Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this “ Agreement
”), originally dated as of August 21, 2006, amended and
restated in its entirety, as of April 1, 2008 (the “
Restatement Date ”), by and between ASSOCIATED
MATERIALS LLC, a Delaware limited liability company (as successor
to Associated Materials Incorporated, a Delaware corporation) (the
“ Company ”), and a wholly owned indirect
subsidiary of AMH Holdings II, Inc., a Delaware corporation
(“ AMH II ”), and THOMAS CHIEFFE, an individual
residing in the State of Ohio (the “ Executive
”).
WITNESSETH :
WHEREAS,
the Company desires to continue to retain the services and
employment of the Executive on behalf of the Company, and the
Executive desires to continue such employment with the Company,
upon the terms and conditions hereinafter set forth; and
WHEREAS,
pursuant to Section 12(g) of this Agreement, this Agreement may be
amended in writing by the parties hereto; and
WHEREAS,
the Company and the Executive mutually desire to amend and restate
this Agreement as set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and promises
contained herein and for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto, each
intending to be legally bound hereby, agree as follows:
1. Employment . On the
terms and subject to the conditions set forth herein, the Company
hereby employs the Executive as the President and Chief Executive
Officer of the Company, and the Executive accepts such employment,
for the Employment Term (as defined in Section 3). During the
Employment Term, the Executive shall serve as the President and
Chief Executive Officer of the Company and shall report solely to
the Board of Directors of AMH II (the “ Board
”), performing such duties as shall be reasonably required of
a president and chief executive officer, and shall have such other
powers and perform such other duties as may from time to time be
assigned to him by the Board. Promptly following the commencement
of the Employment Term, AMH II shall take all action necessary to
appoint the Executive as a director of AMH II, and, thereafter, for
so long as the Executive remains the President and Chief Executive
Officer of the Company, AMH II shall use reasonable efforts to
cause the Executive to be a director of AMH II, and the Executive
agrees to serve as such a director. To the extent requested by the
Board, the Executive shall also serve on any committees of the
Board and/or as a director, officer or employee of AMH II or any
other person or entity which, from time to time, is a direct or
indirect subsidiary of AMH II (AMH II and each such subsidiary,
person or entity, other than the Company, are hereinafter referred
to collectively as the “ Affiliates ,” and
individually as an “ Affiliate ”). The
Executive’s service as a director of the Company or as a
director, officer or employee of any Affiliate shall be without
additional compensation.
2. Performance . The
Executive will serve the Company faithfully and to the best of his
ability and will devote his full business time, energy, experience
and talents to the business of the Company and the Affiliates;
provided , however , that it shall not be a violation
of this Agreement for the Executive to manage his personal
investments and business affairs, or to engage in or serve such
civic, community, charitable, educational, or religious
organizations as he may reasonably select so long as such service
does not interfere with the Executive’s performance of his
duties hereunder. The Company and the Executive understand and
agree that the Executive is obliged under the terms of a consulting
agreement between the Executive and another company to devote, and
that the Executive may so devote, from time to time prior to
October 5, 2007, a portion of his business time and attention
to such other company and its affiliates pursuant to such
consulting agreement, but only to the extent the Executive’s
business time and attention to such other company and its
affiliates does not interfere with the performance of his duties
hereunder.
3. Employment Term .
Subject to earlier termination pursuant to Section 6, the
Executive’s term of employment hereunder shall begin on
April 1, 2008 (hereinafter referred to as the “
Commencement Date ”) and continue through the date
which is two (2) years following the Commencement Date;
provided , however , that beginning on the second
anniversary of the Commencement Date, and on each subsequent
anniversary of the Commencement Date, such term shall be
automatically extended by an additional one (1) year beyond
the end of the then-current term, unless, at least thirty
(30) days before such second anniversary of the Commencement
Date, or thirty (30) days before any such subsequent
anniversary of the Commencement Date, the Company gives written
notice to the Executive that the Company does not desire to extend
the term of this Agreement, in which case, the term of employment
hereunder shall terminate as of the second anniversary of the
Commencement Date or the end of the then-current term, as
applicable (the term of employment hereunder, including any
extensions, in accordance with this Section 3, shall be
referred to herein as the “ Employment Term
”).
