Re: Retention AgreementEmployee Retention Agreement |
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Ply Gem Industries, Inc.
185 Platte-Clay Way, Suite A
Kearney, MO 64060
December 1, 2005
Shawn K. Poe
1560 Parkside Drive
Liberty, MO 64068
Re: Retention Agreement
Dear Shawn:
Ply Gem Industries, Inc. (“Ply Gem”) considers the continuity of management essential to the best interests of Ply Gem and its stockholders and desires to reinforce and encourage your continued attention and dedication to your duties to Ply Gem and its subsidiaries (each, an “Employer”). As you are aware, Ply Gem maintains the Ply Gem Industries, Inc. Change in Control Severance Benefit Plan for Key Employees, dated October 30, 2003 (the “Current Severance Plan”), in which you are a participant. Under the Current Severance Plan, your right to severance will expire on February 12, 2006 (the “Expiration Date”). To assure your continued focus on your duties to your Employer in light of the forthcoming expiration of your severance protection under the Current Severance Plan, the Board of Directors of Ply Gem (the “Board”) has authorized Ply Gem to enter into this letter agreement with you, which sets forth the compensation that Ply Gem agrees to pay you if your employment is terminated after the Expiration Date under the circumstances described herein.
This letter agreement sets forth the terms and conditions of Ply Gem’s agreement to pay you the compensation under the circumstances described herein, and the parties to this letter agreement acknowledge the receipt and sufficiency of good and valuable consideration in support of this letter agreement, including the covenants and agreements set forth herein.
1. Term
This letter agreement is effective as of the date hereof and shall expire on the second anniversary of the Expiration Date; provided, that, Ply Gem shall have the right to renew this letter agreement for successive one year periods (each, a “Renewal Term”), which right it must exercise prior the second anniversary of the Expiration Date, or the last day of any Renewal Term, as applicable. Notwithstanding the foregoing, if your employment with your Employer is terminated prior to the Expiration Date, this letter agreement shall be null and void and of no further force and effect and you shall not be entitled to any payments or benefits hereunder.
2. Compensation
If, during the term of this letter agreement and on or following the Expiration Date, your employment is terminated (A) by your Employer without “Cause” or (B) by you following a “Material Adverse Change” (as such terms are defined below), you will be entitled to receive, subject to your execution of and continued compliance with a Release and Restrictive Covenant Agreement substantially in the form attached to this letter agreement as Exhibit A (the “Release and Restrictive Covenant Agreement”):
(a) An amount equal to your annual base salary in effect on the date of your termination (which, for the avoidance of doubt shall not include any amounts in respect of any car allowance or payments for any other perquisites or benefits that you may be entitled to). This salary continuation shall be payable in equal installments over the 12-month period following the date of your termination of employment (the “Payment Period”), in accordance with your Employer’s normal payroll practices;
(b) An amount equal to the lesser of (I) your target annual cash bonus with respect to the fiscal year during which your termination of employment occurs (the “Year of Termination”) and (II) the actual annual cash bonus you would have received with respect to the Year of Termination based on actual performance during that year, if you had been employed for the full year, measured as of the time such performance is measured for purposes of paying annual cash bonuses to other executives of your Employer with respect to such year (the “Actual Bonus”). As soon as reasonably practicable following the date that the amount of the Actual Bonus is determined, you shall be paid a lump sum cash payment equal to the portion of the Actual Bonus that you would have been paid prior to such date had such amount been determined as of the date of your termination of employment.
(c) A lump sum payment equal to a pro rata portion of any annual cash bonus that you would have been entitled to receive with respect to the Year of Termination based upon the percentage of such year that shall have elapsed through the date of your termination of employment, and determined as of the date such bonuses are determined for other executives of your Employer (the “Pro Rata Bonus”). The Pro Rata Bonus shall be payable when annual cash bonuses with respect to the Year of Termination are paid to other executives of your Employer.
(d) Continuation of medical and dental benefits for you and your spouse and dependents, if any, during the Payment Period, in the same plans and on the same basis (including, without limitation, contribution rates) as such benefits are provided from time to time to actively employed executives of your Employer, subject to the terms of such plans as the same may exist from time to time; provided, that, the Employer’s obligation to provide such medical and dental benefits shall cease at the time you become eligible for such benefits from another employer;
(e) (i) your base salary through the date of termination; (ii) any declared but unpaid annual cash bonus for any fiscal year preceding the year in which the termination occurs; (iii) reimbursement for any unreimbursed business expenses properly incurred by you in accordance with Employer policy through your date of termination; and (iv) any other amounts, including without limitation, accrued but unused vacation, required to be paid to you under any applicable state statute or regulation;
(f) If, at the end of the 12 month Payment Period referred to in paragraph 2(a) above, you have not been able to obtain employment providing you with an annual salary of at least $150,000, the salary and bonus payments and other benefits referred to in paragraphs (a), (b) and (d) above shall be continued for a period equal to the shorter of (i) 12 additional months, or (ii) the period between the end of the initial 12 month Payment Period and the date on which you become employed in a position that provides you with an annual salary of at least $150,000 (the “Extended Payment Period”). Any bonus that you would be entitled to receive during the Extended Payment Period shall be pro rated if the Extended Payment Period is less than 12 months. If, at any time prior to or during the Extended Payment Period, you receive employment providing you with an annual salary of less than $150,000, then all payment of salary and bonus during the Extended Payment Period shall be reduced by the salary and bonus you receive from such other employment during that period and the benefits provided to you under this Letter Agreement shall be equitably adjusted and reduced to reflect the benefits received by you from such other employment.
