effective Date or becomes employed subsequent to the Effective
Date.
SECTION 2.24. "ESOP" means the Chromcraft Revington, Inc. Employee Stock
Ownership Plan Trust which forms a part of the Chromcraft Revington, Inc.
Employee Stock Ownership Plan, as may be amended from time to time.
SECTION 2.25. "EXERCISE PRICE" means the price at which a Share may be
purchased by a Participant pursuant to the exercise of an Option.
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SECTION 2.26. "FAIR MARKET VALUE" means the average of the high and low
prices of a Share as of a particular date, as reported by the principal
securities exchange or market on which the Shares are then listed or traded or,
if there are no trades of shares on such date, on the next preceding day on
which Shares were traded.
SECTION 2.27. "FISCAL YEAR" means the annual accounting period of the
Company.
SECTION 2.28. "NASD DEALER" means a broker-dealer who is a member of the
National Association of Securities Dealers, Inc.
SECTION 2.29. "IMMEDIATE FAMILY MEMBERS" has the meaning set forth in
Section 14.7.
SECTION 2.30. "OPTION" means an Award made to a Participant pursuant to
Article VI of an option to purchase Shares that does not meet the requirements
of Code Section 422 applicable to incentive stock options.
SECTION 2.31. "OPTION PERIOD" means the period during which an Option shall
be exercisable in accordance with the applicable Award Agreement and Article VI.
SECTION 2.32. "PARTICIPANT" means an Employee to whom an Award has been
made.
SECTION 2.33. "PERFORMANCE MEASURES" means the business criteria determined
by the Committee, in its sole discretion, to be applicable to a Participant with
respect to an Award that is performance-based. Each Performance Measure also
shall contain an Award Rate and shall provide for a targeted level or levels of
achievement relating to one or more of the following business criteria with
respect to the Company and/or one or more Subsidiaries, Affiliates or divisions:
(a) EBIT, EBITDA or EBITDAE, (b) return on net assets, (c) return on equity, (d)
return on invested capital, (e) sales or revenues, (f) net income, (g) earnings
per share on a diluted basis, and (h) such other measures, metrics or strategic
actions as may be determined by the Committee in its discretion from time to
time that apply to an Employee who is not a Covered Employee. The Performance
Measures may differ from Participant to Participant, from Award to Award and
from Performance Period to Performance Period. Achievement of the Performance
Measures shall be determined based upon the audited financial statements of the
Company prepared in accordance with generally accepted accounting principles (or
as may otherwise be determined by the Board of Directors) and may exclude any
one-time, non-recurring charges or credits as determined by the Board of
Directors or the Committee.
SECTION 2.34. "PERFORMANCE PERIOD" means the period of time during which
Performance Measures must be achieved with respect to an Award, as determined by
the Committee.
SECTION 2.35. "PERFORMANCE SHARE" means an Award made to a Participant
pursuant to Article IX.
SECTION 2.36. "PERIOD OF RESTRICTION" means the period during which the
transfer of Shares of Restricted Stock are subject to restrictions and,
therefore, the Shares are subject to a substantial risk of forfeiture.
SECTION 2.37. "PLAN" means the Chromcraft Revington, Inc. 2006 Executive
Incentive Plan, as set forth in this document and as may hereafter be amended
from time to time.
SECTION 2.38. "RESTRICTED STOCK" means an Award made to a Participant
pursuant to Article VIII.
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SECTION 2.39. "RETIREMENT" means the date on which a Participant retires
from employment with the Company or any Subsidiary or Affiliate on or after
attaining age 65.
SECTION 2.40. "RULE 16B-3" means Rule 16b-3 promulgated under the 1934 Act,
and any future rule or regulation amending, supplementing or superseding such
rule.
SECTION 2.41. "SECTION 16 PERSON" means a person who is required to file
appropriate forms or reports with the Securities and Exchange Commission
pursuant to Section 16 of the 1934 Act and the regulations promulgated
thereunder.
SECTION 2.42. "SHARES" means the whole shares of voting common stock ($.01
par value) of the Company, whether presently or hereafter issued and
outstanding, and any other stock or securities resulting from adjustment thereof
as provided in Section 4.5, or the stock of any successor to the Company which
is so designated for purposes of the Plan.
SECTION 2.43. "STOCK APPRECIATION RIGHT" OR "SAR" means an Award that is
designated as a "SAR" pursuant to Article VII.
SECTION 2.44. "SUBSIDIARY" means Chromcraft Corporation ("Chromcraft"),
Peters-Revington Corporation ("Peters-Revington"), Cochrane Furniture Company,
Inc. ("Cochrane"), Silver Furniture Co., Inc. ("Silver"), Korn Industries,
Incorporated ("Korn") and such other present or future direct or indirect
subsidiary corporations or entities of the Company which are designated by the
Board of Directors or the Committee.
SECTION 2.45. "TERMINATION OF SERVICE" means any termination, whether
pursuant to an employment agreement or otherwise, that actually or effectively
causes or results in a Participant ceasing, for whatever reason, to be an
Employee of the Company or any Subsidiary or Affiliate, including, but not
limited to, death, Disability, Retirement, any termination by the Company or a
Subsidiary or Affiliate of the Participant's employment with the Company,
Subsidiary or Affiliate (whether with or without Cause), and any voluntary
resignation or termination by the Participant of his or her employment with the
Company or any Subsidiary or Affiliate. A Termination of Service also shall
occur with respect to an Employee who is employed by a Subsidiary or Affiliate
if the Subsidiary or Affiliate ceases to be a Subsidiary or Affiliate and the
Participant shall not immediately thereafter become an Employee of the Company
or another Subsidiary or Affiliate. For purposes of the Plan, transfers or
changes of employment between the Company and a Subsidiary or Affiliate (or
between Subsidiaries or Affiliates) shall not be deemed a Termination of
Service.
ARTICLE III
ADMINISTRATION
SECTION 3.1. THE COMMITTEE. The Plan will be administered by the Committee.
The decision or action of a majority of the actual number of members of the
Committee will constitute the decision or action of the Committee. The Committee
will consist of not less than three Directors. The members of the Committee will
be appointed from time to time by, and will serve at the pleasure of, the Board
of Directors. It is intended that the Committee be comprised solely of Directors
each of whom is (a) independent under the director independence requirements of
the principal securities exchange or market on which the Shares are then traded
or listed, (b) a "non-employee director" under Rule 16b-3, and (c) an "outside
director" under Section 162(m) of the Code. Failure of the Committee to be so
comprised will not result in the cancellation, termination, expiration or lapse
of any Award.
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SECTION 3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or By-Laws of the Company, and subject to the
provisions of the Plan, the Committee will have full power and discretion to
select Employees who will be Participants under the Plan for each Performance
Period; determine the amounts, sizes, types, vesting requirements, forfeitures,
pay-outs, Exercise Prices or other prices and other attributes of Awards;
determine the Performance Measures, Performance Periods, Periods of Restriction,
Option Periods, Award Rates and all other goals, targets, terms and conditions
of Awards in a manner consistent with the Plan; amend or modify the Plan subject
to limitations imposed by applicable law and this Plan; construe and interpret
the Plan, all Award Agreements and any other agreements or instruments entered
into under the Plan; establish, amend or waive rules and regulations for the
Plan's administration; and amend the terms and conditions of any outstanding
Award and applicable Award Agreement to the extent such terms and conditions are
within the discretion of the Committee as provided in the Plan. The Committee
will make all other determinations which may be necessary or advisable for the
administration of the Plan. Each Award, other than a cash Award, shall be
evidenced by a written Award Agreement between the Company and the Participant
and shall contain such terms and conditions established by the Committee
consistent with the provisions of the Plan.
Notwithstanding anything in the Plan to the contrary, all material actions
of the Committee with respect to the administration of the Plan (including, but
not limited to, determinations relating to the Employees who will be
Participants under the Plan; the amounts, sizes, types, vesting requirements,
pay-outs, Exercise Prices or other prices and other attributes of awards; and
the Performance Measures, Performance Periods, Periods of Restriction, Option
Periods, Award Rates and other targets, terms and conditions of Awards) will be
presented to the Board of Directors for ratification or confirmation before such
actions of the Committee are taken or implemented.
The Committee's interpretations, decisions, determinations and actions
under the Plan will be made or taken by the Committee in its sole discretion and
as it deems advisable or appropriate. The Committee's interpretations,
decisions, determinations and actions under the Plan need not be uniform and may
be made or taken by the Committee selectively among Employees and Participants,
whether or not such persons are similarly situated.
Any notice or document required to be given to or filed with the Committee
shall be properly given or filed if hand delivered (and a delivery receipt is
received) or mailed by certified mail, return receipt requested, postage paid,
to the Committee c/o Chromcraft Revington, Inc., 1100 North Washington Street,
Delphi, Indiana, 46923.
SECTION 3.3. DELEGATION BY THE COMMITTEE. The Committee, in its sole
discretion and on such terms and conditions as it may provide, may delegate all
or any part of its authority and powers under the Plan to one or more Directors
or officers of the Company; provided, however, that the Committee may not
delegate its authority and powers (a) with respect to awards to Section 16
Persons, or (b) in any way which would jeopardize the Plan's qualification under
or compliance with Code Section 162(m), Rule 16b-3 or other applicable laws,
rules or regulations.
SECTION 3.4. DECISIONS BINDING. All determinations and decisions made by
the Committee (subject to Section 3.3), the Board of Directors and any delegate
of the Committee pursuant to Section 3.3 shall be final, conclusive and binding
on all persons, including the Company, Participants, stockholders of the
Company, Beneficiaries and persons having an interest in an Award. No such
determinations shall be subject to de novo review if challenged in court.
SECTION 3.5. ADJUSTMENT TO AWARDS. The Committee may also, in its sole
discretion, subject to the limitations contained in the Plan and compliance with
Code Sections 162(m) and 409A, make such
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adjustments to Awards, Performance Measures or Award Rates that the Committee
determines to be advisable or appropriate.
