Associated Materials, LLC 3773 State Road Cuyahoga Falls, OH 44223
Exhibit 10.1
EXECUTION COPY
June 2, 2011
Xx. Xxxx X. Xxxxxx
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Dear Xxxx:
On behalf of Associated Materials, LLC (the “Company”), I am pleased to offer you the
position of Interim Chief Executive Officer of the Company on the terms and conditions set forth in
this letter agreement (this “Agreement”). You have agreed to accept this role while we
engage in a search for a permanent Chief Executive Officer. You may accept this Agreement by
signing and returning a copy of this Agreement to the Company as provided below.
1. Term of Employment. Your employment under this Agreement commenced as of June 2, 2011 (the “Start Date”)
and shall continue until the earliest to occur of: (i) the date on which a permanent Chief
Executive Officer commences employment with the Company, (ii) the date which is six months from the
Start Date, and (ii) your resignation from this position or the termination of your employment by
the Company (each of the foregoing, the “Separation Date”). If the Separation Date occurs
as a result of your resignation (other than at the request of the Board (as defined below) or the
Chairman of the Board), you will also resign as a member of the Board, and of the Parent Board and
the Intermediate Board (each as defined below) upon the Separation Date. Your employment is
terminable by you or the Company at any time (for any reason or for no reason) in accordance with
Section 6 of this Agreement.
2. Position and Duties. During the term of your employment under this Agreement, you shall serve as Interim Chief
Executive Officer of the Company. Your duties and authority as Interim Chief Executive Officer
shall be prescribed by the Board and shall be commensurate with those of a chief executive officer
of a company of comparable size and with a similar business as the Company. During the term of your
employment under this Agreement, you will report directly to the Board and will devote your full
business time, energy, experience and talents to the business of the Company and the Affiliates (as
defined below); provided, that it shall not be a violation of this Agreement for you to (i)
manage your personal investments and business affairs, or to engage in or serve such civic,
community, charitable, educational, or religious organizations as you may reasonably select or (ii)
continue to provide services to CGI Windows & Doors, Inc. (“CGI”) as a non-employee
consultant at the same level as such services are being provided by you immediately prior to the
Start Date, in each case so long as such service does not materially interfere with the
performance of your duties hereunder. During the term of your employment under this Agreement, you
will also continue to serve as a member of
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the Company’s Board of Directors (the “Board”), the Board of Directors of AMH
Intermediate Holdings Corp. (the “Intermediate Board”) and the Board of Directors of AMH
Investment Holdings Corp. (the “Parent Board”) in accordance with the terms of the letter
agreement between you and AMH Investment Holdings Corp. dated as of February 3, 2011;
provided (i) your annual and committee retainers for 2011 provided for under the Section
headed “Cash Compensation” shall be paid to you on a prorated basis by multiplying such retainers
by a fraction, the numerator of which is the number of days in 2011 on which you serve as a
director and are not employed under this Agreement and the denominator of which is 365, and (ii)
you will not be entitled to receive fees for attending any board or committee meetings during your
employment under this Agreement.
3. Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any
Federal, state, or local withholding or other taxes, deductions or charges which the Company is
required to withhold.
4. Compensation and Benefits. In consideration for your services to the Company, you shall receive the following
compensation and benefits from the Company.
(a) Salary. Until the Separation Date, the Company shall pay you a salary at the annual rate
of $625,000 (the “Salary”) in accordance with the Company’s regular payroll practices.
(b) Performance Bonus. For 2011, you shall be entitled to earn an annual incentive bonus,
targeted at 100% of the Salary, but with a maximum possible bonus opportunity equal to 255% of the
Salary; provided that your bonus will be prorated based on the number of days you are
actually employed by the Company during 2011. The amount of the annual bonus payable will be based
upon the achievement of both (i) an Adjusted EBITDA goal as was applicable to the former Chief
Executive Officer, but subject to revision by the Board in its sole discretion (the “EBITDA
Bonus”), and (ii) other operating metrics (the “OM Bonus”) to be mutually agreed by the
Company and you within the first 30 days of employment; provided, that the EBITDA Bonus
will constitute 70% of the annual target bonus (i.e., 70% of the annual target bonus will be paid
to you if the EBITDA Bonus is achieved at target performance levels) and the OM Bonus will
constitute the remaining 30% of the annual target bonus (i.e., 30% of the annual target bonus will
be paid to you if the OM Bonus is achieved at target performance levels). Any annual incentive
bonus to which you are entitled under this Agreement shall be paid in a cash lump-sum within 30
days following the close of AMH Intermediate Holdings Corp.’s books and completion of
Intermediate’s annual audit by its external accountants for 2011 but in any event shall not be paid
later than March 15, 2012. Notwithstanding the foregoing, if your employment is terminated due to
your voluntary resignation (other than at the request of the Board or the Chairman of the Board),
you will automatically forfeit your right to receive the bonus on the date of such termination
unless the Board otherwise agrees.