4. Compensation and
Benefits .
(a)
Salary . As compensation for his services hereunder and in
consideration of the Executive’s other agreements hereunder,
during the Employment Term, the Company shall pay the Executive a
base salary, payable in equal installments in accordance with the
Company’s payroll procedures, at an annual rate of Five
Hundred Fifty Thousand Dollars ($550,000), subject to annual review
by the Board or its Compensation Committee, which may increase but
not decrease the Executive’s base salary.
(b)
Annual Incentive Bonus; Stock Option Plan and Special Retention
Incentive Bonus . (1) Commencing with calendar year 2006,
the Executive shall be entitled to participate in an annual
incentive bonus arrangement established by the Company on terms and
conditions substantially as set forth in Exhibit A
hereto.
(2) The
Executive shall also be entitled to participate in the stock option
plan established by AMH II.
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(3) The
Executive shall also be entitled to receive a Special Retention
Incentive Bonus payable in three equal installments of $500,000
each on (or within thirty (30) days after) October 1,
2008, October 1, 2009, and October 1, 2010, so long as
the Executive is continuously actively employed by the Company
through each such date, or such continuous active employment is
terminated by the Company without Cause (as defined in
Section 6) or by the Executive for Good Reason (as defined in
Section 7(b)) or due to disability (as determined in the good
faith discretion of the Board) or death; provided ,
however , that, if a Liquidity Event that does not
constitute a Qualified Change in Control (as defined below) occurs
during calendar year 2008, all unpaid installments will be payable
no later than March 15, 2009, so long as the Executive is
continuously actively employed by the Company through such date, or
such continuous active employment is terminated by the Company
without Cause or by the Executive for Good Reason or due to
disability (as determined in the good faith discretion of the
Board) or death; and provided further that, if a Liquidity
Event that does not constitute a Qualified Change in Control occurs
during calendar year 2009, the third installment will be payable no
later than March 15, 2010, so long as the Executive is
continuously actively employed by the Company through such date, or
such continuous active employment is terminated by the Company
without Cause or by the Executive for Good Reason or due to
disability (as determined in the good faith discretion of the
Board) or death. “ Qualified Change in Control ”
means a “change in the ownership or effective control”
of AMH II, or “change in the ownership of a substantial
portion of the assets” of AMH II, as such terms are used in
Section 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986,
as amended (the “ Code ”).
(4) For
purposes of this Agreement, “ Liquidity Event ”
shall mean the occurrence of either of the following events:
(A) a transaction or series of transactions (whether
structured as a stock sale, merger, consolidation, reorganization,
asset sale or otherwise) which results in the sale or transfer of
more than a majority of the assets of AMH II and its subsidiaries
(determined based on value) or of a majority of the capital stock
of AMH II to a person other than the Investors or their affiliates;
or (B) a widely distributed sale of the common stock of AMH II
in an underwritten public offering pursuant to an effective
registration statement filed with the Securities and Exchange
Commission which yields at least $150,000,000 of net proceeds to
AMH II. For purposes of the immediately preceding sentence, “
Investors ” shall mean all of the following persons
collectively: Harvest Partners III, L.P., Harvest Partners III
Beteiligungsgesellschaft Bürgerlichen Rechts (mit
Haftungsbeschränkung), Harvest Partners IV, L.P., Harvest
Partners IV GmbH & Co. KG, AM Holdings Limited, AM Equity
Limited, AM Investments Limited, Associated Equity Limited and
Associated Investments Limited.
(5) The
Executive shall not be entitled to participate in any bonus plan,
program or arrangement of the Company or an Affiliate, other than
as specifically provided in this Section 4(b).
(c)
Retirement, Medical, Dental and Other Benefits . During the
Employment Term, the Executive shall, in accordance with the terms
and conditions of the applicable plan documents and all applicable
laws, be eligible to participate in the various retirement,
medical,
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dental
and other employee benefit plans made available by the Company,
from time to time, for its executives.