SECTION 3.6. PAYMENT ON CHANGE IN CONTROL OR TERMINATION OF SERVICE. Unless
expressly provided otherwise in a Participant's employment agreement with the
Company or any Subsidiary or Affiliate or in an Award Agreement, upon a Change
in Control, (a) all outstanding and unvested or unearned non-cash Awards shall
vest and be treated as earned or exercisable, at the "target" Award Rate,
immediately prior to the effectiveness of the Change in Control; and (b) all
outstanding and unearned cash Awards shall be treated as earned, at the "target"
Award Rate, immediately prior to the effectiveness of the Change in Control, on
a prorated basis, based upon the ratio that the number of days in the
Performance Period prior to the effectiveness of the Change in Control bears to
the total number of days in such Performance Period.
Upon any Termination of Service of a Participant, the Awards (whether
vested, unvested or unearned and whether cash or non-cash Awards) shall be
treated as set forth below in this Section, unless expressly provided otherwise
in a Participant's employment agreement with the Company or any Subsidiary or
Affiliate or in an Award Agreement. In the event of any conflict between a
Participant's employment agreement with the Company or any Subsidiary or
Affiliate and an Award Agreement, the Award Agreement shall control.
Upon a Termination of Service due to the death or Disability of a
Participant, all outstanding and unvested or unearned Awards at the time of such
Termination of Service shall vest and be paid, earned or exercisable (a) on a
prorated basis based upon the length of time that the Participant was employed
by the Company or any Subsidiary or Affiliate during the applicable Performance
Period to which each such Award relates, and (b) only if the applicable
Performance Measures and all other targets, metrics, measures, terms and
conditions to which each such Award relates are ultimately satisfied or
fulfilled. In event an Award shall become so vested, earned or exercisable, or
had vested, was earned or became exercisable prior to death or Disability of a
Participant, the Award shall be paid to or exercisable by the Participant or his
or her representative, as the case may be, in accordance with the applicable
Award Agreement.
Upon a Termination of Service due to a voluntary resignation by the
Participant of his or her employment with the Company or any Subsidiary or
Affiliate prior to Retirement or due to a termination of the Participant's
employment by the Company or any Subsidiary or Affiliate without Cause, (a) all
outstanding and unvested or unearned Awards at the time of such Termination of
Service shall be immediately forfeited and the Participant shall have no rights
with respect thereto, and (b) all vested or earned Awards at the time of such
Termination of Service shall be paid to or exercisable by the Participant in
accordance with the applicable Award Agreement. Upon a Termination of Service
due to a termination of the Participant's employment by the Company or any
Subsidiary or Affiliate with Cause, all vested or earned but unexercised or
unpaid Awards, and all outstanding and unvested or unearned Awards, at the time
of such Termination of Service shall be immediately forfeited and the
Participant shall have no rights with respect thereto.
Upon a Termination of Service due to the Retirement of a Participant, all
outstanding and unvested or unearned Awards at the time of such Termination of
Service shall vest and be paid, earned or exercisable (a) on a prorated basis
based upon the length of time that the Participant was employed by the Company
or any Subsidiary or Affiliate during the applicable Performance Period to which
each such Award relates, and (b) only if the applicable Performance Measures and
all other targets, metrics, measures, terms and conditions to which each such
Award relates are ultimately satisfied or fulfilled; provided, however, that if
the Participant's Retirement occurs during the first six (6) months of a
Performance Period, then all Awards relating to such Performance Period shall be
immediately forfeited
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upon Retirement and the Participant shall have no rights with respect thereto.
All Awards that had vested, were earned or became exercisable prior to
Retirement shall be paid to or exercisable by the Participant in accordance with
the applicable Award Agreement.
SECTION 3.7. COMMUNICATION OF AWARD OPPORTUNITY LEVEL AND AWARDS. Not later
than ninety (90) days following the beginning of each Performance Period, as
applicable, the Performance Measures (and their respective weightings), the
Award Rates and any other requirements, criteria or attributes for Awards for
such Performance Period shall be communicated in writing by the Committee to the
Participants eligible for such Awards. Such communication shall not constitute
the grant of an Award.
SECTION 3.8. LIMITATION ON AWARDS. Notwithstanding any other provision in
the Plan to the contrary, the following limitations on Awards shall apply:
(a) The maximum amount of all cash Awards paid under the Plan to any one
Participant in any Fiscal Year shall not exceed (i) with respect to
each officer of the Company, the lesser of two (2) times such
officer's base salary paid in the Fiscal Year prior to the year in
which the Award is paid or $850,000, and (ii) with respect to each
other Participant, the lesser of such Participant's base salary paid
in the Fiscal Year prior to the year in which the Award is paid or
$300,000; and
(b) The maximum amount of all non-cash Awards granted under the Plan to
any one Participant in any Fiscal Year for Performance Periods in
excess of one year shall not exceed (i) with respect to each officer
of the Company, the lesser of two (2) times such officer's base salary
paid in the Fiscal Year prior to the year in which the Award is
granted or $850,000 (except that the maximum amount of all non-cash
Awards granted to the Chief Executive Officer of the Company in 2006
shall be $850,000), and (ii) with respect to each other Participant,
the lesser of such Participant's base salary paid in the Fiscal Year
prior to the year in which the Award is granted or $300,000; and
(c) In the event any Award exceeds either or both of the above
limitations, then the Committee shall adjust and reduce the dollar
value of the Award to the applicable limitation in such amounts and on
such basis as the Committee, in its sole discretion, deems
appropriate; and
(d) The amount of a non-cash Award shall be determined based upon the Fair
Market Value of a Share on the date that the Award is granted to the
Participant.
SECTION 3.9. FORM OF PAYMENT OF NON-CASH AWARDS. Subject to the limitations
contained in Section 3.8 hereof and so long as the Award has been vested or
earned, all non-cash Awards may, in the sole discretion of the Committee, be
paid fifty percent (50%) in a single lump sum payment (in immediately available
funds) and fifty percent (50%) in Shares or Options. The Committee shall make
such determination with respect to the form of payment of non-cash Awards at the
time that the Awards are granted, paid or earned.
SECTION 3.10. TIME OF PAYMENT OF AWARDS. Once an Award has vested or been
earned, the Award shall, with respect to cash Awards, be paid within ninety (90)
days following the end of the applicable Performance Period and shall, with
respect to non-cash Awards, be paid, issued or become exercisable on the day
following the date on which the non-cash Award has vested or been earned.
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SECTION 3.11. PERFORMANCE-BASED AND OTHER AWARDS. The Committee may, in its
sole discretion, require that Awards shall vest or become earned or exercisable
based upon (a) the achievement or satisfaction of Performance Measures, (b)
continued service with the Company or any of its Subsidiaries or Affiliates,
and/or (c) any other basis determined by the Committee; provided, however, that
for purposes of qualifying Awards as "performance-based compensation" under Code
Section 162(m) to Covered Employees, the Awards shall vest or become earned or
exercisable based upon the achievement of Performance Measures. The Committee
shall follow any procedures determined by it in its sole discretion from time to
time to be necessary, advisable or appropriate to ensure the qualification of
Awards under Code Section 162(m) that are to be considered "performance-based
compensation" to Covered Employees.
ARTICLE IV
SHARES SUBJECT TO THE PLAN
SECTION 4.1. NUMBER OF SHARES. Subject to adjustment as provided in Section
4.5, a maximum aggregate of One Million (1,000,000) Shares subject to Options,
SARs, Shares of Restricted Stock and Performance Shares may be granted under the
Plan. Shares issued under the Plan may be either authorized but unissued Shares,
treasury Shares or Shares purchased in the open market, or any combination
thereof, as the Committee or the Board of Directors may from time to time
determine in its sole discretion.
Any Award (or any portion thereof) that is forfeited or that remains
unearned, unpurchased, undistributed, unvested or unexercised upon termination
or expiration of any such Award, or Shares that otherwise cease to be subject to
an Award, may be made the subject of other Awards to the same or other
Participants and shall be added back to the maximum number of non-cash Awards
specified above. If the Exercise Price of any Option, or if any tax liability or
tax withholding obligation with respect to an Award, is satisfied by tendering
Shares, only the number of Shares actually issued to a Participant, net of the
Shares tendered, shall be counted against the maximum number of non-cash Awards
specified above.
SECTION 4.2. SUCCESSOR PLAN. Any Awards or Shares that are available
immediately prior to the termination of the Plan, or any Awards or Shares
returned to the Company for any reason upon the termination of the Plan, may be
transferred to a successor plan.
SECTION 4.3. RESTRICTIONS ON SHARES. Shares issued upon exercise of an
Award shall be subject to the terms, conditions and restrictions specified in
the Plan and to such other terms, conditions and restrictions as the Committee,
in its sole discretion, may determine or provide in an Award Agreement. The
Committee, in its sole discretion, may issue certificates for non-cash Awards or
Shares or may keep a record of non-cash Awards or Shares in book entry form. The
Committee, in its sole discretion, shall not be required to cause the issuance
or delivery of any certificates for Shares, prior to (a) the listing of such
Shares on the principal securities exchange or market on which the Shares may
then be listed or traded, and (b) the completion of any registration or
qualification of such Shares under applicable law or an exemption therefrom. The
Company may cause any certificate for any Shares to be delivered hereunder to be
properly marked with a legend or other notation reflecting the restrictions on
transfer of such Shares as provided in the Plan, as required by applicable law
or as the Committee may otherwise require. No fractional Shares shall be issued
under the Plan; rather, fractional shares shall be aggregated and then rounded
to the next lower whole Share.
SECTION 4.4. STOCKHOLDER RIGHTS. Except with respect to Restricted Stock as
provided in Article VIII, no person shall have any rights or privileges of a
stockholder (including, but not limited to, voting and dividend rights) with
respect to an Award or any Shares subject to an Award until, after proper
exercise or vesting of the Award or other action as may be required by the
Committee in its sole
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discretion, such Shares are recorded on the Company's official stockholder
records (or the records of its transfer agent or registrar) as issued to the
Participant. Upon exercise or vesting of an Award or any portion thereof, the
Company shall have a reasonable period in which to issue the Shares and any
certificate representing such Shares to the Participant, and the Participant
shall not, except with respect to Restricted Stock as provided in Article VIII,
be treated as a stockholder for any purpose whatsoever prior to such issuance.
No payment or adjustment shall be made for cash dividends, distributions or
other rights for which the record date is prior to the date such Shares are
recorded as issued to the Participant in the Company's official stockholder
records (or the records of its transfer agent or registrar), except as otherwise
expressly provided in the Plan or in an Award Agreement.
