1
EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT (this "Agreement"), made and entered into this 18th day
of December, 1999, by and between Associated Materials Incorporated, a Delaware
corporation ("AMI"), and XXXXXXX XXXXXXXX ("XXXXXXXX").
W I T N E S S E T H
WHEREAS, AMI desires to employ XXXXXXXX and XXXXXXXX is willing to
enter into this Agreement upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, AMI hereby employs XXXXXXXX and XXXXXXXX hereby
accepts such employment upon the terms and conditions hereinafter set forth:
1. Employment.
(a) Title: Reporting Obligations. AMI agrees to employ XXXXXXXX and
XXXXXXXX agrees to work for AMI as President of Alside Window Company, a
division of Alside ("Alside"), which is a division of AMI, and in other
capacities as described below. XXXXXXXX'X duties and responsibilities shall be
those traditionally associated with the president of a corporation. XXXXXXXX
shall report to Xxxxxx X. Xxxxxxx for so long as Xxxxxx X. Xxxxxxx is the
President and Chief Executive Officer of Alside. XXXXXXXX shall become President
and Chief Operating Officer ("COO") of Alside not later than April 1, 2000. At
such time as Xxxxxx X. Xxxxxxx ceases to be Chief Executive Officer of Alside,
XXXXXXXX shall become President and Chief Executive Officer ("CEO") of Alside.
XXXXXXXX shall not be required to report to anyone other than Xxxxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxxxx or the Board of Directors of AMI.
(b) Option to Become CEO. XXXXXXXX may elect to become President and
Chief Executive Officer of Alside at any time after June 30, 2000 and before
February 1, 2001. If AMI fails to make XXXXXXXX President and COO of Alside by
April 1, 2000 or President and CEO of Alside by February 1, 2001, then XXXXXXXX
may terminate this Agreement and shall be entitled to receive the following:
i. Balance of any payments remaining under Section 2(c)
hereof in a lump sum.
ii. Full and immediate vesting of all stock options
granted pursuant to Section 2(d) hereof, such options
to remain exercisable for ten (10) years from the
grant date;
2
iii. Two (2) years severance pay paid monthly at Three
Hundred Fifty Thousand Dollars ($350,000) per year
plus two (2) years bonus at One Hundred Fifty
Thousand Dollars ($150,000) per year.
iv. Two (2) years benefit coverage on a monthly basis for
medical, dental, group life insurance, 401(k) and
country club membership, or a payment of an amount
equal to the cost of providing such benefits.
2. Compensation.
(a) Base Salary. XXXXXXXX shall be paid an annualized base salary of
Three Hundred Fifty Thousand Dollars ($350,000) per annum (or fraction for
portions of a year). XXXXXXXX'x salary shall be subject to all appropriate
federal and state withholding taxes and shall be payable in accordance with the
normal payroll procedures of AMI.
(b) Bonus Payments. For the calendar year 2000, XXXXXXXX shall be paid
a bonus of One Hundred Thousand Dollars ($100,000). If XXXXXXXX commences
employment after February 1, 2000, such bonus shall be prorated from the date of
hire to the end of the year. For years after 2000, XXXXXXXX shall be paid a
bonus based upon a formula to be determined at such time as XXXXXXXX becomes COO
or CEO. Bonus amounts will be paid at such times as other executives' bonuses
are paid.
(c) Lost Stock Options. In lieu of the lost stock options opportunity
at XXXXXXXX'x previous employer, XXXXXXXX shall be paid Thirty-Three Thousand
Three Hundred Thirty-Four Dollars ($33,334) after the completion of each twelve
(12) months of service commencing on the date of hire for three years for a
total payment of One Hundred Thousand Two Dollars ($100,002).
(d) Stock Options. AMI shall grant to XXXXXXXX, at the next meeting of
the Board of Directors of AMI, options to purchase 50,000 shares of common stock
of AMI. The exercise price of each option shall be the closing price of one
share of common stock of AMI on the NASDAQ on the date of grant and the date of
hire. 25,000 of the shares shall vest upon the grant, and the remaining 25,000
shares shall vest two years after the original grant, provided XXXXXXXX is still
employed by AMI at that time. Upon XXXXXXXX'x becoming President and CEO of
Alside, as provided above, AMI shall grant to XXXXXXXX, at the next meeting of
the Board of Directors of AMI, options to purchase 50,000 shares of common stock
of AMI. The exercise price of each option shall equal the closing price of one
share of common stock of AMI on the NASDAQ on the date of grant. 25,000 of the
shares shall vest upon the grant, and the remaining 25,000 shares shall vest two
years after the original grant, provided XXXXXXXX is still employed by AMI at
that time.
