EXHIBIT 10(iii)(d)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of June 5, 1995, is entered into
between Ply Gem Industries, Inc., a Delaware corporation (the "COMPANY"), and
Dana R. Snyder (the "EXECUTIVE").
RECITALS
WHEREAS, the Company desires to obtain the services of the Executive,
and the Executive desires to be employed by the Company, upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the Company and the Executive hereby agree as
follows:
TERMS OF AGREEMENT
1. DEFINITIONS.
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(a) "Agreement" shall mean this Employment Agreement, together with
the attachments and schedules attached hereto, as amended or modified from time
to time.
(b) "Base Salary" shall mean Four Hundred Twenty Five Thousand Dollars
($425,000.00) per year; provided, however, that, unless the Chairman has
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determined not to grant salary increases to senior executive employees (other
than the Chairman) during any annual period, the Executive shall be entitled to
a minimum annual increase in the Base Salary of five percent (5%).
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Bonus Year" shall mean the particular calendar year for which a
Performance Award is calculated pursuant to SECTION 4(b) hereof.
(e) "Cause" shall mean a good faith determination by the Chairman that
one or more of the following has occurred (i) the Executive has engaged in
illegal misconduct, (ii) the Executive has engaged in gross insubordination,
(iii) the Executive has engaged in other misconduct materially detrimental to
the Company, (iv) the Executive has willfully neglected his duties to the
detriment
of the Company or (v) the Executive has materially breached this Agreement and
the Executive has failed to cure such breach within twenty (20) days of written
notification from the Company of such breach.
(f) "Chairman" shall mean the Chairman of the Board of the Company.
(g) "Change of Control" shall mean (i) the sale of all or
substantially all of the assets of the Company, (ii) the merger or consolidation
of the Company with any entity which, prior to such merger or consolidation, was
not an Affiliate of the Company, in any case where the holders of the Stock
prior to such merger or consolidation do not hold at least fifty percent (50%)
of the voting common equity of the surviving entity after such merger or
consolidation or (iii) the accumulation by any person or entity or group of
persons or entities (where the term "GROUP" is used as set forth in SECTION
13(D)(3) of the Exchange Act of 1934, as amended) of more than fifty percent
(50%) of the total outstanding Stock; provided, however, that, in each of the
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cases set forth above in CLAUSES (I), (II) AND (III), no "CHANGE OF CONTROL"
shall be deemed to take place if the transaction was approved by the Board, the
majority of the members of which were in place prior to the commencement of such
sale, merger, consolidation or accumulation.
(h) "Company" shall have the meaning ascribed to such term in the
preamble hereof and shall include all permitted successors and assigns, subject
to the Executive's rights in the event of a Change of Control.
(i) "Executive" shall have the meaning ascribed to such term in
the preamble hereof.
(j) "Good Reason" shall mean the Executive's voluntary resignation due
to one or more of the following (i) the Base Salary is reduced during the Term
below the amount set forth in SECTION 4(A) hereof, (ii) the Executive's group
benefits are materially reduced, (iii) the Company insists upon relocation of
the Executive in violation of SECTION 4(F) hereof, (iv) a Change of Control
event occurs or (v) the Company has materially breached this Agreement and the
Company has failed to cure such breach within twenty (20) days of written
notification from the Executive of such breach.
(k) "Great Lakes" shall mean Great Lakes Window, Inc., a Delaware
corporation.
(l) "Life Insurance Policy" shall mean a split dollar permanent whole
life insurance policy in the amount of One Million Seven Hundred Fifty Thousand
Dollars ($1,750,000.00) in respect of the life of the Executive, which Life
Insurance Policy shall be owned by the Executive.
(m) "Operating Income" shall mean the Company's income before income
taxes as reflected in the Company's audited financial statements; provided,
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that, for calendar year 1994, the Operating Income is deemed to be Twenty-Nine
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Million Thirteen Thousand Dollars ($29,013,000.00).
(n) "Option" shall mean the right and option to purchase a total of
three hundred thousand (300,000) shares of Stock pursuant to the Stock Option
Agreement.
(o) "Pension Plan Benefits" shall mean the Ply Gem Industries, Inc.
Group Pension Plan or any successor plan, which currently provides annual
pension benefits to the Executive in an amount of approximately Twenty Thousand
Dollars ($20,000.00) before taxes, beginning at age 65, through age 90.
(p) "Performance Award" shall mean an annual performance bonus as
more fully set forth in SECTION 4(b) hereof.
(q) "Permanent Disability" shall mean, with respect to the Executive
(i) the absence of the Executive from his employment by reason of any mental or
physical illness, disability or incapacity for a period of one hundred eighty
(180) days during any twelve-month period (with such one hundred eighty (180)
days comprised solely of the number of days during which the Executive is absent
for a consecutive period of at least thirty (30) days), effective as of the last
day of such one hundred eighty (180) day period or (ii) the good faith
determination by a physician, reasonably agreed to by the parties, that the
Executive is suffering from any mental or physical illness, disability or
incapacity such that the Executive is, or shall be, unable to perform his duties
prospectively for a period of one hundred eighty (180) days during any twelve-
month period (calculated in the same manner as in CLAUSE (I) above), upon the
giving of notice to the Executive, effective as of the date set forth in such
notice.
(r) "Personal Property" shall mean, without limitation, all books,
manuals, records, reports, notes, contracts, lists, blueprints and other
documents, programs, software or materials or copies thereof, equipment
(including
office equipment), credit cards and all other Proprietary Information relating
to the business of the Company held by the Executive from time to time.
(s) "Policy" shall mean the Mass Mutual Limited Payment Whole Life
Insurance Policy (paid up at age 65), in a form reasonably acceptable to the
Executive, to be purchased by the Company in the Executive's name with an
initial face amount of One Million Eight Hundred Fifteen Thousand Dollars
($1,815,000.00) owned and structured as a split dollar instrument pursuant and
subject to the provisions of SECTION 6 hereof which has been designed to provide
annual benefits to the Executive in an amount of approximately One Hundred
Thirty Thousand Dollars ($130,000.00) after taxes (based upon estimated tax
rates), beginning at age 65, through age 90.
