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Exhibit 9
AGREEMENT, effective as of June 23, 1997, between Ply Gem
Industries, Inc., a Delaware corporation (the "Company" or "Ply Gem"), and
[ ] (the "Director").
WHEREAS, the Company has deemed it necessary that in order to
retain its existing directors and to attract as new directors the most capable
persons available; and
WHEREAS, Director is presently a director of the Company; and
WHEREAS, both the Company and Director recognize the increased
risk of claims of all types and description being asserted against directors of
public companies; and
WHEREAS, the Certificate of Incorporation and By-laws of the
Company require the Company to indemnify its directors to the full extent
permitted by law and the Director has been serving and continues to serve as a
director of the Company in part in reliance on those provisions of the
Certificate of Incorporation and the By-Laws; and
WHEREAS, in recognition of Director's need for significant and
substantial protection against personal liability in order to enhance Director's
continued service to the Company in an effective manner and Director's reliance
on the aforesaid provisions of the Certificate of Incorporation and the By-Laws,
and in part to provide Director with specific contractual assurance that the
protection promised by such Certificate of Incorporation and By-Laws will be
available to Director, regardless of, among other things, any amendment to or
revocation of such provisions of the Certificate of Incorporation or By-Laws or
any change in the composition of the Company's Board of Directors or acquisition
transaction relating to the Company, the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to Director
to the full extent permitted by law and as set forth in this Agreement, and, to
the extent insurance is maintained, for the continued coverage of Director under
the Company's directors' and officers' liability insurance policies.
NOW, THEREFORE, the Company and the Director agree between them
as follows:
1. Certain Definitions:
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(a) CHANGE OF CONTROL EVENT: means the happening of any one of
the following: (a) any "person", as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") but excluding Ply Gem and any employee
benefit plan sponsored or maintained by Ply Gem (including any trustee of such
plan acting as trustee), directly or indirectly, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act, as amended from time to time),
of securities of Ply Gem representing 20 percent or more of the combined voting
power of Ply Gem's then outstanding securities; or (b) during any period of 24
consecutive months during the existence of this Indemnity Agreement, the
individuals who, at the beginning of such period, constitute the Board (the
"Incumbent Directors") cease for any reason other than death to constitute at
least a majority thereof, provided, however, that a director who was not a
director at
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the beginning of such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such director was elected
by, or on the recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either actually (because
they were directors at the beginning of such 24-month period) or by prior
operation of this subsection; or (c) the occurrence of a transaction requiring
shareholder approval for the acquisition of Ply Gem by an entity other than Ply
Gem or a subsidiary or affiliated company through purchase of assets, or by
merger, or otherwise.
(b) CLAIM: any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation, whether conducted by the Company
or any other party, that Director in good faith believes might lead to the
institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.
(c) EXPENSES: include attorneys' fees and all other costs,
expenses and obligations paid or incurred with respect to the investigation,
defense, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to or
based upon the fact that Director is or was a director, officer, employee, agent
or fiduciary of the Company, or is or was serving at the request of the Company
as a director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by Director in any such
capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting
of a member or members of the Company's Board of Directors or any other person
or body appointed by the Board (including the special, independent counsel
referred to in Section 3) who is not a party to the particular Claim for which
Director is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which
vote generally in the election of directors.
2. BASIC INDEMNIFICATION ARRANGEMENT. (a) In the event Director was, is
or becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Claim by reason of (or
arising in part out of) an Indemnifiable Event, the Company shall indemnify
Director to the fullest extent authorized by the Certificate of Incorporation
and/or the By-Laws of the Company as in effect on the date hereof
notwithstanding that such Certificate of Incorporation and/or By-Laws may
subsequently be amended, repealed or otherwise changed in any respect, as soon
as practicable but in any event no later than thirty days after written demand
is presented to the Company, against any and all expenses, judgments, fines,
penalties and amounts paid in settlement (including all interest, assessments
and other charges paid or payable in connection with or in respect of such
expenses, judgments, fines, penalties or amounts paid in settlement) of such
Claim. Notwithstanding anything in this Agreement to the contrary, prior to a
Change in Control Director shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by
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Director against the Company or any director or officer of the Company unless
the Company has joined in or consented to the initiation of such Claim. If so
requested by Director, the Company shall advance (within two business days of
such request) any and all Expenses to Director (an "Expense Advance").
