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Exhibit 10.11
WERNER HOLDING CO. (PA), INC.
1997 STOCK LOAN PLAN
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1. PURPOSE. The Werner Holding Co. (PA), Inc. 1997 Stock Loan Plan (the
"Plan") has been established by Werner Holding Co. (PA), Inc. (the "Company") to
secure for the Company and its shareholders the benefits arising from capital
ownership, and thereby entrepreneurial risk, by certain senior employees of the
Company and its subsidiaries who are and will be responsible for the future
growth and continued success of the Company or its subsidiaries. The Plan will
provide a means whereby such individuals, pursuant to loans made under the Plan,
may acquire shares of Class C Common Stock of the Company, par value $0.01 per
share ("Class C Stock"). The shares of Class C Stock to be available pursuant to
the Plan shall have an aggregate fair market value of no less than $2 million
($2,000,000).
2. ADMINISTRATION. The authority to manage and control the operation
and administration of the Plan shall be vested in a Committee (the "Committee")
consisting of two or more non-employee members of the Board of Directors of the
Company (the "Board") who are appointed by, and may be removed by, the Board;
provided that one member of the Committee shall be a member of the Board
appointed pursuant to Section 4(iii) of the Shareholder Agreement (the
"Shareholder Agreement") by and among the Company, the holders of Class D Common
Stock of the Company, and the Designated Shareholders, as such term is defined
in the Shareholder Agreement. Any interpretation of the Plan by the Committee
and any decision made by the Committee on any matter within its discretion is
final and binding on all persons. No member of the Committee shall be liable for
any action or determination made with respect to the Plan.
3. PARTICIPATION. The Committee shall determine and designate the
employees who will participate in the Plan ("Participants") from among members
of management (including employees who are also directors) who (a) were not
shareholders of the Company prior to the adoption of the Plan and (b) purchase
shares of Class C Stock of the Company (the "Purchased Shares") from Stepup
Limited, a Cayman Islands corporation ("Stepup") at any time prior to April 1,
1998.
4. PURCHASE LOANS. The Company may make a loan (a "Loan") to a
Participant in an amount that shall not exceed the sum of (1) fifty percent
(50%) of the purchase price of the Purchased Shares and (2) the amount of the
retention bonus, if any, payable to the Participant pursuant to the Employee
Protection Agreement, dated July 2, 1997, between the Company and the
Participant (the "Retention Bonus"), subject to the following:
(a) Each Loan shall be evidenced by a promissory note in such
form as the Committee shall approve; provided, that the note shall (i)
provide full recourse to the Participant, (ii) provide for interest at
a rate for each calendar year or part thereof equal to (a) the sum of
the interest accrued under the Company's revolving credit facility
during such period and the interest, discount or yield, accrued under
the Company's receivable facility during such period, divided by (b)
the sum of the average indebtedness outstanding on the Company's
revolving credit facility during such period (based on the daily
balances of such facility) and the average amount of indebtedness
incurred, or
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interests in receivables sold, pursuant to the Company's receivables
facility during such period (based on the daily balances of such
facility) payable in arrears on January 31, (iii) be secured by a
Pledge Agreement (described in subsection 5.1), and (iv) comply with
all applicable laws, regulations and rules of the Board of Governors of
the Federal Reserve System and any other governmental agency having
jurisdiction.
(b) Subject to the prepayment provisions of subsection 5.2 and
the acceleration provisions set forth in paragraphs (c) and (d) below,
each Loan shall mature on November 24, 2004 (the "Maturity Date"), at
which time all unpaid principal and interest shall be payable.
(c) The principal and interest outstanding under a Loan of a
Participant who retires on or after age 65 or whose employment with the
Company and its affiliates terminates by reason of his death or
Disability (as defined below) or terminates for a reason other than
Cause (as defined below), or who terminates his employment with the
Company for Good Reason (as defined below) will not become due and
payable until the Maturity Date of the Loan. All principal and interest
outstanding under a Loan with respect to any other Participant will
automatically become due and payable on the date the Participant's
employment with the Company and its affiliates terminates. "Disability"
has the meaning set forth in the employment agreement between the
Company and the Participant, or if there is no such employment
agreement, means the failure by the Participant to render full-time
employment services to the Company for an aggregate of sixty (60)
business days in any continuous period of six (6) months on account of
physical or mental disability.