SECTION 4.5. CHANGES IN STOCK. In the event of any change in the Shares by
virtue of any stock dividends, stock splits, recapitalizations or
reclassifications, or in the event that other securities of the Company shall be
substituted for the Shares other than by a Change in Control, the Committee
shall appropriately adjust (a) the maximum number of Awards or Shares that may
be issued under the Plan, (b) the number, kind and class of securities subject
to outstanding Awards, (c) the Exercise Price or other price relating to an
Award, and (d) any other term of any Award, all in such manner as the Committee,
in its sole discretion, deems advisable or appropriate. Subject to Section 3.2,
any determination by the Committee under this Section shall be final and
conclusive.
ARTICLE V
ELIGIBILITY
Only Employees shall be eligible to participate in the Plan. The Committee
shall, from time to time and in its sole discretion, select Employees to whom
Awards shall be made and determine the terms and conditions with respect
thereto. In making any such selection and in determining the type, amount,
vesting schedule, Performance Measures and other attributes of an Award, the
Committee may give consideration to the functions and responsibilities of the
Employee to the Company or its Affiliates, the value of the Employee's
contributions or services (past, present or future) to the Company or its
Affiliates, input from the Company's Chief Executive Officer or any other
officer of the Company or any of its Affiliates and such other factors deemed
relevant by the Committee in its sole discretion. Committee members shall not be
eligible to participate in the Plan while serving as Committee members. A
Participant can be removed as a Participant in the Plan by the Committee
effective at any time.
As a condition to eligibility to participate in the Plan, each Participant
shall be required to agree to certain covenants relating to (a) non-solicitation
of employees and customers of the Company and any Subsidiary or Affiliate, (b)
maintaining the confidentiality of non-public information relating to the
Company and any Subsidiary or Affiliate, (c) adherence to the Company's code of
business conduct or ethics, and (d) such other matters as determined by the
Committee. Such covenants, and the consequences of any breach thereof, shall be
set forth in each Award Agreement or in a separate agreement.
ARTICLE VI
STOCK OPTIONS
SECTION 6.1. AWARD OF OPTIONS. Subject to the terms and conditions of the
Plan, the Committee, at any time and from time to time, may award Options to
Employees as the Committee, in its sole discretion, determines. Subject to the
terms and conditions of the Plan, the Committee, in its sole discretion, shall
determine the number of Shares subject to each Option.
SECTION 6.2. OPTION AWARD AGREEMENT. Each Option shall be evidenced by an
Award Agreement that specifies the number of Shares to which the Option
pertains, the Exercise Price, the
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Performance Measures (if applicable), the Performance Period, the Option Period,
any conditions to exercise of the Option and such other terms and conditions as
the Committee, in its sole discretion, determines.
SECTION 6.3. EXERCISE PRICE. The Exercise Price for each Option shall be
determined by the Committee in its sole discretion; provided, however, in no
event shall the Exercise Price be less than the 100% of Fair Market Value of the
Shares to which the Option relates determined as of the Award Date.
SECTION 6.4. DURATION OF OPTIONS. The Option Period with respect to each
Option shall not exceed ten years; provided, however, the Committee may, in its
sole discretion, after an Option is awarded, extend the maximum term of the
Option.
SECTION 6.5. EXERCISABILITY OF OPTIONS. All Options shall be exercisable at
such times, under such terms and subject to such restrictions and conditions as
the Committee determines in its sole discretion and specified in the Award
Agreements to which such Options relate. After an Option is awarded, the
Committee, in its sole discretion, may accelerate the exercisability of the
Option.
SECTION 6.6. METHOD OF EXERCISE. Subject to the provisions of the
applicable Award Agreement, a Participant may exercise an Option, in whole or in
part, at any time during the Option Period by giving written notice to the
Company of exercise on a form provided by the Committee. Such notice shall
specify the number of Shares subject to the Option to be purchased and shall be
accompanied by payment in full of the total Exercise Price by cash, check or
wire transfer of immediately available funds or such other form of payment as
the Company may accept. If permitted by the Committee or the applicable Award
Agreement, payment in full or in part also may be made by:
(a) The delivery of Shares already owned by the Participant for more than
six months and having a total Fair Market Value on the date of such
delivery equal to the total Exercise Price; or
(b) The delivery of cash by a NASD Dealer as a Cashless Exercise.
No Shares shall be issued until full payment therefor has been made to the
Company. A Participant shall have all of the rights of a stockholder of the
Company holding the class of Shares subject to the Option (including, if
applicable, the right to vote the Shares and the right to receive dividends and
distributions) only after the Participant has given written notice of exercise,
has paid the total Exercise Price and such Shares have been recorded on the
Company's official stockholder records (or the records of its transfer agent or
registrar) as having been issued to the Participant.
SECTION 6.7. RELOAD PROVISION. In the event a Participant exercises an
Option and pays all or a portion of the Exercise Price in Shares, in the manner
permitted by Section 6.6, such Participant may (either pursuant to the terms of
the Award Agreement or pursuant to the sole discretion of the Committee at the
time the Option is exercised) be issued a new Option to purchase additional
Shares equal to the number of Shares surrendered to the Company in such payment.
Such new Option shall (a) have an Exercise Price equal to the Fair Market Value
per Share on the Award Date of the new Option, (b) have an Option Period as
determined by the Committee in its sole discretion, and (c) expire on the same
date as the original Option so exercised by payment of the Exercise Price in
Shares.
SECTION 6.8. RESTRICTIONS ON TRANSFERABILITY. In addition to the
restrictions imposed by Section 14.7, at the time an Award of Options is made,
the Committee may impose such restrictions on transfer of any Shares acquired
pursuant to the exercise of an Option as it deems advisable or appropriate
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in its sole discretion, the restrictions related to applicable securities laws
and the requirements of the principal securities exchange or market on which
Shares are then listed or traded.
SECTION 6.9. SHARES ISSUED UPON EXERCISE OF OPTIONS. Shares issued upon the
exercise of Options shall be issued under the Company's 1992 Stock Option Plan
(as amended and restated through March 15, 2002) until the remaining Shares
available for issuance under such plan have been issued. Thereafter, Shares
issued upon the exercise of Options shall be issued under this Plan. The Shares
available for issuance under the 1992 Stock Option Plan shall not be included in
the maximum number of Shares subject to Options set forth in Section 4.1.
ARTICLE VII
STOCK APPRECIATION RIGHTS
SECTION 7.1. AWARD OF SARS. Subject to the terms and conditions of the
Plan, the Committee, at any time and from time to time, may award SARs to
Employees as the Committee, in its sole discretion, determines. Subject to the
terms and conditions of the Plan, the Committee, in its sole discretion, shall
determine the number of SARs awarded to any Participant.
SECTION 7.2. SAR AWARD AGREEMENT. Each SAR shall be evidenced by an Award
Agreement that specifies the number of SARs, the exercise price, the exercise
dates, the Performance Measures (if applicable), the Performance Period any
conditions to the exercise of the SAR and such other terms and conditions as the
Committee, in its sole discretion, determines.
SECTION 7.3. EXERCISE OF SARS. SARs shall be exercisable on such terms and
conditions as the Committee, in its sole discretion, shall specify in the
applicable Award Agreement; provided, however, that the exercise price of a SAR
shall be equal to the Fair Market Value of a Share on the date of grant of the
SAR.
SECTION 7.4. PAYMENT OF SAR AMOUNT. Upon exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The sum resulting from the Fair Market Value of a Share on the date of
exercise less the exercise price of the SAR (so long as such sum is a
positive number); by
(b) The number of Shares with respect to which the SAR is exercised.
At the sole discretion of the Committee, such payment may be in cash, in
Shares which have a Fair Market Value equal to the cash payment calculated under
this Section or in a combination of cash and Shares.
SECTION 7.5. TERMINATION OF SAR. A SAR shall terminate at the time provided
in the applicable Award Agreement.
SECTION 7.6. RESTRICTIONS ON TRANSFERABILITY. At the time an Award of SARs
is made, the Committee may impose such restrictions on transfer of such Award as
it deems advisable or appropriate in its sole discretion.
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ARTICLE VIII
RESTRICTED STOCK
SECTION 8.1. AWARD OF RESTRICTED STOCK. Subject to the terms and conditions
of the Plan, the Committee, at any time and from time to time, may award Shares
of Restricted Stock to Employees as the Committee, in its sole discretion,
determines. Subject to the terms and conditions of the Plan, the Committee, in
its sole discretion, shall determine the number of Shares of Restricted Stock to
be awarded to each Participant.
SECTION 8.2. RESTRICTED STOCK AWARD AGREEMENT. Each Award of Restricted
Stock shall be evidenced by an Award Agreement that specifies the number of
Shares of Restricted Stock, the Period of Restriction, the Performance Measures
(if applicable), the Performance Period and such other terms and conditions as
the Committee, in its sole discretion, determines.
SECTION 8.3. RESTRICTIONS ON TRANSFERABILITY. Until the end of the
applicable Period of Restriction, Shares of Restricted Stock (a) cannot be sold,
transferred, assigned, margined, encumbered, gifted, bequeathed, alienated,
hypothecated, pledged or otherwise disposed of, whether by operation of law,
whether voluntarily or involuntarily or otherwise, nor can a lien, security
interest or option be placed thereon, and (b) are not subject to execution,
attachment or similar process or otherwise available to the creditors of a
Participant. In addition, at the time an Award of Restricted Stock is made, the
Committee may impose such additional restrictions on transfer of such Restricted
Stock as it deems advisable or appropriate in its sole discretion.
SECTION 8.4. BOOK-ENTRY SECURITIES; REMOVAL OF RESTRICTIONS. The Company
shall issue and maintain Shares of Restricted Stock in book-entry form in the
name of the Participant, and such Shares shall be outstanding for all corporate
purposes. Until such time as the Shares of Restricted Stock shall vest and
become free of the restrictions placed thereon, no certificate representing such
Shares shall be issued to, in the name or for the benefit of any Participant.
Shares of Restricted Stock may vest and become free of the restrictions placed
thereon incrementally during, or at the end of, a Performance Period or in such
other manner as the Committee, in its sole discretion, determines. Promptly
following the date on which Shares of Restricted Stock vest or become free of
the restrictions placed thereon, the Company shall release such Shares to the
Participant, less any withholding for applicable taxes.
