EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
December 31, 2000, 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 "Employee").
RECITALS
A. The Company and the Employee entered into an Employment Agreement dated
as of October 2, 1999 (the "October 2, 1999 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
October 2, 1999 Agreement and to enter into this Agreement for purposes of the
Company employing the Employee on the terms and conditions set forth herein.
C. ACI and its subsidiaries will benefit from the services to be provided
by the Employee 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 Employee, and the Employee 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 Employee
at least 30 days prior to the end of the then current term. In the event
Employee 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 Employee with notice of
intent not to renew in accordance with the above, the Company may in its
discretion terminate Employee's services as of the date of such notice by paying
to Employee 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 Employee's employment, the
Employee 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 Employee's employment, and
excluding any periods of vacation and other leave to which the Employee is
entitled, the Employee agrees to devote substantially all his business time
to the business and affairs of the Company and to use the Employee's best
efforts to perform faithfully, effectively and efficiently his duties and
responsibilities.
(iii) During the term of the Employee's employment, it shall
not be a violation of this Agreement for the Employee 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
Employee's duties and responsibilities as an employee of the Company.
(iv) Employee 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 Employee 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,
2001, in an amount equal to $300,000 per annum, (B) during the period
beginning on January 1, 2002 and ending on December 31, 2002, in an amount
equal to $325,000 per annum, (C) during the period beginning on January 1,
2003 and ending on December 31, 2003, in an amount equal to $350,000 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
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. Employee shall be entitled to an
incentive bonus as set forth on Schedule A hereto.
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(iii) INCENTIVE SAVINGS, STOCK OPTION AND RETIREMENT PLANS.
During the term of the Employee's employment, the Employee 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 Employee's
employment, the Employee and/or the Employee'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 Employee's
employment, the Employee 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 Employee's employment,
the Employee shall be entitled to receive prompt reimbursement for all
reasonable employment expenses incurred by the Employee in accordance with
the Company's policies, practices and procedures, as amended from time to
time.
(vii) AUTOMOBILE. The Company recognizes the Employee's need
for an automobile for business purposes. The Company shall provide the
Employee 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.
(viii) VACATION. During the term of the Employee's
employment, the Employee 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 Employee. Accrued vacation not taken in
any calendar year will not be carried forward or used in any subsequent
calendar year and the Employee 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 Employee will be entitled to the stock options described on
Schedule B hereto.
(c) KEY-MAN INSURANCE. At any time during the Employment Period, the
Company shall have the right to insure the life of the Employee for the
Company's sole benefit, and to determine the amount of insurance and the type
of policy. The Employee
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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 Employee 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 Employee's employment shall
terminate automatically upon the Employee's death during the Employment
Period. If the Disability (as defined below) of the Employee has occurred
during the Employment Period, the Company may give to the Employee written
notice in accordance with Section 13(b) of its intention to terminate the
Employee's employment. In such event, the Employee's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Employee (the "Disability Effective Date"), if, within the 30
days after such receipt, the Employee 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
Employee'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 Employee or the Employee's legal
representative, such agreement as to acceptability not to be unreasonably
withheld or delayed. Any refusal by Employee 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 Employee's Disability.
Nothing in this Agreement shall be construed as a waiver of Employee'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 Employee's
employment during the Employment Period for Cause or without Cause. For purposes
of this Agreement, "Cause" shall mean (i) a breach by the Employee of the
Employee's obligations under Section 2(a) (other than as a result of physical or
mental incapacity) which constitutes a continued material nonperformance by the
Employee 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 Employee of an act of fraud, embezzlement,
misappropriation, willful misconduct or breach of fiduciary duty against the
Company; (iii) a material breach by the Employee of Sections 7, 8, 10 or 11;
(iv) the Employee'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 Employee 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 Employee's
unlawful use (including being under the influence) or possession of illegal
drugs on the Company's premises or while performing
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the Employee's duties and responsibilities under this Agreement. For purposes of
this Agreement, "without Cause" shall mean a termination by the Company of the
Employee'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 Employee's employment may be terminated
during the Employment Period by the Employee for Good Reason or without Good
Reason; provided, however, that the Employee agrees not to terminate his
employment for Good Reason unless (i) the Employee 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 Employee's consent in the Employee'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 Employee;
(ii) any termination or material reduction of a material
benefit under any Investment Plan or Welfare Plan in which the Employee
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 reduced with respect to all employees
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 Employee; 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 Employee 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.
