EXHIBIT 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
January 1, 2003, by and between Atrium Corporation (f/k/a D and W Holdings,
Inc.), a Delaware corporation (together with its successors and assigns
permitted hereunder, the "Company"), Atrium Companies, Inc., a Delaware
corporation ("ACI"), and Xxxx X. Xxxx (the "Executive").
RECITALS
A. The Company and the Executive entered into an Employment Agreement dated as
of December 31, 2000 (the "December 31, 2000 Agreement").
B. The Board of Directors of the Company (the "Board") determined that it is in
the best interest of the Company and its stockholders to terminate the
December 31, 2000 Agreement and to enter into this Agreement for purposes of
the Company employing the Executive on the terms and conditions set forth
herein.
C. ACI and its subsidiaries will benefit from the services to be provided by the
Executive hereunder.
AGREEMENTS
NOW, THEREFORE, in consideration of the respective agreements and covenants set
forth herein and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. EMPLOYMENT PERIOD
Subject to Section 3, the Company hereby agrees to employ the Executive, and
the Executive hereby agrees to be employed by the Company in accordance with
the terms and provisions of this Agreement, for a period commencing on the
date hereof and ending on the third anniversary of such date (the "Initial
Term", and including any and all renewals thereof, the "Employment Period");
provided the Initial Term is renewable for a series of three-year terms
thereafter as mutually agreed upon by the Company and Executive at least 30
days prior to the end of the then current term. In the event Executive
continues to perform services after the Employment Period, and pending
agreement for extension of the Employment Agreement, such services shall
constitute employment for an unspecified term, terminable at will, with or
without cause or reason, with or without advance notice, and with or without
pay in lieu of advance notice. If the Company provides the Executive with
notice of intent not to renew in accordance with the above, the Company may
in its discretion terminate Executive's services as of the date of such
notice by paying to Executive all amounts that will become due during the
remainder of the Employment Period.
2. TERMS OF EMPLOYMENT
(a) Position and Duties
(i) During the term of the Executive's employment, the Executive shall
serve as President and Chief Executive Officer of the Company and,
in so doing, shall perform normal duties and responsibilities
associated with such position, subject to the general direction,
approval and control of the Board of Directors.
(ii) During the term of the Executive's employment, and excluding any
periods of vacation and other leave to which the Executive is
entitled, the Executive agrees to devote substantially all his
business time to the business and affairs of the Company and to
use the Executive's best efforts to perform faithfully,
effectively and efficiently his duties and responsibilities.
(iii) During the term of the Executive's employment, it shall not be a
violation of this Agreement for the Executive to (1) serve on
industry trade, civic or charitable boards or committees, (2)
deliver lectures or fulfill speaking engagements or (3) manage
personal investments, so long as such activities do not interfere
with the performance of the Executive's duties and
responsibilities as an Executive of the Company.
(iv) Executive agrees to observe and comply with the Company's rules
and policies as adopted by the Company from time to time.
(b) Compensation
(i) Base Salary. During the Initial Term, the Executive shall receive
an annual base salary ("Annual Base Salary"), which shall be paid
in accordance with the customary payroll practices of the Company,
as follows: (A) during the period beginning on the date hereof and
ending on December 31, 2003, in an amount equal to $400,000 per
annum, (B) during the period beginning on January 1, 2004 and
ending on December 31, 2004, in an amount equal to $450,000 per
annum, (C) during the period beginning on January 1, 2005 and
ending on December 31, 2005, in an amount equal to $500,000 per
annum. The Board, in its discretion, may at any time increase the
amount of the Annual Base Salary to such greater amount as it may
deem appropriate, and the term "Annual Base Salary," as used in
this Agreement, shall refer to the Annual Base Salary as it may be
so increased. It is understood that the
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Company may, at any time, in the discretion of the Board,
increase, but not decrease, the amount of the Annual Base Salary.
(ii) Incentive Bonus. Executive shall be entitled to an incentive bonus
as set forth on Schedule A hereto.
(iii) Incentive Savings, Stock Option and Retirement Plans. During the
term of the Executive's employment, the Executive shall be
entitled to participate in all incentive, savings, stock option
and retirement plans, practices, policies and programs applicable
generally to other employees of the Company ("Investment Plans"),
as amended from time to time.
(iv) Welfare Benefit Plans. During the term of the Executive's
employment, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall
receive all benefits under the welfare benefit plans, practices,
policies and programs ("Welfare Plans") provided by the Company
(including medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and
travel accident insurance plans and programs), as amended from
time to time, to the extent applicable generally to other
employees of the Company.
(v) Perquisites. During the term of the Executive's employment, the
Executive shall be entitled to receive (in addition to the
benefits described above) such perquisites and fringe benefits
appertaining to his position in accordance with any policies,
practices and procedures established by the Board, as amended from
time to time.
