EX-10.8 7 d02830exv10w8.txt AMENDED/RESTATED SUPPLEMENTAL BENEFIT PLAN EXHIBIT 10.8 NCI BUILDING SYSTEMS, INC. AMENDED AND RESTATED SUPPLEMENTAL BENEFIT PLAN [AS AMENDED AND RESTATED ON DECEMBER 12, 2002] NCI Building Systems, Inc. (the "Company"), hereby establishes the NCI Building Systems, Inc. Supplemental Benefit Plan for specified employees of the Company upon the terms and conditions below, effective as of February 1, 1996. ARTICLE I PURPOSE The purpose of this Plan is to provide retirement and survivor benefits to or on behalf of a select group of management or highly compensated Employees on the terms and conditions set forth herein to reward such Employees for their loyal service to the Company and to provide an incentive to remain in the employ of the Company. The Company intends that the Plan shall constitute an unfunded deferred compensation arrangement for a select group of management or highly compensated employees for purposes of the Internal Revenue Code of 1986, as amended (the "Code") and of the Employee Retirement Income Security Act of 1974, as amended, and that any Employee or Beneficiary shall have the status of an unsecured general creditor of the Company in the event the Company becomes Insolvent as to the Plan and any trust fund that may be established by the Company, or asset identified specifically by the Company, as a reserve for the discharge of its obligations under the Plan. Benefits provided under the Plan are in addition to any other benefit plans or programs of the Company. Participation in the Plan does not limit or otherwise affect an Employee's participation in any other plan sponsored by the Company. ARTICLE II DEFINITIONS Unless the context otherwise requires, capitalized terms used herein shall have the meanings set forth below: 2.1 "Administrator" means the Company or such other person or committee as may be appointed from time to time by the Board to administer the Plan. 2.2 "Beneficiary" means the Beneficiary designated in writing by the Employee to receive benefits due under the Plan after his or her death. If the Employee fails to designate a Beneficiary or if the designated Beneficiary predeceases the Employee, the Employee's Beneficiary shall be his or her spouse, if living, and if no such spouse is living, the Employee's estate. 2.3 "Board" means the Board of Directors of the Company, or any committee of the Board or person authorized to act on its behalf. NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 1 2.4 "Cause" shall be determined by the Board, in its sole and absolute discretion, and means the occurrence of either or both of the following: (a) The Employee's conviction for committing an act of fraud, embezzlement, theft, or other act constituting a felony; or (b) The willful engaging by the Employee in gross misconduct materially and demonstrably injurious to the Company, as determined by the Company. However, no act or failure to act, on the Employee's part shall be considered "willful" unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. 2.5 "Change in Control" of the Company means the occurrence of one or more of the following conditions: (a) Any "Person", [as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and used in Sections 13(d) and 14(d) thereof], including a "group" as defined in Section 13(d) of the Exchange Act, (other than those Persons in control of the Company as of the effective date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), becomes the "Beneficial Owner", [as described in Rule 13d-3 of the General Rules and Regulations under the Exchange Act], directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company's then outstanding securities; or (b) During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who are in the beginning of such period constitute the Board (and any new members of the Board, whose election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the Board members then still in office who either were Board members at the beginning of the period or whose election or nomination for election was so approved), cease for any reason to constitute a majority thereof; or (c) The stockholders or Directors of the Company approve: (A) a plan of complete liquidation of the Company; or (B) an agreement for the sale or disposition of all or substantially all the Company's assets; or (C) a merger, consolidation, or reorganization of the Company with or involving any other corporation, other than a merger, consolidation, or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least fifty percent (50%) of the combined voting power of the voting securities of the Company NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 2 (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization. However, in no event shall a Change in Control be deemed to have occurred, with respect to an Employee if the Employee is part of a purchasing group which consummates the Change in Control transaction. The Employee shall be deemed "part of a purchasing group" for purposes of the preceding sentence if the Employee is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing Board members). 2.6 "Disabled" or "Disability" means the physical or mental incapacity of an Employee which, in the opinion of a physician approved by the Company, will permanently prevent such Employee from performing the principal duties of his or her employment with the Company. 2.7 "Employee" means any person employed by the Company who is included on the Federal Insurance Contribution Act rolls of the Company and who is designated by the Board to receive benefits from the Plan in accordance with the provisions of Article III. 2.8 "Insolvent" means (i) the Company is unable to pay its debts as they become due or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. 