Document:

EX-10.5

 

EXHIBIT 10.5

THE KITCHEN COLLECTION, INC.

2008 ANNUAL INCENTIVE COMPENSATION PLAN

Introduction

     The Kitchen Collection, Inc. (“the Company”) has established an Annual Incentive Compensation
Plan (“Plan”) as part of a competitive program for the officers and key management employees of the
Company.

Plan Objectives

     The Company desires to attract and retain talented employees to enable the Company to meet its
financial and business objectives. The objective of the Plan is to provide an opportunity to earn
annual incentive compensation to those employees whose performance has a significant impact on the
Company’s short-term and long-term profitability.

Administration

     The Plan is administered by the Compensation Committee of the Board of Directors of the
Company (the “Committee”). The Committee:

	 	 	 
	A.

	 	May amend, modify, or discontinue the Plan.

	B.

	 	Will designate Plan Participants.
	C.

	 	Will determine the annual performance criteria which generate the incentive
compensation pool.
	D.

	 	Will determine the total amount of both the target and actual annual incentive
compensation pool.
	E.

	 	Will approve individual incentive Awards to Participants who are officers of
the Company.
	F.

	 	May delegate to the Chief Executive Officer of the Company the approval of
incentive compensation Awards to Participants below officer level.
	G.

	 	May approve a pro rata incentive compensation Award for Participants in the
Plan whose employment is terminated before the end of the Award Term (1) due to death,
disability, Retirement or facility closure or (2) under other circumstances at the
recommendation of the Chief Executive Officer of the Company. In furtherance of, but
without limiting the foregoing, except as determined by the Committee, a Participant
must be employed on December 31 of the Award Term in order to be entitled to receive an
Award hereunder.

     The Committee shall have complete authority to interpret all provisions of this Plan
consistent with law, to prescribe the form of any instrument evidencing any Award granted or paid
under this Plan, to adopt, amend and rescind general and special rules and regulations for its
administration, and to make all other determinations necessary or advisable for the administration
of this Plan. A majority of the Committee shall constitute a quorum, and the action of members of
the Committee present at any meeting at which a quorum is present or acts unanimously approved in
writing, shall be the act of the Committee. All acts and decisions of the Committee with respect
to any questions arising in connection with the administration and interpretation of this Plan,
including the severability of any or all of the provisions hereof, shall be conclusive, final and
binding upon the Company and all present and former Participants and employees and their respective
descendants, successors and assigns. No member of the Committee shall be liable for any such act
or decision made in good faith.

Determination of Corporate Incentive Compensation Pool

     Each Participant in the Plan will have an individual target incentive compensation percentage
which is determined by the Participant’s salary grade. This percentage is multiplied by the
mid-point of the Participant’s salary grade to determine his individual target incentive
compensation Award. The total of the target incentive compensation Awards of all participants
equals the target corporate incentive compensation pool (“Target Pool”). The Target Pool is
approved at the beginning of each Award Year by the Committee.

     The actual corporate incentive compensation pool (”Actual Pool”) is determined as of the end
of each Award Year based on the Company’s actual performance against specific criteria established
in the beginning of the Award Year by the Committee. The Target Pool is adjusted upwards or
downwards by corporate performance adjustment factors to determine the Actual Pool. In no event
will the Actual Pool exceed 150% of the Target Pool, except that the Committee elects to increase
the Actual Pool by up to 10% as described below.

 

 

     The Target and Actual Pools may consist of the sum of two or more subpools, provided the
subpools have individual objectives.

     Subject to the Committee’s right to amend or terminate the Plan at any time, it is the intent
of the Plan that the Actual Pool, as determined above, will be the final total corporate incentive
compensation pool. However, the Committee, in its sole discretion, may increase or decrease by up
to 10% of the Actual Pool or may approve an incentive compensation pool where there would normally
be no pool due to Company performance which is below the criteria established for the year.

     The Actual and Target Pools exclude the Marketing Incentive Plan for regional, district,
store, support and area managers. However, total compensation for employees covered by the
Marketing Incentive Plan will be based on competitive levels.

Determination of Individual Incentive Compensation Awards

     Salary grades and the corresponding target incentive percentage for each Participant in the
Plan will be established at the beginning of each Award Year and approved by the Committee.
Individual target incentive compensation will then be adjusted by the appropriate pool or subpool
factor. Such adjusted individual incentive compensation will be further modified based on a
Participant’s performance as compared to his individual goals for the Award Year.

     The total of all individual incentive compensation Awards must not exceed the Actual Pool for
the Award Year.

	 	 	 
	A.

	 	Example Calculation for Determination of Actual Pool
	 
	 	 
	 

	 	Intentionally Omitted
	 
	 	 
	B.