(vi) Expenses. During the term of the Executive's employment, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable employment expenses incurred by the Executive in
accordance with the Company's policies, practices and procedures,
as amended from time to time.
(vii) Automobile. The Company recognizes the Executive's need for an
automobile for business purposes. The Company shall provide the
Executive with an automobile allowance of $1,650 per month, which
amount shall be grossed up for income taxes, as applicable, plus
reasonable related expenses for maintenance, fuel and insurance.
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(viii) Vacation. During the term of the Executive's employment, the
Executive shall be entitled to four (4) weeks paid vacation each
calendar year. Any vacation shall be taken at the reasonable and
mutual convenience of the Company and the Executive. Accrued
vacation not taken in any calendar year will not be carried
forward or used in any subsequent calendar year and the Executive
shall not be entitled to receive pay in lieu of accrued but unused
vacation in any calendar year. Vacation will be deemed to accrue
daily for purposes of the payments described in Section 4 hereof.
(ix) Stock Options. Upon the effective date of this Agreement, the
Executive will be entitled to the stock options described on
Schedule B hereto.
(x) Gross-up Payment. In the event that any payments or benefits
either under this agreement or otherwise (together, the
"Payments") to which the Executive is entitled from his employment
with the Employer, will be subject to the excise tax imposed by
section 4999 of the Internal Revenue Code or any successor
provision ("section 4999"), the Employer will, prior to the date
on which any amount of the excise tax must be paid or withheld,
make an additional lump-sum payment (the "gross-up payment") to
the Executive as described in the immediately succeeding sentence;
provided that the Executive shall not be entitled to this gross-up
payment if a reduction in the Payments (the "section 4999
Reduction Amount") to the largest amount that would not be subject
to excise taxes under section 4999 would provide the Executive
with an amount (net of federal, state, and local income taxes)
greater than or equivalent to the amount of the unreduced Payments
(net of all federal, state and local income taxes, and excise
taxes); provided, however, that the immediately preceding proviso
shall not apply if the section 4999 Reduction Amount would exceed
10% of the unreduced Payments. If payable, the gross-up payment
will be sufficient, after giving effect to all federal, state and
other taxes and other charges (including interest and penalties,
if any) with respect to the gross-up payment, to make the
Executive whole for all taxes (including withholding taxes) and
any associated interest and penalties imposed under or as a result
of section 4999. Any tax determinations required under this
paragraph shall be computed at the highest applicable marginal tax
rate, and shall be made in writing by the Employer's independent
accountants, whose determination shall be conclusive and binding
for all purposes on the parties and their successors.
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The Employer shall provide the Executive with a detailed
accounting of the underlying assumptions and calculations.
(xi) Key-Man Insurance. At any time during the Employment Period, the
Company shall have the right to insure the life of the Executive
for the Company's sole benefit, and to determine the amount of
insurance and the type of policy. The Executive shall cooperate
with the Company in taking out such insurance by submitting to
physical examinations, by supplying all information required by
the insurance company, and by executing all necessary documents.
The Executive shall incur no financial obligation by executing any
required document, and shall have no interest in any such policy.
3. TERMINATION OF EMPLOYMENT
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
If the Disability (as defined below) of the Executive has occurred
during the Employment Period, the Company may give to the Executive
written notice in accordance with Section 13(b) of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day
after receipt of such notice by the Executive (the "Disability Effective
Date"), if, within the 30 days after such receipt, the Executive shall
not have returned to perform, with or without reasonable accommodation,
the essential functions of his position. For purposes of this Agreement,
"Disability" shall mean the Executive's inability to perform, with or
without reasonable accommodations, the essential functions of his
position hereunder for a period of 120 days, consecutive or
non-consecutive, in any 12-month period due to mental or physical
incapacity, as determined by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's legal
representative, such agreement as to acceptability not to be
unreasonably withheld or delayed. Any refusal by Executive to submit to
a medical examination for the purpose of determining Disability under
this Section 3(a) shall be deemed to constitute conclusive evidence of
Executive's Disability. Nothing in this Agreement shall be construed as
a waiver of Executive's rights under the Americans with Disabilities Act
or any other applicable law or statute relating to disabilities or
handicaps.
(b) Cause or Without Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause or without Cause. For
purposes of this Agreement, "Cause" shall mean (i) a breach by the
Executive of the Executive's obligations under Section 2(a) (other than
as a result of physical or mental incapacity) which constitutes a
continued
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material nonperformance by the Executive of his obligations and duties
thereunder, and which is not remedied within 30 days after receipt of
written notice from the Company specifying such breach, (ii) commission
by the Executive of an act of fraud, embezzlement, misappropriation,
willful misconduct or breach of fiduciary duty against the Company;
(iii) a material breach by the Executive of Sections 7, 8, 10 or 11;
(iv) the Executive's conviction, plea of no contest or nolo contendere,
or unadjudicated probation for any felony or crime involving moral
turpitude; (v) the failure of the Executive to carry out, or comply
with, in any material respect any lawful and reasonable directive of the
Board consistent with the terms of this Agreement, which is not remedied
within 30 days after receipt of written notice from the Company
specifying such failure; or (vi) the Executive's unlawful use (including
being under the influence) or possession of illegal drugs on the
Company's premises or while performing the Executive's duties and
responsibilities under this Agreement. For purposes of this Agreement,
"without Cause" shall mean a termination by the Company of the
Executive's employment during the Employment Period for any reason other
than a termination based upon Cause, death, Disability or upon a Change
of Control, as defined below.