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(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 Employee's
employment with the Company, within one year of such Change of Control the
Company may terminate the Employee's employment by giving the Employee
written notice in accordance with Section 13(b) of its intention to terminate
the Employee'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 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 Employee 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
Employee'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 Employee 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 Employee or the Company
hereunder or preclude the Employee or the Company from asserting such fact or
circumstance in enforcing the Employee's or the Company's rights hereunder.
(f) DATE OF TERMINATION. "Date of Termination" means (i) if the
Employee's employment is terminated by the Company for Cause or upon a Change
of Control, or by the Employee 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 Employee's
employment is terminated by the Company other than for Cause or upon a Change
of Control, the date on which the
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Company notifies the Employee of such termination and (iii) if the Employee's
employment is terminated by reason of death or Disability, the date of death of
the Employee 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 Employee's employment for Cause or the Employee
shall terminate his employment without Good Reason, and the termination of
the Employee's employment in any case is not due to his death or Disability
or upon a Change of Control, the Employee shall forfeit all rights to the
Incentive Bonus otherwise due to him or to which he may be entitled, all
unexercised stock options held by Employee shall lapse and expire, and the
Company shall have no further payment obligations to the Employee 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
Employee's Annual Base Salary through the Date of Termination to the extent
not theretofore paid, any compensation previously deferred by the Employee
(together with any accrued interest or earnings thereon) and any accrued
vacation pay (collectively, the "Accrued Obligations"); and (ii) any amount
arising from the Employee'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 Employee's employment is terminated by reason of
the Employee's death during the Employment Period, all unexercised stock
options held by Employee shall immediately vest (in his legal
representatives) and become exercisable and the Company shall have no further
payment obligations to the Employee 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 Employee's employment is terminated by
reason of the Employee's Disability during the Employment Period, all
unexercised stock options held by Employee shall immediately vest and become
exercisable and the Company shall have no further payment obligations to the
Employee 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.
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(d) WITHOUT CAUSE OR FOR GOOD REASON. If the Employee's employment is
terminated by the Company without Cause or by the Employee for Good Reason, all,
unvested stock options held by Employee (the "Unvested Options") shall
immediately vest and become exercisable for a period of thirty (30) days from
the Date of Termination (the "Exercise Period") and the Company shall have no
further payment obligations to the Employee 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 Employee'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 Employee's employment is terminated
upon a Change of Control as contemplated in Section 3(d), all unexercised
stock options held by Employee shall immediately vest and become exercisable
and the Company shall have no further payment obligations to the Employee 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 Employee'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 Employee is employed by the Company on the 12-month
anniversary of the Change of Control, the Company shall pay the Employee a
retention bonus in an amount equal to the Employee'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 Employee the right to be retained in the employ of
the Company or to restrict the right of the Company to terminate the Employee 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 Employee to remain in the employ of the Company or to restrict
the Employee's right to terminate his employment at any time and for any reason,
without Good Reason or for Good Reason.
6. FULL SETTLEMENT; MITIGATION. In no event shall the Employee be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any of the provisions of this Agreement
and such amounts
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shall not be reduced whether or not the Employee obtains other employment.
Neither the Employee 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 Employee's employment prior to the end of the Employment
Period; provided, however, that the Company shall be entitled to seek damages
from the Employee for any breach of Sections 7, 8, 9, 10, or 11 by the Employee
and either party shall be entitled to seek damages for criminal misconduct.
7. CONFIDENTIAL INFORMATION.
(a) The Employee 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 Employee 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 Employee shall take all reasonable
steps to prohibit disclosure pursuant to subsection (ii) above.
(b) During and following the Employee's employment by the Company,
the Employee 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 employee of the Company or its affiliates or a person to whom
disclosure is reasonably necessary or appropriate in connection with the
performance by the Employee of his duties as an employee of the Company.
(c) The Employee further agrees not to use any Confidential
Information for the benefit of any person or entity other than the Company or
its affiliates.
