EMPLOYMENT AGREEMENT
THIS AGREEMENT is
entered into on
Aug 14th ,
2006 (the “
Execution Date ”),
by and between
PLY GEM INDUSTRIES, INC. ,
a Delaware corporation (“
Employer ”)
and
GARY E. ROBINETTE (“
Employee ”).
For purposes of this Agreement, the “
Companies ”
shall mean, collectively, Employer and any affiliates of Employer
with whom Employee is employed during the Term (as defined
below).
WHEREAS ,
the Companies desire to employ Employee and to enter into an
agreement embodying the terms of such employment and considers it
essential to their best interests and the best interests of their
stockholders to foster the employment of Employee by the Companies
during the term of this Agreement;
WHEREAS ,
Employee desires to accept such employment with and participation
in the ownership of the Companies and to enter into this
Agreement;
WHEREAS ,
Employee is willing to accept employment on the terms hereinafter
set forth in this Agreement;
WHEREAS ,
the parties desire that Employee commence his employment with the
Companies as of a date (the “
Effective Date ”)
not later than October 6, 2006, to be designated by Employee by
advance written notice to the Companies of at least ten (10) days;
and
WHEREAS ,
except as specifically provided herein, this Agreement shall become
effective, and Employee’s employment with the Companies shall
commence, as of the Effective Date.
NOW THEREFORE ,
in consideration of the premises and mutual covenants herein and
for other good and valuable consideration, the parties agree as
follows:
1.
Employment .
The Companies agree to employ Employee, and Employee accepts
employment with the Companies pursuant to the terms and conditions
set forth in this Agreement. Employee will devote his full business
time, attention and best effort to the performance of his duties
and responsibilities as an Employee of the Companies for the
benefit of the Companies and will not engage in any other business,
profession or occupation for compensation or otherwise which would
conflict or interfere with the rendition of such services either
directly or indirectly, without the prior written consent of the
Board of Directors of Employer (the “
Board ”).
Without limiting the foregoing, Employee may continue to serve as a
member of the Boards of Directors of the organizations listed on
Exhibit A and may serve as a member of the Boards of Directors of
such other organizations as approved by the Board at its
discretion, so long as Employee’s service on such Boards does
not conflict or interfere, either directly or indirectly, with the
rendition of his services to the Companies. Employee shall serve as
President and Chief Executive Officer of Employer and as a member
of the Board and shall have such duties and responsibilities as are
consistent with the duties and responsibilities of a President and
Chief Executive Officer. Employee shall also serve as President and
Chief Executive Officer and/or a member of the Board of Directors
of any of the other Companies as the Board may determine from time
to time.
2.
Term and Termination .
(a)
Subject to Section 2(b) below, the term of this Agreement will
commence as of the Effective Date and continue until the second
anniversary of the Effective Date; provided, however, that,
commencing with such second anniversary date and on each
anniversary of such date thereafter (each an “
Extension Date ”)
,
this Agreement will automatically renew for an additional one (1)
year term, unless the Companies or Employee provides the other
party hereto 60 days’ prior written notice before the
Extension Date that the term shall not be extended. The initial
two-year term of this Agreement (the “
Initial Term ”)
and any renewal thereof shall be referred to herein as the
Term.
(b)
This Agreement and Employee’s employment hereunder may be
terminated by the Companies with or without “Cause” or
by Employee whether or not following a “Material Adverse
Change” (as such terms are defined below). In the case of a
termination by the Companies without Cause or by Employee whether
or not following a Material Adverse Change, such termination shall
be effective upon 60 days’ advance written notice to the
other party. During the Term, if Employee’s employment is
terminated by the Companies without Cause or by Employee following
a Material Adverse Change, subject to Employee’s execution of
a release of all claims against the Companies in a form provided by
the Companies, which shall be substantially in the form attached
hereto as Exhibit B, and to his continued compliance with the
provisions of Sections 4, 5, 6 and 7 of this Agreement, Employee
shall be entitled to receive (i) continued payment of the
“Salary” (as defined below) for two years following the
date of such termination (such two-year period, the “
Severance Period ”),
payable in accordance with the normal payroll practices of the
Companies, (ii) continuation of medical and dental benefits at the
cost of the Companies, pursuant to the same benefit plans as in
effect for active employees of the Companies, until the earlier to
occur of the end of the Severance Period and the date on which
Employee becomes eligible to receive comparable health benefits
from any subsequent employer; provided, that if continuation of
such benefits would be inconsistent with the terms of such benefit
plans, the Companies will reimburse Employee for amounts incurred
in maintaining substantially similar coverage under an individual
policy in an amount not to exceed $20,000 per year and (iii)
payment of the “Bonus” (as defined below) in respect of
the fiscal year of termination (the “
Year One Bonus ”),
the Bonus for the fiscal year following the year of termination
(the “
Year Two Bonus ”)
and a pro-rated portion of the Bonus for the fiscal year ending two
years after the year of termination (the “
Pro-Rated Year Three Bonus
”),
in each case, based on actual achievement for the full year of
termination. The Year One Bonus will be an amount equal to the
Bonus that Employee would have received with respect to the fiscal
year of termination had his employment continued through the end of
such year, and will be paid when the Bonus for such year would
otherwise have been paid to Employee had his employment continued
through the end of such year. The Year Two Bonus will be an amount
equal to the Year One Bonus, and will be paid when the Bonus for
the fiscal year following the year of termination would otherwise
have been paid to Employee had his employment continued through the
end of such year. The
Pro-Rated
Year Three Bonus will be an amount equal to (x) the Year One Bonus
multiplied by (y) a fraction, the denominator of which is 365 and
the numerator of which is the number of days that Employee was
employed by the Companies in the year of termination, and will be
paid when the Bonus for the fiscal year ending two years after the
year of termination would otherwise have been paid to Employee had
his employment continued through the end of such year. The
severance payments and benefits described in (i) through (iii) of
this paragraph shall be referred to herein, collectively, as the
“
Severance ”.