(c) Good Reason. The Executive's employment may be terminated during the
Employment Period by the Executive for Good Reason or without Good
Reason; provided, however, that the Executive agrees not to terminate
his employment for Good Reason unless (i) the Executive has given the
Company at least 30 days' prior written notice of his intent to
terminate his employment for Good Reason, which notice shall specify the
facts and circumstances constituting Good Reason, and (ii) the Company
has not remedied such facts and circumstances constituting Good Reason
within such 30-day period. For purposes of this Agreement, "Good Reason"
shall mean:
(i) any significant reduction, approved by the Board without the
Executive's consent in the Executive's position, authority, duties
or responsibilities as contemplated in Section 2(a) or any other
action by the Company which results in a material diminution in
such position, authority, duties or responsibilities, excluding
for this purpose an inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of written
notice thereof given by the Executive;
(ii) any termination or material reduction of a material benefit under
any Investment Plan or Welfare Plan in which the Executive
participates unless (A) there is substituted a comparable benefit
that is economically substantially equivalent to the terminated or
reduced benefit prior to such termination or reduction or (B)
benefits under such Investment Plan or Welfare Plan are terminated
or
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reduced with respect to all Executives previously granted benefits
thereunder;
(iii) any failure by the Company to comply with any of the provisions of
Section 2(b), other than an inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of written notice thereof given by the Executive; or
(iv) without limiting the generality of the foregoing, any material
breach by the Company or any of its subsidiaries or other
affiliates (as defined below) of (A) this Agreement or (B) any
other agreement between the Executive and the Company or any such
subsidiary or other affiliate.
As used in this Agreement, "affiliate" means, with respect to a person,
any other person controlling, controlled by or under common control with
the first person; the term "control," and correlative terms, means the
power, whether by contract, equity ownership or otherwise, to direct the
policies or management of a person; and "person" means an individual,
partnership, corporation, limited liability company, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
(d) Change of Control. If a Change of Control (as defined below) occurs
during the Employment Period and the Board determines in good faith that
it is in the Company's best interest to terminate the Executive's
employment with the Company, within one year of such Change of Control
the Company may terminate the Executive's employment by giving the
Executive written notice in accordance with Section 13(b) of its
intention to terminate the Executive's employment. Any such termination
by the Company as contemplated in this Section 3(d) is referred to
herein as a termination "upon a Change of Control."
As used in this Agreement, "Change of Control" means the first to occur
of: (i) any sale, lease, exchange or other transfer of all or
substantially all of the assets of the Company (including capital stock
or assets of operating subsidiaries) to any person or group of persons,
(ii) a majority of the Board of Directors of the Company shall consist
of persons who are not nominated collectively by Ardshiel, Inc. and its
affiliates and GE Investment Private Placement Partners II, a Limited
Partnership or (iii) the acquisition by any person or group (other than
Ardshiel, Inc., GE Investment Private Placement Partners II, a Limited
Partnership and their affiliates) of the power to vote or direct the
voting of securities having more than 50% of the ordinary voting power
for the election of directors
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of the Company.
(e) Notice of Termination. Any termination by the Company for Cause or
without Cause or upon a Change of Control, or by the Executive for Good
Reason or without Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
13(b). For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is
other than the date of receipt of such notice, specifies the termination
date (which date shall not be more than 15 days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause or a termination upon a Change of
Control shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from asserting such
fact or circumstance in enforcing the Executive's or the Company's
rights hereunder.
(f) Date of Termination. "Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause or upon a Change of
Control, or by the Executive for Good Reason or without Good Reason, the
date of receipt of the Notice of Termination or any later date specified
therein pursuant to Section 3(e), as the case may be, (ii) if the
Executive's employment is terminated by the Company other than for Cause
or upon a Change of Control, the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. OBLIGATIONS OF THE COMPANY UPON TERMINATION
(a) For Cause; Without Good Reason; Other Than for Death, Disability or Upon
a Change of Control. If, during the Employment Period, the Company shall
terminate the Executive's employment for Cause or the Executive shall
terminate his employment without Good Reason, and the termination of the
Executive's employment in any case is not due to his death or Disability
or upon a Change of Control, the Executive shall forfeit all rights to
the Incentive Bonus otherwise due to him or to which he may be entitled.