2.9 "Participation Agreement" means the agreement executed by the Employee following his designation by the Board as eligible to participate in the Plan and shall be in such form as the Board shall approve from time to time. The Participation Agreement shall become a part of the Plan with respect to the Employee who executes such Participation Agreement. 2.10 "Plan" means the agreement set forth in this document, as it may be amended from time to time. 2.11 "Preretirement Survivor Benefit" means with respect to any Employee, the amount designated by the Board and listed on Exhibit "A" to the Plan to which the Employee's Beneficiary will be entitled in the event an Employee dies prior to terminating employment with the Company. A Preretirement Survivor Benefit will be payable in accordance with Section 4.3. 2.12 "Normal Retirement Age" means, with respect to each Employee, the date the Employee attains age 65. 2.13 "Normal Retirement Date" means, with respect to each Employee, the later of (i) the first day of the month following the date the Employee attains Normal Retirement Age or NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 3 (ii) the first day of the month following the termination of the Employee's employment with the Company. 2.14 "Year of Participation" means (i) each calendar year during which an Employee is eligible to participate in the Plan and performs at least 1,000 hours of service for the Company, and (ii) each other calendar year, or portion thereof, commencing April 1, 1992, during which an Employee performs at least 1,000 hours of service for the Company. 2.15 "Retirement Benefit" means, with respect to any Employee, the amount designated by the Board on Exhibit "A" to the Plan to which the Employee will be entitled in the event of the Employee's termination of employment, subject to the vesting provisions of Section 4.4. An Employee's Retirement Benefit will be payable in accordance with Section 4.2. ARTICLE III ELIGIBILITY The Board shall designate Employees eligible to receive benefits under the terms of the Plan. The Board, or its representative, shall notify each Employee of his or her eligibility to participate in the Plan as soon as administratively practicable following the Board's designation. Prior to commencing participation in the Plan, each Employee shall be given a copy of this Agreement and shall execute a Participation Agreement. The amount of benefits, if any, that an Employee (or, if applicable, his or her Beneficiary following the Employee's death) shall be entitled to receive under the Plan shall be determined under Article IV. ARTICLE IV PLAN CONTRIBUTIONS AND PLAN BENEFITS 4.1 Amount of Benefits. At the time the Board designates an Employee as eligible to participate in the Plan, the Board shall irrevocably specify the amount of Retirement Benefit and Preretirement Survivor Benefit to which each Employee shall be entitled under the Plan. Benefits awarded to an Employee shall be expressed as a dollar amount, or as a percentage of an Employee's current compensation. A separate bookkeeping account shall be established by the Company for each Employee who is entitled to benefits hereunder and such account shall be credited with the amounts awarded to the Employee by the Board. The Company shall maintain a schedule, which shall be attached hereto as Exhibit "A", reflecting the Retirement Benefit and Preretirement Survivor Benefit to which each Employee is entitled under the Plan. As soon as administratively practicable following each such determination of Plan benefits by the Board, Exhibit "A" shall be restated to reflect the appropriate amount of benefits to which an Employee is entitled from the Plan. 4.2 Retirement Benefits. Except as provided in Section 4.5, the Retirement Benefit credited to an Employee's bookkeeping account pursuant to Section 4.1, to the extent vested under Section 4.4, shall become payable in the form described herein to the Employee as soon as NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 4 administratively practicable, but not later than 30 days, following the Employee's Normal Retirement Date, or if earlier, the date the Employee ceases active employment with the Company due to his Disability. The Employee's Retirement Benefit shall be paid in equal monthly installments over a period of 10 years. If the Employee dies prior to receiving the entire Retirement Benefit to which he or she is entitled, the Employee's Beneficiary shall receive the unpaid portion of the Employee's Retirement Benefit in equal monthly payments during the remainder of the 10 year period. 4.3 Preretirement Survivor Benefit. If an Employee dies while employed by the Company, the Employee shall not be entitled to a Retirement Benefit and Employee's Beneficiary shall receive the Preretirement Survivor Benefit credited to the Employee's bookkeeping account under Section 4.1 payable in equal monthly installments over a period of 10 years. Payment of the Beneficiary's Preretirement Survivor Benefit shall commence as soon as administratively practicable, but not later than 30 days, following the Employee's death. If the Employee's Beneficiary dies prior to the payment of the entire Preretirement Survivor Benefit, the then present value of Beneficiary's remaining Preretirement Survivor Benefit, shall be paid to Beneficiary's estate in a single sum distribution within 30 days after the date of Beneficiary's death. 