Ply Gem Prime Holdings, Inc.
Ply
Gem Prime Holdings, Inc.
000
Xxxx Xxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
September
25, 2006
Xxxx
Xxxxxxxxxx
0000
Xxxxxx Xxxx
Xxxxx,
XX
00000
Dear
Xx.
Xxxxxxxxxx:
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 and your Phantom Additional 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 the Phantom Incentive Unit Award Agreement or the Phantom Additional Unit
Award Agreement, as applicable.)
Phantom
Common Equity Converted to Dollars and Paid Out on January 31,
2007.
On the
date of this letter, the portion of your Account that is represented by Phantom
Incentive Units and the portion of Phantom Additional Units that represents
shares of Common Stock (collectively, “Common Units”), shall be assigned a cash
value, calculated by multiplying $10.00 by the number of Common Units credited
to your Account on the date of this letter, and, at all times after the date
of
this letter, denominated in U.S. dollars rather than Common Stock or any other
form of real or phantom equity. This portion of your Account shall be referred
to in this letter as the “Common Account.” After the date of this letter, and
until January 31, 2007, the value of the Common Account shall be updated as
if
interest was credited on the value of the Common 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 Common Account on such date, calculated as described
in the preceding paragraph, even if your employment is terminated
earlier.
Phantom
Preferred Equity Converted to Dollars and Paid Out Over
Time.
On the
date of this letter, the portion of your Account that is represented by
Preferred Strip Units shall be assigned a cash value equal to the face amount
of
the shares of Preferred Stock represented by such Preferred Strip Units and
shall be credited with deemed earnings, as if with interest, at an annual rate
of 10%, compounded semi-annually as of each June 30 and December 31, from the
date of issuance of the Phantom Additional Unit Award through the date of
payment. This portion of your Account shall be paid to you, in cash, in
accordance with the following schedule: one-third of the original face amount
shall be paid on each of August 31, 2009, 2010, and 2011, in each case together
with deemed earnings (accrued to the date of payment) on the portion of the
Account then being paid; provided, that the full unpaid amount of the account
including deemed earnings thereon accrued to the date of payment shall be
payable upon the earliest of your (i) death, (ii) Disability (as defined in
the
Plan) and (iii) the occurrence of an event which is both a Realization Event
(as
defined in the Plan) and a Change of Control as defined in section 409A of
the
Internal Revenue Code.
Despite
any reference to an “Account” in this letter, in the Phantom Plan, in your
Phantom Incentive Unit Award Agreement or in your Phantom Additional Unit Award
Agreement, the arrangements represented by your Awards under the Phantom Plan,
as modified by this letter, remain nonqualified deferred compensation
arrangements. To the extent that any provisions of the Phantom Plan, the Phantom
Incentive Unit Award Agreement or your Phantom Additional 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, equity effective on and after the
date of this letter or any provision regarding 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
Awards.
*
*
*
By
signing this letter in the space below, you indicate your consent to the
amendments to your Phantom Incentive Unit Award and Phantom Additional Unit
Award on the terms set forth in this letter.
Ply
Gem
Prime Holdings, Inc.
By:
___________________________
Name:
Xxxxx X. Xxx
Title:
Chief Financial Officer
Accepted
and Agreed to:
By:
__________________________
Xxxx
Xxxxxxxxxx