If the termination is for Cause, all stock options held by the Executive
shall lapse and expire. If the Executive terminates his
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employment without Good Reason, all unvested stock options held by the
Executive shall lapse and expire and any remaining unexercised stock
options shall remain exercisable for a period of thirty (30) days from
the Date of Termination. The Company shall have no further payment
obligations to the Executive or his legal representatives, other than
for the payment of: (i) in a lump sum in cash within ten (10) days after
the Date of Termination the sum of the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay
(collectively, the "Accrued Obligations"); and (ii) any amount arising
from the Executive's participation in, or benefits under, any Investment
Plans (the "Accrued Investments"), which amounts shall be payable in
accordance with the terms and conditions of such Investment Plans.
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, all unexercised stock
options held by Executive shall immediately vest (in his legal
representatives) and become exercisable and the Company shall have no
further payment obligations to the Executive or his legal
representatives, other than for payment of: (i) in a lump sum in cash
within ten (10) days after the Date of Termination the Accrued
Obligations; (ii) the Accrued Investments, which shall be payable in
accordance with the terms and conditions of the Investment Plans; and
(iii) the Incentive Bonus prorated from the first day of the Company's
then current fiscal year to the Date of Termination (the "Prorated
Incentive Bonus"), payable following calculation of the Incentive Bonus
in accordance with Section 2(b) (ii) hereof.
(c) Disability. If the Executive's employment is terminated by reason of the
Executive's Disability during the Employment Period, all unexercised
stock options held by Executive shall immediately vest and become
exercisable and the Company shall have no further payment obligations to
the Executive or his legal representatives, other than for payment of:
(i) in a lump sum in cash within ten (10) days after the Date of
Termination the Accrued Obligations; (ii) the Accrued Investments, which
shall be payable in accordance with the terms and conditions of the
Investment Plans; and (iii) the Prorated Incentive Bonus, payable
following calculation of the Incentive Bonus in accordance with Section
2(b)(ii) hereof.
(d) Without Cause or for Good Reason. If the Executive's employment is
terminated by the Company without Cause or by the Executive for Good
Reason, all, unvested stock options held by Executive (the "Unvested
Options") shall immediately vest and become exercisable for a period of
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ninety (90) days from the Date of Termination (the "Exercise Period")
and the Company shall have no further payment obligations to the
Executive or his legal representatives, other than for: (i) payment of,
in a lump sum in cash within ten (10) days after the Date of
Termination, the Accrued Obligations; (ii) payment of the Accrued
Investments, which, except with respect to the Unvested Options, shall
be payable in accordance with the terms and conditions of the Investment
Plans; (iii) payment of the Prorated Incentive Bonus, payable following
calculation of the Incentive Bonus in accordance with Section 2(b)(ii)
hereof; and (iv) payment for each month during a period of 24 months
following the Date of Termination (the "Severance Period") of
one-twelfth of the sum of the Executive's Annual Base Salary on the Date
of Termination and 80% of the Incentive Bonus, in accordance with the
customary payroll practices of the Company. All Unvested Options, which
remain unexercised at the end of the Exercise Period shall lapse and
expire.
(e) Change of Control. If the Executive's employment is terminated upon a
Change of Control as contemplated in Section 3(d), all unvested stock
options held by Executive shall immediately vest and become exercisable
and the Company shall have no further payment obligations to the
Executive or his legal representatives, other than for (i) payment of,
in a lump sum in cash within ten (10) days after the Date of
Termination, the Accrued Obligations; (ii) payment of the Accrued
Investments, which shall be payable in accordance with the terms and
conditions of the Investment Plans; (iii) payment of the Prorated
Incentive Bonus; and (iv) payment for each month during the Severance
Period of one-twelfth of the sum of the Executive's Annual Base Salary
on the Date of Termination and 80% of the Incentive Bonus, in accordance
with the customary payroll practices of the Company.
5. RETENTION BONUS
Following a "Change of Control," as contemplated in Section 3(d), if the
Executive is employed by the Company on the 12-month anniversary of the
Change of Control, the Company shall pay the Executive a retention bonus in
an amount equal to the Executive's Annual Base Salary in effect at the time
the Change of Control takes place. Nothing in this Section 5 shall be deemed
to give the Executive the right to be retained in the employ of the Company
or to restrict the right of the Company to terminate the Executive at any
time and for any reason, without Cause or for Cause or upon a Change of
Control. Nothing in this Section 5 shall be deemed to give the Company the
right to require the Executive to remain in the employ of the Company or to
restrict the Executive's right to terminate his employment at any time and
for any reason, without Good Reason or for Good Reason.
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6. FULL SETTLEMENT; MITIGATION
In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be
reduced whether or not the Executive obtains other employment. Neither the
Executive nor the Company shall be liable to the other party for any damages
in addition to the amounts payable under Section 4 arising out of the
termination of the Executive's employment prior to the end of the Employment
Period; provided, however, that the Company shall be entitled to seek damages
from the Executive for any breach of Sections 7, 8, 9, 10, or 11 by the
Executive and either party shall be entitled to seek damages for criminal
misconduct.