(t) "Prohibited Activity" shall mean to directly or indirectly (i)
own, manage, operate, join, control, participate in, or become employed by, (ii)
render any services (including, without limitation, consulting services), advice
or assistance of any nature on behalf of or (iii) invest in, acquire any
interest in, or participate in the management, operation or control of, any
person, corporation, partnership or other entity which is engaged in the
manufacture or sale of building materials or any other businesses in which the
Company or any of its Subsidiaries is engaged; provided, however, that, the
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Executive shall not be prohibited from continuing to hold or subsequently
purchasing, on a passive basis, the real estate investments described in
SCHEDULE 1(q) attached hereto as amended from time to time by the Executive;
provided, further, however, that, if the Company or any Subsidiary commences
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activities, or acquires a business which includes activities, which result in
any then current activity or interest of the Executive becoming a Prohibited
Activity, then the Executive and the Company shall negotiate in good faith a
reasonable manner for and timing of the cessation of such Prohibited Activities
by the Executive and/or the disposition of such interest; provided, however,
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that, this restriction shall not preclude the Executive from investing his funds
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in securities of any company if the securities of such company are listed for
trading on a nationally registered stock exchange or traded in the NASDAQ
"National Market" and the Executive's holdings therein represent less than two
percent (2%) of the total number of outstanding shares or other securities of
such company.
(u) "Proprietary Information" shall mean information which would be
treated under appropriate legal standards as confidential and proprietary,
including, but not limited to (i) marketing, competitive or other information
available only to top management of the Company, (ii) information pertaining to
the contracts between the Company and its customers or vendors, including the
identity of the customers or vendors, pricing information and contract
termination dates, (iii) any and all other information related to the Company of
which the Executive may become aware but which is not generally known to
outsiders, including, but not limited to, cost allocations and other
confidential information concerning or relating to any of the customers,
business or methods of operation of the Company and (iv) various trade secrets
which are or will in the future be owned by the Company and which are or will be
regularly used in the business of the Company; provided, that, the foregoing
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provisions shall not be construed to prevent the Executive from making use of or
disclosing information which (A) is in the public domain through no fault on the
part of the Executive, provided, however, that, specific information which is
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aggregated specifically on behalf of the Company shall not be deemed to be in
the public domain merely because the components thereof are encompassed in
general information that is published or in the public domain or in the
Executive's prior possession, (B) is intentionally disclosed by the Company to
any entity (not an affiliate of the Company) on a non-confidential basis, (C)
was in the possession of the Executive prior to commencing discussions with the
Company with regard to a potential employment relationship with the Company or
(D) is developed by the Executive without the use of any Proprietary
Information.
(v) "Return on Net Assets" shall mean the Operating Income for the
Bonus Year divided by the stockholders' equity as of the last date of the
preceding calendar year as reflected in the Company's audited financial
statements.
(w) "Richwood" shall mean Richwood Building Products, Inc.
(x) "Signing Date" shall mean the date first written above.
(y) "SNE" shall mean SNE Enterprises, Inc., a Delaware
corporation.
(z) "Start Date" shall mean June 15, 1995 or such earlier or later
date as the Executive shall be reasonably available, but in no event later than
July 3, 1995.
(aa) "Start Price" per share shall mean the lower of the closing price
of the Stock on the Start Date and on the last trading day prior to the Signing
Date.
(ab) "Stock" shall mean the Company's common stock, par value
$0.25 per share.
(ac) "Stock Option Agreement" shall mean that certain Stock Option
Agreement to be entered into on the Start Date between the Company and the
Executive substantially in the form of EXHIBIT A attached hereto.
(ad) "Stolle Arrangements" shall mean the terms of the Executive's
prior employment with the Aluminum Company of America or its subsidiary, the
Stolle Corporation, including, without limitation, that certain Employment
Agreement, between the Stolle Corporation and the Executive, dated as of June
28, 1989 and any amendments, renewals, continuations or replacements thereof.
(ae) "Subsidiaries" shall mean any corporation, partnership or other
entity in which the Company has, directly or indirectly, (i) a majority equity
interest or (ii) in the case where the Executive has or shares, or has had or
shared, operation or management responsibility therefor, a minority equity
interest.
(af) "Target Subsidiaries" shall mean collectively, SNE,
Variform, Richwood, and Great Lakes.
(ag) "Term" shall mean the period commencing on the Start Date and
ending on the fourth anniversary of the Start Date, or any abbreviated portion
thereof resulting from termination of employment pursuant to the provisions of
SECTION 5(A) hereof.
(ah) "Termination Date" shall mean the date on which the Executive's
employment is terminated due to the expiration of the Term in accordance with
SECTION 2(a) or SECTION 2(b) hereof or pursuant to SECTION 5(a) hereof.
(ai) "Variform" shall mean Variform, Inc.
2. EMPLOYMENT; TERM.
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(a) Initial Term. The Company hereby employs the Executive as its
President and Chief Operating Officer and the Executive hereby accepts
employment from the Company and agrees to perform in such capacity upon the
terms and conditions set forth herein, for a term commencing no later than the
Start Date and continuing thereafter for the duration of the Term. The Chairman
shall promptly submit this Agreement to the Board for its required approval and
recommend and vote in favor of such approval.
(b) Extensions. On the fourth anniversary of the Start Date, subject
to earlier termination pursuant to the provisions of SECTION 5 hereof, the term
of this Agreement shall be extended for an additional one (1) year, unless
either the Company or the Executive notifies the other in writing no later than
six (6) months prior to the fourth anniversary of the Start Date, that it does
not intend to renew this Agreement.
3. POSITION; DUTIES; RESPONSIBILITY.
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(a) Position. During the Term, the Executive shall be employed as the
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President and Chief Operating Officer of the Company. The Executive shall
faithfully and diligently use his best efforts to perform the duties and bear
the responsibilities of such office and report and be responsible directly to
the Chairman. The Executive acknowledges and agrees that his exclusive function
shall be to be responsible for the overall profitability of the Subsidiaries in
order to enhance the value of the Stock and that unless otherwise specifically
directed by the Chairman, the Executive shall have no responsibility with
respect to the operation of the Company at the holding company level. Without
limiting the generality of the foregoing, the Executive further acknowledges and
agrees that his primary focus shall be to be responsible for the management of
the Target Subsidiaries. The Executive shall devote all of his professional
time to the business of the Company in order to satisfactorily discharge his
duties and responsibilities to the Company, except for reasonable time spent for
trade, civic and charitable activities or for service on other boards of
directors, subject to approval as provided in SECTION 3(b) hereof.
