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Exhibit 2.3
TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT (this "Agreement"), dated as of July
24, 1997, is made and entered into by Nortek, Inc., a Delaware corporation
("Parent"), Ply Gem Industries, Inc., a Delaware corporation (the "Company") and
Xxxxxxx X. Xxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, NTK Sub, Inc. ("Sub") and the
Company are entering into an Agreement and Plan of Merger (as such agreement may
hereafter be amended from time to time, the "Merger Agreement"; capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement), pursuant to which Sub will be merged with and into the
Company (the "Merger");
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that Executive agree, and Executive has agreed,
to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT AGREEMENT. Executive hereby represents and warrants that
his employment relationship with the Company is pursuant to and governed by the
Employment Agreement dated March 7, 1986 between Executive and the Company, as
amended on May 4, 1987, March 1, 1988, and January 26, 1989, a true and correct
copy of which has been furnished to Parent (the "Employment Agreement").
2. TERMINATION OF EMPLOYMENT AGREEMENT. Effective as of the Effective
Time (a) Executive hereby tenders his resignation as an officer and director of
the Company and each of its Subsidiaries, and (b) the Employment Agreement shall
be terminated in full without any further action on the part of the Company or
Executive. Except as expressly provided in this Agreement (including the
exceptions set forth in Section 4(a)), from and after the date of termination of
the Employment Agreement, Executive shall not be entitled to receive any further
wages, compensation or benefits arising pursuant to the Employment Agreement or
his employment relationship with the Company or any of its Subsidiaries, and
Executive shall not be entitled to any post termination wages, compensation or
benefits (including, without limitation, severance pay, nonqualified
supplemental executive retirement plan payments, vacation pay or sick pay).
3. FORGIVENESS OF INDEBTEDNESS. Effective as of the termination of the
Employment
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Agreement, the Company hereby forgives in its entirety and hereby releases all
of its rights in respect of the indebtedness described on Annex II attached
hereto including, without limitation, all principal and interest that may be due
and owing or that may become due and owing thereunder. Notwithstanding the
foregoing, any indebtedness owed to the Company or any of its Subsidiaries by
Executive and which is not described on Annex II shall not be released pursuant
to this Section 3 and shall remain in full force and effect notwithstanding the
terms of any other agreement or arrangement between the Company or any of its
Subsidiaries and Executive to the contrary. Except with respect to interest that
may hereafter accrue on the indebtedness described on Annex II, from and after
the date of this Agreement, Executive shall not borrow any additional
indebtedness from the Company or any of its Subsidiaries.
4. RELEASE OF CLAIMS.
(a RELEASE BY EXECUTIVE. Effective as of the Effective Time,
Executive hereby releases and discharges the Released Parties from all Claims
and Damages, including those related to, arising from, or attributed to (i) his
employment with, and membership on the Boards of Directors for, the Company and
its Subsidiaries and resignations therefrom, (ii) the Employment Agreement, and
(iii) all other acts or omissions related to any matter at any time prior to and
including the date of termination of the Employment Agreement; except that this
release shall not include Executive's (A) entitlement to continued group medical
coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act
of 1985 ("COBRA"), (B) vested accrued benefits in the Company's qualified
employee benefit plans described in Annex III attached hereto, (C) rights
arising under the Merger Agreement, (D) rights of Executive arising under this
Agreement, (E) his right to be reimbursed for reasonable out-of-pocket costs and
expenses incurred after the date of this Agreement and prior to the Effective
Time in connection with services rendered by Executive to, or on behalf of, the
Company and (F) his rights under that certain Agreement, dated January 2, 1991,
pertaining to certain life insurance policies. Executive understands and
expressly agrees that, unless specifically excluded from this release, this
release extends to all Claims and Damages of every nature and kind, known or
unknown, suspected or unsuspected, past or present, whether or not these Claims
and Damages were set forth in any writing, and that all such Claims and Damages
are hereby expressly settled or waived.