SECTION 8.5. VOTING RIGHTS. During the Period of Restriction, Participants
holding Shares of Restricted Stock shall possess full voting rights with respect
to such Shares, unless the applicable Award Agreement expressly provides
otherwise.
SECTION 8.6. DIVIDEND RIGHTS. During the Period of Restriction,
Participants holding Shares of Restricted Stock shall receive all dividends and
other distributions, if any, with respect to such Shares, unless the applicable
Award Agreement expressly provides otherwise.
SECTION 8.7. RETURN OF RESTRICTED STOCK TO COMPANY. All Shares of
Restricted Stock that have not vested or have not become free of the
restrictions placed thereon by the end of Period of Restriction shall be
forfeited and shall revert to the Company and thereafter shall be available for
new Awards.
SECTION 8.8. SECTION 83(B) ELECTION. The Committee may, in its sole
discretion, provide in an Award Agreement that a Participant to whom an Award of
Shares of Restricted Stock has been granted is permitted to make or prohibited
from making an election with respect to such Award under Section 83(b) of the
Code. If a Participant to whom an Award of Restricted Stock has been granted is
permitted to
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make an election under to Section 83(b) of the Code, then the Participant shall
provide a copy of such election to the Company within thirty (30) days following
the Award Date.
ARTICLE IX
PERFORMANCE SHARES
SECTION 9.1. AWARD OF PERFORMANCE SHARES. Subject to the terms and
conditions of the Plan, the Committee, at any time and from time to time, may
award Performance Shares to Employees as the Committee, in its sole discretion,
determines. Subject to the terms and conditions of the Plan, the Committee, in
its sole discretion, shall determine the number of Performance Shares awarded to
each Participant.
SECTION 9.2. PERFORMANCE SHARE AWARD AGREEMENT. Each Performance Share
shall be evidenced by an Award Agreement that specifies the number of
Performance Shares, the Performance Period, the Performance Measures (if
applicable) and such other terms and conditions as the Committee, in its sole
discretion, determines.
SECTION 9.3. VALUE OF PERFORMANCE SHARES. Each Performance Share shall have
an initial value corresponding to the Fair Market Value of a Share on the Award
Date.
SECTION 9.4. BOOK-ENTRY SECURITIES; EARNING OF PERFORMANCE SHARES. The
Company shall maintain Performance Shares in book-entry form in the name of the
Participant, but such Shares shall not be issued or outstanding for any
corporate purpose. Performance Shares may be earned incrementally during, or at
the end of, a Performance Period or in such other manner as the Committee, in
its sole discretion, determines. After the applicable Performance Period has
ended, the Participant shall be entitled to receive those Performance Shares
earned by the Participant over the Performance Period, to be determined as a
function of the extent to which the applicable Performance Measures were
achieved.
SECTION 9.5. FORM OF PAYMENT OF PERFORMANCE SHARES. The Committee, in its
sole discretion, may pay earned Performance Shares in the form of cash, Options
or Shares which have an aggregate Fair Market Value equal to the value of the
earned Performance Shares, as the case may be, determined as of the last day of
the applicable Performance Period, or a combination thereof.
SECTION 9.6. CANCELLATION OF PERFORMANCE SHARES. All Performance Shares
that have not been earned or vested by the end of the applicable Performance
Period shall be forfeited and thereafter shall be available for new Awards.
SECTION 9.7. NO RIGHTS AS STOCKHOLDER. Participants shall not have any
rights as a stockholder of the Company with respect to any Performance Shares
until such time as such Shares have been earned or vested and payment for such
Performance Shares have been made in Shares rather than cash (as determined by
the Committee), and the Shares have been recorded on the Company's official
stockholder records (or the records of its transfer agent or registrar) as
issued to the Participant.
SECTION 9.8. RESTRICTIONS ON TRANSFERABILITY. At the time an Award of
Performance Shares is made, the Committee may impose such restrictions on
transfer of such Performance Shares as it deems advisable or appropriate in its
sole discretion.
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ARTICLE X
CASH AWARDS
SECTION 10.1. CALCULATION OF AWARDS. For each Fiscal Year, the Committee
may, in its sole discretion, establish the following with respect to the payment
of Awards of cash under the Plan:
(a) The Performance Measures to be achieved or satisfied;
(b) The weight accorded to each Performance Measure for each Participant;
(c) The Award Rates for each Participant; and
(d) Such other terms and conditions as the Committee, in its sole
discretion, determines.
SECTION 10.2. DEFERRED PAYMENT OF CASH AWARDS. No Participant may defer the
receipt of payment of a cash Award that would otherwise be due to a Participant
by virtue of the achievement or satisfaction of the Performance Measures
relating to such Award, unless the Committee, in its sole discretion, determines
to allow deferrals of cash Awards by Participants and such deferral right is
contained in an Award Agreement and is permitted by applicable law, rule or
regulation, including, but not limited to, Code Section 409A. If the Committee
determines to permit Participants to defer cash Awards, then the Committee shall
establish rules and procedures relating to such deferrals, including, but not
limited to, the amount of the Award that may be deferred, the time when an
election to defer may be made, the time period of the deferral, the events that
would result in payment of the deferred Award, the interest or other earnings
attributable to the deferred Award and the method of funding, if any, for the
deferred Award.
ARTICLE XI
AMENDMENT, TERMINATION AND DURATION
SECTION 11.1. AMENDMENT, SUSPENSION OR TERMINATION. The Board of Directors
may supplement, amend, alter, freeze or discontinue the Plan in its sole
discretion at any time and from time to time, but no supplement, amendment,
alteration, freezing or discontinuation shall be made which would impair the
rights of a Participant under an Award theretofore awarded without the
Participant's consent, except that any supplement, amendment, alteration,
freezing or discontinuation may be made to (a) avoid a material charge or
expense to the Company or an Affiliate, (b) cause the Plan to comply with
applicable law or (c) permit the Company or an Affiliate to claim a tax
deduction under applicable law. In addition, subject to the provisions of this
Article, the Board of Directors, in its sole discretion at any time and from
time to time, may supplement, amend, alter, freeze or discontinue the Plan
without the approval of the Company's stockholders (i) to the extent such
approval is not required by applicable law or the terms of a written agreement,
and (ii) so long as any such amendment or alteration does not increase (other
than pursuant to Section 4.5) the maximum number of Shares subject to the Plan
or increase the maximum number of Options, SARs, Shares of Restricted Stock or
Performance Shares that the Committee may award to a Participant.
SECTION 11.2. DURATION OF THE PLAN AND STOCKHOLDER APPROVAL. The Plan shall
become effective on the Effective Date, and subject to Section 11.1, shall
remain in effect thereafter; provided, however, that no Options shall be
exercised and no other Award shall be exercised, issued or otherwise paid
hereunder until the Plan has been approved by the holders of at least a majority
of the outstanding Shares at a meeting at which approval of the Plan is
considered; and provided further, however, that no Awards shall be granted after
the tenth anniversary of the Effective Date.
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ARTICLE XII
TAX WITHHOLDING
SECTION 12.1. WITHHOLDING REQUIREMENTS. All applicable federal, state,
local and other income and employment taxes (and all interest and penalties
thereon) that arise by virtue of the payment or exercise of an Award shall be
the responsibility of and paid by the Participant. Prior to the delivery of any
Shares or cash pursuant to the payment or exercise of an Award, the Company
shall have the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy all
federal, state, local and other income and employment taxes required to be
withheld with respect to the payment or exercise of such Award.
SECTION 12.2. WITHHOLDING ARRANGEMENTS. The Committee, in its sole
discretion and pursuant to such procedures as it may specify from time to time,
may permit a Participant to satisfy such tax withholding obligation, in whole or
in part, by (a) electing to have the Company withhold otherwise deliverable
Shares, or (b) delivering Shares then owned by the Participant for more than six
months to the Company which have a Fair Market Value equal to the amount
required to be withheld. The amount of the withholding requirement shall be
deemed to include any amount that the Committee agrees may be withheld at the
time any such election is made, not to exceed, in the case of income tax
withholding, the amount determined, based upon minimum statutory requirements,
by using the maximum federal, state or local marginal income tax rates
applicable to the Participant with respect to the Award on the date that the
amount of income tax to be withheld is determined. The Fair Market Value of the
Shares to be withheld or delivered shall be determined as of the date that the
taxes are required to be withheld.
ARTICLE XIII
LEGAL CONSTRUCTION
SECTION 13.1. GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine and
neuter, the plural shall include the singular, and the singular shall include
the plural.
SECTION 13.2. SEVERABILITY. In the event any provision of the Plan (or any
portion thereof) is held to be illegal, invalid or unenforceable for any reason,
such illegality, invalidity or uneforceability shall not affect the remaining
parts of the Plan, and the Plan shall be construed and enforced as if the
illegal, invalid or unenforceable provision (or portion thereof) had never been
included herein.
SECTION 13.3. REQUIREMENTS OF LAW. The issuance of Awards and Shares under
the Plan shall be subject to all applicable statutes, laws, rules and
regulations and to such approvals and requirements as may be required from time
to time by any governmental authorities or any securities exchange or market on
which the Shares are then listed or traded.
SECTION 13.4. GOVERNING LAW. Except to the extent preempted by the federal
laws of the United States of America, the Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of Indiana
without giving effect to any choice or conflict of law provisions, principles or
rules (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. The Plan and all Award Agreements are intended to comply, and shall be
construed by the Committee in a manner which complies with Code Section 409A. To
the extent there is any conflict between a provision of the Plan or an Award
Agreement and a provision of Code Section 409A, the application of Code Section
409A shall control.
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SECTION 13.5. HEADINGS. The descriptive headings and sections of the Plan
are provided herein for convenience of reference only and shall not serve as a
basis for interpretation or construction of the Plan.
SECTION 13.6. MISTAKE OF FACT. Any mistake of fact or misstatement of facts
shall be corrected when it becomes known by a proper adjustment to an Award or
Award Agreement.
SECTION 13.7. CODE SECTION 162(M) REQUIREMENTS AND BIFURCATION OF THE PLAN.