(d) 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 Employee shall advise the Company of the identity of his new
employer within ten (10) days after accepting new employment and further agrees
to
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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 Employee that he has an obligation not to compete with the Company during
such term;
(c) The Employee 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 Employee 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 Employee'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
Employee. Neither this Agreement nor any rights, interests or obligations
hereunder may be assigned by the Employee without the prior written consent of
the Company.
10. NON-COMPETITION.
(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 Employee's employment is
terminated by the Company for Cause or due to Disability or by the Employee
without Good Reason, or (ii) the last day of the Severance Period if the
Employee's employment is terminated by the Company without Cause (and not due
to Disability) or upon a Change of Control or by the Employee for Good Reason.
(b) During the term of Non-Competition, the Employee 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 Employee's management
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responsibility at any time within the twelve-month period immediately prior to
the termination of the Employee's employment with the Company, in any capacity
which would (i) utilize the Employee'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 Employee's employment with the Company; or (ii) utilize the
Employee'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 Employee's employment with the Company (a "Competing
Business"). Notwithstanding the foregoing, the Company agrees that the Employee
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 Employee
does not otherwise participate in such Competing Business in any way prohibited
by the preceding clause.
(c) During the term of Non-Competition, Employee will not, and
will not permit any of his affiliates to, directly or indirectly, recruit or
otherwise 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 Employee or any of his affiliates for any business
purpose deemed competitive with the business of the Company.
(d) The Employee 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 Employee 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 Employee
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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 Employee 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 Company to make payments hereunder, including the obligation to pay any
compensation to Employee under Section 2(b), may, at the sole discretion of the
Company, 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 Employee: Xxxx X. Xxxx
000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
If to the Company: Atrium Corporation
c/o Ardshiel, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
12
with a copy to:
Xxxx X. Xxxxx
Xxxxx Xxxxxxxxxx
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
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.
(f) EQUITABLE RELIEF. The Employee 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 Employee 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 Employee.
13
(g) COMPLETE AGREEMENT. The provisions of this Agreement
constitute 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 Employee and the Company, or its affiliates and
subsidiaries, which are hereby terminated. Other than expressly set forth
herein, the Employee 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 Employee 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 Employee do not resolve the claim or
controversy within five (5) days after the date of the Mediation Notice, the
Company and the Employee shall then use reasonable efforts to agree upon an
independent mediator. If the Company and the Employee 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 Employee 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
Employee do not resolve the dispute within thirty (30) days after the date of
the Mediation 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
14
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.
(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 Employee.
(l) EMPLOYEE ACKNOWLEDGMENT. Employee 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 OCTOBER 2, 1999 AGREEMENT. Effective upon the
execution of this Agreement, the October 2, 1999 Agreement shall
automatically be terminated and of no further force or effect and Employee's
employment by the Company and its subsidiaries shall solely be governed by
this Agreement.
15
IN WITNESS WHEREOF, the Employee has hereunto set the Employee'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 31st day of
December, 2000.
EMPLOYEE
-------------------------------------
Xxxx X. Xxxx
ATRIUM CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ATRIUM COMPANIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
16
SCHEDULE A
TO XXXX XXXX EMPLOYMENT AGREEMENT
A. Employee shall be entitled to a target bonus (the "Incentive Bonus") for
the period ending on December 31, 2000 until the end of the Employment Period,
in an amount of $350,000 per annum as follows:
B. 50% of the Employee'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 Employee
shall receive 50% of the EBITDA Bonus.
(ii) If the Company achieves 90% of its budgeted EBITDA, the Employee
shall receive 75% of the EBITDA Bonus.
(iii) If the Company achieves 100% of its budgeted EBITDA, the Employee
shall receive 100% of the EBITDA Bonus.
(iv) If the Company achieves 110% of its budgeted EBITDA, the Employee
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
Employee 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 from operations before interest, taxes, depreciation,
amortization and extraordinary gains or losses of the Company and
all of its subsidiaries on a consolidated basis. Budgeted EBITDA
shall be such amount as is set by the Board of Directors annually
as adjusted from time to time to reflect acquisitions/divestitures
by the Company or its subsidiaries.
C. 35% of the Employee's Incentive Bonus shall be payable based upon
achievement of the following targets:
(i) If the Company meets the performance targets set by the Board of
Directors with respect to Bad Debts/Collections, then the Employee
shall be entitled to receive 10% of the Incentive Bonus.