7. CONFIDENTIAL INFORMATION
(a) The Executive acknowledges that the Company and its affiliates have
trade, business and financial secrets and other confidential and
proprietary information (collectively, the "Confidential Information").
"Confidential Information" includes sales materials, technical
information, processes and compilations of information, records,
specifications and information concerning customers or vendors, manuals
relating to suppliers' products, customer lists, information regarding
methods of doing business, and the identity of suppliers. "Confidential
Information" shall not include (i) information that is generally known
to other persons or entities who can obtain economic value from its
disclosure or use and (ii) information required to be disclosed by the
Executive pursuant to a subpoena or court order, or pursuant to a
requirement of a governmental agency or law of the United States of
America or a state thereof or any governmental or political subdivision;
provided, however, that the Executive shall take all reasonable steps to
prohibit disclosure pursuant to subsection (ii) above.
(b) The Company has divulged, and herein promises to continue to divulge,
appropriate Confidential Information to the Executive as of the
effective date of this Agreement, and from time to time thereafter as
such appropriate Confidential Information arises.
(c) During and following the Executive's employment by the Company, the
Executive shall hold in confidence and not directly or indirectly
disclose or use or copy or make lists of any Confidential Information or
proprietary data of the Company or its affiliates except to the extent
authorized in writing by the Board or required by any court or
administrative agency, other than to an Executive of the Company or its
affiliates or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of his
duties as an employee of the Company.
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(d) The Executive further agrees not to use any Confidential Information for
the benefit of any person or entity other than the Company or its
affiliates.
(e) As used in this Section 7, "Company" shall include Atrium Corporation
and any of its direct or indirect subsidiaries.
8. RESPONSIBILITIES UPON TERMINATION
Upon the termination of his employment by the Company for whatever reason and
irrespective of whether or not such termination is voluntary on his part:
(a) The Executive shall advise the Company of the identity of his new
employer within ten (10) days after accepting new employment and further
agrees to keep the Company so advised of any change in employment during
the term of Non-Competition set forth in Section 10 hereof;
(b) The Company in its sole discretion may notify any new employer of the
Executive that he has an obligation not to compete with the Company
during such term;
(c) The Executive shall deliver to the Company any and all records, forms,
contracts, memoranda, work papers, customer data and any other documents
which have come into his possession by reason of his employment with the
Company (including Atrium Corporation and its direct and indirect
subsidiaries), irrespective of whether or not any of said documents were
prepared for him, and he shall not retain memoranda in respect of or
copies of any of said documents; and
(d) The Executive shall participate in an exit interview with the Company.
9. SUCCESSORS
The Company may assign its rights and obligations under this Agreement to any
successor to all or substantially all the assets of the Company, by merger or
otherwise, subject, however, to the Executive's right to terminate this
Agreement for Good Reason as provided in Section 3(c), and may assign or
encumber this Agreement and its rights hereunder as security for indebtedness
of the Company and its affiliates. All representations, warranties,
covenants, terms, conditions and provisions of this Agreement shall be
binding upon and inure to the benefit of, and be enforceable by the
respective heirs, legal representatives, successors and permitted assigns of
the Company and Executive. Neither this Agreement nor any rights, interests
or obligations hereunder may be assigned by the Executive without the prior
written consent of the Company.
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10. NON-COMPETITION
The provisions of this Section 10 are in consideration for the Company's
promise in Section 7 to continue to make appropriate Confidential
Information available to the Executive.
(a) The term of Non-Competition (herein so called) shall be for a term
beginning on the effective date hereof and continuing until (i) the
first anniversary of the Date of Termination if the Executive's
employment is terminated by the Company for Cause or due to Disability
or by the Executive without Good Reason, or (ii) the last day of the
Severance Period if the Executive's employment is terminated by the
Company without Cause (and not due to Disability) or upon a Change of
Control or by the Executive for Good Reason.
(b) During the term of Non-Competition, the Executive shall not (other than
for the benefit of the Company or its affiliates pursuant to this
Agreement) directly or indirectly, render services to, assist,
participate in the affairs of, or otherwise be connected with, any
person or enterprise (other than the Company), which person or
enterprise is engaged in, or is planning to engage in, and shall not
personally engage in, any business that is in any respect competitive
with the business of the Company, with respect to any products of the
Company that were within the Executive's management responsibility at
any time within the twelve-month period immediately prior to the
termination of the Executive's employment with the Company, in any
capacity which would (i) utilize the Executive's services with respect
to such business within any state of the United States, or any
substantially comparable political subdivision of any other country,
wherein the Company sold or actively attempted to sell, such products
within the twelve-month period immediately prior to the termination of
the Executive's employment with the Company; or (ii) utilize the
Executive's services in selling any products similar to such products
of the Company to any person or entity to which the Company sold or
actively attempted to sell such products within the twelve-month period
immediately prior to the termination of the Executive's employment with
the Company (a "Competing Business"). Notwithstanding the foregoing,
the Company agrees that the Executive may own less than five percent of
the outstanding voting securities of any publicly traded company that
is a Competing Business so long as the Executive does not otherwise
participate in such Competing Business in any way prohibited by the
preceding clause.