It is the intent of the Company that the Plan and Awards satisfy and be
interpreted in a manner that, in the case of Participants who are Covered
Employees, satisfies any applicable requirements as "performance-based
compensation." Any provision, application or interpretation of the Plan which is
inconsistent with this intent to satisfy the standards in Code Section 162(m)
shall be disregarded. Notwithstanding anything to the contrary in the Plan or
any Award agreement, the provisions of the Plan may at any time be bifurcated by
the Committee in any manner so that certain provisions of the Plan or Award
specified by the Committee which are necessary to satisfy the requirements of
Code Section 162(m) are only applicable to Covered Employees.
ARTICLE XIV
MISCELLANEOUS
ARTICLE 14.1. NO EFFECT ON EMPLOYMENT OR SERVICE. Neither the Plan or any
Award, nor the execution of any Award Agreement, shall confer upon any
Participant any right to continued employment by the Company or shall interfere
with or affect in any way the right of the Company to terminate any
Participant's employment at any time, with or without Cause, or to change the
terms and conditions of such employment unless expressly provided otherwise in a
written employment agreement between the Participant and the Company or an
Affiliate. Employment with the Company or an Affiliate is on an employee-at-will
basis only, unless expressly provided otherwise in a written employment between
the Participant and the Company or an Affiliate.
SECTION 14.2. NO ADVICE. The Company, any Affiliate, the Board of
Directors, the Committee and any attorneys, accountants, advisors or agents for
any of the foregoing shall not provide any advice, counsel or recommendation to
any Participant with respect to, without limitation, any Award, any exercise of
an Option or any tax consequences relating to an Award.
SECTION 14.3. PARTICIPATION. No Employee shall have the right to be
selected to be a Participant or to receive an Award under the Plan or, after
having been selected to be a Participant for a particular Performance Period, to
be selected to be a Participant for another Performance Period or to receive any
future Awards (whether or not on the same terms and conditions or with similar
Performance Measures or otherwise). Participation in the Plan shall not give any
Participant any right or claim to any benefit under the Plan, unless such right
or claim has specifically accrued under the terms of the Plan.
SECTION 14.4. NO LIABILITY. No member of the Board of Directors, the
Committee or any officer or employee of the Company or any Affiliate shall be
personally liable for any action, failure to act, decision or determination made
in good faith in connection with the Plan.
SECTION 14.5. SUCCESSORS. All rights and obligations of the Company under
the Plan, with respect to Awards awarded hereunder, shall be binding on any
successor or assign of the Company, whether or not the existence of such
successor or assign is the result of a Change in Control.
SECTION 14.6. BENEFICIARY DESIGNATIONS. Any Participant may designate, on
such forms as may be provided by the Committee for such purpose, a Beneficiary
to whom any vested but unpaid
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Award shall be paid in the event of the Participant's death. Each such
designation shall revoke all prior designations by the Participant and shall be
effective only if given in a form and manner acceptable to the Committee. In the
absence of any such designation, any vested benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate and, subject to
the terms of the Plan and of the applicable Award Agreement, any unexercised
vested Award may be exercised by the administrator or executor of the
Participant's estate.
SECTION 14.7. NONTRANSFERABILITY OF AWARDS. Except as provided in
subsections (a) and (b) below, no Award can be sold, transferred, assigned,
margined, encumbered, bequeathed, gifted, alienated, hypothecated, pledged or
otherwise disposed of, nor can a lien, security interest, option or right to
acquire be placed thereon, whether by operation of law, whether voluntarily or
involuntarily or otherwise, except by will or by the laws of descent and
distribution. In addition, no Award under the Plan shall be subject to
execution, attachment or similar process or otherwise be available to the
creditors of a Participant. Any attempted or purported act in contravention of
or in breach of the Plan or an Award Agreement shall be null and void and of no
force or effect whatsoever. All rights with respect to an Award awarded to a
Participant shall be exercisable during his or her lifetime only by the
Participant, except as provided otherwise in this Section.
(a) TRANSFERS OF OPTIONS. Notwithstanding the foregoing, the Committee
may, in its sole discretion, permit the transfer of an Option by a
Participant to: (i) the Participant's spouse, any children or lineal
descendants of the Participant or the Participant's spouse, or the
spouse(s) of any such children or lineal descendants ("Immediate
Family Members"); (ii) a trust or trusts for the exclusive benefit of
Immediate Family Members; or (iii) a partnership or limited liability
company in which the Participant and/or the Immediate Family Members
are the only equity owners (collectively, "Eligible Transferees");
provided, however, that, in the event the Committee permits the
transfer of Options awarded to the Participant, the Committee may
subsequently, in its sole discretion, amend, modify, revoke or
restrict, without the prior consent, authorization or agreement of the
Eligible Transferee, the ability of the Participant to transfer
Options that have not been already transferred to an Eligible
Transferee. An Option that is transferred to an Immediate Family
Member shall not be transferable by such Immediate Family Member,
except for any transfer by such Immediate Family Member's will or by
the laws of descent and distribution upon the death of such Immediate
Family Member.
(b) EXERCISE BY ELIGIBLE TRANSFEREES. In the event that the Committee, in
its sole discretion, permits the transfer of Options by a Participant
to an Eligible Transferee under subsection (a), the Options
transferred to the Eligible Transferee must be exercised by such
Eligible Transferee and, in the event of the death of such Eligible
Transferee, by such Eligible Transferee's executor or administrator
only in the same manner, to the same extent, and under the same
circumstances (including, but not limited to, the time period within
which the Options must be exercised) as the Participant could have
exercised such Options. The Participant, or in the event of his or her
death, the Participant's estate, shall remain liable for all federal,
state, local and other taxes applicable upon the exercise of an Option
by an Eligible Transferee.
SECTION 14.8. EXCESS PARACHUTE PAYMENTS. Unless expressly provided
otherwise in a Participant's employment agreement with the Company or any
Subsidiary or Affiliate or in an Award Agreement, following a Change in Control,
to the extent that any payment made to a Participant under or by virtue of the
Plan constitutes an "excess parachute payment," as such term is defined in
Section 280G(b)(1) of the Code, the Company shall make an additional payment to
the Participant equal to the
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excise taxes attributable to the excess parachute payment and all taxes
attributable to such additional payment.
For purposes of determining whether a payment under or by virtue of the
Plan is an excess parachute payment, all payments to the Participant from all
other sources shall first be taken into account.
SECTION 14.9. UNFUNDED PLAN. Benefits payable under the Plan to any person
shall be paid by the Company from its general assets, and any person entitled to
a payment under the Plan shall have no rights greater than the rights of any
other unsecured general creditor of the Company. Shares to be distributed
hereunder shall be issued directly by the Company from its authorized but
unissued Shares or treasury Shares or acquired by the Company on the open
market, or a combination thereof. The Company shall not be required to segregate
on its books or otherwise establish any funding procedure for any amount to be
used for the payment of benefits under the Plan. If, however, the Company
determines to reserve Shares or any cash amounts to discharge its obligations
hereunder, such reservation shall not be deemed to create a trust or other
funded arrangement.
SECTION 14.10. MEDICAL TESTING. In connection with the determination of
whether Cause for a Termination of Service exists under Section 2.10(h), the
Participant shall promptly submit to such reasonable testing as the Company may
require and the Participant consents to such test results being provided to the
Company.
* * *
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APPENDIX B
CHROMCRAFT REVINGTON, INC.
AMENDED AND RESTATED DIRECTORS' STOCK PLAN
(EFFECTIVE AS OF DECEMBER 1, 2005)
ARTICLE I
PURPOSE AND DURATION
SECTION 1.1. HISTORY AND PURPOSE OF THE PLAN. The Directors' Stock Option
Plan of Chromcraft Revington, Inc. was originally adopted effective as of
January 1, 2002. Effective as of December 1, 2005, the Plan was amended to
increase the number of Shares reserved for issuance under the Plan from
Seventy-Five Thousand (75,000) to One Hundred Fifty Thousand (150,000) shares.
The Plan was subsequently amended and restated, again effective as of December
1, 2005, principally to (i) provide for the granting of Shares of Restricted
Stock in addition to Options, and (ii) rename the Plan as the Directors' Stock
Plan.
The Plan is designed to promote the interests of Chromcraft Revington, Inc.
and its stockholders through the granting of Options and Restricted Stock to the
non-employee members of the Company's Board of Directors, thereby encouraging
their focus on enhancing long-term stockholder value of the Company.
SECTION 1.2. EFFECTIVE DATE AND DURATION. Options and Restricted Stock may
be granted hereunder for a period of ten (10) years commencing December 1, 2005.
However, no Options can be exercised and no Shares of Restricted Stock can vest
until the Plan has been approved by the stockholders of the Company. No Options
or Shares of Restricted Stock will be awarded after December 1, 2015. On that
date, the Plan will expire, except as to outstanding grants of Restricted Stock
which have not vested and outstanding Options, with such Shares of Restricted
Stock to become vested or forfeited and such Options to remain in effect until
they have been exercised, terminated or have lapsed, as applicable.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following words and phrases will have the
following meanings unless a different meaning is plainly required by the
context:
SECTION 2.1. "1934 ACT" means the Securities Exchange Act of 1934, as
amended. Reference to a specific section of the 1934 Act or regulation
thereunder will include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing, or superseding such section
or regulation.
SECTION 2.2. "AFFILIATE" means any Subsidiary and any corporation or any
other entity (including, but not limited to, partnerships, limited liability
companies and joint ventures) controlling, controlled by or under common control
with the Company.
SECTION 2.3. "AWARD" means an award of Options or Restricted Stock under
the Plan.
SECTION 2.4. "AWARD AGREEMENT" means the written agreement executed by the
Company and a Director which sets forth the terms and provisions applicable to
each Award.
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SECTION 2.5. "AWARD DATE" means, with respect to any Award, the date on
which the Award is made.
SECTION 2.6. "BENEFICIARY" means the person or persons designated by a
Director to receive the benefits under the Plan, if any, which become payable as
a result of the Director's death.
SECTION 2.7. "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors
of the Company serving on the Effective Date or thereafter.
SECTION 2.8. "CASHLESS EXERCISE" means, if there is a public market for the
Shares, the payment of the Exercise Price of Options, (a) through a "same day
sale" commitment from the Director and an NASD Dealer whereby the Director
irrevocably elects to exercise the Option and to sell a portion of the Shares so
purchased in order to pay the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such stock to forward the Exercise Price
directly to the Company; or (b) through a "margin" commitment from the Director
and an NASD Dealer whereby the Director irrevocably elects to exercise the
Option and to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of the
Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to the Company.