Employee shall have no further rights to any compensation or any
other benefits under this Agreement or under any severance policy
or program of the Companies. In the event that either party elects
not to extend the Term pursuant to Section 2(a) above, unless
Employee’s employment is earlier terminated pursuant to this
Section 2(b), Employee’s termination of employment hereunder
(whether or not Employee continues as an employee of the Companies
thereafter) shall be deemed to occur upon expiration of the Term,
and Employee shall not be entitled to the payments described in
this Section 2(b). Employee may terminate his employment with the
Companies for any reason; provided, that Employee will be required
to give the Companies at least 60 days’ advanced notice of
such resignation. If Employee’s employment by the Companies
continues beyond the end of the Term without extension pursuant to
Section 2(a) above, Employee shall be an employee at will and upon
termination from such employment at will, he will be entitled to
severance only under the Companies’ plan or policy applicable
to similarly situated senior executives.
(c)
For purposes of the Agreement, “
Cause ”
shall mean the following actions of Employee: (i) Employee’s
willful and continued failure to perform substantially his 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 him by
the Board, which notice specifically identifies the manner in which
he has not substantially performed his material duties, and his
neglect to cure such failure within 30 days; (ii) Employee’s
willful failure to follow the lawful direction of the Board; (iii)
Employee’s material act of dishonesty or breach of trust in
connection with the performance of his duties to the Companies;
(iv) Employee’s 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 any of the Companies is awarded damages
from Employee in respect of a claim of loss of funds through fraud
or misappropriation by Employee, any of which has become final and
is not subject to further appeal.
(d)
For purposes of this Agreement, “
Material Adverse Change ”
shall mean any of the following, without Employee’s express
written consent: (i) assignment to Employee of any duties that are
inconsistent with his position, duties and responsibilities and
status with the Companies as President and Chief Executive Officer;
(ii) reduction of the Salary or “Target Bonus” (as
defined below); or (iii) any action by the Companies that would
reduce or deprive Employee of any material employee benefit enjoyed
by Employee, except where such change is applicable to all
employees participating in such benefit plan; provided, that a
Material Adverse Change shall cease to exist for an event on the
60th day following the later of its occurrence or Employee’s
actual knowledge thereof, unless Employee has given the Companies
written notice thereof prior to such date.
(e)
If the payment of the Severance pursuant to this Section 2 causes
Employee to become subject to the golden parachute excise tax rules
of Internal Revenue Code Section 4999, then the Companies will pay
Employee a gross-up amount calculated so that after all taxes are
paid on the gross-up, Employee will have sufficient funds remaining
to pay the Section 4999 tax imposed on the Severance. This gross-up
will be calculated and administered by the Companies under
procedures developed by them with their auditors, and Employee
agrees to cooperate as reasonably requested by the Companies
(including, without limitation, by claiming any available tax
refunds) with a view to achieving the purpose of this Section 2(e),
which is to keep Employee whole with respect to the Severance (that
is, as if the parachute tax had not applied to the Severance)
rather than to confer any additional compensatory
benefit.
3.
Salary and Benefits .
(a)
Salary. During
the Term, Employee shall be entitled to an annual base salary,
payable in accordance with the normal payroll practices of the
Companies (the “
Salary ”).