(c) Restricted Stock. As additional consideration for your services as Interim Chief Executive
Officer, on the date of this Agreement, Parent has granted you an award of 40,000 shares of
Restricted Stock under and subject to the terms and conditions of the Stock Grant Notice and
Restricted Stock Agreement attached hereto as Exhibit A.
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(d) Benefits. During your employment with the Company, you shall be eligible to participate in
the Company’s employee benefit plans, policies and arrangements as may now or hereafter be adopted
by the Company, in accordance with the terms of such plans, policies and arrangements, and on the
same basis as other members of the senior management team. In addition, after the Separation Date
(unless the Separation Date occurs as a result of your resignation (other than at the request of
the Board (or the Chairman of the Board)), you and your spouse will continue to be eligible to
participate in the Company’s health plans at active employee rates for a period commencing on the
Separation Date and ending on the later of December 31, 2012 or the date which is six months
following the Separation Date; provided, that your coverage (but not your spouse’s) will terminate
earlier on the date on which you attain age 65.
(e) Expenses. The Company shall reimburse you for business expenses that are reasonable and
necessary for you to perform, and were incurred by you in the course of the performance of, your
duties pursuant to this Agreement and in accordance with the Company’s expense reimbursement
policies. The Company will also reimburse you for your reasonable expenses for accommodation in
Cuyahoga Falls, Ohio, a rental car and meals, in each case during the period of your employment
under this Agreement.
(f) Indemnification; D&O Coverage. The Company, and its successors and/or assigns, shall
indemnify and defend you to the fullest extent provided by the By-Laws and Certificate of
Incorporation of the Company with respect to any claims that may be brought against you arising out
of any action taken or not taken in your capacity as an officer or director of any of the Company,
AMH Investment Holdings Corp. or any other entity which, from time to time, is a direct or indirect
subsidiary of AMH Investment Holdings Corp. (AMH Investment Holdings Corp. and each such
subsidiary, other than the Company, are hereinafter referred to collectively as the
“Affiliates,” and individually as an “Affiliate”). In addition, you shall be
covered as an insured in respect of your activities as an officer and director of the Company or
any Affiliate by the Directors and Officers liability policy of such entity or other comparable
policies obtained by any successor thereto, in amounts and coverage as determined by the applicable
board of directors in its sole discretion. The indemnification and insurance-related obligations
under this Section 4(f) shall remain in effect following your termination of employment hereunder.
5. Covenants. By accepting the terms of this Agreement, you hereby agree to the following covenants in
addition to any obligations you may have by law and make the following representations.
(a) Noncompetition. During your employment with the Company and for the one-year period following the Separation
Date (the “Restricted Period”), you shall not, within any jurisdiction or marketing area in
which the Company or any Affiliate is doing or is qualified to do business, directly or indirectly,
own, manage, operate, control, be employed by or participate in the ownership, management,
operation or control of, or be connected in any manner with, any Business (as hereinafter defined);
provided that (i) your ownership of securities of two percent (2%) or less of any class of
securities of a public company, or (ii) your continued provision of services to CGI in the manner
and at the level described in Section 2 above, shall not, by itself, be considered to be
competition with the Company or any Affiliate. For purposes of this Agreement, “Business”
shall mean the manufacturing, production, distribution or sale of exterior
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residential building products, including, without limitation, vinyl siding, windows, fencing,
decking, railings and garage doors, or any other business of a type and character engaged in by the
Company or an Affiliate during your employment with the Company (including, without limitation, any
business in which the Company or any Affiliate has specific plans to conduct in the future and as
to which you were aware of such planning at or prior to the Separation Date).
(b) Nonsolicitation. During your employment with the Company and the Restricted Period, you shall not, directly
or indirectly, (i) hire or employ, solicit for employment or otherwise contract for the services of
any individual who is or was an employee or consultant of the Company or any Affiliate; (ii)
otherwise induce or attempt to induce any employee or consultant of the Company or an Affiliate to
leave the employ or service of the Company or such Affiliate, or in any way interfere with the
relationship between the Company or any Affiliate and any employee or consultant respectively
thereof; or (iii) induce or attempt to induce any customer, supplier, licensee or other business
relation of the Company or any Affiliate to cease doing business with the Company or such
Affiliate, or interfere in any way with the relationship between any such customer, supplier,
licensee or business relation and the Company or any Affiliate.