3. Benefits.
(a) Moving Expenses. AMI shall pay the costs of all expenses incurred
in connection with XXXXXXXX'x moving to the Akron/Cleveland, Ohio area. Such
expenses shall include without limitation temporary living costs, house
searching trips for the family, moving costs,
-2-
3
legal fees, two points in connection with the purchase of a home, closing costs
and real estate commissions in connection with the sale of XXXXXXXX'x existing
home. AMI shall be responsible for the sale of XXXXXXXX'x existing home at an
appraised value if not sold by XXXXXXXX by a date mutually agreed upon by
XXXXXXXX and AMI, but no later than September 1, 2000. Appraised value shall be
based upon the average of the two closest appraisals of three appraisals.
(b) Insurance Premiums. AMI will reimburse XXXXXXXX for all COBRA
premiums charged by his previous employer until insurance benefits provided
under this Agreement become effective.
(c) Benefit Plans. XXXXXXXX shall participate in all benefit programs
and plans provided to other Alside executives in accordance with the terms and
conditions of those programs and plans. Such benefits currently include medical,
dental, long-term disability and group life insurance, an employee spending
account, employee stock purchase plan, and the Alside 401(k) Plan. XXXXXXXX'x
group life insurance benefit shall be Seven Hundred Fifty Thousand Dollars
($750,000).
(d) Car Allowance. XXXXXXXX shall be paid a car allowance as provided
to other executives of Alside. Currently the car allowance is One Thousand
Dollars ($1,000) per month. Such allowance shall be paid by AMI to XXXXXXXX on
the last business day of each month or on such other day during the month as the
parties shall mutually agree.
(e) Club Memberships. AMI shall reimburse XXXXXXXX for initiation fees,
monthly dues and business related expenses in connection with his country club
membership throughout the terms of this Agreement.
(f) Officer's Indemnification and Exculpations. AMI agrees that
XXXXXXXX shall be entitled to indemnification as an officer of Alside to the
fullest extent permitted by law. This Section 6(f) shall survive termination of
this agreement.
7. Vacations. XXXXXXXX shall be permitted to take vacation time in each calendar
year as determined by the Board of Directors of AMI. XXXXXXXX shall be entitled
to four weeks paid vacation during each calendar year. Should XXXXXXXX die or
leave AMI, he shall be paid any unused vacation allocated to that calendar year.
In addition, XXXXXXXX shall be entitled to such holidays as may be established
by Alside for employees generally and a reasonable number of personal and sick
days not inconsistent with the performance of his duties hereunder.
8. Term of Employment. This Agreement shall be effective when executed by both
XXXXXXXX and AMI (the "Effective Date") and, except as otherwise provided, shall
remain in effect for a period of three years from the date XXXXXXXX commences
employment.
9. Termination. The employment relationship between AMI and XXXXXXXX created
hereunder shall terminate before the expiration of the stated term upon the
occurrence of any one of the following events:
-3-
4
(a) Mutual Agreement. Mutual written agreement between XXXXXXXX and
AMI. Any severance hereunder shall be payable as mutually agreed.
(b) Death. Upon Xxxxxxxx'x death, AMI shall have no further obligations
hereunder other than for amounts accrued and unpaid prior to the date of death
(other than as set forth herein).
(c) Termination by AMI for Cause. AMI may terminate this Agreement for
cause. As used herein, "cause" for termination by AMI shall mean gross
misconduct or dereliction of duties hereunder by XXXXXXXX. If XXXXXXXX'x
employment is terminated for cause by AMI pursuant to this Section 9(c), AMI
shall have no further obligations hereunder other than for amounts accrued and
unpaid prior to the date of termination (other than as set forth herein).
(d) Termination by AMI Without Cause. AMI may terminate this Agreement
at any time.