Your termination shall not be deemed to be terminated by your Employer without Cause or by you following a Material Adverse Change, and you shall not be entitled to any payments or benefits under this Section 2 solely on account of, the sale or disposition by Ply Gem or any Employer, or any parent of Ply Gem or any Employer, as applicable, of the subsidiary or division for which you are employed if you are offered employment by the purchaser or acquirer of such subsidiary or division and such acquirer or purchaser agrees to assume the terms of this letter agreement.
Notwithstanding anything to the contrary in this letter agreement, no further payments or benefits are due under this Section 2 and, subject to applicable state law, Ply Gem and any Employer, as applicable, shall have the right to reclaim any amounts already paid to you under this Section 2 if, at any time after your employment is terminated, (i) you breach any of the provisions of Section VI of the Release and Restrictive Covenant Agreement, or (ii) the Board determines, in good faith, that grounds existed, on or prior to the date of termination of your employment with Employer, including prior to the date of this letter agreement, for your Employer to terminate your employment for Cause; provided, that, in all events you will be entitled to receive amounts in sub-clauses (i), (iii), and (iv) of Section 2(e) above.
For the avoidance of doubt, if your employment is terminated prior to the Expiration Date, you shall not be entitled to any payments or benefits under this letter agreement, and any right that you may have to severance or termination pay or benefits shall be governed by the Current Severance Plan, other arrangements of your Employer, if applicable, and applicable state statute or regulation. You shall have no further rights to any compensation or other benefits under this letter agreement. All other benefits, if any, due you following a termination of employment shall be determined in accordance with the plans, policies and practices of your Employer.
3. Definitions
For purposes of this letter agreement, “Cause” shall mean: (i) your willful and continued failure to perform substantially your material duties (other than any such failures resulting from, or contributed to by, incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to you by the Board, which notice specifically identifies the manner in which you have not substantially performed your material duties, and you neglect to cure such failure within 30 days; (ii) a willful failure to follow the lawful direction of the Board or of the senior executive officer of Ply Gem to whom you directly report (if applicable); (iii) your material act of dishonesty or breach of trust in connection with the performance of your duties to Ply Gem or your Employer; (iv) your conviction of, or plea of guilty or no contest to, (x) any felony or (y) any misdemeanor having as its predicate element fraud, dishonesty or misappropriation; or (v) a civil judgment in which Employer is awarded damages from you in respect of a claim of loss of funds through fraud or misappropriation by you, which has become final and is not subject to further appeal.
For purposes of this letter agreement, a “Material Adverse Change” shall mean any of the following, without your express written consent:
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(1) |
Assignment to you of any duties that are inconsistent with your position, duties and responsibilities and status with Employer as of the Expiration Date; |
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(2) |
Employer’s reduction of your base salary; |
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(3) |
Without your express written consent, Employer’s requiring you to be based anywhere other than within 50 miles of your office location immediately prior to such required relocation, except for required travel on the Employer’s business to an extent substantially consistent with your business travel obligations immediately prior to such required relocation; |
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(4) |
Any action by Employer that would deprive you of any material employee benefit enjoyed by you, except where such change is applicable to all employees participating in such benefit plan; |
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(5) |
Any breach by the Company or Employer of any provision of this Letter Agreement or the Release and Restrictive Covenant Agreement. |
4. Release and Restrictive Covenant Agreement
All payments and benefits described in Section 2 of this letter agreement are conditional upon and subject to your execution of the Release and Restrictive Covenant Agreement.
5. Notices
Any notice required by this letter agreement must be in writing and will be deemed to have been duly given (i) if delivered personally or by overnight courier service, sent by facsimile transmission or mailed by United States registered mail, return receipt requested, postage prepaid, and (ii) addressed to the respective addresses or sent via facsimile to the respective facsimile numbers, as the case may be, as set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt; provided, however, that (X) notices sent by personal delivery or overnight courier shall be deemed given when delivered; (Y) notices sent by facsimile transmission shall be deemed given upon the sender’s receipt of confirmation of complete transmission, and (Z) notices sent by United States registered mail shall be deemed given two days after the date of deposit in the United States mail.
If to the Employee, to the address as shall most currently appear on the records of the Company
If to the Company, to:
Ply Gem Industries, Inc.
606 West Major Street
Kearny, MO 64060
Fax: (816) 903-4330
Attn: President
6. General
Your Employer may withhold from any amounts payable under Section 2 of this letter agreement such federal, state, local or other taxes required to be withheld pursuant to applicable law or regulation.
The payments and benefits provided for in Section 2 of this letter agreement shall not be counted as compensation for purposes of determining benefits under other benefit plans, programs, policies an