(b) Notwithstanding the foregoing, (i) the obligations of the
Company under Section 2(a) shall be subject to the condition that the Reviewing
Party shall not have determined (in a written opinion, in any case in which the
special, independent counsel referred to in Section 3 hereof is involved) that
Director would not be permitted to be indemnified under applicable law, and (ii)
the obligation of the Company to make an Expense Advance pursuant to Section
2(a) shall be subject to the condition that, if, when and to the extent that the
Reviewing Party determines that Director would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed
by Director (who hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Director has commenced legal
proceedings in a court of competent jurisdiction to secure a determination that
Director should be indemnified under applicable law, any determination made by
the Reviewing Party that Director would not be permitted to be indemnified under
applicable law shall not be binding and Director shall not be required to
reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed). If there has not been a Change in
Control, the Reviewing Party shall be selected by the Board of Directors, and if
there has been such a Change in Control, the Reviewing Party shall be the
special, independent counsel referred to in Section 3 hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party determined
that Director substantively would not be permitted to be indemnified in whole or
in part under applicable law, Director shall have the right to commence
litigation in any court in the State of New York or Delaware having subject
matter jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any determination by
the reviewing Party otherwise shall be conclusive and binding on the Company and
Director.
3. CHANGE IN CONTROL. The Company agrees that if there is a
Change in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then with respect to all matters
thereafter arising concerning the rights of Director to indemnity payments and
Expense Advances under this Agreement or any other agreement or the Certificate
of Incorporation of the Company and/or its By-Laws now or hereafter in effect
relating to Claims for Indemnifiable Events, the Company shall seek legal advice
only from special, independent counsel selected by Director and approved by the
Company (which approval shall not be unreasonably withheld), and who has not
otherwise performed services for the Company within the last 5 years (other than
in connection with such matters) or Director. Such counsel, among other things
shall render its written opinion to the Company and Director as to whether and
to what extent the Director would be permitted to be indemnified under
applicable law. The Company agrees to pay the reasonable fees of the special,
independent counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys'
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fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Director against any and all expenses (including attorneys' fees) and,
if requested by Director, shall (within two business days of such request)
advance such expenses to Director, which are incurred by Director in connection
with any claim asserted against or action brought by Director for (i)
indemnification or advance payment of Expenses by the Company under this
agreement or any other agreement or the Certificate of Incorporation of the
Company and/or its By-Laws now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless of whether
Director ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be.
5. PARTIAL INDEMNITY ETC. If Director is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, penalties and amounts paid in
settlement or a Claim but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify Director for the portion thereof to which
Director is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that Director has been successful on the merits or
otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Director shall be indemnified against all Expenses
incurred in connection therewith. With respect to any determination by the
Reviewing Party or otherwise as to whether Director is entitled to be
indemnified hereunder the burden of proof shall be on the Company to establish
that Director is not so entitled.
6. NO PRESUMPTION. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding by judgment, order,
settlement whether with or without court approval) or conviction, or upon a plea
of nolo contendere, or its equivalent, shall not create a presumption that
Director did not meet any particular standard of conduct or have any particular
belief or that a court has determined that indemnification is not permitted by
applicable law.
7. NON-EXCLUSIVITY, ETC. The rights of the Director hereunder
shall be in addition to any other rights Director may have under the Company's
By-Laws or the Delaware General Corporation Law or otherwise. To the extent that
a change in the Delaware General Corporation Law (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under the Company's Certificate of Incorporation and/or its By-Laws
and this Agreement, it is the intent of the parties hereto that Director shall
enjoy by this Agreement the greater benefits so afforded by such change.
8. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Director shall be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage available for any
Company director or officer.
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9. PERIOD OF LIMITATIONS. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against Director, Director's spouse, heirs, executors
or personal or legal representatives after the expiration of one year from the
date of accrual of such cause of action, and any claim or cause of action of the
Company or its affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such one year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action such shorter period shall govern.
10. AMENDMENTS, ETC. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
11. SUBROGATION. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Director, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to bring
suit to enforce such rights.
12. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim made
against Director to the extent Director has otherwise actually received payment
(under any insurance policy, the Certificate of Incorporation or By-Laws or
otherwise) of the amounts otherwise indemnifiable hereunder.
13. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to the
Director, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the company would be required to perform if
no such succession had taken place. This Agreement shall continue in effect
regardless of whether Director continues to serve as a director of the Company
or of any other enterprise at the Company's request with respect to the period
of service thereof.
14. SEVERABILITY. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the fullest extent permitted by
law.
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15. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such State without giving
effect to the principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the 23d day of June, 1997.
PLY GEM INDUSTRIES, INC.
By:____________________________
Name: XXXXXXX X. XXXXXXXXX
Title: Chairman
_______________________________
Director:
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