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EXHIBIT 10.11
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement"), dated
as of September 30, 1996, is between Atrium Corporation, a Delaware corporation
(the "Employer"), and Howard S. Saffan (the "Employee").
WHEREAS, the Employer is the parent corporation of Vinyl Building
Specialties of Connecticut, Inc.; Bishop Manufacturing Co., Inc., Bishop
Manufacturing Company of New England, Inc. and Bishop Manufacturing Co. of New
York, Inc., each a Connecticut corporation (collectively, the "Bishop
Companies", and singly a "Bishop Company"); and
WHEREAS, the Employer wishes to employ the Employee as an executive
officer of the Bishop Companies, and the Employee wishes to work as an
executive officer of the Bishop Companies, on the terms set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
Section 1. EMPLOYMENT. The Employer hereby employs the Employee, and
the Employee hereby accepts employment, with effect from July 1, 1996, upon the
terms and subject to the conditions hereinafter set forth.
Section 2. DUTIES. The Employee shall be employed as the General
Manager of each of the Bishop Companies or in such other executive capacity as
the Employer may from time to time designate. In such capacity, the Employee
shall have the executive responsibilities and duties assigned by the Employer's
Board of Directors (the "Board"). The Employee agrees to devote his full time
and best efforts to the performance of his duties to the Employer and to the
Bishop Companies.
Section 3. TERM. The initial term of employment of the Employee
hereunder shall commence on July 1, 1996 (the "Commencement Date") and shall
continue until the third anniversary of the Commencement Date, (the "Initial
Term"), unless earlier terminated pursuant to Section 7, and shall be renewed
automatically for additional one (1) year terms (each an "Additional Term")
unless either party delivers written notice to the other party of an intent not
to renew ninety (90) days prior to the expiration of the Initial Term, or the
then current Additional Term, as the case may be.
Section 4. COMPENSATION AND BENEFITS. Until the termination of the
Employee's employment hereunder, in consideration for the services of the
Employee hereunder, the Employer shall compensate the Employee as follows:
(a) Base Salary. The Employer shall pay the Employee fixed
compensation equal to $150,000 per annum (the "Base Salary") during
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the term of the Employee's employment hereunder. The Base Salary shall accrue
and be payable in accordance with the payroll practices of Employer for
executives in effect from time to time during the term hereof. All such
payments shall be subject to deduction and withholding authorized or required
by applicable law. The Base Salary may be increased from time to time in the
sole discretion of the Board and the Base Salary, as so increased, shall
thereafter become the Base Salary payable hereunder.
(b) Vacation. The Employee shall be entitled to four (4) weeks
vacation in any period of twelve (12) consecutive calendar months. Any
vacation shall be taken at the reasonable and mutual convenience of the Bishop
Companies and the Employee. Accrued vacation not taken in any calendar year
will not be carried forward or used in any subsequent calendar year.
(c) Insurance; Other Benefits. Accident, disability, life and health
insurance for the Employee shall be provided by the Employer under group
accident, disability, life and health insurance plans maintained by the
Employer for its full-time, salaried employees as such employment benefits may
be modified from time to time by the Employer for all full-time, salaried
employees. The amount and extent of such coverage shall be subject to the
discretion of the Board.
(d) Bishop Incentive Bonus. The Employer shall pay the Employee an
incentive bonus (the "Incentive Bonus") during the term of the Employee's
employment hereunder equal to two percent (2%) of the "Bishop Pre-Tax Profit"
(as defined below). All such payments shall be subject to deduction and
withholding authorized or required by applicable law.
For purposes of this Agreement, "Bishop Pre-Tax Profit" shall mean, for the
period beginning on the Commencement Date to the last day of the Bishop
Companies' then-current fiscal year and for each successive fiscal year
thereafter (each such period, an "Incentive Period"), the gross income of the
Bishop Companies for such period, excluding capital gains, less the Bishop
Companies' expenses, deductions and credits directly attributable for such
period to such operations, including, but not limited to, a management fee of
two percent (2%) of gross sales of the Bishop Companies and management expenses
reasonably allocated to the Bishop Companies. In computing the Bishop Pre-Tax
Profit, no deduction shall be taken or allowance made for: (a) federal or
state income taxes; (b) the Incentive Bonus or (c) any interest expense not
directly attributable to the operations of the Bishop Companies. The Bishop
Pre-Tax Profit for any applicable period shall be determined in accordance with
generally accepted accounting principles, consistent with the Bishop Companies'
financial statements for the year ended December 31, 1996, by the certified
public accountants regularly engaged by the Employer (the "Accountants") and
their determination shall be final and conclusive on the parties hereto.
