EXHIBIT 10.5
INSTRUMENT OF AMENDMENT
INSTRUMENT OF AMENDMENT, dated as of March 31, 2006, by and between
ASSOCIATED MATERIALS INCORPORATED, a Delaware corporation (the "Company"), and a
wholly owned indirect subsidiary of AMH Holdings II, Inc., a Delaware
corporation ("AMH"), and XXXXXX XXXXXXXX (the "Executive"), to the Employment
Agreement, dated as of November 28, 2005, between the Company and the Executive
(the "Employment Agreement") (capitalized terms used but not defined herein
shall have the respective meanings given such terms in the Employment
Agreement).
WITNESSETH:
WHEREAS, the Company and the Executive have entered into the Employment
Agreement;
WHEREAS, Section 12(g) of the Employment Agreement provides that the
Employment Agreement may not be amended except in writing by the Executive and
the Company; and
WHEREAS, the Company and the Executive desire to amend the Employment
Agreement as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Exhibit A to the Employment Agreement is hereby deleted in its
entirety and replaced with a new Exhibit A, as attached hereto.
2. (a) In the event of any conflict between the terms of this Instrument
of Amendment and the terms of the Employment Agreement, the terms
of this Instrument of Amendment shall take precedence. Except as
expressly modified herein, the Employment Agreement shall remain
in full force and effect throughout the entire Employment Term.
(b) The validity, interpretation, construction and performance of
this Instrument of Amendment shall be governed by the laws of the
State of
New York applicable to contracts executed and to be performed
entirely within said State.
(c) This Instrument of Amendment may be executed in two or more
counterparts, all of which taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto executed this Instrument of Amendment, effective for all purposes
as of the January 1, 2006.
ASSOCIATED MATERIALS INCORPORATED
Date: 4/3/06 By: /s/ X. Xxxxxxxx
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Name: X. X. Xxxxxxxx
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Title: CFO
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XXXXXX XXXXXXXX
Date: 4/3/06 By: /s/ Xxxxxx Xxxxxxxx
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Exhibit A
Annual Incentive Bonus
The Executive's annual incentive bonus for each calendar year during
the Employment Term shall be a percentage of the Executive's base salary based
upon the achievement by AMH II of annual EBITDA Hurdles with respect to the
applicable calendar year, as follows:
Achievement of EBITDA Hurdles Percentage of Base Salary
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Less than threshold Zero
Threshold 20.00%
Target 60.00%
Maximum 100.00%
If the actual EBITDA for a particular calendar year is between two
EBITDA Hurdles, the applicable percentage of base salary shall be determined by
linear interpolation based on the difference between such EBITDA Hurdles. For
the avoidance of doubt, in no event shall the annual incentive bonus exceed 100%
of base salary. For purposes of the Executive's annual incentive bonus and the
computation thereof:
1. Base salary shall mean the annual rate of base salary in effect under this
Agreement as of April 1 of the calendar year to which the bonus relates.
2. "EBITDA Hurdle" means threshold, target and maximum amounts of EBITDA with
respect to a calendar year, as determined in good faith by the Board.
3. EBITDA shall mean the consolidated net income of AMH, adjusted to exclude
deduction of interest expense (net of interest income), income taxes,
depreciation and amortization and the Harvest Fee pursuant to the
Management Agreement, dated as of April 19, 2002, between Harvest Partners,
Inc. and Associated Materials Incorporated, as amended from time to time,
and to exclude gain or loss from sale of capital assets, and including
deduction of all bonuses paid or accrued with respect to the Executive and
all other officers and employees of AMH and its subsidiaries (including,
without limitation, the Executive's bonus hereunder), for the relevant
calendar year, calculated otherwise in accordance with generally accepted
accounting principles, subject to any adjustments made in good faith by the
Board. EBITDA shall be determined by the Company's management, subject to
audit or review by AMH's external accountants and approval, in good faith,
by the Board. EBITDA shall exclude, without duplication, any transaction-
or merger-related costs which are expensed rather than capitalized; any
revenue, expense, gain or loss from operations divested during the relevant
calendar year; the effect of inventory write-ups made due to purchase
accounting; and any other non-recurring, extraordinary items subject to
approval, in good faith, by the Board.
4. Any annual incentive bonus to which the Executive is entitled under this
Agreement for any calendar year shall be paid in a cash lump-sum within
thirty days following the close of AMH's books and completion of AMH's
annual audit by its external accountants for
such calendar year but in any event shall not be paid later than March 15
of the calendar year immediately following the calendar year to which the
bonus relates.
The Executive's entitlement to an annual incentive bonus shall be determined by
the Board in good faith in accordance with this Exhibit A.
