EXHIBIT 10.6
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PLY GEM INDUSTRIES, INC.
Change in Control Severance Benefit
Plan for Key Employees
October 30, 2003
Ply Gem Industries, Inc. (the "Company") desires to assure that it and
its subsidiaries (the "Employer") will have the benefit of the continued service
and experience of certain of their key employees designated as hereinafter
provided ("Employees," or individually, the "Employee") and to assure Employer
and the Employee of the continuity of management of the Company and Employer in
the event of any change in control of the Company on or before March 31, 2004
and adopts this plan (the "Plan") to provide such assurances.
1. Designated Employees. Employees entitled to participate in the
Plan shall be those designated from time to time by the Board of Directors of
the Company.
2. Change in Control. For purposes of this Plan, a "Change in
Control" shall be deemed to have occurred upon the closing on an agreement for
the acquisition, merger or consolidation of the Company resulting in all or
substantially all of the business and/or assets of the Company being controlled
by a corporation or other entity other than Nortek, Inc. or its affiliates.
4. Severance Benefit. If during a period of 24 months following a
Change in Control, either (i) the employment of Employee is terminated by
Employer without Cause (as defined below) or (ii) there is a material adverse
change in the terms of the employment of Employee which entitles Employee to
treat any such change as such a termination as hereinafter provided (either (i)
or (ii) being referred to herein as a "Qualifying Termination") Employee shall
be entitled to receive severance pay at an annual rate in an amount equal to
Employees 2003 base pay plus his estimated/actual 2003 performance incentive
bonus (excluding all other bonuses, such as, any "stay" or relocation bonuses),
such severance pay to be paid for the 24-month period following such termination
in the same manner as Employee's basic salary was paid immediately prior to such
termination and to be subject to appropriate tax withholding. Payment of such
amount shall be considered severance pay in consideration of past services,
services subsequent to Employee's designation under this Plan and continued
services during a period while any such Change in Control is pending and
thereafter and is not to be reduced by compensation or income received by
Employee from any other employment or other source. It is understood and agreed
to by Employee that any payments made pursuant to this agreement are not counted
as wages or other compensation for purposes of any pension, 401(k) or other
benefit plan of Employer.
For the purpose of this Plan, "Cause" shall mean: (i) the willful and
continued failure of Employee to perform substantially Employee's material
duties (other than any such failures resulting from or contributed to by,
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to Employee by the Board of Directors of
the Company and which notice specifically identifies the
manner in which the Employee has not substantially performed his material
duties; or (ii) because of conviction of Employee of a crime involving theft,
embezzlement or fraud against Employer or a civil judgment in which Employer is
awarded damages from Employee in respect of a claim of loss of funds through
fraud or misappropriation by Employee, which in either case has become final and
is not subject to further appeal, continued employment of Employee would be
demonstrably injurious to Employer.
In the event of a Qualifying Termination, Employee shall continue for a
period of 24 months after termination to be covered at the expense of Employer
(reduced by the employee contribution under the plan for active employees) by
the same or equivalent medical and dental insurance coverage as he was covered
immediately prior to such termination, it being understood that the Employer's
obligation during the first 18 months shall be the reimbursement of the
Employee's COBRA premium (reduced by the employee contribution for active
employees).
Following a Change in Control, a material adverse change in the terms
of employment of Employee by Employer which Employee is entitled to treat as a
termination by Employer for purposes of this Plan includes:
(a) Without Employee's express written consent,
assignment of Employee to any duties inconsistent with his position,
duties and responsibilities and status with Employer immediately prior
to a Change in Control; or
(b) A reduction by the Employer in Employee's base salary
as in effect immediately prior to a Change in Control; or
(c) Without Employee's express written consent, the
Employer's requiring Employee to be based anywhere other than within 50
miles of his office location immediately prior to a Change in Control,
except for required travel on the Employer's business to an extent
substantially consistent with his business travel obligations
immediately prior to a Change in Control; or
(d) The taking of any action by the Employer which would
deprive Employee of any material employee benefit enjoyed by him
immediately prior to a Change in Control except where such change is
applicable to all employees participating is such benefit plan; or
(e) Any breach by the Company or Employer of any
provision of this Plan.
6. Limited Effect. This Plan, any agreement entered into pursuant
hereto and payment of severance benefits hereunder shall not give Employee any
right of continued employment, and no right to any compensation or benefits from
the Company or Employer except the right specifically stated herein for certain
severance pay benefits in the event of a Change in Control at a time when
Employee is still employed by Employer and is a designated Employee under this
Plan, shall not limit Employer's right to terminate Employee's employment at any
time prior to a Change in Control, with or
without cause, or to terminate Employees designation as an Employee under this
Plan, except as may be otherwise provided in a written employment agreement
between Employee and Employer, and shall not confer on Employee any right to
severance pay except in the event as specifically provided for herein.
7. Termination. This Plan and the employee benefits described
herein shall terminate on March 31, 2004 provided no Change of Control has
occurred prior to that date.
8. Indemnification. Employer agrees to pay all costs and expenses
incurred by Employee in connection with the enforcement of his rights under this
Plan and will indemnify and hold harmless Employee from and against any damages,
liabilities and expenses (including without limitation fees and expenses of
counsel) incurred by Employee in connection with any litigation or threatened
litigation, arising out of the making, performance or enforcement of this Plan.
9. Governing Law. This Plan and agreements made with Employees
hereunder shall be governed by the laws of the State of Delaware.