4.4 Vesting. An Employee's right to a Retirement Benefit shall vest over a period of 10 years, at the rate of 10% for each Year of Participation by the Employee. In addition, an Employee shall become fully vested in his or her Retirement Benefit upon the occurrence of his or her Disability or a Change in Control. Notwithstanding any other provision of the Plan to the contrary, if an Employee's employment with the Company is terminated for Cause, the Employee shall forfeit his or her rights to any benefits under the Plan. 4.5 Timing of Certain Payments. Notwithstanding the provisions of Section 4.2, benefits will be paid to an Employee or if applicable his or her Beneficiary upon the following terms: (a) If an Employee's employment with the Company is terminated without Cause on or after the occurrence of a Change in Control (irrespective of whether such termination is initiated by an Employee or the Company and without regard to the reason therefor), the then present value of the Employee's Retirement Benefit shall be paid to the Employee in a single sum distribution within 30 days after the Employee's termination of employment. (b) If Employee's employment with the Company is terminated without Cause prior to the occurrence of a Change in Control (irrespective of whether such termination is initiated by Employee or the Company and without regard to the reason therefor), Employee shall become fully vested in his or her Retirement Benefit, which Retirement Benefit shall be paid in annual installments over a period of 10 years, commencing on the first anniversary of such termination. If a Change in Control occurs while Employee is entitled to receive his Retirement Benefit, the then present value of Employee's remaining NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 5 Retirement Benefit shall be paid to Employee in a single sum distribution within 30 days after such Change in Control. (c) For purposes of this Plan, whenever the Company is required to calculate the present value of any benefit to be paid in a single sum hereunder, the Company shall calculate the present value of such benefit using a discount rate equal to the prime rate reported by the Company's principal bank lender on the date on which such payment became payable (i.e., the date of termination of Employee's employment with the Company or the occurrence of a Change in Control), but in no event shall such discount rate exceed 8%. (d) The Administrator may make payments from the Plan before they would otherwise be due if, based on a change in the federal or applicable state tax or revenue laws, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury, a decision by a court or competent jurisdiction involving an Employee or a Beneficiary, or a closing agreement made under Code section 7121 that is approved by the Internal Revenue Service and involves an Employee, the Administrator determines that an Employee has or will recognize income for federal or state income tax purposes with respect to amounts that are or will be payable under the Plan before they otherwise would be paid. The amount of any payments made from the Plan pursuant to this Section 4.5 shall not exceed the lesser of (i) the amount in the trust properly allocable to the Employee or (ii) the amount of taxable income with respect to which the tax liability is assessed or determined. 4.6 Financing the Plan. All benefits under this Plan shall be paid or provided directly by the Company. Such benefits shall be general obligations of the Company which shall not require the segregation of any funds or property therefor. Notwithstanding the foregoing, in the discretion of the Company, the Company's obligations hereunder may be satisfied from a grantor trust established by the Company or from an insurance contract, annuity or similar funding vehicle owned by the Company. The assets of any such trust, insurance contract, or other funding vehicle shall continue for all purposes to be a part of the general funds of the Company, shall be considered solely a means to assist the Company to meet its contractual obligations under this Plan and shall not create a funded account or security interest for the benefit of any Employee under this Plan. All such assets shall be subject to the claims of the general creditors of the Company in the event the Company is Insolvent. To the extent that any person acquires a right to receive a payment from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. 4.7 Death of Employee. In the event of an Employee's death, the Company shall make any payments called for hereunder to his or her Beneficiary in the manner described in Section 4.2 or 4.3, as applicable, following his or her death. Any payment made by the Company in good faith shall fully discharge the Company from its obligations with respect to such payment, and the Company shall have no further obligation to see to the application of any money so paid. NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 6 4.8 Claims Procedure. An Employee or Beneficiary may make a claim for specific benefits under the Plan by filing a written request with the Company. If a claim is wholly or partially denied, notice of the decision shall be furnished to the claimant within 60 days after receipt of the claim by the Company, unless special circumstances require an extension of time for processing the claim, in which case a decision shall be rendered as soon as possible, but in no event later than 120 days after receipt of the claim. Written notice of the extension shall be furnished to the claimant prior to the termination of the initial 60-day period, and shall indicate the circumstances requiring the extension and the date by which the Company expects to render its decision. The notice of the decision shall contain the specific