Exhibit 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this “ Agreement
”), dated as of April 1, 2008, 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 WARREN J. ARTHUR, 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 his employment with the Company, upon
the terms and conditions hereinafter set forth.
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 Senior Vice President of
Operations 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 Senior
Vice President of Operations of the Company and shall report to the
President and Chief Executive Officer of the Company, performing
such duties as shall be reasonably required of a vice president,
and shall have such other powers and perform such other duties as
may from time to time be assigned to him by the President and Chief
Executive Officer of the Company and the Board of Directors of AMH
II (the “ Board ”). To the extent requested by
the Company’s President and Chief Executive Officer or the
Board, the Executive shall also serve on any committee 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.
3. Employment Term .
Unless earlier terminated 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 one (1) year following
the
Commencement Date (the “ Initial Term ”);
provided that such term shall be automatically extended for
additional one (1) year periods commencing on the first day
immediately following the expiration date of the Initial Term and
successively thereafter on the first day immediately following the
expiration of each such one-year period (each such period an
“ Additional Term ”) unless the Company shall
have given notice to the Executive that the Company does not desire
to extend the term of this Agreement, such notice to be given at
least thirty (30) days prior to the end of the Initial Term or
the applicable Additional Term (the Initial Term and any Additional
Terms, if applicable, collectively, 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 Two
Hundred Twenty Five Thousand Dollars ($225,000), 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 Options . 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. The Executive shall not
be entitled to participate in any other annual cash bonus plan,
program or arrangement with respect to any period to which the
annual incentive bonus arrangement described in the immediately
preceding sentence applies. The Executive shall also be entitled to
participate in the stock option plan established by AMH II.
(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, 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 three (3) 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
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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 during the Employment Term; (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
knowingly 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.
(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.
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(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
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 material provision of this
Agreement which breach is not cured, to the extent susceptible to
cure, within thirty (30) days after the Company has given
notice to the Executive describing such breach; (iv) willful
failure by the Executive to perform the duties of his employment
hereunder which continues for a period of
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fourteen
(14) days following written notice thereof by the Company to
the Executive; (v) the conviction of, or a plea of nolo
contendere (or a similar plea) to, any criminal offense that is
a felony or involves fraud, or any other criminal offense
punishable by imprisonment of at least one year or materially
injurious to the business or reputation of the Company involving
theft, dishonesty, misrepresentation or moral turpitude;
(vi) 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; (vii) the
Executive’s breach of his fiduciary obligations to the
Company or an Affiliate; (viii) the Executive’s
commission of intentional, wrongful damage to property of the
Company or an Affiliate; (ix) any chemical dependence of the
Executive which adversely affects the performance of his duties and
responsibilities to the Company or an Affiliate; or (x) 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. 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 . Except as
otherwise provided in Section 8, if the Executive’s
employment hereunder is terminated during the Employment Term by
the Company or is terminated due to expiration of the Employment
Term following notice by the Company not to extend the Employment
Term in accordance with Section 3, in each case other
than for Cause or due to disability (as determined in the good
faith discretion of the Board) or death, the Executive shall be
entitled to receive as severance (subject to Section 9):
(i) an amount equal to the Executive’s base salary as in
effect immediately prior to the date of the Executive’s
termination of employment for twelve (12) months, payable,
commencing no later than sixty (60) days following such
termination, in equal installments in accordance with the
Company’s payroll procedures during the twelve
(12) months following the date of the Executive’s
termination (such twelve-month period, the “ Severance
Period ”); (ii) continued medical and dental
benefits described in Section 4(c) for the Severance Period, at the
same rate of employee and Company shared costs of such coverage as
in effect from time to time for active employees of the Company;
and (iii) a pro rata portion (based on the number of
days the Executive was employed by the Company during the calendar
year of termination) of any incentive bonus otherwise payable in
accordance with Section 4(b) for the year of termination of the
Executive’s employment, payable no earlier than the date on
which such bonus, if any, would have been paid under the applicable
plan or policy of the Company absent such termination of
employment, but no later than March 15 of the calendar year
immediately following the calendar year of such termination. With
respect to any such continued medical and dental benefits described
in clause (ii) of the first sentence of this Section 7
for which the Executive is eligible, (I) if the Company cannot
continue such benefits
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