Notwithstanding any provision in this Agreement to the contrary, the Executive's
employment will be subject to the Ply Gem Industries, Inc. Code of Conduct and
Conflict of Interest Policy.
(b) Other Activities. Except upon the prior oral or written consent
of the Chairman, the Executive, during the Term, shall not (i) accept any other
employment, (ii) serve on the board of directors of any other company or (iii)
engage in any Prohibited Activity.
(c) Board Member; Other Duties. The Chairman shall nominate and vote
for the Executive, and the Executive agrees to serve, for no additional
compensation, as a member of the Board. The Executive further agrees to serve
as an officer or director of any of the Subsidiaries of the Company as the
Chairman shall request, without any additional compensation.
4. SALARY AND BENEFITS.
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(a) Base Salary. In consideration of the services to be rendered
hereunder, the Executive shall be paid the Base Salary payable at the same
intervals as the other senior executive employees of the Company.
(b) Performance Award. The committee that administers the Company's
Incentive Compensation Plan has selected the Executive to participate in such
Incentive Compensation Plan and to receive an annual Performance Award
commencing January 1, 1996 (together with a Performance Award for calendar year
1995 referenced below). The Performance Awards are subject to the provisions of
SECTION 5 hereof, have been awarded in accordance with such Incentive
Compensation Plan, shall be paid in cash and shall be determined in accordance
with the following formula:
(i) If the Return on Net Assets of the Company is less than
twenty percent (20%), then the Performance Award shall be determined based
upon SCHEDULE 4(b)(i) attached hereto based upon the positive difference in
the Company's Operating Income for the Bonus Year and the Company's average
Operating Income for the two (2) immediately preceding calendar years;
provided, that, the Executive shall not be entitled to any Performance
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Award under this formula if the Company's Operating Income for such Bonus
Year is less than one hundred ten percent (110%) of the Company's average
Operating Income for the two (2) immediately preceding calendar years.
(ii) If the Return on Net Assets of the Company is twenty percent
(20%) or greater, the Performance Award calculation shall be made pursuant
to SCHEDULE 4(b)(ii) attached hereto. A Performance Award pursuant to this
SECTION 4(b)(ii) shall be calculated and paid for in a Bonus Year,
regardless of whether or not the Return of Equity percentage of the Company
is more or less than the prior year.
For calendar year 1995 (A) the minimum Performance Award shall be Seventy Five
Thousand Dollars ($75,000.00) and (B) any additional Performance Award shall be
dependent upon a good faith, reasonable determination by the Chairman evaluating
the performance of the Subsidiaries for which the Executive has operating
authority, the formula for which shall be finalized within sixty (60) days of
the Start Date. The Company agrees
to determine the amount of the Performance Award, if any, to which the Executive
shall be entitled as soon as possible after the end of each Bonus Year, and to
pay such Performance Award no later than April 30 of the following year. The
parties agree to re-evaluate in good faith and make any appropriate adjustments
to both formulas if there occurs a material event not in the ordinary course of
business such as an acquisition or divestiture of any substantial assets of the
Company or a debt restructuring in order to accomplish the same objectives from
the application of the Performance Award criteria for the Executive that were in
place prior to the acquisition, divestiture, or debt restructuring.
(c) Benefits. During the Executive's employment hereunder, the
Executive shall be entitled to an automobile allowance of Eight Hundred Dollars
($800.00), net of any applicable taxes, per month and to participate in any
plan, arrangement or policy of the Company providing for medical benefits,
dental benefits, life insurance, disability insurance, vacation time, sick
leave, options or other stock programs and other benefits offered by the Company
to senior executive employees of the Company generally. In addition, the
Company shall obtain and maintain during the Term, the Life Insurance Policy.
The Executive shall be entitled to four (4) weeks of paid vacation per year to
be taken at such times as shall be mutually agreed by the Chairman and the
Executive. To the extent not prohibited by law and not commercially
unreasonable, the Company shall waive all waiting periods required for
participation in the benefit plans and arrangements and policies described
above.
(d) Withholding. The Company shall make all legally required
deductions and other withholdings, including, without limitation, from all
applicable payments of the Base Salary, the Performance Award and benefits to
the Executive.
(e) Expense Reimbursement. The Company shall reimburse the Executive
for all reasonable and necessary business expenses incurred by him in connection
with his duties; provided, that, such expenses are appropriately documented and
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are otherwise consistent with the Company's policies.
(f) Relocation. The Executive acknowledges and agrees that the
Executive shall be principally based at a location to be jointly determined;
provided, that, the Executive hereby acknowledges and agrees that he is prepared
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to relocate to any of the Company's current executive offices, including,
without limitation, to the Company's offices in the Chicago area; provided,
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further, however, that, if the
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Executive shall be principally based at the Company's New York City location,
the Company and the Executive shall in good faith negotiate appropriate
increases in the Executive's compensation to account for cost of living and tax
rate differentials. At the time that the Executive is required to relocate in
connection with his employment with the Company, the Company shall provide an
Executive relocation package, consistent with industry standards, as agreed by
the Chairman and the Executive; provided, that, in the event that the Executive
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is unable to sell his home located in Sidney, Ohio at fair market value, the
Company shall either purchase such home or pay the Executive the difference
between the fair market value and the actual sales price of such home; provided,
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further, that, the Executive agrees to use good faith efforts to obtain the
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highest reasonable sales price for the home within a reasonable time.
(g) Physical Examinations. The Executive agrees that as soon as
practicable after the Start Date, and from time to time thereafter, he shall
undergo any physical examinations and any other tests required for key man,
disability and employee benefit insurance (including, without limitation, the
Life Insurance Policy), as are reasonably required to obtain such insurance.
The cost of such physical examinations shall be borne by the Company. The
Executive shall make immediately available to the Chairman and any medical
representative of the Company the results of his last physical examination. It
is agreed that such information shall remain confidential. The Executive shall
promptly sign any insurance applications submitted to enable the Company to
obtain key man insurance.