(i) "Cause," when used in connection with the
termination of employment of the Participant, has the meaning set forth
in the employment agreement between the Company and the Participant, or
if there is no such employment agreement, means (A) conviction of the
Participant for a felony, or the entry by the Participant of a plea of
guilty or NOLO CONTENDERE to a felony, (B) the commission of an act of
fraud involving dishonesty for personal gain which is materially
injurious to the Company, (C) the willful and continued refusal by the
Participant to substantially perform his duties with the Company (other
than any such refusal resulting from his incapacity due to mental
illness or physical illness or injury), after a demand for substantial
performance is delivered to the Participant by the Company's Board of
Directors, where such demand specifically identifies the manner in
which the Company's Board of Directors believes that the Participant
has refused to substantially perform his duties and the passage of a
reasonable period of time for the Participant to comply with such
demand or (D) the willful engaging by the Participant in gross
misconduct materially and demonstrably injurious to the Company or any
of its subsidiaries. For purposes of this paragraph, no act or failure
to act on the Participant's part shall be considered "willful" unless
done, or omitted to be done, by the Participant not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Company or its Subsidiaries. Notwithstanding the
foregoing, with respect to termination for Cause arising out of conduct
described in clause (B), (C) or (D) above, a termination shall not be
considered for Cause for purposes of this Plan unless there shall have
been delivered to the
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Participant a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters of the entire Board of Directors of the
Company, at a meeting of such board called and held for that purpose
(after reasonable notice to the Participant and an opportunity for the
Participant, together with his counsel or other advisors, to be heard
at such meeting), finding that in the good faith opinion of the board
the Participant had engaged in conduct described above in clause (B),
(C) or (D) of the first sentence of this paragraph and specifying the
particulars thereof in detail. Such a finding by the Board of Directors
of the Company is a prerequisite to a termination for Cause pursuant to
clauses (B), (C) or (D) above; PROVIDED, HOWEVER, that such a finding
may be challenged, by appropriate judicial process, on the merits
(i.e., that Cause did not exist) or on the basis that the board's
finding was not made in good faith (provided that proof that Cause for
termination existed shall be a complete defense to any showing that the
board's findings was not made in good faith).
(ii) "Good Reason" means, unless the Participant
shall have consented in writing thereto, any of the following: (A)
except as specifically provided in the Participant's employment
agreement, if any, the assignment to the Participant of duties, or the
assignment of the Participant to a position, constituting a material
diminution in the Participant's role, responsibilities or authority
compared with his role, responsibilities or authority on the Effective
Date, as such term is defined in the Management Stock Purchase
Agreement between the Participant and the Company (the "Management
Stock Purchase Agreement"); (B) a reduction by the Company in the
Participant's bonus opportunities or base salary as in effect on the
Effective Date, or as the same may be increased from time to time; (C)
unless the members of the Board appointed pursuant to section 4(iii) of
the Shareholder Agreement agree to such reduction or other action, any
material reduction in the level of benefits (including participation in
any bonus plan) to which the Participant is entitled under one or more
employee benefit plans on the Effective Date, or the taking of any
action by the Company which would adversely affect the Participant's
accrued benefits under any such employee benefit plans or deprive the
Participant of any material fringe benefit enjoyed by the Participant
on the Effective Date; (D) a demand by the Company to the Participant
to relocate to any place that exceeds a fifty (50) mile radius beyond
the location at which the Participant performed his duties on the
Effective Date; or (E) any material breach by the Company of the
Management Stock Purchase Agreement.
(d) The Company has the right to accelerate the principal and
interest due under the Loan if any of the following events occurs: (i)
the Participant defaults in the payment of any amount due under the
Loan and the default remains uncured for a period of ten (10) business
days after the date the Company gives the Participant notice of the
default, (ii) the Participant defaults under or breaches any other
covenant, representation or warranty under the Note, the Pledge
Agreement or any other agreement under the Plan and the default or
breach remains uncured for a period of thirty (30) days after the date
the Company gives the Participant notice of his default or breach,
(iii) the Participant applies for or consents to the appointment of a
receiver, trustee, custodian or liquidator of any of his property,
admits in writing his inability to pay his debts as they mature, makes
a general assignment as a bankrupt or insolvent or is the subject of an
order for relief
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under Chapter 7 or Chapter 13 of the United States Bankruptcy Code or
files a voluntary petition in bankruptcy or a petition or answer
seeking an arrangement with creditors to take advantage of any
bankruptcy, insolvency, readjustment or debt or liquidation law or
statute, or an answer admitting the material allegations of a petition
filed against him in any proceeding under any such law, or (iv) any
court of competent jurisdiction enters an order, judgment or decree,
without the application, approval or consent of the Participant,
approving a petition appointing a receiver, trustee, custodian or
liquidator of all or a substantial part of the assets of the
Participant, and such order, judgment or decree continues unstayed and
in effect for a period of thirty (30) days.
