Ply Gem Prime Holdings, Inc.
Ply
Gem Prime Holdings, Inc.
000
Xxxx Xxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
September
25, 2006
Xxxxx
Xxx
0000
X.
Xxxxxxxx Xxx.
Xxxxxx
Xxxx, XX 00000
Re: Phantom
Incentive Unit Award Agreement Amendment
Dear
Xx.
Xxx:
As
you
know, the Board of Directors (the “Board”) of Ply Gem Prime Holdings, Inc. (the
“Company”) has determined that it is desirable to amend and shorten the lifespan
of the nonqualified deferred compensation arrangement represented by your
Phantom Incentive Unit Award under the Ply Gem Prime Holdings, Inc. Amended
and
Restated Phantom Stock Plan (the “Phantom Plan”). The primary reason for this
determination is the significant uncertainty regarding the proper application
of
new Internal Revenue Code Section 409A, particularly as applied to phantom
equity arrangements of private companies. Any Section 409A compliance mistake
can result in phantom equity holders having to pay substantial penalty taxes
in
addition to regular income taxes. (Capitalized terms used but not defined in
this letter shall have the meaning ascribed to such terms in the Phantom Plan
or, if not defined therein, in your Phantom Incentive Unit Award
Agreement.)
Your
Account under the Phantom Plan shall (i) as of the date of this letter, be
assigned a cash value, calculated by multiplying $10.00 by the number of Phantom
Incentive Units credited to your Account on the date of this letter, and, (ii)
at all times after the date of this letter, be denominated in U.S. dollars
rather than Common Stock or any other form of real or phantom equity. After
the
date of this letter and until January 31, 2007, the value of the Account shall
be updated as if interest was credited on the value of the Account, and
compounded at December 31, 2006, at a rate equal to the applicable federal
rate
for short-term loans.
On
January 31, 2007, the Company shall pay you a one-time, lump-sum cash payment
equal to the value of your Account on such date, calculated as described in
the
preceding paragraph, even if your employment with the Company or its Affiliates
is terminated earlier.
Despite
any reference in this letter or in the Phantom Plan to an “Account”, the
arrangement represented by your Phantom Incentive Unit Award, as modified by
this letter, remains a nonqualified deferred compensation arrangement. To the
extent that any provisions of the Phantom Plan or the Phantom Incentive Unit
Award Agreement are inconsistent with the terms of this letter, including,
without limitation, any provisions regarding the payment of your Account in
the
form of, or valuation of your Account by reference to, Common Stock effective
on
and after the date of this letter or the payment of your Account following
termination of employment or any IPO or Realization Event, such provisions
shall
be deemed amended to the extent necessary to be consistent with this letter
and,
if they cannot be read to be consistent with this letter, then they shall be
void and of no further force and effect as applied to your Phantom
Award.
*
*
*
By
signing this letter in the space below, you indicate your consent to the
amendments to your Phantom Incentive Unit Award on the terms set forth in this
letter.
Ply
Gem
Prime Holdings, Inc.
By:
___________________________
Name:
Xxx
X. Xxxxx
Title:
Chief Executive Officer and President
Accepted
and Agreed to:
By:
__________________________
Xxxxx
X.
Xxx