(h) Country Club Membership. In the event of a relocation pursuant to
SECTION 4(f) hereof, the Company agrees to make a one-time payment to the
Executive, upon presentation by the Executive of appropriate documentation, to
reimburse the Executive for the cost of the Executive's initiation fees at a
country club of the Executive's reasonable choice; provided, however, that, the
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amount of such one-time payment shall not exceed a reasonable amount to be
jointly determined by the parties. In addition, without regard to whether the
Executive has relocated pursuant to SECTION 4(f) hereof, the Company agrees to
reimburse the Executive, upon presentation by the Executive of appropriate
documentation, for the annual dues incurred by the Executive during each year of
the Term hereof in connection with the Executive's membership at a country club
of his choice. The Executive agrees to provide the Company with any evidence he
may have showing that his membership related to a business use.
5. TERMINATION OF EMPLOYMENT.
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(a) Termination Events. Subject to the other terms and conditions
hereof, the Executive's employment under this Agreement shall terminate upon the
expiration of the Term or, if earlier, upon the earliest to occur of any of the
following events.
(i) Death; Permanent Disability. The Executive's employment
shall terminate upon (A) the death of the Executive or (B) the Permanent
Disability of the Executive.
(ii) Resignation With Good Reason; Termination Without Cause.
The Executive's employment may be terminated (A) by the Executive for Good
Reason or (B) by the Company without Cause, each upon the giving of notice
to the other party, effective as of the date set forth in such notice.
(iii) Resignation Without Good Reason; Termination With Cause.
The Executive's employment may be terminated (A) by the Executive without
Good Reason or (B) by the Company with Cause, each upon the giving of
notice to the other party, effective as of the date set forth in such
notice.
(b) Termination Obligations of the Company. Upon the termination of
the Executive's employment, subject in every respect to the fulfillment of the
Executive's obligations pursuant to SECTIONS 5(c) AND 5(d) hereof, the Executive
shall be entitled to the following.
(i) Death; Permanent Disability. In the event of termination
pursuant to SECTION 5(A)(I) hereof, the Executive or his estate, as
applicable, shall be entitled to the following:
(A) BASE SALARY. The Base Salary accrued and unpaid
through the Termination Date.
(B) PERFORMANCE AWARD. A pro rata portion of the
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Performance Award for the Bonus Year which includes the Termination
Date to be paid at the time specified in SECTION 4(b) hereof, with
such proration to be calculated based on the financial results of the
Company for the entire Bonus Year prorated for the period during which
the Executive was employed.
(C) BENEFITS. Any benefits pursuant to SECTION 4(c) hereof
accrued through the Termination Date; provided, that, in the event of
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termination of employment as a result of Permanent Disability, the
Company shall maintain the Life Insurance Policy through age 65 for
the Executive; provided, further, that, in the event that the
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Executive's employment is terminated as a result of Permanent
Disability which is employment related then the Company shall fund the
Policy through age 65; provided, further, that, in the event that the
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Executive's employment is terminated as a result of Permanent
Disability which is not employment related, then the Company shall
cease funding the Policy on the Termination Date.
(D) STOCK. The Stock Option benefits pursuant to SECTION
6(B) hereof.
(ii) Resignation With Good Reason; Termination Without Cause. In
the event of termination pursuant to SECTION 5(a)(ii) hereof, the Executive
shall be entitled to the following:
(A) BASE SALARY. The Base Salary through the fourth
anniversary of the Start Date as described in SECTION 4(a) hereof (or
through the end of any extension period pursuant to SECTION 2(b)
hereof to the extent that the Termination Date occurs within that
extension period); provided, that, after the Termination Date the Base
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Salary shall not be increased as provided in the definition of "BASE
SALARY"; provided, further, that, the Base Salary shall not be
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decreased below the level of the Base Salary on the Termination Date.
(B) PERFORMANCE AWARD. A pro rata portion of the
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Performance Award for the Bonus Year which includes the Termination
Date to be paid at the time specified in SECTION 4(b) hereof, with
such proration to be calculated based on the financial results of the
Company for the entire Bonus Year prorated for the period during which
the Executive was employed; provided, however, that, in the event of a
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Change of Control, the Executive shall be entitled to receive a
Performance Award for all periods through the fourth anniversary of
the Start Date (or through the end of any extension pursuant to
SECTION 2(b) hereof to the extent that
the Termination Date occurs within that extension period) at the time
specified in SECTION 4(b) hereof, calculated based on the average
Performance Award received for all periods prior to the Termination
Date. For the period commencing January 1, 1999, through the fourth
anniversary of the Start Date (or through the end of any extension
pursuant to SECTION 2(b) hereof to the extent that the Termination
Date occurs within that extension period), the Performance Award
specified in the proviso in the immediately preceding sentence shall
be paid no later than such fourth anniversary of the Start Date (or
through the end of any extension pursuant to SECTION 2(B) hereof to
the extent that the Termination Date occurs within that extension
period) and shall be calculated on a pro rata portion of the year
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represented by such period.
(C) BENEFITS. Any benefits pursuant to SECTION 4(c) hereof
accrued through the fourth anniversary of the Start Date (or through
the end of any extension pursuant to SECTION 2(b) hereof to the extent
that the Termination Date occurs within that extension period) that
the Executive is entitled to receive.
(D) STOCK. The Option with respect to fifty percent (50%)
of the shares of Stock with respect to which the Option have not, on
or prior to the Termination Date, become exercisable shall become
exercisable on the Termination Date; provided, however, that, nothing
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in this SECTION 5(b)(ii)(D) shall be deemed to affect the period of
time following the Termination Date in which the Executive may
exercise the Option which period shall be determined by the terms of
the Stock Option Agreement; provided, that, in the event of a Change
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of Control, the Executive shall receive the most favorable treatment
to the Executive available with respect to the Options pursuant to the
1989 Senior Executive Stock Option Plan as such plan provides as of
the date hereof or the Stock Option Agreement; provided, further,
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that, any additional Options granted to the Executive shall be subject
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to the above referenced plan, or any successor plan, as such plan may
be amended from time to time.