(d)
Vacation; Sick Leave . During the Employment Term, the
Executive shall be entitled to not less than four (4) weeks of
vacation during each calendar year and sick leave in accordance
with the Company’s policies and practices with respect to its
executives.
(e)
Business Expenses . The Company shall reimburse or advance
payment to the Executive for all reasonable expenses actually
incurred by him in connection with the performance of his duties
hereunder in accordance with policies established by the Company
from time to time and subject to receipt by the Company of
appropriate documentation.
5. Covenants of the
Executive . The Executive acknowledges that in the course of
his employment with the Company he has and will become familiar
with the Company’s and the Affiliates’ trade secrets
and with other confidential information concerning the Company and
the Affiliates, and that his services are of special, unique and
extraordinary value to the Company and the Affiliates. Therefore,
the Company and the Executive mutually agree that it is in the
interest of both parties for the Executive to enter into the
restrictive covenants set forth in this Section 5 and that
such restrictions and covenants are reasonable given the nature of
the Executive’s duties and the nature of the Company’s
business.
(a)
Noncompetition . During the Employment Term and for the two
(2)-year period (the “ Restricted Period ”)
following termination of the Employment Term, the Executive shall
not, within any jurisdiction or marketing area in which the Company
or any Affiliate is doing or is qualified to do business, directly
or indirectly, own, manage, operate, control, be employed by or
participate in the ownership, management, operation or control of,
or be connected in any manner with, any Business (as hereinafter
defined), provided that the Executive’s ownership of
securities of two percent (2%) or less of any class of securities
of a public company shall not, by itself, be considered to be
competition with the Company or any Affiliate. For purposes of this
Agreement, “ Business ” shall mean the
manufacturing, production, distribution or sale of exterior
residential building products, including, without limitation, vinyl
siding, windows, fencing, decking, railings and garage doors, or
any other business of a type and character engaged in by the
Company or an Affiliate during the Employment Term.
(b)
Nonsolicitation . During the Employment Term and for the
Restricted Period following termination of the Employment Term, the
Executive shall not, directly or indirectly, (i) employ, solicit
for employment or otherwise contract for the services of any
individual who is or was an employee of the Company or any
Affiliate; (ii) otherwise induce or attempt to induce any
employee of the Company or an Affiliate to leave the employ of the
Company or such Affiliate, or in any way interfere with the
relationship between the Company or any Affiliate and any employee
respectively thereof; or (iii) induce or attempt to induce any
customer, supplier, licensee or other business relation of the
Company or any Affiliate to cease doing business with the Company
or such Affiliate, or interfere in any way with the relationship
between any such customer, supplier, licensee or business relation
and the Company or any Affiliate.
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(c)
Nondisclosure; Inventions . For the Employment Term and
thereafter, (i) the Executive shall not divulge, transmit or
otherwise disclose (except as legally compelled by court order, and
then only to the extent required, after prompt notice to the Board
of any such order), directly or indirectly, other than in the
regular and proper course of business of the Company and the
Affiliates, any customer lists, trade secrets or other confidential
knowledge or information with respect to the operations or finances
of the Company or any Affiliates or with respect to confidential or
secret processes, services, techniques, customers or plans with
respect to the Company or the Affiliates (all of the foregoing
collectively hereinafter referred to as, “ Confidential
Information ”), and (ii) the Executive will not use,
directly or indirectly, any Confidential Information for the
benefit of anyone other than the Company and the Affiliates;
provided , however , that the Executive has no
obligation, express or implied, to refrain from using or disclosing
to others any such knowledge or information which is or hereafter
shall become available to the general public other than through
disclosure by the Executive. All Confidential Information, new
processes, techniques, know-how, methods, inventions, plans,
products, patents and devices developed, made or invented by the
Executive, alone or with others, while an employee of the Company
which are related to the business of the Company and the Affiliates
shall be and become the sole property of the Company, unless
released in writing by the Board, and the Executive hereby assigns
any and all rights therein or thereto to the Company.
(d)
Nondisparagement . During the Employment Term and
thereafter, the Executive shall not take any action to disparage or
criticize the Company or any Affiliate or their respective
employees, directors, owners or customers or to engage in any other
action that injures or hinders the business relationships of the
Company or any Affiliate. Nothing contained in this Section 5(d)
shall preclude the Executive from enforcing his rights under this
Agreement.