(e) If a Participant fails to make any payment required under
his Loan when due, the Company may foreclose on the Pledged Property
(as defined in subsection 5.1) and may otherwise enforce its rights
under the Plan and any Note or other agreement entered into under the
Plan.
(f) One-half of the Retention Bonus, if any, shall be
dedicated to repayment of the Loan; provided that, if there is no such
Retention Bonus, the Company will negotiate, on an individual basis,
alternative terms of repayment with the Participant. In addition, the
Company will negotiate on an individual basis the amount of principal
that each Participant will pay from his annual bonus, provided that
such amount shall not exceed the lesser of twenty percent (20%) of the
annual bonus and 1/14 of the original amount of principal of the Loan.
5. PLEDGE OF SHARES.
5.1 PLEDGE AGREEMENT. Each Participant shall enter into an
agreement with the Company in such form as the Committee shall approve
(the "Pledge Agreement") to pledge to the Company all of the Purchased
Shares (the "Pledged Shares"), any non-cash dividends or distributions
payable with respect to such shares and any securities or other
property (other than cash) payable in respect of or in exchange for
such shares pursuant to any merger, reorganization, consolidation,
recapitalization, exchange offer or other similar corporate transaction
("Related Property") and all proceeds thereof (collectively, the
"Pledged Property") to secure repayment of the Loan. Notwithstanding
the foregoing, in the event that the Committee determines that a
Participant would recognize a net increase in taxable income from the
receipt of any such dividends or distributions, the Committee may in
its discretion permit the Participant to retain a portion of the
dividends or distributions so as to be able to pay all or part of his
related increase in taxes.
(a) Certificates representing shares of stock that consist of
Pledged Property shall bear the following legend in addition to any
other legends that the Company may deem appropriate:
THIS CERTIFICATE AND THE SHARES OF STOCK AND ALL RIGHTS HEREBY
REPRESENTED ARE SUBJECT TO THE TERMS, CONDITIONS AND
RESTRICTIONS SET FORTH IN THE WERNER HOLDING CO. (PA), INC.
1997 STOCK LOAN
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PLAN AND ANY AGREEMENT UNDER THAT PLAN AND THE PLEDGE
AGREEMENT BETWEEN THE OWNER OF SUCH SHARES AND WERNER HOLDING
CO. (PA), INC. AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF SUCH PLAN AND
AGREEMENTS, COPIES OF WHICH ARE ON FILE AT THE OFFICES OF
WERNER HOLDING CO. (PA), INC.
(b) Any cash received upon an exchange or conversion of
Pledged Property shall be applied to reduce the outstanding Loan
balance (with accrued but unpaid interest being reduced first). Any
cash in excess of that applied against the outstanding Loan balance
shall be paid to the Participant.
5.2. PREPAYMENTS OF LOAN AND RELEASES FROM PLEDGE.
(a) A Participant may make voluntary prepayments on the Loan
at any time without penalty in such minimum amounts as the Committee
may determine, which shall be applied first to accrued but unpaid
interest, and then to principal.
(b) In the event that any cash dividend or distribution is
paid by the Company with respect to any Pledged Property relating to
the Loan, the Participant shall make a mandatory prepayment with
respect to the Loan equal to the amount of such dividend or
distribution, which shall be applied first to accrued but unpaid
interest under the Loan, then to principal. Notwithstanding the
foregoing, in the event that the Committee determines that a
Participant would recognize a net increase in taxable income from the
receipt of any such dividends or distributions after giving effect to
any deduction for the related payment under the Loan, the Committee may
in its discretion permit the Participant to retain a portion of the
dividends or distributions so as to be able to pay all or part of his
related increase in taxes.