(iii) Resignation Without Good Reason; Termination With Cause.
In the event of
termination pursuant to SECTION 5(a)(iii) hereof, the Executive shall be
entitled to the Base Salary accrued and unpaid through the Termination Date
and any benefits pursuant to SECTION 4(c) hereof accrued through the
Termination Date.
Except as expressly set forth in this SECTION 5(b), following the Termination
Date, the Executive shall be entitled to no compensation, bonus, benefits,
stock, stock options or other remuneration of any kind whether under this
Agreement or otherwise. Without limiting the foregoing, the remuneration
described in this SECTION 5(b) shall be deemed to be liquidated damages in the
case of every termination described above and shall be deemed to be adequate and
appropriate consideration for all releases, covenants and other agreements of
the Executive hereunder which survive the Termination Date. Notwithstanding any
provision herein to the contrary, the Company shall be permitted to maintain key
man insurance policies regarding the life of the Executive for its own benefit
during any period of time whether during the Term or thereafter.
(c) Termination Obligations of the Executive.
(i) The Executive hereby acknowledges and agrees that all
Personal Property furnished to or prepared by the Executive in the course
of or incident to his employment, belong to the Company and shall be
promptly returned to the Company upon the Termination Date. Following the
Termination Date, the Executive shall not retain any written or other
tangible material containing any Proprietary Information relating to the
business of the Company.
(ii) The Executive hereby acknowledges that for the duration of
this Agreement, he has gained and will gain knowledge of Proprietary
Information. The Executive shall not during the Term or for a period of
three (3) years thereafter use (other than in the performance of his duties
to the Company) or disclose to any person, firm, corporation, partnership
or other entity whatsoever outside the Company or to any officer, director,
stockholder, partner, associate, employee, agent or representative of any
thereof (except as required by law or with the express prior written
approval of the Chairman) any such Proprietary Information either directly
or indirectly.
(iii) The Company shall be entitled, in addition to any other
right and remedy it may have, at law or in equity, to seek an injunction,
enjoining or restraining the Executive from any violation or threatened
violation of this SECTION 5(c), and the Executive agrees that the Company
has the right to seek such injunction.
(iv) For a period of two (2) years following the Termination
Date, the Executive agrees that the Executive shall not, engage in any
Prohibited Activity; provided, however, that, in the event that the
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Executive's employment is terminated pursuant to the provisions of SECTION
5(a)(ii) hereof or the Company elects nor to renew this Agreement pursuant
to the provisions of SECTION 2(b) hereof following the end of the period
referenced in SECTION 5(b)(ii)(A) hereof, the Executive shall have the
option of electing to either (A) render the provisions of this SECTION
5(c)(iv) inapplicable to the Executive in its entirety thereafter or (B)
receive for the balance of the two (2) year period referenced in this
SECTION 4(c)(iv) an amount equal to fifty percent (50%) of the Base Salary
in effect on the Termination Date; provided, further, that, this provision
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shall not prohibit the Executive from making any personal investment which
is purely passive in nature following the Termination Date; provided,
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further, that, so long as the Executive has no responsibility to manage or
------- ----
advise with respect to the Prohibited Activity, nothing in this Agreement
shall prohibit the Executive from acting as (A) a senior officer of an
entity which is engaged in a Prohibited Activity so long as such Prohibited
Activity is not a principal activity of such entity or (B) an officer,
employee or manager of a division or subsidiary of an entity which may be
engaged in a Prohibited Activity so long as such division or subsidiary is
not engaged in a Prohibited Activity; provided, further, that, if the
-------- ------- ----
Executive desires to become a consultant to an entity which is engaged in a
Prohibited Activity, the Executive may seek the consent of the Company by
submitting to the Chairman in writing a detailed description of the
Executive's proposed consulting activities, the identity of the entity to
receive such consulting activities and the Executive's proposed
responsibilities (including, without limitation, the extent to which the
Executive will
be engaged in consulting activities relating to a Prohibited Activity).
(v) The Executive acknowledges and agrees that any solicitation
of the Company's or any of its Subsidiaries' customers or suppliers may
involve the use or disclosure of Proprietary Information protected by this
Agreement. In recognition of this fact, for a period of two (2) years
following the Termination Date, the Executive agrees that the Executive
shall not for himself or on behalf of any other person, corporation,
partnership or other entity, directly or indirectly, or by action in
concert with others, solicit, induce or encourage or attempt to solicit,
induce or encourage, any person known by him to have a relationship with
the Company or any of its Subsidiaries, or any customer or supplier of the
Company or any of its Subsidiaries, to discontinue, terminate, cancel or
refrain from entering into any contractual or business relationship with
the Company or any of its Subsidiaries.
(vi) The Executive acknowledges and agrees that any solicitation
of the Company's or any of its Subsidiaries' officers, managers or other
employees may involve the use or disclosure of Proprietary Information
protected by this Agreement. In recognition of this fact, for a period of
two (2) years following the Termination Date, the Executive agrees that the
Executive shall not for himself or on behalf of any other person,
corporation, partnership or other entity, directly or indirectly, or by
action in concert with others, solicit for employment any person who at the
Termination Date is or was an officer, manager or other employee of the
Company or any of its Subsidiaries without the prior written consent of the
Company.
The Executive acknowledges and agrees that any obligations of the Company
payable to or inuring to the benefit of the Executive following the Termination
Date are expressly conditioned upon the Executive's compliance with and
adherence to the provisions of SECTION 5(c) hereof and to the execution,
delivery and performance of a general release in favor of the Company, its
affiliates, advisors, representatives, senior executive officers and directors
from any and all claims relating to the Executive's employment with the Company
in a form reasonably satisfactory to the Company; provided, that,
-------- ----
any rights and obligations of the Company pursuant to this Agreement arising
after the Termination Date shall not be subject to such general release;
provided, further, that, the Company shall execute, deliver and perform a
- -------- ------- ----
general release of the Executive from all claims discovered subsequent to one
(1) year after the Termination Date.
(d) Other Positions. Upon the Termination Date, the Executive shall
be deemed to have resigned, and if requested by the Company shall tender his
resignation, from all offices and directorships then held with the Company and
any Subsidiaries.