Except as otherwise specifically provided herein, the Incentive Bonus shall
be paid to the Employee on or before April 10th of the fiscal year immediately
following the one for which
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the calculation is made (the "Bonus Payment Date"). In the event that the
Incentive Bonus is not determined by the Accountants on or before the Bonus
Payment Date, the Employer shall prepare an estimate thereof and shall pay to
the Employee the amount of such estimate on the Bonus Payment Date. Such
payment shall be accompanied by a copy of the calculation on which the estimate
of the Incentive Bonus is based. If for any reason the Incentive Bonus as
determined by the Accountants or the estimate thereof as determined by the
Employer, as applicable, shall be recalculated for the applicable period and
result in an amount exceeding the payment made to the Employee on the Bonus
Payment Date, the Employer shall pay to the Employee (a) such excess, plus (b)
interest for the period in question in an amount equal to the product of such
excess multiplied by The First National Bank of Boston's base rate of interest
plus 2%.
(e) Car Allowance. The Employer recognizes the Employee's need for an
automobile for business purposes. The Employer shall provide the Employee with
a new automobile, including all related maintenance, repairs, insurance and
other costs. The cost to the Employer of the new automobile shall not exceed
$35,000 (plus all sales taxes attributable to such $35,000 purchase). The
automobile purchased by the Employer pursuant to this Section 4(e) shall be for
the Employee's use and not ownership and shall remain an asset of the Employer.
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Section 5. SIGNING BONUS. In addition to, and not in limitation of,
Section 4, as further consideration for the Employee entering into this
Agreement and agreeing to be bound by the terms and provisions hereof, the
Employer shall pay to the Employee, in three (3) equal installments, a $150,000
signing bonus (the "Signing Bonus"). The first $50,000 of the Signing Bonus
shall be due and payable on the Commencement Date, and $50,000 of the Signing
Bonus shall be due and payable on each of the first and second anniversaries of
the Commencement Date.
Section 6. EXPENSES. The Employer shall reimburse the Employee for
all reasonable expenses of types authorized by the Employer and incurred by the
Employee in the performance of his duties hereunder. The Employee shall comply
with such budget limitations and approval and reporting requirements with
respect to expenses as the Employer may establish from time to time.
Section 7. TERMINATION. The Employee's employment hereunder shall
commence on the Commencement Date and continue until the expiration of the
Initial Term, and any extension of such term pursuant to Section 3, except that
the employment of the Employee hereunder shall earlier terminate:
(a) By the Employer for Cause (as defined below) immediately upon
written notice to the Employee. In such event, the Employee shall be paid only
the Base Salary pro rata to the date of such termination notice, less all
amounts required to be withheld or deducted therefrom and all amounts owed or
due by Employee to Employer. Upon termination of the Employee's employment for
Cause, the Employee shall forfeit all of his rights to all payments of both the
Incentive Bonus and the Signing Bonus otherwise due to him or to which he may
be entitled.
(b) By the Employee upon thirty (30) days written notice to the
Employer. In such event, if the Employee has not breached any provision of
this Agreement, the Employer shall pay the Employee the Base Salary, as has
been earned to the date of such termination, less all amounts required to be
withheld or deducted therefrom and all amounts owed or due by Employee to
Employer. Any such termination of employment by the Employee, and the payment
by the Employer of Base Salary pursuant to this Section 7(b), shall be without
prejudice to any rights of Employer under this Agreement. Upon termination by
the Employee of his employment hereunder, the Employee shall forfeit all of his
rights to all payments of both the Incentive Bonus and the Signing Bonus
otherwise due to him or to which he may be entitled.
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(c) By the Employer other than for Cause, and other than as set forth
in Section 7(d) below, upon ninety (90) days written notice to the Employee.
In such event, the Employer shall continue to pay the Employee an amount equal
to (i) the sum of (A) Base Salary for a period (x) if the Employee's employment
is terminated during the Initial Term, to the third anniversary of the
Commencement Date or (y) if the Employee's employment is terminated during any
subsequent Additional Term, to the last day of the twelfth month after
commencement of such Additional Term, plus (B) the Incentive Bonus pro-rated
from the first day of the then-current Incentive Period to the date of such
termination, plus (C) if the Employee, prior to such termination, had elected
to be covered under the Employer's health plan, the cost of such coverage on
the same basis as prior to the Employee's termination for a period of twelve
(12) months thereafter, less (ii) all amounts required to be withheld or
deducted therefrom and all amounts owed or due by Employee to Employer. The
Incentive Bonus to be paid pursuant to this Section 7(c) shall be paid by the
Employer within one-hundred twenty (120) days following the date of the
Employee's termination.