(b) LIMITATION. Nothing herein shall be interpreted as obligating the
Company, Purchaser or Parent to pay, make reimbursement for or otherwise assume
responsibility for any Taxes imposed on Executive or for any other amount
relating to any of Executive's Tax obligations or liabilities.
(c) DEFINITIONS. As used in this Section 4, the following terms shall
have meanings set forth below:
(i) "Claims" means all theories of recovery of whatever nature,
whether known or unknown, and now recognized by the law or equity of any
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jurisdiction, based on acts, omissions or other matters occurring on or
before the date the parties sign this Agreement. This term includes,
without limitation, lawsuits, petitions, complaints, causes of action,
charges, indebtedness, losses, claims, liabilities, and demands, whether
arising in equity or under the common law or under any contract (including,
without limitation, the Employment Agreement), statute, regulation or
ordinance. This term also includes, without limitation, any Claim of
discrimination (based on age or any other factor) under any statute or law
(including, without limitation, the Age Discrimination in Employment Act,
29 U.S.C. ss. 621, et seq.; Title VII of the Civil Rights Act of 1964, 42
U.S.C. ss. 2000e, et seq.; and the Americans with Disabilities Act, 42
U.S.C. ss. 12101, et seq.), and all Claims asserted by Executive, in
writing or otherwise, or which could be asserted, by Executive.
(ii) "Damages" means all elements of relief or recovery of
whatever nature, whether known or unknown, which are recognized by the law
or equity of any jurisdiction. This term includes, without limitation,
actual, incidental, indirect, consequential, compensatory, liquidated,
exemplary, and punitive damages; rescission, attorneys' fees; interest;
costs; equitable relief; and expenses.
(iii) "Released Parties" means and includes the Company and its
Subsidiaries, and all of the foregoing entities' past, present and future
shareholders, directors, officers, employees, agents, insurance carriers,
employee benefit plans (and such plans' fiduciaries, trustees,
administrators and representatives), predecessors, successors, assigns,
executors, administrators, attorneys and representatives, in both their
corporate and individual capacities.
5. SETTLEMENT AMOUNT. In consideration of the termination of Executive's
Employment Agreement and Executive's release and discharge of the Released
Parties from all Claims and Damages, the Company shall tender and pay to
Executive immediately after the Effective Time, by means of wire transfer of
immediately available funds, an amount equal to $1,900,000, and shall forgive
and release all of its rights in respect of the indebtedness owed the Company by
Executive. Executive shall be paid his regular salary of $47,103 per month, less
lawful taxes and withholdings, to and through the date of termination of the
Employment Agreement in accordance with the Company's customary payroll
practices.
6. CONFIDENTIALITY.
(a) PROTECTION OF CONFIDENTIAL INFORMATION AND TRADE SECRETS.
Executive acknowledges that the business of the Company and its Subsidiaries is
highly competitive and that certain confidential contracts, books, records, and
documents, confidential technical information concerning their services, pricing
techniques, and computer system and software, and other confidential information
(such as credit and financial data) concerning their customers and business
affiliates, all comprise confidential business information and trade secrets
which are valuable, special, and unique assets which the Company and its
Subsidiaries
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use in their business to obtain a competitive advantage over their competitors.
(All such information belonging to the Company and its Subsidiaries and not
publicly available is jointly referred to herein as "Confidential Information
and Trade Secrets.") Effective as of the Effective Time, Executive agrees that
all Confidential Information and Trade Secrets are the exclusive, confidential,
and proprietary information and property of the Company and, except as necessary
to perform the consulting services to be provided hereunder, will not be used by
Executive for any other purpose or in any other manner. Executive further
acknowledges that protection of such Confidential Information and Trade Secrets
against unauthorized disclosure and use is of critical importance to the Company
and its Subsidiaries in maintaining their competitive position. Executive hereby
agrees that he will not make any unauthorized disclosure of any such
Confidential Information and Trade Secrets, or make any unauthorized use
thereof. In the event that Executive is requested pursuant to, or required by,
applicable law or regulation or by legal process to disclose any Confidential
Information and Trade Secrets, Executive agrees to use his reasonable efforts to
provide the Company with prompt notice of such request(s) to enable the Company
to seek an appropriate protective order; provided, however, that Executive shall
not be prohibited from complying with any such request unless an appropriate
protective order is in place.