(e) Termination by XXXXXXXX. After the initial three-year term,
XXXXXXXX may terminate this Agreement without liability to AMI arising from the
resignation. If XXXXXXXX terminates this Agreement during the initial year of
this Agreement, XXXXXXXX shall return to AMI any payments to him provided for in
Section 2(c) hereof, and AMI shall have no further obligations hereunder other
than for amounts accrued and unpaid prior to the date of termination (other than
as set forth herein).
(f) Termination by XXXXXXXX for Good Reason. XXXXXXXX may terminate
this Agreement and become entitled to the rights and amounts provided for in
Section 9(h) hereof, if XXXXXXXX has Good Reason to terminate his employment
with AMI. As used herein, "Good Reason" to terminate employment with AMI occurs
if (1) duties are assigned to XXXXXXXX that are materially inconsistent with his
previous duties or with his position as President, COO or CEO; (2) duties and
responsibilities previously performed by XXXXXXXX are substantially reduced or
assigned to others without his consent; or (3) AMI breaches any of its material
obligations hereunder, including without limitation payment obligations and
obligations to provide benefits, failure to grant the stock options provided for
in Paragraph 2(d) and fails to cure the same within thirty (30) days of written
notice.
(g) Termination Upon Change of Control. XXXXXXXX may resign and
terminate this Agreement and become entitled to the rights and amounts provided
for in Section 9(h) hereof within 120 days of a Change of Control with respect
to AMI or Alside. A "Change of Control" shall be deemed to occur if (1) Xxxxxxx
X. Xxxxxxxx ceases, either directly or indirectly, to be the largest shareholder
of AMI or is no longer the chairman of the Board of Directors of AMI; (2) AMI or
Alside becomes a subsidiary of another corporation or entity or is merged with
or consolidated into another corporation or entity in which Xxxxxxx X. Xxxxxxxx
is not, either directly or indirectly, the largest shareholder; or (3) AMI or
Alside sells, transfers, assigns or otherwise conveys all or substantially all
of its assets to a third party in which Xxxxxxx X. Xxxxxxxx is not, either
directly or indirectly, the largest shareholder.
-4-
5
(h) Severance Payments. In the event XXXXXXXX'x employment has been
terminated by AMI without cause or by XXXXXXXX for Good Reason, or if XXXXXXXX
has resigned within 120 days following a Change of Control, XXXXXXXX shall
receive the following:
i. Two year's annual salary and bonus paid monthly based
on the last twelve months earnings, at a minimum of
$500,000 per year.
ii. Any remaining unpaid balance of the One Hundred
Thousand Two Dollars ($100,002) representing the lost
stock option payments referenced in Section 2(c) in a
lump sum.
iii. Full and immediate vesting of the stock options
granted pursuant to Section 2(d), which options shall
remain exercisable for ten (10) years from the grant
date, and
iv. Two (2) years benefit coverage paid monthly for
medical, dental, group life insurance, 401(k) and
country club membership, or a payment of an amount
equal to the cost of providing such benefits.
10. Trade Secrets. XXXXXXXX recognizes and acknowledges that during his term of
employment hereunder, he will come into possession of trade secrets, customer
lists, and other confidential information in connection with the business of AMI
and Alside. XXXXXXXX agrees that he will not at any time disclose to any other
third party any trade secrets, business policies or other confidential
information pertaining to AMI's or Alside's business.
11. Miscellaneous.
(a) Successors Bound. This Agreement shall be binding upon AMI and
XXXXXXXX and their respective heirs, executors, administrators or successors in
interest.
(b) Notices. All notices and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by certified mail (return receipt
requested) or sent by overnight delivery service, cable, telegram, facsimile
transmission or telex (with electronic confirmation of successful transmission)
to the parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
-5-
6
If to AMI: Associated Materials Incorporated
0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, President
If to Employee:
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal law, and not the law of conflicts, of the State of
Ohio.
Dated as of this 18th day of December, 1999.
XXXXXXX XXXXXXXX ASSOCIATED MATERIALS INCORPORATED
By: /s/ XXXXXXX XXXXXXXX By: /s/ XXXXXXX X. XXXXXXXX
------------------------------- --------------------------------------
Xxxxxxx Xxxxxxxx Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
-6-