1
(ii) If the Company meets the performance targets set by the Board of
Directors with respect to Accounts Receivable Days, then the
Employee shall be entitled to receive 15% of the Incentive Bonus.
(iii) If the Company meets its performance targets with respect to Month
End Closing, then the Employee shall be entitled to receive 10% of
the Incentive Bonus.
(iv) The above-stated percentages of Incentive Bonus shall not be paid
on a sliding scale or pro rated basis. Achievement of the
performance targets set by the Board of Directors shall be
determined by the Board of Directors in its sole discretion. The
above-described performance targets shall be set from time to time
by the Board of Directors in its sole discretion.
D. The remaining 15% of the Employee'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:
1) Effective as of October 2, 1998, the Employee has been granted options
to purchase 1,183,842 shares of common stock (the "Common Stock") of the Company
pursuant to the D and W Holdings, Inc. 1998 Stock Option Plan (the "Plan") and
options to purchase 125,000 shares of Common Stock pursuant to the D and W
Holdings, Inc. 1998 Replacement Plan (the "Replacement Plan"). Notwithstanding
the terms of the Plan, the Replacement Plan or any stock option agreement
entered into thereunder by the Company and the Employee (the "Option
Documents"), the vesting schedule for such options is hereby amended to provide
that all such options that are unvested as of October 2, 1999 shall vest in
daily increments from October 2, 1999 until October 2, 2002.
2) Effective as of July 1, 1999, the Employee has been granted options to
purchase 200,000 shares of Common Stock at an exercise price of $1.10 per share.
Notwithstanding the terms of the Option Documents, all such options that are
unvested as of July 1, 1999 shall vest in daily increments from July 1, 1999
until July 1, 2002.
3) Effective as of October 1, 1999, the Employee has been granted options
to purchase 75,000 shares of Common Stock at an exercise price of $.01 per share
and options to purchase 150,000 shares of Common Stock at an exercise price of
$1.25 per share. Notwithstanding the terms of the Option Documents, all such
options that are unvested as of the date hereof shall vest in daily increments
from October 1, 1999 until October 1, 2002.
4) 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 Employee's
employment by the Company without Cause or by the Employee for Good Reason (but
not in the event of termination of the Employee's employment upon a Change of
Control), the repurchase price for the Options shall not be less than $1.25 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.
5) Effective as of the date of this Agreement, the Employee shall be
granted options to purchase 500,000 shares of Common Stock at an exercise price
of $1.50 per share, options to purchase 500,000 shares of Common Stock at an
exercise price of $1.75 per share, and options to purchase 750,000 shares of
Common Stock at an exercise price of $2.00 per share.
6) Notwithstanding the terms of the Option Documents, all options described
in paragraph 5 of this Schedule B (the "CEO Options") shall vest upon the
earliest to occur of (i) a Change of Control or (ii) the end of the Initial
Term; provided, however, that if a Change of Control occurs during the Initial
Term, the cash proceeds payable or the shares of stock issuable upon the
Employee's exercise of any of the CEO Options (the "CEO Option Payment") shall
be paid to Employee as follows:
(a) one-half of the CEO Option Payment shall be paid to Employee at
the time of the Change of Control, and
(b) the remaining one-half of the CEO Option Payment shall be paid to
Employee upon the earliest to occur of (i) the first anniversary of the
event that constitutes a Change of Control; (ii) the termination by the
Company or any successor employer of the Employee's employment without
Cause, (iii) the death or Disability of the Employee, or (iv) the
termination by the Employee of his employment with the Company or any
successor employer for Good Reason. If the Employee's employment with the
Company or any successor employee is terminated prior to the first
anniversary of the event that constitutes a Change of Control by the
Employee without Good Reason or by the Company or any successor employer
for Cause, the Employee shall forfeit any right to the unpaid, one-half
balance of the CEO Option Payment, and such balance of the CEO Option
Payment shall not be paid to the Employee.
In the event that subparagraphs (a) and (b) of this paragraph 6 become
applicable, the Employee shall pay to the Company or any successor employer only
one-half of the applicable Exercise Price at the time the Employee exercises the
CEO Options, and the remaining one-half of the applicable Exercise Price shall
be paid by the Employee when, and if, the remaining one-half of the CEO Option
Payment is made to the Employee under subparagraph (b).