(b) SCOPE OF PROHIBITED ACTIVITIES; REMEDIES. Executive acknowledges
that the scope of prohibited activities, and time of duration of the provisions
of this Section 6 are reasonable and are no broader than are necessary to
protect the goodwill and legitimate business interests of the Company and its
Subsidiaries. Executive also acknowledges that the provisions of this Section 6
do not and will not impose any unreasonable burden on Executive. Executive
further acknowledges that a violation of this Section 6 will cause irreparable
damage to the Company and its Subsidiaries, entitling them to an injunction and
other equitable relief in a court of competent jurisdiction against Executive.
In addition, the Company and its Subsidiaries shall be entitled to whatever
other remedies they may have at law, including, without limitation, reasonable
attorneys' fees and costs incurred by the Company and its Subsidiaries in
enforcing the terms of this Section 6.
7. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Executive agrees that this Agreement and the
obligations hereunder shall be binding upon his heirs, guardians, administrators
or successors.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party.
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(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Executive: At the addresses set forth on signature pages hereto
copy to: Squadron, Ellenoff, Plesent & Xxxxxxxxx, L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
If to Parent: Nortek, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Xx., Esq.
Telecopy: (000) 000-0000
If to the Company: Ply Gem Industries, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
copy to: Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
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or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto; PROVIDED that, in the event of Executive's
death, the benefits to be received by Executive hereunder shall inure to his
successors and heirs.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of Delaware in any
action, suit or proceeding
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arising in connection with this Agreement, and agrees that any such action, suit
or proceeding shall be brought only in such court (and waives any objection
based on forum non conveniens or any other objection to venue therein);
PROVIDED, HOWEVER, that such consent to jurisdiction is solely for the purpose
referred to in this paragraph (l) and shall not be deemed to be a general
submission to the jurisdiction of said Court or in the State of Delaware other
than for such purposes. Each party hereto hereby waives any right to a trial by
jury in connection with any such action, suit or proceeding.
(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
(o) TAX REPORTING. As may be appropriate, the Company shall report
the payments made hereunder by filing the appropriate 1099 or other appropriate
forms for these amounts.
8. TERMINATION. This Agreement shall terminate upon the termination of
the Merger Agreement without any further action on the part of any party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
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Address:
00 Xxxxxxx Xxxxx
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X. Xxxxxxxx XX 00000
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Nortek, Inc.
/s/ Xxxxx X. Xxxxxxxx
By: ___________________________________
Xxxxx X. Xxxxxxxx
Name: _________________________________
Vice President, General Counsel
Title: ________________________________
Ply Gem Industries, Inc.
/s/ Xxxxxxx X. Xxxxxxxxx
By: ___________________________________
Xxxxxxx X. Xxxxxxxxx
Name: _________________________________
Chairman & CEO
Title: ________________________________
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NORTEK
July 28, 1997
By Facsimile
------------
Xx. Xxxxxxx X. Xxxxxxx
Ply Gem Industries, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Xx. Xxxxxxx:
Reference is hereby made to the Termination and Release Agreement
dated as of July 24, 1997 (the "Dooskin Agreement") among you, Nortek, Inc., a
Delaware corporation ("Nortek"), and Ply Gem Industries, Inc., a Delaware
corporation ("Ply Gem").
In the Dooskin Agreement, paragraph (i) 2 included one reference, (ii)
4(a) included two references, (iii) 5 included one reference, and (iv) 6(a)
included one reference, to the term "Effective Time." We hereby confirm the
term "Effective Time" in such five places shall be deemed deleted and replaced
with the term "consummation of the Offer." All other terms and conditions of
the Dooskin Agreement are hereby confirmed.
Very truly yours,
NORTEK, INC.
BY /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Vice President/General Counsel
[NORTEK LETTERHEAD]
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Agreed to and Accepted by:
PLY GEM INDUSTRIES, INC.
BY /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxxx
Chairman
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