(e) Survival. The representations, warranties, covenants and
agreements contained in SECTIONS 5(b), 5(c), 5(d) AND 7 hereof shall survive the
Termination Date and the expiration of this Agreement pursuant to their
respective terms.
6. THE POLICY; CERTAIN STOCK MATTERS. In addition to any other
---------------------------------
compensation described in this Agreement, as of the Start Date, the Executive
shall be granted certain additional consideration as set forth hereinbelow.
(a) The Policy. The Company agrees to provide the Executive with
annual retirement benefits in the amount of Two Hundred Twenty Six Thousand
Dollars ($226,000.00) before taxes, beginning at age 65, through age 90,
pursuant to a combination of the Company's Pension Plan Benefits and the Policy
to be purchased by the Company in the Executive's name and to be funded ratably
and equally over the sixteen (16) year period commencing the Start Date;
provided, that, the Company shall retain an interest in the cash value and death
- -------- ----
benefit of the Policy in the amount of aggregate premiums paid from time to time
by the Company for the Policy; provided, further, that, the Company shall pay to
-------- ------- ----
the Executive, on an annual basis, from the date hereof to age 65, the amount,
after taxes, of any income tax required to be paid by the Executive as a result
of income imputed to the Executive based upon the Insurer's Alternate Term Rate
tables in connection with premium payments paid in respect of the Policy;
provided, further, that, the Company agrees to pay to the Executive at age 65
- -------- ------- ----
and each calendar year thereafter, an amount, before taxes, equal to (i) Two
Hundred Twenty Six Thousand Dollars ($226,000.00) minus (ii) the actual Pension
-----
Plan Benefits paid for such year minus (iii) the Policy benefits, before taxes,
-----
paid for such year, as calculated by grossing up the actual after tax Policy
payments using the Executive's then current effective local, state and federal
income tax rates; provided, further, that, in the event that the Executive's
-------- ------- ----
employment is
terminated pursuant to the provisions of SECTION 5(a)(ii) hereof or the Company
elects not to renew this Agreement pursuant to the provisions of SECTION 2(B)
hereof, the Company shall continue to fund the Policy through age 65; provided,
--------
further, that, in the event the Executive's employment is terminated pursuant to
- ------- ----
the provisions of SECTION 5(a)(iii) hereof, the Company shall cease funding the
Policy on the Termination Date; provided, further, that, in the event that the
-------- ------- ----
Executive elects not to renew this Agreement pursuant to the provisions of
SECTION 2(b) hereof, the Company shall continue to fund the Policy for a period
of two (2) years form the Termination Date.
(b) Stock Options. The Company shall issue to the Executive the
Option pursuant to the Stock Option Agreement, the terms of which shall provide
as follows (i) the Option with respect to one hundred thousand (100,000) shares
of the Stock shall be exercisable on the first anniversary of the Start Date,
(ii) the Option with respect to one hundred twenty five thousand (125,000)
shares of the Stock shall be exercisable at any time during the Term on and
after the price of the Stock has reached or exceeded a price which shall be
equal to one hundred fifty percent (150%) of the Start Price and (iii) the
Option with respect to seventy five thousand (75,000) shares of the Stock shall
be exercisable at any time during the Term on and after the price of the Stock
has reached or exceeded a price which shall be equal to two hundred percent
(200%) of the Start Price. A portion of the Option may be incentive stock
options qualifying as such under the Internal Revenue Code. The Option granted
pursuant to this SECTION 6(b) shall be for ten (10) years, subject to continued
employment with the Company; provided, that, such Option shall be subject to
-------- ----
SECTION 7 of the Stock Option Agreement. The Company shall seek immediate
ratification of the Stock Option Agreement by the Board.
7. REPRESENTATIONS OF THE EXECUTIVE AND THE COMPANY.
------------------------------------------------
(a) Other Agreements. The Executive hereby represents and warrants to
the Company that he is not bound by any employment agreement, restrictive
covenant, confidentiality or proprietary information or other agreement that
would prohibit or inhibit in any way the full and complete performance by the
Executive of his duties hereunder or as the President and Chief Operating
Officer of the Company. The Executive further represents, warrants and agrees
that he will not use any trade secret, confidential or
other proprietary information of any former employer or other person or entity
in the course of performing his duties hereunder or as the President and Chief
Operating Officer of the Company and will not disclose any such information to
the Company or any of its representatives. Without limitation, the Executive
acknowledges that the representations and warranties set forth in this SECTION
7(a) shall apply with full force and effect to those certain restrictions placed
upon the Executive in SECTION 10 of the Stolle Arrangements. The Company hereby
represents, warrants and agrees that the Company shall not request or require
the Executive to divulge, in whole or any part, any information that would be in
violation of the Stolle Arrangements.
(b) Tax Consequences. The Executive acknowledges that the payments
and other benefits herein provided will have serious negative income tax
consequences to the Executive. The Executive represents, warrants and agrees
that he has consulted with an independent, professional tax advisor, that he is
fully responsible for all the tax ramifications of the provisions of this
Agreement and that neither the Company nor any of its representatives, agents or
advisors has made any representations or warranties to the Executive as to the
appropriate tax treatment to the Executive of these matters.
(c) Health of the Executive. The Executive represents and warrants
that as of the date hereof, the Executive has no reason to believe that he
suffers from a condition that would lead to a Permanent Disability during the
four year period commencing on the Start Date.
8. MISCELLANEOUS
-------------
(a) Assignment; Successors and Assigns. This Agreement may not be
assigned, nor may any obligations hereunder be delegated, by the Executive.
This Agreement is fully and freely assignable by the Company in connection with
the consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of its
properties or assets subject to the Executive's rights in the event of a Change
in Control. Subject to the foregoing, the Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective heirs, legal
representatives, successors and permitted assigns, and shall not benefit any
person or entity other than those enumerated above.
(b) Notices. Any notice, request, claim, demand, document and other
communication hereunder to any
party shall be effective upon receipt or, in the case of transmission by mail as
set forth below, three (3) business following deposit of such notice, request,
claim, demand, document or communication with the postal service, and shall be
in writing and delivered personally or sent by courier, telecopy, or certified
or registered mail, postage prepaid, or other similar means of communication,
(i) if to the Company, addressed to its principal executive offices to the
attention of its Chairman and (ii) if to the Executive, to him at the address
set forth below under his signature or at any such other address as either party
shall have specified by notice in writing to the other.