SECTION 2.9. "CHANGE IN CONTROL" means the effective date of a transaction
or series of related transactions whereby (a) at least fifty-one percent (51%)
of the Shares will subsequent to the effective date be owned by any person,
entity or group (within the meaning of Section 13(d)(3) of the 1934 Act)
unrelated to or unaffiliated with the Company, (b) the Company merges into or
with, consolidates with or effects any plan of share exchange or other
combination with any person or entity unrelated to or unaffiliated with the
Company and in which transaction the Company is not the survivor, or (c) the
Company disposes of all or substantially all of its assets other than in the
ordinary course of business to any person or entity unrelated to or unaffiliated
with the Company.
For purposes of the definition of a Change in Control, a person or entity
will not include any Subsidiary or Affiliate or the employee stock ownership
plan or any other employee benefit plan sponsored by the Company.
SECTION 2.10. "CODE" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code or a regulation thereunder will
include such section, any regulation promulgated under each section and any
comparable provision of any future law, legislation or regulation amending,
supplementing or superseding such section or regulation.
SECTION 2.11. "COMMITTEE" means the Compensation Committee of the Board of
Directors, or such other committee appointed by the Board to administer the
Plan, serving on the Effective Date or thereafter.
SECTION 2.12. "COMPANY" means Chromcraft Revington, Inc., a Delaware
corporation, and any successor thereto.
SECTION 2.13. "DIRECTOR" means any individual who is a member of the Board
of Directors on the Effective Date or thereafter and who is not an employee of
the Company or any of its Affiliates.
SECTION 2.14. "DISABILITY" means an illness or a physical or mental
disability or incapacity of a Director such that the Director has not been able
to perform his duties and responsibilities for the Company (as determined by the
Board of Directors) for a period of at least ninety (90) consecutive days.
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SECTION 2.15. "EFFECTIVE DATE" of the Plan, as amended and restated, means
December 1, 2005.
SECTION 2.16. "ELIGIBLE TRANSFEREE" has the meaning set forth in Section
10.6.
SECTION 2.17. "EXERCISE PRICE" means the price at which a Share may be
purchased by a Director pursuant to the exercise of an Option.
SECTION 2.18. "FAIR MARKET VALUE" means, on any given date, the average of
the high and low prices of a Share, as reported by the principal securities
exchange or market on which the Shares are then listed or traded, or, if there
are no trades of Shares on such date, on the next preceding day on which Shares
were traded.
SECTION 2.19. "IMMEDIATE FAMILY MEMBERS" has the meaning set forth in
Section 10.6.
SECTION 2.20. "NASD DEALER" means a broker-dealer who is a member of the
National Association of Securities Dealers, Inc.
SECTION 2.21. "OPTION" means an Award made to a Director pursuant to
Article VI of an option to purchase Shares that does not meet the requirements
of Code Section 422 applicable to incentive stock options.
SECTION 2.22. "OPTION PERIOD" means the period during which an Option will
be exercisable in accordance with the applicable Award Agreement and Article VI.
SECTION 2.23. "PERIOD OF RESTRICTION" means the period during which the
transfer of Shares of Restricted Stock are subject to restrictions and,
therefore, the Shares are subject to a substantial risk of forfeiture.
SECTION 2.24. "PLAN" means the Amended and Restated Directors' Stock Plan
of Chromcraft Revington, Inc. as set forth in this document and as may hereafter
be amended from time to time.
SECTION 2.25. "RESTRICTED STOCK" means an Award made to a Director pursuant
to Article VII.
SECTION 2.26. "RULE 16B-3" means Rule 16b-3 promulgated under the 1934 Act,
and any future rule or regulation amending, supplementing, or superseding such
rule.
SECTION 2.27. "SECTION 16 PERSON" means a person who is required to file
appropriate forms or reports with the Securities Exchange Commission pursuant to
Section 16 of the 1934 Act and the regulations promulgated thereunder.
SECTION 2.28. "SHARES" means the whole shares of voting common stock ($.01
par value) of the Company, whether presently or hereafter issued and
outstanding, and any other stock or securities resulting from adjustment thereof
as provided in Section 4.5, or the stock of any successor to the Company which
is so designated for the purposes of the Plan.
SECTION 2.29. "SUBSIDIARY" means Chromcraft Corporation ("Chromcraft"),
Peters-Revington Corporation ("Peters-Revington"), Cochrane Furniture Company,
Inc. ("Cochrane"), Silver Furniture Co., Inc. ("Silver"), Korn Industries,
Incorporated ("Korn") and such other present or future direct or indirect
subsidiary corporations or entities of the Company which are designated by the
Board of Directors or the Committee.
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ARTICLE III
ADMINISTRATION
SECTION 3.1. THE COMMITTEE. The Plan will be administered by the Committee.
The decision or action of a majority of the actual number of members of the
Committee will constitute the decision or action of the Committee. The Committee
will consist of not less than three Directors. The members of the Committee will
be appointed from time to time by, and will serve at the pleasure of, the Board
of Directors. It is intended that the Committee be comprised solely of
Directors, each of whom is (a) independent under the director independence
requirements of the principal securities exchange or market on which the Shares
are then listed or traded, or (b) a "non-employee director" under Rule 16b-3.
Failure of the Committee to be so comprised will not result in the cancellation,
termination, expiration, or lapse of any Award.
SECTION 3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or By-Laws of the Company, and subject to the
provisions of the Plan, the Committee will have full power and discretion to
construe and interpret the Plan, all Award Agreements and any other agreements
or instruments entered into under the Plan; establish, amend or waive rules and
regulations for the Plan's administration; and amend the terms and conditions of
any Award and applicable Award Agreement to the extent such terms and conditions
are within the discretion of the Committee as provided in the Plan. The
Committee will make all other determinations which may be necessary or advisable
for the administration of the Plan. Each Award will be evidenced by a written
Award Agreement between the Company and the Director and will contain such terms
and conditions established by the Committee consistent with the provisions of
the Plan.
The Committee's interpretations, decisions, determinations and actions
under the Plan will be made by the Committee in its sole discretion and as it
deems advisable or appropriate. Any notice or document required to be given to
or filed with the Committee will be properly given or filed if hand delivered
(and a delivery receipt is received) or mailed by certified mail, return receipt
requested, postage paid, to the Committee c/o Chromcraft Revington, Inc., 1100
North Washington Street, Delphi, Indiana 46923.
The Committee will determine whether each Award under the Plan will be made
in either Options or Restricted Stock, or in a combination of Options and
Restricted Stock in which latter case the Committee will make an appropriate
adjustment to the number of Options and Shares of Restricted Stock subject to an
Award so that the value or effect of the Award will be substantially similar to
an Award made under either Section 6.1 or Section 7.1 but not an aggregate of
both such Sections.
SECTION 3.3. DELEGATION BY THE COMMITTEE. The Committee, in its sole
discretion and on such terms and conditions as it may provide, may delegate all
or any part of its authority and powers under the Plan to one or more Directors
or officers of the Company; provided, however, that the Committee may not
delegate its authority and powers (a) with respect to Awards to Section 16
Persons, or (b) in any way which would jeopardize the Plan's qualification under
or compliance with Rule 16b-3 or other applicable laws, rules or regulations.
SECTION 3.4. DECISIONS BINDING. All determinations and decisions made by
the Committee, the Board and any delegate of the Committee pursuant to Section
3.3 will be final, conclusive and binding on all persons, including the Company,
Directors, stockholders of the Company, Beneficiaries and persons having an
interest in an Award. No such determinations will be subject to de novo review
if challenged in court.
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SECTION 3.5. ADMINISTRATIVE DISCRETION. Notwithstanding any other provision
of the Plan, the Committee will have no authority to (a) grant Awards; (b)
change the number of Options or Shares of Restricted Stock subject to Awards
(except as provided in Section 3.2); (c) determine the Option Period or Period
of Restriction; (d) determine the time or times at which Options and Restricted
Stock will be granted; (e) determine the time or times when an Option becomes
exercisable or Restricted Stock vests; or (f) determine other conditions and
limitations applicable to the exercise of an Option or the grant or vesting of
Restricted Stock.
SECTION 3.6. NO RIGHT TO BE RETAINED ON BOARD. Neither the Plan nor any
Award Agreement executed hereunder will give any Director the right to be
retained, nominated or re-elected as a Director.
SECTION 3.7. EFFECT OF CHANGE IN CONTROL. Unless expressly provided
otherwise in an Award Agreement, all outstanding and unvested shares of
Restricted Stock will vest immediately prior to the effectiveness of a Change in
Control.
ARTICLE IV
SHARES SUBJECT TO THE PLAN
SECTION 4.1. NUMBER OF SHARES. Subject to adjustment as provided in Section
4.5, a maximum aggregate of One Hundred Fifty Thousand (150,000) Options and
Shares of Restricted Stock may be granted under the Plan. Shares issued under
the Plan may be authorized but unissued Shares, treasury Shares or Shares
purchased in the open market, or any combination thereof, as the Committee or
the Board of Directors may from time to time determine in its sole discretion.
Any Award (or any portion thereof) that is forfeited or that remains
unexercised or unvested upon termination or expiration of any such Award, or
Shares that otherwise cease to be subject to an Award, may be made the subject
of other Awards to the same or other Directors and will be added back to the
maximum number of Shares specified above.
SECTION 4.2. SUCCESSOR PLAN. Any Awards or Shares that are available
immediately prior to the termination of the Plan, or any Awards or Shares
returned to the Company for any reason upon termination of the Plan, may be
transferred to a successor plan.
