EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
October 2, 1998, by and between D and W Holdings, Inc., a Delaware corporation
(together with its successors and assigns permitted hereunder, the "Company"),
Xxxx X. Xxxx (the "Employee") and Atrium Companies, Inc., for the limited
purposes of Section 12(m) hereof.
RECITALS
A. The Company, Atrium Corporation ("Atrium"), D and W Acquisition Corp.
("Sub") and certain securityholders have entered into an Agreement and Plan of
Merger, dated as of August 3, 1998, pursuant to which Sub will merge with and
into Atrium and Atrium will become a wholly-owned subsidiary of the Company (the
"Merger").
B. Contemporaneous with the Merger, the outstanding capital stock of Wing
Industries Holdings, Inc. ("Wing") and Door Holdings, Inc. ("Door") will be
contributed, through a series of transactions to Atrium Companies, Inc., a
wholly-owned subsidiary of Atrium (the "Contribution").
C. Atrium Companies, Inc. and the Employee entered into an Employment
Agreement dated as of January 1, 1998 (the "Original Employment Agreement").
D. The Board of Directors of the Company (the "Board") and of Atrium
Companies, Inc. determined that it is in the best interest of each company and
its stockholders to terminate, effective as of the consummation of the Merger
and the Contribution, the Original Employment Agreement and to enter into this
Agreement for purposes of the Company employing the Employee on the terms and
conditions set forth herein upon consummation of the Merger and Contribution.
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 (including any and all renewals thereof, the "Employment Period")
commencing on the date hereof and ending on the fourth anniversary of such date;
provided the Employment Period is renewable for a series of three year terms
thereafter as mutually agreed upon notice by the Company at least 30 days prior
to the end of the then 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 Chief Financial 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 President and
Chief Executive Officer of the Company.
(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 and (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 term of the Employee's
employment, 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, in an amount equal to $155,000. 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.
(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 $650 per month plus reasonable related expenses
for 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 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 12(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, 9, 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 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.
(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 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 12(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 12(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 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.
(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 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, 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 12 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.
(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 the amount of $75,000. 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 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 D and
W Holdings, Inc. 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 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 D&W Holdings, Inc. 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
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 D and
W Holdings, Inc. 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
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. 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: D and W Holdings, Inc.
c/o Ardshiel, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxx
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.
(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 12(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 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
12(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, and 12 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 ORIGINAL EMPLOYMENT AGREEMENT. Effective upon
consummation of the Merger, the Original Employment 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.
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, on this __ day of ________,
1998, to be effective as of the day and year first above written.
EMPLOYEE
D AND W HOLDINGS, INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
ATRIUM COMPANIES, INC.
for the limited purposes of Section 12(m) hereof
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
SCHEDULE A
TO HULL EMPLOYMENT AGREEMENT
Employee shall be entitled to a target bonus in the amount of $100,000 per
annum (the "Incentive Bonus").
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 by the Company or
its subsidiaries.
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.
(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.
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.
SCHEDULE B
Stock Options:
Effective as of the date of this Agreement the Employee shall be granted
options to purchase 1,183,842 shares of common stock of the Company pursuant to
the D and W Holdings, Inc. 1998 Stock Option Plan (the "Plan"). Such options
shall provide the following:
EXERCISE PRICE: $1.00 per share subject to adjustment as set forth in the Plan.
VESTING: Annually in equal installments over four years from the date of grant,
subject to continued employment as set forth in the Plan, in accordance with the
following schedule:
VESTING SCHEDULE
---------------------------------------------
Anniversary of
Grant Date Vested Shares
---------------- -------------
1st 295,960.5 shares
2nd 295,960.5 shares
3rd 295,960.5 shares
4th 295,960.5 shares
Total 1,183,842 shares