(c) During the term of Non-Competition, Executive will not, and will not
permit any of his affiliates to, directly or indirectly, recruit or
otherwise
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solicit or induce any employee, customer, subscriber or supplier of the
Company to terminate its employment or arrangement with the Company,
otherwise change its relationship with the Company or establish any
relationship with the Executive or any of his affiliates for any
business purpose deemed competitive with the business of the Company.
(d) The Executive acknowledges that the geographic boundaries, scope of
prohibited activities, and time duration of the preceding paragraphs
are reasonable in nature and are no broader than are necessary to
maintain the goodwill of the Company and its affiliates and the
confidentiality of their Confidential Information, and to protect the
other legitimate business interests of the Company and its affiliates.
(e) If any court determines that any portion of this Section 10 is invalid
or unenforceable, the remainder of this Section 10 shall not thereby be
affected and shall be given full effect without regard to the invalid
provisions. If any court construes any of the provisions of this
Section 10, or any part thereof, to be unreasonable because of the
duration or scope of such provision, such court shall have the power to
reduce the duration or scope of such provision and to enforce such
provision as so reduced.
(f) As used in this Section 10, "Company" shall include Atrium Corporation
and any of its direct or indirect subsidiaries.
11. INVENTIONS; ASSIGNMENT
All rights to discoveries, inventions, improvements and innovations
(including all data and records pertaining thereto) related to the
Company's business, whether or not patentable, copyrightable, registrable
as a trademark, or reduced to writing, that the Executive may discover,
invent or originate during the Employment Period, and for a period of
twelve (12) months thereafter, either alone or with others and whether or
not during working hours or by the use of the facilities of the Company
("Inventions"), shall be the exclusive property of the Company. The
Executive shall promptly disclose all Inventions to the Company, shall
execute at the request of the Company any assignments or other documents
the Company may deem necessary to protect or perfect its rights therein,
and shall assist the Company, at the Company's expense, in obtaining,
defending and enforcing the Company's rights therein. The Executive hereby
appoints the Company, as his attorney-in-fact to execute on his behalf any
assignments or other documents deemed necessary by the Company to protect
or perfect its rights to any Inventions.
12. ACI
At any time during the Employment Period, any of the obligations of the
14
Company to make payments hereunder, including the obligation to pay any
compensation to Executive under Section 2(b), may, at the sole discretion
of the Company (subject to the approval of the Board), be discharged and
satisfied by ACI.
13. MISCELLANEOUS
(a) Construction. This Agreement shall be deemed drafted equally by both
the parties. Its language shall be construed as a whole and according
to its fair meaning. Any presumption or principle that the language is
to be construed against any party shall not apply. The headings in this
Agreement are only for convenience and are not intended to affect
construction or interpretation. Any references to paragraphs,
subparagraphs, sections or subsections are to those parts of this
Agreement, unless the context clearly indicates to the contrary. Also,
unless the context clearly indicates to the contrary, (a) the plural
includes the singular and the singular includes the plural; (b) "and"
and "or" are each used both conjunctively and disjunctively; (c) "any,"
"all," "each," or "every" means "any and all," and "each and every";
(d) "includes" and "including" are each "without limitation"; (e)
"herein," "hereof," "hereunder" and other similar compounds of the word
"here" refer to the entire Agreement and not to any particular
paragraph, subparagraph, section or subsection; and (f) all pronouns
and any variations thereof shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the entities or
persons referred to may require.
(b) Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: Xxxx X. Xxxx
000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
If to the Company: Atrium Corporation
0000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxx 0000X, Xxxxxx Xxxxx 00000
Attention: Xxxxxx Xxxxxx,
General Counsel
Fax: (000) 000 0000
15
with copies to:
Ardshiel, Inc.
0 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
and to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Xxxxx Xxxxxxxxxx
Fax: (000) 000-0000
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) Enforcement. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during
the term of this Agreement, such provision shall be fully severable;
this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a portion of
this Agreement; and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from
this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision there shall be added automatically as part of
this Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid and
enforceable.
(d) Withholding. The Company shall be entitled to withhold from any amounts
payable under this Agreement any federal, state, local or foreign
withholding or other taxes or charges, which it is from time to time,
required to withhold. The Company shall be entitled to rely on an
opinion of counsel if any questions as to the amount or requirement of
such withholding shall arise.
(e) No Waiver. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at any time.