reason or reasons for the denial of the claim, specific references to pertinent Plan provisions on which the denial is based, a description of any additional material or information necessary for the claimant to perfect the claim, an explanation of why such additional material or information is necessary and an explanation of the Plan's claims review procedure. If notice of the denial is not furnished in accordance with the above procedure, the claim shall be deemed denied and the claimant shall be permitted to proceed with the review procedure. A claimant or his duly authorized representative may appeal the denial of a claim by making a written application to the Company requesting a review. The claimant or his duly authorized representative may, in connection with the appeal, review pertinent documents and submit issues and comments to the Company in writing. The request for a review of a denied claim must be made to the Company within 60 days after receipt by the claimant of written notification of denial of a claim. A decision by the Company shall be made no later than 60 days after its receipt of a request for a review, unless special circumstances require an extension of time for processing the request, in which case a decision shall be rendered as soon as possible, but in no event later than 120 days after receipt of the request for review. If such an extension of time for review is required, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. The decision on review shall be in writing and shall include specific reasons for the decision and specific references to the pertinent Plan provisions on which the decision is based. If the decision on review is not furnished within the appropriate time, the claim shall be deemed denied on review. All interpretations, determinations, and decisions by the Company in respect of any matter hereunder will be final, conclusive, and binding upon the Company, Employees, Beneficiaries, and all other persons claiming any interest in the Plan. 4.9 Arbitration. If an Employee or Beneficiary has completed the claims procedures set forth in Section 4.8 and decides to pursue his or her claim further, the Employee or Beneficiary shall comply with the following procedures: (a) The exclusive remedy or method of resolving all disputes or questions arising out of or relating to this Agreement shall be arbitration. Arbitration shall be held in Houston, Texas by three arbitrators, one to be appointed by the Company, a second to be appointed by the Employee (or Beneficiary, if applicable), and a third to be appointed by those two arbitrators. The third arbitrator shall act as chairman. Any arbitration may be initiated by the Employee (or Beneficiary) by written notice to the Company specifying the NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 7 subject of the requested arbitration and appointing the Employee's (or Beneficiary's) arbitrator ("Arbitration Notice"). (b) If (i) the Company fails to appoint an arbitrator by written notice to the Employee (or Beneficiary) within ten days after the Arbitration Notice is given, or (ii) the two arbitrators appointed by the parties herein fail to appoint a third arbitrator within ten days after the date of the appointment of the second arbitrator, then the American Arbitration Association in Houston, Texas, upon application of the Employee (or Beneficiary) shall appoint an arbitrator to fill that position. (c) The arbitration proceeding shall be conducted in accordance with the rules of the American Arbitration Association. A determination or award made or approved by at least two of the arbitrators shall be the valid and binding action of the arbitrators. The costs of arbitration (exclusive of the expense of a party in obtaining and presenting evidence and attending the arbitration and of the fees and expense of legal counsel to a party, all of which shall be borne by that party) shall be borne by the Company if the Employee (or Beneficiary) receives substantially the relief sought by the Employee (or Beneficiary) in the arbitration, whether by settlement, award, or judgment; otherwise, the costs shall be borne equally by the parties. The arbitration determination or award shall be final and conclusive on the parties, and judgment upon such award may be entered and enforced in any court of competent jurisdiction. ARTICLE V ADMINISTRATION 5.1 Authority of Company. The Administrator may adopt rules and procedures regarding the operation of the Plan and shall have full power and authority to interpret, construe and administer the Plan. The Administrator's interpretation and construction hereof, and actions hereunder, including any determination of the amount or recipient of any payment to be made under the Plan, shall be binding and conclusive on all persons and for all purposes. The Board may request certain of the Company's employees to assist the Administrator in its administration of the Plan. The Administrator may employ attorneys, accountants, actuaries and other professional advisors to assist the Administrator in its administration of the Plan. The Company shall pay the reasonable fees of any such advisor employed by the Administrator. To the extent permitted by law, no member of the Board or any employee or officer of the Company shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan unless attributable to his or her own willful misconduct or lack of good faith. 