(d) Immediately upon the death of the Employee, or, at the option of
the Employer, upon the disability of the Employee with thirty (30) days written
notice to the Employee. In such event, the Employer shall pay to the estate of
Employee, or to the Employee as the case may be, an amount equal to (i) the sum
of (A) the Base Salary which would otherwise be payable to the Employee through
the end of the month in which his death or disability occurs, plus (B) the
Incentive Bonus pro-rated from the first day of the then-current Incentive
Period to the date of the Employee's death or disability, less (ii) all amounts
required to be withheld or deducted therefrom and all amounts owed or due by
Employee to Employer. The Incentive Bonus to be paid pursuant to this Section
7(d) shall be paid by the Employer within one-hundred twenty (120) days
following the date of the Employee's death or disability. For purposes of this
Section 7(d), the Employee shall be deemed disabled if an independent medical
doctor selected by the Employer's health or disability insurer certifies that
the Employee has for one hundred twenty (120) days, consecutive or non-
consecutive, in any twelve (12) month period been disabled in a manner which
seriously interferes with his ability to perform his responsibilities under
this Agreement. Any refusal by the Employee to submit to a medical examination
for the purpose of certifying disability under this Section 7(d) shall be
deemed to constitute conclusive evidence of the Employee's disability.
(e) In the event that this Agreement or the Employee's employment
hereunder is terminated, the Employee shall not be obligated to mitigate his
damages nor the amount of any payment due and owing to him hereunder by seeking
other employment or otherwise.
(f) For purposes of this Agreement, "Cause" shall mean:
(i) the Employee shall have committed an act of fraud,
embezzlement, misappropriation or breach of fiduciary duty against the
Employer or any of the Bishop Companies, including, but not limited to, the
offer, payment, solicitation or acceptance of any
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unlawful bribe or kickback with respect to the Employer's or any of the
Bishop Companies' business; or
(ii) the Employee shall have been convicted by a court of
competent jurisdiction of, or pleaded guilty or nolo contendere to, any
felony or any crime involving moral turpitude; or
(iii) the Employee shall have been chronically absent from work
(excluding vacations, illnesses or leaves of absence approved by the
Employer); or
(iv) the Employee shall have refused, after explicit written
notice, to obey any lawful resolution of or direction by the Employer's
Board of Directors or the Board of Directors of any of the Bishop Companies
which is consistent with his duties hereunder; or
(v) the Employee shall have engaged in the unlawful use
(including being under the influence) or possession of illegal drugs on the
Employer's or any of the Bishop Companies premises.
Section 8. INVENTIONS; ASSIGNMENT. All rights to discoveries,
inventions, improvements and innovations (including all data and records
pertaining thereto) related to the Employer's or any of the Bishop Companies'
business, whether or not patentable, copyrightable, registrable as a trademark,
or reduced to writing, that the Employee may discover, invent or originate
during the term of his employment hereunder, 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 Employer or any of the
Bishop Companies ("Inventions"), shall be the exclusive property of the
Employer or the respective Bishop Company, as the case may be. The Employee
shall promptly disclose all Inventions to the Employer, shall execute at the
request of the Employer any assignments or other documents the Employer may
deem necessary to protect or perfect its rights therein, and shall assist the
Employer, at the Employer's expense, in obtaining, defending and enforcing the
Employer's rights therein. The Employee hereby appoints the Employer as his
attorney-in-fact to execute on his behalf any assignments or other documents
deemed necessary by the Employer to protect or perfect its rights to any
Inventions.
Section 9. CONFIDENTIAL INFORMATION. The Employee recognizes and
acknowledges that certain assets of the Employer and the Bishop Companies,
including without limitation information regarding customers, pricing policies,
methods of operation, proprietary computer programs, sales, products, profits,
costs, markets, key personnel, formulae, product applications, technical
processes, and trade secrets (hereinafter called "Confidential Information")
are valuable, special, and unique assets of the Employer, the Bishop Companies
and their respective affiliates. The Employee shall not, during or after his
term of employment, disclose any or any part of the Confidential Information to
any person, firm, corporation, association, or any other entity for any reason
or purpose whatsoever, directly or indirectly, except as may be required by law
or pursuant to his employment
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hereunder, unless and until such Confidential Information becomes publicly
available other than as a consequence of the breach by the Employee of his
confidentiality obligations hereunder. In the event of the termination of his
employment, whether voluntary or involuntary and whether by the Employer or the
Employee, the Employee shall deliver to the Employer all documents and data
pertaining to the Confidential Information and shall not take with him any
documents or data of any kind or any reproductions (in whole or in part) or
extracts of any items relating to the Confidential Information.