(c) Entire Agreement. The terms of this Agreement together with the
attachments hereto are intended by the parties to be the final expression of
their agreement with respect to the employment of the Executive by the Company
and may not be contradicted by evidence of any prior or contemporaneous
agreement. The parties hereby agree that this Agreement shall be in effect as
of the date hereof and shall supersede and be in lieu of any and all prior
agreements or understandings regarding the employment of the Executive, whether
verbal or written.
(d) Amendments; Waivers. This Agreement may not be modified, amended
or terminated except by an instrument in writing, signed by the Executive and by
the Chairman. By an instrument in writing similarly executed, either party may
waive compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform. A waiver of any
provision of this Agreement shall not be deemed a waiver of any other provision
of this Agreement. No waiver of any breach of any provision of this Agreement
shall be deemed the waiver of any subsequent breach thereof or of any other
provision.
(e) Severability; Enforcement. If any provision of this Agreement, or
the application thereof to any person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
(f) Governing Law. The validity, interpretation, enforceability and
performance of this Agreement shall be governed by and construed in accordance
with the internal substantive laws (and not the law of conflict of laws) of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
--------------------------
Name: Jeffrey S. Silverman
Title: Chairman of the Board and
Chief Executive Officer
/s/ Dana R. Snyder
--------------------------
Dana R. Snyder
Address for Notices
Dana R. Snyder
c/o Richard H. Wallace
Elsass, Wallace, Evans,
Schelle & Co., L.P.A
100 South Main Avenue, Suite 162
Sidney, Ohio 45365-0499
Ply Gem Industries, Inc.
777 Third Avenue
New York, New York 10017
June 5, 1995
Mr. Dana R. Snyder
c/o Richard H. Wallace
Elsass, Wallace, Evans,
Schelle & Co. L.P.A.
100 South Main Avenue, Suite 102
Sidney, Ohio 45365-0499
Dear Mr. Snyder:
This letter agreement (this "LETTER AGREEMENT") will confirm our
understanding with respect to the obligation of Ply Gem Industries, Inc. (the
"COMPANY") to defend and hold you (the "EXECUTIVE") harmless in the event of
certain claims made against you, as more fully provided hereinbelow.
1. Effectiveness. This Letter Agreement shall be effective for the Term of
------------
the Executive's employment by the Company, or by the Company's Subsidiaries or
affiliates, pursuant to the terms and conditions set forth in that certain
Employment Agreement between the Company and the Executive dated as of even date
herewith (the "AGREEMENT"); provided, that, in the event of a termination of
--------------
employment of the Executive as a result of (i) Permanent Disability, (ii)
termination by the Company without Cause or (iii) resignation by the Executive
for Good Reason, the term of this Letter Agreement shall extend through the end
of the fourth anniversary of the Start Date (or through the end of any
extension pursuant to SECTION 2(b) of the Agreeemnt to the extent that the
Termination Date occurs within that extension period). Unless otherwise defined
herein, or the context otherwise requires, all terms used but not defined herein
shall have the meanings ascribed to such term in the Agreement.
2. The Company. Subject to the provisions of Section 3 hereof, and
-----------
notwithstanding any provision in the Agreement to the contrary, the Company
agrees to defend and to hold harmless the Executive from any claims that may be
brought against the Executive by the Aluminum Company of America ("ALCOA") or
its subsidiary, the Stolle Corporation ("STOLLE"), which claims assert that the
performance by the Executive of any duties as an employee of the Company, or the
Company's Subsidiaries or affiliates, constitutes a breach of the terms of the
Executive's prior employment with ALCOA or STOLLE, including, without
limitation, under SECTION 10 of that certain Employment Agreement with the
Stolle Corporation, dated as of June 28, 1989 (collectively, the "STOLLE
ARRANGEMENTS")' provided that, the indemnification provided for in this
-------- ----
SECTION 2 shall not apply to any non-appealable judgment against the Executive
based upon a breach of his obligations to ALCOA or Stolle pursuant to the Stolle
Arrangements.
3. The Executive. The Executive acknowledges and agrees that the Company's
-------------
obligation to defend and hold harmless the Executive from the claims referenced
in SECTION 2 hereof shall be subject to the execution, delivery and performance
by the Executive of a Reimbursement Agreement, in a form satisfactory to the
Company, which shall provide that the Executive shall reimburse the Company for
any non-appealable judgments and attorneys' fees incurred therewith in
connection with the Company's obligations set forth in Section 2 hereof, in the
event that a court or other judicial tribunal or any arbitrator with
jurisdiction renders a non-appealable judgment against the Executive based upon
any of the following: (a) a breach of the Executive's obligations to ALCOA or
Stolle pursuant to the Stolle Arrangements, (b) a breach by the Executive of any
convenant or agreement set forth in SECTION 7(a) of the Agreement or (c) any
representation or warranty contained in such SECTION 7(a) being untrue;
provided, that, any amount to be reimbursed to the Company by the Executive
- ---------------
shall consist solely of the forfeiture of the Option on shares not yet vested
pursuant to the Agreement and the documents referenced therein.
4. ALCOA Stock Options. In the event that the Executive is not permitted to
-------------------
exercise his option on
approximately eight thousand seven hundred (8,700) shares of common stock of
ALCOA (the "ALCOA OPTION") as a result of the termination of his employment with
ALCOA, the Company shall pay to the Executive fifty percent (50%) of any
monetary losses incurred by the Executive as a result of the inability to
exercise the ALCOA Option; provided, that, the Executive shall attempt to
exercise the ALCOA Option no later than September 1, 1995; provided, further,
that, the Executive shall present appropriate proof of such loss; provided
further, that, the Company's obligations pursuant to this Section 4 shall not
exceed an aggregate amount equal to Forty Three Thousand Five Hundred Dollars
($43,500.00).
5. General Matters.
(a) Entire Agreement. This Letter Agreement, the Agreement and
the other documents contemplated herein and therein constitute the entire
agreement and understanding of the parties hereto with respect to the
obligations referenced herein and supersedes all prior agreements and
correspondence among the parties with respect to such subject matter.