SECTION 4.3. RESTRICTIONS ON SHARES. Shares issued upon exercise of an
Award will be subject to the terms and conditions specified in the Plan and to
such other terms, conditions and restrictions as the Committee, in its sole
discretion, may determine or provide in an Award Agreement. The Committee, in
its sole discretion, may issue certificates for Shares or keep a record of
Shares in book entry form. The Committee, in its sole discretion, will not be
required to cause the issuance or delivery of any certificates for Shares prior
to (a) the listing of such Shares on the principal securities exchange or market
on which the Shares may then be listed or traded, (b) the completion of any
registration or qualification of such Shares under applicable law or an
exemption therefrom, and (c) the notation on the Company's official stockholder
records (or the records of its transfer agent or registrar) that such Shares are
issued to the Director. The Company may cause any certificate for any Shares to
be delivered hereunder to be properly marked with a legend or other notation
reflecting the limitations on transfer of such Shares as provided in the Plan,
as required by applicable law or as the Committee may otherwise require. No
fractional Shares will be issued under the Plan; rather, fractional Shares will
be aggregated and then rounded to the next lower whole Share.
SECTION 4.4. STOCKHOLDER RIGHTS. No person will have any rights or
privileges of a stockholder (including, but not limited to, voting and dividend
rights) as to Shares subject to an Option until, after proper exercise of the
Award or other action as may be required by the Committee in its sole
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discretion, such Shares are recorded on the Company's official stockholder
records (or the records of its transfer agent or registrar) as issued to the
Director. Upon exercise of an Option or any portion thereof, the Company will
have a reasonable period in which to issue the Shares to the Director, and the
Director will not be treated as a stockholder for any purpose whatsoever prior
to such issuance. A person holding Shares of Restricted Stock will have such
rights as a stockholder as provided in Article VII. No payment or adjustment
will be made for cash dividends, distributions or other rights for which the
record date is prior to the date such Shares are recorded as issued to the
Director in the Company' official stockholder records (or the records of its
transfer agent or registrar), except as provided in the Plan or in an Award
Agreement.
SECTION 4.5. CHANGES IN STOCK. In the event of any change in the Shares by
virtue of any stock dividends, stock splits, recapitalizations or
reclassifications, or in the event that other securities of the Company will be
substituted for the Shares other than by a Change in Control, the Committee will
appropriately adjust (a) the maximum number of Awards or Shares that may be
issued under the Plan; (b) the number of Options or Shares of Restricted Stock
subject to automatic Awards under the Plan to Directors; (c) the number, kind
and class of securities subject to outstanding Awards; (d) the Exercise Price or
other price relating to an Award; and (e) any other term of any Award, all in
such manner as the Committee, in its sole discretion, determines advisable or
appropriate. Any determination by the Committee under this Section will be final
and conclusive.
ARTICLE V
ELIGIBILITY
Only individuals who are Directors on an Award Date are eligible to receive
grants of Options and Shares of Restricted Stock.
ARTICLE VI
STOCK OPTIONS
SECTION 6.1. OPTION GRANTS. Subject to Section 3.2, each individual who is
appointed or elected to serve as a Director for the first time will receive an
Option to purchase Ten Thousand (10,000) Shares, and thereafter, for each year
during the term of the Plan, each Director will receive an Option to purchase
Two Thousand Five Hundred (2,500) Shares effective on the day after his
re-election as a Director at each annual meeting of stockholders of the Company
and commencing with the 2006 annual meeting.
SECTION 6.2. OPTION AWARD AGREEMENT. Each Option will be evidenced by an
Award Agreement that specifies the Exercise Price, the number of Shares to which
the Option pertains, the Option Period, any conditions to exercise of the Option
and such other terms and conditions as the Committee, in its sole discretion,
determines within the limitations prescribed by the Plan.
SECTION 6.3. EXERCISE PRICE. The Exercise Price for each Option will be not
be less than one hundred percent (100%) of the Fair Market Value of the Shares
to which the Option relates determined as of the Award Date.
SECTION 6.4. OPTION PERIOD. The Option Period for each Option will be ten
(10) years from the Award Date.
SECTION 6.5. METHOD OF EXERCISE. Subject to the provisions of the
applicable Award Agreement, a Director may exercise an Option, in whole or in
part, at any time during the Option Period by giving written notice to the
Company of exercise on a form provided by the Committee. Such notice
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will specify the number of Shares subject to the Option to be purchased and will
be accompanied by payment in full of the total Exercise Price by cash, check or
wire transfer of immediately available funds or such other form of payment as
the Company may accept. If permitted by the Committee or the applicable Award
Agreement, payment in full or in part may also be made by:
(a) The delivery of Shares already owned by the Director for more than six
months and having a total Fair Market Value on the date of such
delivery equal to the total Exercise Price; or
(b) The delivery of cash by a NASD Dealer as a Cashless Exercise.
No Shares will be issued until full payment therefor has been made to the
Company. A Director will have all of the rights of a stockholder of the Company
holding the class of Shares subject to the Option (including, if applicable, the
right to vote the shares and the right to receive dividends and distributions)
only after the Director has given written notice of exercise, has paid the total
Exercise Price and such Shares have been recorded on the Company's official
stockholder records (or the records of its transfer agent or registrar) as
having been issued to the Director.
SECTION 6.6. RELOAD PROVISION. In the event a Director exercises an Option
and pays all or a portion of the Exercise Price in Shares, in the manner
permitted by Section 6.5, such Director may (either pursuant to terms of the
Award Agreement or pursuant to the sole discretion of the Committee at the time
the Option is exercised) be issued a new Option to purchase additional Shares
equal to the number of Shares surrendered to the Company in such payment. Such
new Option will (a) have an Exercise Price equal to the Fair Market Value per
Share on the Award Date of the new Option, (b) have an Option Period as
determined by the Committee in its sole discretion, and (c) expire on the same
date as the original Option so exercised by payment of the Exercise Price in
Shares.
SECTION 6.7. RESTRICTIONS ON TRANSFERABILITY. In addition to the
restrictions imposed by Section 10.6, the Committee may impose such restrictions
on the transfer of any Shares acquired pursuant to the exercise of an Option as
it deems advisable or appropriate in its sole discretion, the restrictions
related to applicable securities laws and the requirements of the principal
securities exchange or market on which Shares are then listed or traded.
SECTION 6.8. TERMINATION OF OPTIONS. All rights to exercise an Option will
terminate 90 days following the date on which the Director ceases to be a
Director, unless the termination of his status is on account of (a) Disability,
or (b) death, but not later than the date the Option expires pursuant to its
terms. In the case of Disability or death, the Option may be exercised within
one (1) year from the date the Director's status as a Director ceases, but not
later than the date the Option expires pursuant to its terms. Notwithstanding
the preceding provisions of this Section, if a Director is removed from the
Board, all outstanding Options granted to such Director will be cancelled as of
the date of removal.
ARTICLE VII
RESTRICTED STOCK
SECTION 7.1. AWARD OF RESTRICTED STOCK. Subject to Section 3.2, each
individual who is appointed or elected to serve as a Director for the first time
will receive an Award of Three Thousand (3,000) Shares of Restricted Stock, and
thereafter, for each year during the term of the Plan, each Director will
receive an Award of Eight Hundred (800) Shares of Restricted Stock effective on
the day after his re-election as a Director at each annual meeting of
stockholders of the Company and commencing with the 2006 annual meeting.
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SECTION 7.2. RESTRICTED STOCK AWARD AGREEMENT. Each Award of Restricted
Stock will be evidenced by an Award Agreement that specifies the Period of
Restriction, and the number of Shares awarded and such other terms and
conditions as the Committee, in its sole discretion, determines within the
limitations prescribed by the Plan.
SECTION 7.3. PERIOD OF RESTRICTION. All Awards of Restricted Stock will
have a Period of Restriction of one (1) year commencing on the Award Date.
Except as provided in Section 7.9, the Period of Restriction will lapse, and the
Shares of Restricted Stock subject to the Award will become vested, on the one
(1) year anniversary of the Award Date, provided that the Director is serving as
a Director on that date.
SECTION 7.4. RESTRICTIONS ON TRANSFERABILITY. Until the end of the
applicable Period of Restriction, Shares of Restricted Stock (a) cannot be sold,
transferred, assigned, margined, encumbered, gifted, bequeathed, alienated,
hypothecated, pledged or otherwise disposed of, whether by operation of law,
whether voluntarily or involuntarily or otherwise, nor can a lien, security
interest or Option be placed thereon, and (b) are not subject to execution,
attachment or similar process or otherwise available to the creditors of a
Director.
SECTION 7.5. BOOK-ENTRY SECURITIES; REMOVAL OF RESTRICTIONS. The Company
will issue and maintain Shares of Restricted Stock in book-entry form in the
name of the Director, and such Shares will be outstanding for all corporate
purposes. Until such time as the Shares of Restricted Stock become free of the
restrictions placed thereon, no certificate representing such Shares will be
issued to, in the name of or for the benefit of any Director. Promptly following
the date on which Shares of Restricted Stock become free of the restrictions
placed thereon, the Company will release such Shares to the Director.
SECTION 7.6. VOTING RIGHTS. During the Period of Restriction, Directors
holding Shares of Restricted Stock will possess full voting rights with respect
to such Shares, unless the applicable Award Agreement provides otherwise.
SECTION 7.7. DIVIDEND RIGHTS. During the Period of Restriction, Directors
holding Shares of Restricted Stock will receive all dividends and other
distributions, if any, with respect to such Shares, unless the applicable Award
Agreement expressly provides otherwise.
SECTION 7.8. FORFEITURE AND RETURN OF RESTRICTED STOCK TO COMPANY. All
Shares of Restricted Stock that have not become free of the restrictions placed
thereon by the end of the Period of Restriction will be forfeited and will
revert to the Company and thereafter will be available for new Awards. If a
Director resigns or is removed from the Board or is not re-elected to the Board,
all Shares of Restricted Stock with respect to which the Period of Restriction
has not lapsed as of the date of resignation, removal or failure to be
re-elected will be forfeited.
SECTION 7.9. LAPSE OF RESTRICTIONS ON DEATH OR DISABILITY. In the event of
a Director's death or Disability during the Period of Restriction, the
restrictions on his Shares of Restricted Stock will lapse and the Director (or
his or her Beneficiary) will, on the date of such death or Disability, be fully
vested in the Restricted Stock.