16
(f) Equitable Relief. The Executive acknowledges that money damages would
be both incalculable and an insufficient remedy for a breach of Section
7, 8, 9, 10 or 11 by the Executive and that any such breach would cause
the Company irreparable harm. Accordingly, the Company, in addition to
any other remedies at law or in equity it may have, shall be entitled,
without the requirement of posting of bond or other security, to
equitable relief, including injunctive relief and specific performance,
in connection with a breach of Section 7, 8, 9, 10 or 11 by the
Executive.
(g) Complete Agreement. This Agreement constitutes the entire and complete
understanding and agreement between the parties with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
oral and written agreements, representations and understandings between
the Executive and the Company, or its affiliates and subsidiaries
(except for the Change of Control Agreement dated as of the date
hereof), which are hereby terminated. Other than as expressly set forth
herein or in the aforementioned Change of Control Agreement, the
Executive and the Company acknowledge and represent that there are no
other promises, terms, conditions or representations (oral or written)
regarding any matter relevant hereto. This Agreement may be executed in
two or more counterparts.
(h) Mediation; Arbitration
(i) The Company and the Executive shall mediate any claim or
controversy arising out of or relating to this Agreement or any
breach thereof if either of them requests mediation and gives
written notice to the other (the "Mediation Notice"). Any notice
given pursuant to the preceding sentence shall include a brief
statement of the claim or controversy. If the Company and the
Executive do not resolve the claim or controversy within five (5)
days after the date of the Mediation Notice, the Company and the
Executive shall then use reasonable efforts to agree upon an
independent mediator. If the Company and the Executive do not
agree upon an independent mediator within ten (10) days after the
date of the Mediation Notice, either party may request that
JAMS/Endispute ("JAMS"), or a similar mediation service of a
similar national scope if JAMS no longer then exists, appoint an
independent mediator. The Company and the Executive shall share
the costs of mediation equally and shall pay such costs in advance
upon the request of the mediator or any party. Within ten (10)
days after selection of the mediator, the mediator shall set the
mediation. If the Company and the Executive do not resolve the
dispute within thirty (30) days after the date of the Mediation
17
Notice, the dispute shall be decided by arbitration as set forth
below.
(ii) Any claim or controversy arising out of or relating to this
Agreement or any breach thereof shall be settled by arbitration if
such claim or controversy is not settled pursuant to mediation as
set forth above. The venue for any such arbitration shall be
Dallas, Texas, or such other location as the parties may mutually
agree. Except as expressly set forth herein, all arbitration
proceedings under this Section 13(h)(ii) shall be undertaken in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA") then in force. Only
individuals who are (i) lawyers engaged full-time in the practice
of law and (ii) on the AAA register of arbitrators shall be
selected as an arbitrator. There shall be one arbitrator who shall
be chosen in accordance with the rules of the AAA. Within twenty
(20) days of the conclusion of the arbitration hearing, the
arbitrator shall prepare written findings of fact and conclusions
of law. Judgment on the written award may be entered and enforced
in any court of competent jurisdiction. It is mutually agreed that
the written decision of the arbitrator shall be valid, binding,
final and non-appealable; provided however, that the parties
hereto agree that the arbitrator shall not be empowered to award
punitive damages against any party to such arbitration. The
arbitrator shall require the non-prevailing party to pay the
arbitrator's full fees and expenses or, if in the arbitrator's
opinion there is no prevailing party, the arbitrator's fees and
expenses will be borne equally by the parties thereto. In the
event action is brought to enforce the provisions of this
Agreement pursuant to this Section 13(h)(ii), the non-prevailing
parties shall be required to pay the reasonable attorneys' fees
and expenses of the prevailing parties, except that if in the
opinion of the court or arbitrator deciding such action there is
no prevailing party, each party shall pay its own attorneys' fees
and expenses.
(i) Survival. Sections 4, 6, 7, 8, 9, 10, 11, 12 and 13 of this Agreement
shall survive the termination of this Agreement.
(j) Choice of Law. This Agreement and the rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the
State of Texas without reference to principles of conflicts of law of
Texas or any other jurisdiction, and, where applicable, the laws of the
United States.
18
(k) Amendment. This Agreement may not be amended or modified at any
time except by a written instrument approved by the Board and
executed by the Company and the Executive.
(l) Executive Acknowledgment. Executive acknowledges that he has read
and understands this Agreement, is fully aware of its legal
effect, has not acted in reliance upon any representations or
promises made by the Company other than those contained in writing
herein, and has entered into this Agreement freely based on his
own judgment.
(m) Termination of December 31, 2000 Agreement. Effective upon the
execution of this Agreement, the December 31, 2000 Agreement shall
automatically be terminated and of no further force or effect and
Executive's employment by the Company and its subsidiaries shall
solely be governed by this Agreement.