(c) Nondisclosure; Inventions. During your employment with the Company and at all times thereafter, (i) you shall not
divulge, transmit or otherwise disclose (except as legally compelled by court order, and then only
to the extent required, after prompt notice to the Board of any such order), directly or
indirectly, other than in the regular and proper course of business of the Company and the
Affiliates, any customer lists, trade secrets or other confidential knowledge or information with
respect to the operations or finances of the Company or any Affiliates or with respect to
confidential or secret processes, services, techniques, customers or plans with respect to the
Company or the Affiliates, including, without limitation, any know-how, research and development,
software, databases, inventions, processes, formulae, technology, designs and other intellectual
property, information concerning finances, investments, profits, pricing, costs, products,
services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting,
training, advertising, sales, marketing, promotions, government and regulatory activities and
approvals concerning the past, current or future business, activities and operations of the Company
and the Affiliates (all of the foregoing collectively hereinafter referred to as “Confidential
Information”), and (ii) you will not use, directly or indirectly, any Confidential Information
for the benefit of anyone other than the Company and the Affiliates; provided, that you
have no obligation, express or implied, to refrain from using or disclosing to others any such
knowledge or information which is or hereafter shall become available to the general public other
than through disclosure by you. All Confidential Information, new processes, techniques, know-how,
methods, inventions, plans, products, patents and devices developed, made or invented by you, alone
or with others, while an employee of the Company which are related to the business of the Company
and the Affiliates shall be and become the sole property of the Company, unless released in writing
by the Board, and you hereby assign any and all rights therein or thereto to the Company.
(d) Cooperation. Both during and after the term of your employment with the Company, you
shall provide your reasonable cooperation in connection with any action or proceeding (or any
appeal from any action or proceeding) which relates to events occurring during your employment
hereunder. In the event that you are required to provide such
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cooperation, the Company will reimburse you for your reasonable, documented out-of-pocket
expenses.
(e) Non-Disparagement. From and after the Separation Date, (i) you hereby agree not to
defame, or make any disparaging or untrue statements that are intended or would reasonably be
expected to cause harm to the Company or any of its directors, officers or shareholders (including
any officer or employee thereof) in any medium to any person or entity without limitation in time
and (ii) the Company hereby agrees that the Board and the Company’s executive officers shall not
defame, or make any disparaging or untrue statements that are intended or would reasonably be
expected to cause harm to, you in any medium to any person or entity without limitation in time.
Notwithstanding this provision, you and the Company (including the members of the Board and the
Company’s executive officers) may confer in confidence with legal representatives and make truthful
statements as required by law. The Company shall control the timing, content and manner of any
internal, external and media communication concerning the termination of your employment with the
Company.
(f) Specific Performance. In the event of a breach or threatened breach of any provision of
this Section 7, in addition to any remedies at law, either party hereto shall be entitled to seek
equitable relief in the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.
6. Termination; Termination Benefits. Your employment hereunder may be terminated by you at any time for any or no reason upon no
less than thirty (30) days prior written notice to the Board. Your employment hereunder may be
terminated by the Company at any time for any or no reason. In the event that your employment is
terminated prior to the date which is the four month anniversary of the date on which you commenced
employment hereunder and such termination is not due to your voluntary resignation (other than at
the request of the Board or the Chairman of the Board), you will be entitled to continued payment
of the Salary through such four month anniversary and the prorated bonus described in Section 4(b)
shall be prorated based on a period of four months.
7. Miscellaneous.
(a) This Agreement constitutes the complete, final and exclusive embodiment of the entire
agreement between you and the Company with regard to the terms and conditions of your employment as
Interim Chief Executive Officer. It is entered into without reliance on any promise or
representation, written or oral, other than those expressly contained herein, and it supersedes any
other such promises, warranties or representations and any other written or oral statements
concerning your rights to any compensation, equity or benefits from the Company, its predecessors
or successors in interest.
(b) This Agreement may not be modified or amended except in a writing signed by both you and a
duly authorized officer of the Company.
(c) This Agreement may be signed in counterparts and the counterparts taken together shall
constitute one agreement.
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(d) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER
OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW
OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN
IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME
OTHER JURISDICTION WOULD ORDINARILY APPLY. ANY ACTION TO ENFORCE THIS AGREEMENT AND/OR THE
EXHIBITS HERETO MUST BE BROUGHT IN, AND THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF, A COURT
SITUATED IN THE CITY OF WILMINGTON, DELAWARE. EACH PARTY HEREBY WAIVES THE RIGHTS TO CLAIM THAT
ANY SUCH COURT IS AN INCONVENIENT FORUM FOR THE RESOLUTION OF ANY SUCH ACTION. EACH PARTY HERETO
EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN
ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.
[Signature Page Follows]
If this Agreement is acceptable to you, please sign below and return the original, fully executed
Agreement to the Company.
| Sincerely, | ||||
| ASSOCIATED MATERIALS LLC | ||||
By:
|
/s/ Xxxxxxx Xxxxxx | |||
| Print Name: Xxxxxxx Xxxxxx | ||||
| Title: Vice President, Chief Financial Officer | ||||
| AGREED AND ACCEPTED: | ||||
| /s/ Xxxx X. Xxxxxx | ||||
| Xxxx X. Xxxxxx | ||||
| Date: June 2, 2011 | ||||
[Signature Page to Interim Chief Executive Officer Agreement]
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Exhibit A
[Attach Restricted Stock Agreement]