(c) In the event that the Participant at any time desires to
obtain a release of all or part of any Pledged Property securing the
Loan, whether for the purpose of selling such Pledged Property or
otherwise, as a condition to the release, the Participant shall make
arrangements satisfactory to the Company for the prepayment by the
Participant of an amount equal to the higher of (i) a percentage of the
outstanding Loan balance as of the date of the release equal to the
percentage in value of the Pledged Property sought to be released and
(ii) a sufficient portion of the outstanding Loan balance so that the
amount of the outstanding Loan balance remaining unpaid after giving
effect to such payment does not exceed fifty percent (50%) of the fair
market value of the Pledged Property determined in good faith by the
Committee that will remain subject to the Pledge Agreement after giving
effect to the release, which shall be applied first to accrued but
unpaid interest under the Loan, then to principal.
(d) In the event of any prepayment of principal under the
Loan, the Company will release from the pledge under the Pledge
Agreement a portion of the Pledged Property equal to the percentage of
the outstanding principal balance so paid, provided,
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that (i) the Company will retain Pledged Property with an aggregate
fair market value determined in good faith by the Committee equal to at
least two hundred percent (200%) of the outstanding Loan balance as of
the date of the prepayment (after giving effect to the prepayment) and
(ii) to the extent any of the released Pledged Property is subject to
restriction under section 6, the Company will retain custody of the
property until the end of the Restricted Period (as defined below).
6. RESTRICTIONS ON SHARES. From the date of the purchase of the
Purchased Shares until the principal of the Loan and all unpaid interest thereon
is repaid in full (the "Restricted Period"):
(a) Purchased Shares may not be sold, assigned, transferred,
pledged or otherwise encumbered;
(b) the certificate representing such shares shall be
registered in the name of the Participant and shall be deposited with
the Company, together with a stock power (in such form as the Company
may determine); and
(c) the Participant shall be treated as a stockholder with
respect to the Purchased Shares, including the right to vote such
shares.
7. TRANSFERS AT TERMINATION OF RESTRICTED PERIOD. At the end of the
Restricted Period with respect to Purchased Shares, the certificate representing
such shares shall be transferred to the Participant (or the Participant's legal
representative or heir) free of all restrictions under this Agreement.
8. GENERAL.
8.1. EFFECTIVE DATE AND DURATION. The Plan will become
effective upon its approval by the Company's Board of Directors.
8.2. AGREEMENTS EVIDENCING PARTICIPATION. At the time of his
designation as a Participant, the Committee may require a Participant to enter
into one or more agreements with the Company in a form specified by the
Committee agreeing to the terms and conditions of the Plan and to such
additional terms and conditions, not inconsistent with the Plan, as the
Committee may in its discretion prescribe.
8.3. NONTRANSFERABILITY. Except as provided in the Management
Stock Purchase Agreement between the Company and the Participant, no right
provided under the Plan to any Participant may be transferred pledged or
assigned by the Participant (except, in the event of the Participant's death, by
will or the laws of descent and distribution), and the Company shall not be
required to recognize any attempted assignment of such rights by any
Participant. During a Participant's lifetime, purchases may be made only by him
or by his guardian or legal representative.
8.4. COMPLIANCE WITH APPLICABLE LAW AND WITHHOLDING. The
Company shall have the right to require a Participant to pay to the Company the
amount of any taxes that are
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required to be withheld with respect to a Participant's participation in the
Plan, including any such taxes required to be withheld in connection with (i)
the purchase by the Participant of any Purchased Shares, (ii) any dividend or
distribution in respect of the Purchased Shares or any Related Property, (iii)
any repayment of a Loan, (iv) the lapse of the Restricted Period, (v) any
release of Pledged Property or (vi) any sale of Purchased Shares or any Related
Property. To the extent permitted by the Committee, a Participant may elect to
have any distribution otherwise required to be made under the Plan to be
withheld to fulfill any tax withholding obligation.
8.5. NO EMPLOYMENT RIGHTS. The Plan does not constitute a
contract of employment, and participation in the Plan will not give any
Participant the right to be retained in the employ of the Company or an
affiliate or the right to continue as an officer or director of the Company or
any right or claim to any benefit under the Plan unless such right or claim has
specifically accrued under the terms of the Plan or the terms of any award under
the Plan.
8.6. GOVERNING LAW. The Plan and all determinations made and
actions taken thereunder, to the extent not otherwise governed by the laws of
the United States, shall be governed by the internal laws of the Commonwealth of
Pennsylvania and construed accordingly.
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