19
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from the Board, the Company has caused this
Agreement to be executed in its name on its behalf, as of the 1st day of
January, 2003.
EXECUTIVE
-----------------------------------
Xxxx X. Xxxx
ATRIUM CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ATRIUM COMPANIES, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
20
SCHEDULE A
TO XXXX X. XXXX'X EMPLOYMENT AGREEMENT
Executive shall be entitled to a target bonus (the "Incentive Bonus") of (a)
during the period beginning on the date hereof and ending on December 31, 2003,
in an amount equal to $400,000 per annum, (b) during the period beginning on
January 1, 2004 and ending on December 31, 2004, in an amount equal to $450,000
per annum, (c) during the period beginning on January 1, 2005 and ending on
December 31, 2005, in an amount equal to $500,000 per annum, computed as
follows:
(a) 50% of the Executive's Incentive Bonus ("EBITDA Bonus") shall be
payable based upon achievement of the following targets:
(i) If the Company achieves 80% of its budgeted EBITDA, the
Executive shall receive 50% of the EBITDA Bonus.
(ii) If the Company achieves 90% of its budgeted EBITDA, the
Executive shall receive 75% of the EBITDA Bonus.
(iii) If the Company achieves 100% of its budgeted EBITDA, the
Executive shall receive 100% of the EBITDA Bonus.
(iv) If the Company achieves 110% of its budgeted EBITDA, the
Executive shall receive 125% of the EBITDA Bonus.
(v) The EBITDA Bonus will be paid on a sliding scale on a pro
rated basis. For example, if 95% of budgeted EBITDA is
achieved, the Executive is entitled to 87.5% of the EBITDA
Bonus. No EBITDA Bonus will be paid if the Company achieves
less than 80% of the budgeted EBITDA and in no event will
the Company pay in excess of 125% of the EBITDA Bonus.
(vi) For purposes of the EBITDA Bonus, EBITDA shall be defined as
earnings before interest, taxes, depreciation and
amortization of the Company and all of its subsidiaries on a
consolidated basis. EBITDA shall exclude any extraordinary
gains or losses, special charges, any compensation expense
attributable to the Company's equity securities, management
fees paid to the Company's equity sponsor, any accounts
receivable securitization expense, any transaction or
merger-related costs that are expensed rather than
capitalized including any effect of fair market value
adjustments made pursuant to purchase accounting and any
other
1
non-cash items. The EBITDA will be adjusted for all
acquisitions and/or divestitures as if the transactions had
occurred at the beginning of the fiscal year.
(vii) Budgeted EBITDA shall be such amount as is set by the Board
of Directors annually as adjusted from time to time to
reflect acquisitions and/or divestitures by the Company or
its subsidiaries.
(b) The remaining 50% of the Executive's Incentive Bonus shall be
based upon the achievement of management objectives to be set from
year to year by the Board of Directors.
2
SCHEDULE B
STOCK OPTIONS:
Effective as of October 2, 1998, the Executive has been granted options to
purchase 1,183 (split -adjusted) shares of common stock (the "Common Stock") at
an exercise price of $1,000 per share of the Company pursuant to the D and W
Holdings, Inc. 1998 Stock Option Plan (the "Plan").
Effective as of July 1, 1999, the Executive has been granted options to purchase
200 (split-adjusted) shares of Common Stock at an exercise price of $1,100 per
share.
Effective as of October 1, 1999, the Executive has been granted options to
purchase 150 (split-adjusted) shares of Common Stock at an exercise price of
$1,250 per share.
Effective as of December 31, 2000, the Executive was granted options to purchase
500 (split-adjusted) shares of Common Stock at an exercise price of $1,500 per
share, options to purchase 500 (split-adjusted) shares of Common Stock at an
exercise price of $1,750 per share, and options to purchase 750(split-adjusted)
shares of Common Stock at an exercise price of $2,000 per share.
As of October 2, 2002, all of the above options are fully vested and
exercisable.
Notwithstanding the terms of the Option Documents, in the event the Company
repurchases the stock options described in paragraphs 1, 2 and 3 of this
Schedule B (the "Prior Options") upon the termination of the Executive's
employment by the Company without Cause or by the Executive for Good Reason (but
not in the event of termination of the Executive's employment upon a Change of
Control), the repurchase price for the Options shall not be less than $1,250 per
share, provided that the EBITDA for the Company for the most recent twelve
months is not less than $75 million, adjusted for acquisitions or divestitures,
as applicable.
Effective on the date hereof, the stock purchase rights evidenced by all of the
above options (except for the options to acquire 500 shares awarded on October
2, 1998, which have an exercise price of $1,000 (such 500 options being referred
to herein as the Excluded Options")) shall, subject to the approval of certain
lenders to the Company, be repurchased by the Company from the Executive for the
sum of $252,400 in cash, whereupon such options (other than the Excluded
Options) shall be cancelled unexercised and shall be of no further force or
effect.