Section 10. NON-COMPETITION. During the term of the Employee's
employment hereunder and until one (1) year after termination of the Employee's
employment hereunder, the Employee will not (a) in any region in which the
Employer or any of its subsidiaries (including, without limitation, any of the
Bishop Companies) operate, engage, directly or indirectly, alone or as a
shareholder (other than as a holder of less than five percent (5%) of the
common stock of any publicly traded corporation), partner, officer, director,
employee or consultant of any other business organization that is engaged or
becomes engaged in the business of manufacturing or distributing aluminum, wood
or vinyl windows or doors or in any other business activity that the Employer
or any of the Bishop Companies is conducting at the time of the Employee's
termination or has notified the Employee that it proposes to conduct (the
"Designated Industry"), (b) divert to any competitor of the Employer in the
Designated Industry any customer of the Employer or of any of the Bishop
Companies, or (c) solicit or encourage any officer, employee or consultant of
the Employer or of any of the Bishop Companies to leave its employ for
employment by or with any competitor of the Employer or of any of the Bishop
Companies in the Designated Industry. If at any time the provisions of this
Section 10 shall be determined to be invalid or unenforceable, by reason of
being vague or as to area, duration or scope of activity, this Section 10 shall
be considered divisible and shall become and be immediately amended to only
such area, duration and scope of activity as shall be determined to be
reasonable and enforceable by the court or other body having jurisdiction over
the matter; and the Employee agrees that this Section 10 as so amended shall be
valid and binding as though any invalid or unenforceable provision had not been
included herein.
Section 11. GENERAL.
(a) Key-Man Insurance. At any time during the term of this Agreement,
the Employer shall have the right to insure the life of the Employee for the
Employer's sole benefit, and to determine the amount of insurance and the type
of policy. The Employee shall cooperate with the Employer
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in taking out such insurance by submitting to physical examination, 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.
(b) Survival. The Employee acknowledges that the Employer would not
enter into this Agreement, employ him or divulge to him any proprietary
information without the Employee agreeing to the covenants and agreements
contained in Sections 8, 9 and 10 hereof. The continuation of the employment
of the Employee pursuant to the terms hereof is not a condition to the survival
of the covenants and provisions contained in Sections 8, 9 and 10. All
obligations and duties of the Employee and all rights of the Employer as set
forth in said sections shall survive the termination or expiration of this
Agreement.
(c) Notices. All notices and other communications hereunder shall be
in writing or by written telecommunication, and shall be deemed to have been
duly given if delivered personally or if mailed by certified mail, return
receipt requested, postage prepaid or sent by written telecommunication or
telecopy, to the relevant address set forth below, or to such other address as
the recipient of such notice or communication shall have specified to the
other party hereto in accordance with this Section 11(c):
If to the Employer, to:
Randall S. Fojtasek
Fojtasek Companies, Inc.
2100 E. Union Bower Road
Irving, Texas 75061
With copies to:
T. Brook Parker
Heritage Partners, Inc.
30 Rowes Wharf, Suite 300
Boston, Massachusetts 02110
and:
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Robert M. Wolf, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
If to the Employee, to:
Howard S. Saffan
85 Beachside Avenue
Westpo rt, Connecticut 06880
With a copy to:
John R. Fallon, Jr., Esq.
Hunton & Williams
200 Park Avenue
New York, New York 10166
(d) Equitable Remedies. Each of the parties hereto acknowledges and
agrees that upon any breach by the Employee of his obligations under Sections
8, 9 and 10 hereof, the Employer will have no adequate remedy at law, and
accordingly will be entitled to specific performance and other appropriate
injunctive and equitable relief.
(e) Severability. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.
(f) Waivers. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder shall impair such right,
power or privilege, nor shall any single or partial exercise of any such right,
power or privilege preclude any further exercise thereof or the exercise of any
other right, power or privilege.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(h) Assigns. This Agreement shall be binding upon and inure to the
benefit of the heirs and successors of each of the parties hereto.
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(i) Entire Agreement. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and shall not be amended
except by a written instrument hereafter signed by each of the parties hereto.
(j) Governing Law. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the State of Delaware.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date and year
first above written.
ATRIUM CORPORATION
By: /s/ T. Brook Parker
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Title: Vice President and
Assistant Secretary
/s/ Howard S. Saffan
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Howard S. Saffan