The Salary shall be paid at the annual rate of $530,000 with
respect to the period commencing on the Effective Date and ending
on the last day of fiscal year 2006. With respect to any fiscal
year during the Term following 2006, the Salary shall be determined
by the Compensation Committee of the Board (the “
Compensation Committee ”),
and shall in no event be paid at an annual rate less than $530,000
per fiscal year.
(b)
Benefits .
During the Term, Employee will have the right to participate in and
receive benefits under the Companies’ employee benefit plans
(other than any severance plan) at the same level as other senior
executives of the Companies, subject to compliance with each
plan’s requirements for participation, including 401K,
medical insurance, life insurance, disability insurance, expense
reimbursement, car allowance and holidays. The benefits identified
herein are not intended to be exclusive, but are not intended to
include any severance plan.
(c)
Vacation .
During the Term, Employee shall be entitled to approximately four
weeks of paid vacation each fiscal year, with the exact amount of
such vacation determined at Employee’s reasonable
discretion.
(d)
Temporary Living and Relocation Expenses .
During the period of time commencing on the Effective Date and
ending on the date that Employee relocates his principal residence
from Raleigh, North Carolina to Employer’s headquarters in
Kearney, Missouri or a subsequent headquarters of Employer (the
“
Headquarters ”),
the Companies will reimburse Employee for reasonable expenses
incurred in connection with (i) locating and maintaining temporary
housing and an automobile in the Headquarters area and (ii) air
travel between Raleigh and the Headquarters. In addition, if
Employee relocates his principal residence from Raleigh to the
Headquarters area, the Companies will reimburse him for reasonable
moving expenses incurred in connection with such
relocation.
(e)
Bonus .
With respect to each fiscal year during the Term, commencing with
the 2006 fiscal year, Employee will be entitled to receive a bonus
(the “
Bonus ”)
upon the achievement of the “
Executive Compensation Goals ”,
which shall be set by the Compensation Committee. The target Bonus
(the “
Target Bonus ”)
with respect to any fiscal year during the Term will be an amount
equal to 100% of the Salary; provided, that for fiscal year 2006,
Employee will be guaranteed a minimum Bonus equal to the Target
Bonus multiplied by a fraction, the denominator of which is 365 and
the numerator of which is the number of days that Employee was
employed by the Companies in such fiscal year. The Bonus shall be
paid as soon as reasonably practicable following the end of the
fiscal year to which such Bonus relates, but in no event later than
the date that is 2 ½ months after the end of such fiscal
year.
(f)
Equity .
(i)
Incentive Stock .
Employee will have the right to purchase 110,000 shares of common
stock of Ply Gem Prime Holdings, Inc. (the “
Incentive Stock ”)
at the fair market value price of $10 per share.
(ii)
Strip Equity .
Employee will also have the right to purchase shares of preferred
stock and additional shares of common stock of Ply Gem Prime
Holdings, Inc. (the “
Strip Equity ”)
on the same terms and conditions pursuant to which Caxton-Iseman
Capital, Inc. acquired its Strip Equity.
(iii)
Stockholders’ and Subscription Agreements
.
As a condition precedent to the purchase and receipt of the
Incentive Stock and/or the Strip Equity, Employee agrees to execute
and be bound by the Ply Gem Prime Holdings, Inc.
Stockholders’ Agreement, dated as of February 24, 2006 (the
“
Stockholders’ Agreement ”),
substantially in the form attached hereto as Exhibit C, and to
enter into a Subscription Agreement with Ply Gem Prime Holdings,
Inc., substantially in the form attached hereto as Exhibit
D.
(g)
D&O Insurance .
The Companies shall at all times during Employee’s employment
maintain directors’ and officers’ liability insurance
coverage for the benefit of Employee and his estate in an amount of
at least Three Million Dollars $(3,000,000.00).
4.
Developments .
All discoveries, inventions, ideas, technology, formulas, designs,
software, programs, algorithms, products, systems, applications,
processes, procedures, methods and improvements and enhancements
conceived, developed or otherwise made or created or produced by
Employee, alone or with others, and in any way relating to the
business or any proposed business of the Companies of which
Employee has been made aware, or the products or services of the
Companies of which Employee has been made aware, whether or not
subject to patent, copyright or other protection and whether or not
reduced to tangible form, at any time during Employee’s
employment with the Companies (“
Developments ”),
shall be the sole and exclusive property of the Companies. Employee
agrees to, and hereby does, assign to the Companies, without any
further consideration, all of Employee’s right, title and
interest throughout the world in and to all Developments. Employee
agrees that all such Developments that are copyrightable may
constitute works made for hire under the copyright laws of the
United States and, as such, acknowledges that the Companies are the
authors of such Developments
|