	 	Example Calculation for Determination of Individual

Incentive Compensation Awards
	 
	 	 
	 

	 	Intentionally Omitted

Payment Date/Taxes

     Promptly following the Committee’s approval of the final Awards, the Company shall pay the
amount of such Awards to the Participants in cash, subject to all withholdings and deductions
described in the following sentence; provided, however, that (i) no Award shall be payable to a
Participant except as determined by the Committee and (ii) all Awards shall be paid during the
period from January 1st through March 15th after the close of the Award Term.
Any Award paid to a Participant under this Plan shall be subject to all applicable federal, state
and local income tax, social security and other standard withholdings and deductions.

Definitions

     (a) “Award” means cash paid to a Participant under the Plan for the Award Term in an amount
determined in accordance with the Plan.

     (b) “Award Term” means the period from January 1, 2008 through December 31, 2008.

     (c) “Participant” means any person who is classified by the Company as a salaried employee and
in salary grades 4 and above, who in the judgment of the Committee occupies a key position in which
his efforts may significantly contribute to the profits or growth of the Company; provided,
however, that the Committee may select any employee who is expected to contribute, or who has
contributed, significantly to the Company’s profitability to participate in the Plan and receive an
Award hereunder; and further provided, however, that following the end of the Award Term the
Committee may make one or more discretionary Awards to employees of the Company who were not
previously designated as Participants. Directors of the Company who are also employees of the
Company are eligible to participate in the Plan. The Committee shall have the power to add
Participants at any later date in the Award Term if individuals subsequently become eligible to
participate in the Plan. Each Participant shall be notified that he is eligible to receive an
Award and the amount of his target Award. If a Participant receives a change in salary midpoint,
such Participant shall be notified of any resulting change in his target Award.

 

 

     (d) “Retirement” shall mean the termination of a Participant’s employment with the Company
after reaching age 60 and completing at least 15 years of service.

General Plan Provisions

     (a) No Right of Employment. Neither the adoption or operation of this Plan, nor any
document describing or referring to this Plan, or any part thereof, shall confer upon any employee
any right to continue in the employ of the Company, or shall in any way affect the right and power
of the Company to terminate the employment of any employee at any time with or without assigning a
reason therefor to the same extent as the Company might have done if this Plan had not been
adopted.

     (b) Governing Law. The provisions of this Plan shall be governed by and construed in
accordance with the laws of the State of Ohio.

     (c) Miscellaneous. Headings are given to the sections of this Plan solely as a
convenience to facilitate reference. Such headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the construction of this Plan or any provisions
thereof. The use of the masculine gender shall also include within its meaning the feminine. The
use of the singular shall also include within its meaning the plural, and vice versa.

     (d) American Jobs Creation Act. It is intended that this Plan be exempt from the
requirements of Section 409A of the Internal Revenue Code, as enacted by the American Jobs Creation
Act, and the Plan shall be interpreted and administered in a manner to give effect to such intent.

     (e) Limitation on Rights of Participants; No trust. No trust has been created by the
Company for the payment of Awards granted under this Plan; nor have the Participants been granted
any lien on any assets of the Company to secure payment of such benefits. This Plan represents
only an unfunded, unsecured promise to pay by the Company and a Participant hereunder is a mere
unsecured creditor of the Company.

     (f) Payment to Guardian. If an Award is payable to a minor, to a person declared
incompetent or to a person incapable of handling the disposition of his property, the Committee may
direct payment of such Award to the guardian, legal representative or person having the care and
custody of such minor, incompetent or person. The Committee may require such proof of
incompetency, minority, incapacity or guardianship as it may deem appropriate prior to the
distribution of such Award. Such distribution shall completely discharge the Company from all
liability with respect to such Award.

     (g) Effective Date. This Plan shall become effective as of January 1, 2008.

2008 Performance Targets

     The performance targets for the Plan are attached as an Addendum to this document.ex101.htm

    AMENDMENT TO SEPARATION
AGREEMENT, GENERAL RELEASE, 

    CONSULTING AGREEMENT, AND
NON-COMPETITION, NON-DISCLOSURE 

    AND NON-SOLICITATION
AGREEMENT

    

    THIS AMENDMENT TO THE SEPARATION
AGREEMENT, GENERAL RELEASE, CONSULTING AGREEMENT, AND NON-COMPETITION,
NON-DISCLOSURE AND NON-SOLICITATION AGREEMENT (“Amendment”), made and
entered into this 17th day of
October, 2007, by and between Celadon Trucking Services, Inc. (the “Company” or
“Celadon”) and Thomas M. Glaser (“Glaser”) (hereinafter the Company or Celadon
and Glaser are referred to herein collectively as the “Parties”) hereby modify
and supplement the  Separation Agreement, General Release, Consulting
Agreement, and Non-Competition, Non-Disclosure and Non-Solicitation Agreement
(“Agreement”) entered into between the parties on or about the 25th day of July,
2007, as provided herein.