(b) Governing Law. It is understood and agreed that the
construction and interpretation of this Letter Agreement shall at all times and
in all respects be governed by the laws of the State of Delaware, without giving
effect to principles of conflicts of law thereunder. The parties hereto
irrevocably submit to the jurisdiction of (i) the state or federal courts
located in New York, New York, in the event that a claim is brought against the
Company and (ii) the state or federal courts located at the Executive's
residence or principal place of business, in the event that a claim is brought
against the Executive; in connection with any claim arising out of or relating
to this Letter Agreement and the Agreement and the transactions contemplated
hereby and hereby agree not to assert, by way of motion, as a defense or
otherwise in any such claim that the claim is brought in an inconvenient forum
or that the venue of the claim is improper.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
--------------------------
Name: Jeffrey S. Silverman
Title: Chairman of the Board and
Chief Executive Officer
/s/ Dana R. Snyder
--------------------------
Dana R. Snyder
Address for Notices
Dana R. Snyder
c/o Richard H. Wallace
Elsass, Wallace, Evans,
Schelle & Co., L.P.A
100 South Main Avenue, Suite 162
Sidney, Ohio 45365-0499
EMPLOYMENT AGREEMENT
AMENDMENT NO. 1
THIS AMENDMENT, dated as of October 25, 1995, by and between Ply Gem
Industries, Inc., a Delaware corporation, having its principal place of business
at 777 Third Avenue, New York, New York 10017 (the Company), and Dana R. Snyder,
residing at 700 Plum Ridge Trail, Sidney, Ohio 45365 (the Executive).
RECITALS
WHEREAS, the parties hereto, under date of June 5, 1995, have entered into
an Employment Agreement (the "Employment Agreement") pursuant to which the
Company employed the Executive as its Chief Operating Officer upon terms and
conditions therein set forth; and
WHEREAS, Section 6(a) of the Employment Agreement requires the Company to
annually pay the Executive $226,000 commencing in the year in which he attains
the age of 65 and ending in the year in which he attains the age of 90, which
payments are to be funded in part by the Policy and the Pension Plan Benefits;
and
WHEREAS, Section 4(c) of the Employment Agreement requires the Company to
provide the Executive with the Life Insurance Policy, a $1,750,000 split dollar
life insurance policy; and
WHEREAS, pursuant to Section 6(b) of the Employment Agreement, the Company
granted the Executive options to acquire 300,000 shares of the Company's common
stock, which options as of the date hereof have not become exercisable; and
WHEREAS, the Company and the Executive desire to exchange (i) the Company's
obligations under the Employment Agreement to pay the Executive the $226,000
annuity and to provide the Life Insurance Policy for (ii) the acceleration of
the exercisability of the options to acquire 300,000 shares and the issuance of
additional options to acquire up to 500,000 shares of the Company's common
stock; and
WHEREAS, the parties hereto desire to restate and modify certain provisions
of the Employment Agreement upon the following terms and conditions.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings between them, the Company and the Executive hereby agree as
follows:
1. Section 6 of the Employment Agreement shall be deemed modified and
amended to provide that the provisions of Section 6(a) shall be deleted and
deemed of no further force and effect. In addition, the Company's obligation to
furnish the Life Insurance Policy in accordance with Section 4(c) is canceled.
References in the Agreement to Life Insurance Policy and Policy shall be deleted
and canceled. In consideration therefore it is agreed that:
(i) The stock options issued pursuant to Section 6(b) shall be deemed
modified and amended so as to provide that all of the options shall be fully
exercisable as of the date hereof and the option agreement shall be as more
particularly set forth in the forms attached to this Amendment as Exhibit A and
Exhibit A-1 respectively. The provisions of Section 5(b)(ii)(D) of the
Employment Agreement shall be canceled.
(ii) The Company has issued to the Executive additional stock options
to acquire 250,000 shares of common stock of the Company pursuant to the Stock
Option Agreement delivered this date, the form of which is attached hereto as
Exhibit B.
(iii) The Company shall issue to Executive on January 2, 1996,
additional stock options to acquire 206,000 shares of common stock of the
Company pursuant to the 1994 Employee Incentive Stock Plan. Except as herein
set forth, these options shall be in the form of Exhibit B attached hereto. The
exercise price of the options shall be the Fair Market Value of the shares of
Ply Gem Common Stock on January 2, 1996. In the event the Fair Market Value of
Ply Gem Common Stock on January 2, 1996 shall be in excess of $16 per share,
then the number of options granted shall be increased so that the number of
options granted times the difference between the Fair Market Value of Ply Gem
Common Stock on January 2, 1996 and $26 shall equal $2,060,000. Notwithstanding
the aforesaid, the maximum number of options to be granted on January 2, 1996
shall be 250,000.
(iv) The provisions of Section 1(g) shall be modified in its entirety
as more particularly set forth on Exhibit C attached hereto so that the
definition of "Change of Control" shall be consistent with and conform to the
definition adopted by the Board of Directors of the Company for other purposes.
2. Section 1(j) of the Agreement shall be amended in its entirety, for
clarification purposes and to reflect the understanding and agreement of the
parties, as follows:
(j) "Good Reason" shall mean the Executive's voluntary resignation due
to one or more of the following (i) the Base Salary is reduced during the
Term below the amount set forth in Section 4(a) hereof, (ii) the
Executive's group benefits are materially reduced, (iii) the Company
insists upon relocation of the Executive in violation of Section 4(f)
hereof or a change occurs in the Executives responsibilities without his
consent, (iv) a Change of Control event occurs or (v) the Company has
materially breached this Agreement and the Company has failed to cure such
breach within twenty (20) days of written notification from the Executive
of such breach.
3. The Company agrees to furnish to the Executive at the Company's
expense a term life insurance policy in the amount of $1,750,000. The Executive
shall have the right to designate the beneficiary.
The Employment Agreement as heretofore adopted and as dated as of June 5,
1995 and as amended herein is hereby ratified and confirmed and is deemed in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
------------------------------
Name: Jeffrey S. Silverman
Title: Chairman of the Board and
Chief Executive Officer
/s/ Dana R. Snyder
------------------------------
Dana R. Snyder