(e)
Return of Company Property . All Confidential Information,
files, records, correspondence, memoranda, notes or other documents
(including, without limitation, those in computer-readable form) or
property relating or belonging to the Company or an Affiliate,
whether prepared by the Executive or otherwise coming into his
possession in the course of the performance of his services under
this Agreement, shall be the exclusive property of the Company and
shall be delivered to the Company, and not retained by the
Executive (including, without limitations, any copies thereof),
promptly upon request by the Company and, in any event, promptly
upon termination of the Employment Term.
(f)
Enforcement . The Executive acknowledges that a breach of
his covenants contained in this Section 5 may cause
irreparable damage to the Company and the Affiliates, the exact
amount of which would be difficult to ascertain, and that the
remedies at law for any such breach or threatened breach would be
inadequate. Accordingly, the Executive agrees that if he breaches
or threatens to breach any of the covenants contained in this
Section 5, in addition to any other remedy which may be
available at law or in equity, the Company and the Affiliates shall
be entitled to specific performance and injunctive relief to
prevent the breach or any threatened breach thereof without bond or
other security or a showing that monetary damages will not provide
an adequate remedy.
(g)
Scope of Covenants . The Company and the Executive further
acknowledge that the time, scope, geographic area and other
provisions of this Section 5 have been specifically negotiated
by sophisticated commercial parties and agree that all such
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provisions are reasonable under the circumstances of the activities
contemplated by this Agreement. In the event that the agreements in
this Section 5 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of their extending for
too great a period of time or over too great a geographical area or
by reason of their being too extensive in any other respect, they
shall be interpreted to extend only over the maximum period of time
for which they may be enforceable and/or over the maximum
geographical area as to which they may be enforceable and/or to the
maximum extent in all other respects as to which they may be
enforceable, all as determined by such court in such action.
6. Termination . The
employment of the Executive hereunder shall automatically terminate
at the end of the Employment Term. The employment of the Executive
hereunder and the Employment Term may also be terminated at any
time by the Company with or without Cause. For purposes of this
Agreement, except as otherwise provided in Section 8, “
Cause ” shall mean: (i) embezzlement, theft or
misappropriation by the Executive of any property of the Company or
an Affiliate; (ii) any breach by the Executive of the
Executive’s covenants under Section 5; (iii) any
breach by the Executive of any other provision of this Agreement
which breach is not cured, to the extent susceptible to cure,
within fourteen (14) days after the Company has given written
notice to the Executive describing such breach; (iv) failure
or refusal by the Executive to perform any directive of the Board
or the duties of his employment hereunder which continues for a
period of fourteen (14) days following notice thereof by the
Company to the Executive; (v) any act by the Executive
constituting a felony or otherwise involving theft, fraud,
dishonesty, misrepresentation or moral turpitude;
(vi) conviction of, or plea of nolo contendere (or a
similar plea) to, any criminal offense; (vii) gross negligence
or willful misconduct on the part of the Executive in the
performance of his duties as an employee, officer or director of
the Company or an Affiliate; (viii) the Executive’s
breach of his fiduciary obligations, or disloyalty, to the Company
or an Affiliate; (ix) any act or omission to act of the
Executive intended to harm or damage the business, property,
operations, financial condition or reputation of the Company or any
Affiliate; (x) any chemical dependence of the Executive which
adversely affects the performance of his duties and
responsibilities to the Company or an Affiliate; or (xi) the
Executive’s violation of the Company’s or an
Affiliate’s code of ethics, code of business conduct or
similar policies applicable to the Executive, including but not
limited to, the Company’s Code of Ethics for the Chief
Executive Officer and the Senior Financial Officers. The existence
or non-existence of Cause shall be determined in good faith by the
Board. The employment of the Executive may also be terminated at
any time by the Executive by notice of resignation delivered to the
Company not less than ninety (90) days prior to the effective
date of such resignation.
7. Severance .
(a) Except as otherwise provided in Section 8, if the
Executive’s employment hereunder is terminated during the
Employment Term (1) b
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