    

    WHEREAS, the Company and
Glaser entered into the Agreement, which set forth the terms and conditions of
Glaser’s retirement and separation from the Company; and,

    

    WHEREAS, the parties agree
that said Agreement should be amended to adjust some of said terms and
conditions as provided herein.

    

    NOW, THEREFORE, in consideration of
the foregoing premises, the mutual agreements and covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:

    

    1.           The
Parties' Agreement is hereby amended by deleting Paragraph 6 B of the Parties’
Agreement, and substituting the following paragraph in its place. The purpose of
this modification is to delay the date when the Company will issue the vested
shares of Celadon Group stock to Glaser from September 4, 2007 to August 3,
2009:

    

    
      	
              6.  

            	
              Equity
      Grants.

            

    

    

    B.           Restricted Stock
Grants.    Glaser has also been grantedand is hereby: (1)
75% vested in 40,050 Restricted Stock Grants as referenced in Restricted Stock
Grant number 6 which was granted on October 30, 2003; and (2) 25% vested in
19,800 Restricted Stock Grants as referenced in Restricted Stock Grant number 2
which was granted on January 12, 2006. The Company will permit Glaser to acquire
any of these Restricted Stock Grants, to the extent vested, in accordance with
the terms of the Plans and the related agreements or award notices and he may
retain such stock or sell the aforesaid stock on the open market; provided,
notwithstanding anything in the Plans and related agreements or award notices to
the contrary.  The Company will issue such vested shares of Celadon
Group stock on August 3, 2009, provided there have been no violations of the
Agreement or this Amendment.

    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

    2.           The
Parties' Agreement is hereby amended by deleting Paragraphs 10 D and E of the
Parties’ Agreement, and substituting the following paragraphs in their place.
The purpose of these modifications is to permit Glaser to serve as a director of
the board of directors of Priority America Inc., clarify Glaser’s permissible
contacts with current employees of the Celadon Group of Companies and to reduce
the employment restrictions on Glaser after August 3, 2008:

    

    10.           Non-Competition.   Glaser
warrants and represents that for a period of Twenty-Four (24) months from
August3, 2007 that he will not, directly or indirectly:

    

    D.           Engage
in any employment or business activity thatis in competition or is reasonably
expected to be in competition with the Celadon Group of Companies or which
performs services or sells goods or services which are similar to those provided
or sold by  the Celadon Group of Companies, except that Glaser shall
be free to participate in the transportation of materials provided that they are
not transported in dry van equipment at any time; Glaser is permitted to accept
a director position on the board of directors of Priority America, Inc.
(“Priority America”)  in and after October, 2007, provided that
neither Glaser nor Priority America make a public announcement of Glaser’s
appointment to its board of directors; and Glaser shall be permitted to be
employed in the trucking industry on and after August 3, 2008 except that he
will not be authorized to work for a dry van motor carrier until August 3,
2009.  However, the  exceptions set forth in this subsection
10 (D) shall have no affect on subsections 10(A), 10(B), 10(C) or 10(E) in this
section 10; or

     

    E.           Solicit
or attempt to hire, for himself or any otherperson, any of the Celadon Group of
Companies’ employees, independent contractors or to attempt to or encourage any
of the Celadon Group of Companies’ employees or independent contractors to
terminate their employment, or business relationship, with the Celadon Group of
Companies and will not have conversations with, or send, or respond to, emails,
voice mails, or text messages or communicate in any other form or fashion with
any current employee, contractor or agent of the Celadon Group of Companies
relating to any business dealings, performance results, internal communications,
personnel issues or “Proprietary Information” of the Celadon Group of Companies.
“Proprietary Information” is defined in section 9 of the Agreement. However,
Glaser shall not be prohibited from contacting current employees of the Celadon
Group of Companies on purely personal and non-business matters.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    In the event of a conflict between the
terms of this Amendment and any term, condition or provision of the Agreement,
the terms of this Amendment shall govern, and the Agreement shall be modified
accordingly.

    

    All other provisions of the Agreement,
not specifically changed by this Amendment, shall remain in full force and
effect and be binding upon the parties.

    

    This Amendment shall be effective on
date first indicated above.

    

    

    
      	
              Celadon
      Trucking Services, Inc.

            	 	
              Thomas
      M. Glaser

            
	 
      	 
      	 	 
      	 
      
	
              By:

            	 
      /s/ Stephen Russell	 	
              By:

            	 
      /s/ Thomas M. Glaser
	
              Print:

            	
              Stephen
      Russell

            	 	
              Print:

            	
              Thomas
      M. Glaser

            
	
              Title

            	
              CEO
      and Chairman of the Board

            	 	 
      	 
      

    

    

    
3

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