5.2 Indemnification of Employees of the Company. The Company hereby agrees to indemnify, jointly and severally, all members of the Board and all employees of the Company against any and all claims, losses, damages, expenses, including counsel fees, incurred by them, and any liability, including any amounts paid in settlement with their approval arising from their action or failure to act with respect to any matter relating to the Plan, except when the same is NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 8 judicially determined to be attributable to their willful misconduct or lack of good faith. The indemnification provided by this Section 5.2 shall survive the termination of the Plan and shall be binding upon the Company's successors and assigns. 5.3 Cost of Administration. The cost of this Plan and the expenses of administering the Plan shall be paid by the Company. ARTICLE VI AMENDMENT AND TERMINATION 6.1 Amendment. The Company, by action of the Board, shall have the right to amend this Plan at any time and from time to time, including a retroactive amendment, by resolution adopted by the Board. Any such amendment shall become effective upon the date stated therein, except as otherwise provided in such amendment; provided, however, that no such action shall affect any benefit adversely to which an Employee would be entitled had his employment terminated immediately before such amendment was effective. 6.2 Termination of the Plan. The Company has established this Plan with the bona fide intention and expectation that from year to year it will deem it advisable to continue it in effect. However, the Board, in its sole discretion, reserves the right to terminate the Plan in its entirety at any time; provided, however, that (i) an Employee's benefits hereunder shall not be affected by the termination where the event giving rise to the benefit (the Employee's termination of employment, death or disability, or a Change in Control) has occurred and (ii) no such action shall affect any benefit adversely to which an Employee would be entitled had his employment terminated immediately before such termination was effective. ARTICLE VII GENERAL PROVISIONS 7.1 Rights Against Company. The Plan shall not be deemed to constitute a contract between the Company and any Employee or to be a consideration for, or an inducement for, the employment of any Employees by the Company. Nothing contained in the Plan shall be deemed to give any Employee the right to be retained in the service of the Company or to interfere with the right of the Company to discharge any Employee at any time, without regard to the effect such discharge may have on any rights under the Plan. 7.2 Payment Due an Incompetent. If the Company shall find that any person to whom any payment is payable under the Plan is unable to care for his affairs because of mental or physical illness, accident, or death, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, a child, a parent, a brother or sister or any person deemed by the Company, in its sole discretion, to have incurred expenses for such person otherwise entitled to payment, in such manner and proportions as the Company may determine. Any such payment shall be a NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 9 complete discharge of the liabilities of the Company under this Plan, and the Company shall have no further obligation to see to the application of any money so paid. 7.3 Spendthrift Clause. No right, title or interest of any kind in the Plan shall be transferable or assignable by any Employee or Beneficiary or be subject to alienation, anticipation, encumbrance, garnishment, attachment, execution or levy of any kind, whether voluntary or involuntary, nor subject to the debts, contracts, liabilities, engagements, or torts of the Employee or Beneficiary. Any attempt to alienate, anticipate, encumber, sell, transfer, assign, pledge, garnish, attach or otherwise subject to legal or equitable process or encumber or dispose of any interest in the Plan shall be void. 7.4 Severability. In the event that any provision of this Plan shall be declared illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of this Plan but shall be fully severable and this Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted herein. 7.5 Construction. The article and section headings and numbers are included only for convenience of reference and are not to be taken as limiting or extending the meaning of any of the terms and provisions of this Plan. Whenever appropriate, words used in the singular shall include the plural or the plural may be read as the singular. When used herein, the masculine gender includes the feminine gender. 7.6 Governing Law. The validity and effect of this Plan, and the rights and obligations of all persons affected hereby, shall be construed and determined in accordance with the laws of the State of Texas unless superseded by federal law. 7.7 Effectiveness. Section 4.5(b) of this Amended and Restated Plan shall be effective on December 12, 2002. All other terms and provisions hereof are effective as of February 1, 1996, including amendments adopted thereafter. EXECUTED this 12th day of December, 2002. NCI BUILDING SYSTEMS, INC. By: /s/ A.R. Ginn ------------------------------------- A.R. Ginn, Chairman of the Board NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 10 EXHIBIT "A" NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN
Employee's Name Benefit Retirement Benefit Preretirement Survivor ----------------------- ------------------ ---------------------- Robert J. Medlock $ 1,000,000 $ 2,500,000
THIS EXHIBIT "A" to the NCI Building Systems, Inc. Supplemental Benefit Plan is dated effective as of February 1, 1996. NCI BUILDING SYSTEMS, INC. By: /s/ A.R. Ginn ------------------------------------- A.R. Ginn, Chairman of the Board NCI BUILDING SYSTEMS, INC. SUPPLEMENTAL BENEFIT PLAN (AMENDED AND RESTATED 12/12/02) Page 11