ARTICLE VIII
AMENDMENT, TERMINATION AND DURATION
SECTION 8.1. AMENDMENT, SUSPENSION OR TERMINATION. The Board of Directors
may supplement, amend, alter, freeze or discontinue the Plan in its sole
discretion at any time and from time to time, but no supplement, amendment,
alteration or discontinuation will be made which would impair the
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rights of a Director under an Award theretofore awarded without the Director's
consent, except that any supplement, amendment, alteration or discontinuation
may be made to (a) avoid a material charge or expense to the Company or an
Affiliate, (b) cause the Plan to comply with applicable law, or (c) permit the
Company or an Affiliate to claim a tax deduction under applicable law. In
addition, subject to the provisions of this Article, the Board of Directors, in
its sole discretion at any time and from time to time, may supplement, amend,
alter, freeze or discontinue the Plan without the approval of the Company's
stockholders (including, but not limited to, amending the Plan to change the
number of Options or Shares of Restricted Stock that may be awarded to a
Director upon his initial election or his re-election as a Director) (i) to the
extent such approval is not required by applicable law or the terms of a written
agreement, and (ii) so long as any such amendment or alteration does not
increase the maximum number of Shares subject to the Plan (other than pursuant
to Section 4.5).
SECTION 8.2. DURATION OF PLAN AND STOCKHOLDER APPROVAL. The Plan, as
amended and restated, will become effective on the Effective Date, and subject
to Section 8.1, remain in effect thereafter; provided, however, that no Options
will be exercised and no Shares of Restricted Stock will become free of the
restrictions placed thereon until the amended and restated Plan has been
approved by the holders of at least a majority of the outstanding Shares at a
meeting at which approval of the Plan is considered; and, provided, further,
however, that no Awards will be made after the tenth anniversary of the
Effective Date.
ARTICLE IX
LEGAL CONSTRUCTION
SECTION 9.1. GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also will include the feminine and
neuter, the plural will include the singular, and the singular will include the
plural.
SECTION 9.2. SEVERABILITY. In the event any provision of the Plan is held
to be illegal, invalid or unenforceable for any reason, such illegality,
invalidity or unenforceability will not affect the remaining parts of the Plan,
and the Plan will be construed and enforced as if the illegal, invalid or
unenforceable provision (or portion thereof) had never been included herein.
SECTION 9.3. REQUIREMENTS OF LAW. The issuance of Awards and of Shares
hereunder will be subject to all applicable statutes, laws, rules and
regulations and to such approvals and requirements as may be required from time
to time by any governmental authorities or any securities exchange or market on
which the Shares are then listed or traded.
SECTION 9.4. GOVERNING LAW. Except to the extent preempted by the federal
laws of the United States of America, the Plan and all Award Agreements will be
construed in accordance with and governed by the laws of the State of Indiana
without giving effect to any choice or conflict of law provisions, principles or
rules (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. The Plan and all Award Agreements are intended to comply, and will be
construed in a manner which complies with Code Section 409A. To the extent there
is any conflict between a provision of the Plan or an Award Agreement and a
provision of Code Section 409A, the provision of Code Section 409A will control.
SECTION 9.5. HEADINGS. The descriptive headings and sections of the Plan
are provided herein for convenience of reference only and will not serve as a
basis for interpretation or construction of the Plan.
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SECTION 9.6. MISTAKE OF FACT. Any mistake of fact or misstatement of facts
will be corrected when it becomes known by a proper adjustment to an Award or
Award Agreement.
SECTION 9.7. EVIDENCE. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person relying
thereon considers pertinent and reliable, and signed, made or presented by the
proper party or parties.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. NO ADVICE. The Company, any Affiliate, the Board of
Directors, the Committee and any attorneys, accountants, advisors or agents for
any of the foregoing will not provide any advice, counsel or recommendation to
any Director with respect to, without limitation, any Award, any exercise of an
Option or any tax consequences relating to an Award.
SECTION 10.2. NO LIABILITY. No member of the Board of Directors, the
Committee or any officer or employee of the Company or any Affiliate will be
personally liable for any action, failure to act, decision or determination made
in good faith in connection with the Plan.
SECTION 10.3. SUCCESSORS. All rights and obligations of the Company under
the Plan with respect to Awards awarded hereunder will be binding on any
successor or assign of the Company, whether or not the existence of such
successor or assign is the result of a Change in Control.
SECTION 10.4. BENEFICIARY DESIGNATIONS. A Director may designate, on such
forms as may be provided by the Committee for such purpose, a Beneficiary to
whom vested but unpaid or unexercised Awards will be paid or exercisable in the
event of the Director's death. Each such designation will revoke all prior
designations by the Director and will be effective only if given in a form and
manner acceptable to the Committee. In the absence of any such designation, any
vested benefits remaining unpaid at the Director's death will be paid to the
Director's estate and, subject to the terms of the Plan and of the applicable
Award Agreement, any unexercised Option may be exercised by the administrator or
executor of the Director's estate.
SECTION 10.5. NONTRANSFERABILITY OF AWARDS. Except as provided in
subsections (a) and (b) below, no Award can be sold, transferred, assigned,
margined, encumbered, bequeathed, gifted, alienated, hypothecated, pledged or
otherwise disposed of, whether by operation of law, whether voluntarily or
involuntarily or otherwise, other than by will or by the laws of descent and
distribution. In addition, no Award will be subject to execution, attachment or
similar process or otherwise be available to the creditors of a Director. Any
attempted or purported transfer of an Award in contravention of or in breach of
the Plan or an Award Agreement will be null and void and of no force or effect
whatsoever. All rights with respect to an Option will be exercisable during the
Director's lifetime only by the Director, except as otherwise provided in this
Section.
(a) TRANSFERS OF OPTIONS. Notwithstanding the foregoing, the Committee
may, in its sole discretion, permit the transfer of Options by a
Director to (a) the Director's spouse, any children or lineal
descendants of the Director or the Director's spouse, or the spouse(s)
of any such children or lineal descendants ("Immediate Family
Members"), (b) a trust or trusts for the exclusive benefit of
Immediate Family Members, or (c) a partnership or limited liability
company in which the Director and/or the Immediate Family Members are
the only equity owners, (collectively, "Eligible Transferees");
provided, however, that, in the event the Committee permits the
transfer of Options granted to the Director, the Committee may
subsequently, in its sole discretion, amend, modify, revoke or
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restrict, without the prior consent, authorization, or agreement of
the Eligible Transferee, the ability of the Director to transfer
Options that have not been already transferred to an Eligible
Transferee. An Option that is transferred to an Immediate Family
Member will not be transferable by such Immediate Family Member,
except for any transfer by such Immediate Family Member's will or by
the laws of descent and distribution upon the death of such Immediate
Family Member.
(b) EXERCISE BY ELIGIBLE TRANSFEREES. In the event the Committee, in its
sole discretion, permits the transfer of Options by a Director to an
Eligible Transferee under subsection (a), the Options transferred to
the Eligible Transferee must be exercised by such Eligible Transferee
and, in the event of the death of such Eligible Transferee, by such
Eligible Transferee's executor or administrator, only in the same
manner, to the same extent, and under the same circumstances
(including, but not limited to, the time period within which the
Options must be exercised) as the Director could have exercised such
Options. The Director, or in the event of his death, the Director's
estate, will remain liable for all federal, state, local and other
taxes applicable upon the exercise of an Option by an Eligible
Transferee.
SECTION 10.6. UNFUNDED PLAN. Benefits payable under the Plan to any person
will be paid by the Company from its general assets, and any person entitled to
a payment under the Plan will have no rights greater than the rights of any
other unsecured general creditor of the Company. Shares to be distributed
hereunder will be issued directly by the Company from its authorized but
unissued Shares or treasury Shares or acquired by the Company in the open
market, or a combination thereof. The Company will not be required to segregate
on its books or otherwise establish any funding procedure for the amount to be
used for the payment of benefits under the Plan. If, however, the Company
determines to reserve Shares to discharge its obligations hereunder, such
reservation will not be deemed to create a trust or other funded arrangement.
* * *
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CHROMCRAFT REVINGTON, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR USE AT THE 2006 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints BENJAMIN M. ANDERSON-RAY and FRANK T. KANE,
and each of them singly, as proxies, each having the power to appoint his
substitute, to represent and to vote all shares of common stock of Chromcraft
Revington, Inc. (the "Company") that the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held on May 9, 2006, and at any adjournment
or postponement thereof, with all of the powers the undersigned would possess if
personally present, as follows:
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
ANNUAL MEETING OF STOCKHOLDERS OF
CHROMCRAFT REVINGTON, INC.
MAY 9, 2006
Please date, sign and mail
Your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. ELECTION OF DIRECTORS. To elect as directors the nominees named below to
hold office until the 2007 annual meeting of stockholders and until their
respective successors are duly elected and qualified.
NOMINEES:
[ ] FOR ALL NOMINEES ( ) Benjamin M. Anderson-Ray
( ) Ronald H. Butler
( ) John R. Hesse
[ ] WITHHOLD AUTHORITY ( ) David L. Kolb
FOR ALL NOMINEES ( ) Larry P. Kunz
( ) Theodore L. Mullett
[ ] FOR ALL EXCEPT ( ) Craig R. Stokely
(See instruction below) ( ) John D. Swift
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark "FOR ALL EXCEPT" and fill in the circle next to each
nominee you wish to withhold, as shown here: (X)
FOR AGAINST ABSTAIN
2. APPROVAL OF EXECUTIVE INCENTIVE PLAN. [ ] [ ] [ ]
To approve the 2006 Executive Incentive Plan of
the Company.
3. APPROVAL OF DIRECTORS' STOCK PLAN. To approve the [ ] [ ] [ ]
amended and restated Directors' Stock Plan of the
Company.
4. OTHER MATTERS. In their discretion, on such other matters as may properly
come before the annual meeting of stockholders and any adjournment or
postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES NAMED ABOVE, FOR THE
APPROVAL OF THE 2006 EXECUTIVE INCENTIVE PLAN AND FOR THE APPROVAL OF THE
DIRECTORS' STOCK PLAN. WITH RESPECT TO ANY OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OF STOCKHOLDERS, THE PROXIES NAMED HEREIN WILL HAVE
THE AUTHORITY TO VOTE ON SUCH MATTERS AND INTEND TO VOTE IN ACCORDANCE WITH THE
DIRECTIONS OF THE COMPANY'S BOARD OF DIRECTORS.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. [ ]
Signature of Stockholder Date:
------------------------- ---------------------
Signature of Stockholder Date:
------------------------- ---------------------
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is
a partnership, please sign in partnership name by authorized person.