CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT, dated effective as of May 9, 1997 (the
"Effective Date"), is by and between Reliant Building Products, Inc., a Delaware
corporation (the "Company"), and Xxxxxx Group, Inc., a Texas corporation (the
"Consultant").
For and in consideration of the mutual covenants and agreements set forth
herein and other good and valuable consideration, the adequacy and receipt of
which are hereby acknowledged and agreed, the parties hereby agree as follows:
1. ENGAGEMENT. The Company hereby agrees to engage the Consultant, and
the Consultant hereby agrees to serve the Company, in each case upon the terms
and subject to the conditions set forth herein.
2. TERM.
2.1 ORIGINAL TERM. The term of this Agreement (the "Term") shall be
the period commencing on the Effective Date and ending on the date eighteen
months after the Effective Date (the "Performance Term") or, if applicable, the
expiration of the Extended Performance Term (as defined herein), subject to the
earlier exercise of the termination rights of the Company or the Consultant set
forth in Section 9 below.
2.2 EXTENDED PERFORMANCE TERM. The Consultant may, in its sole
discretion, extend the Performance Term an additional six months (the "Extended
Performance Term") upon written notice to the Company at least 30 days prior to
the expiration of the Performance Term; PROVIDED, HOWEVER, that no additional
Monthly Fee (as defined herein) or other compensation, other than reimbursement
for reasonable, out-of-pocket expenses incurred by the Consultant, will be due
or payable to the Consultant in consideration of services performed during the
Extended Performance Term.
3. ADVISORY SERVICES. During the Term, the Consultant shall provide
personnel and resources as necessary to design and implement Company-wide
business processes consistent with those practices generally considered to be
"best practices" and designed to result in improvements in the Company's
revenue, cash flow, and return on invested capital (the "Services") in
accordance with the Consulting Plan and Budget attached hereto as EXHIBIT "A"
(the "Plan") with the intention of meeting the Final Performance Goals specified
in EXHIBIT "B" attached hereto. The Consultant shall perform its duties
hereunder in good faith.
4. COMPENSATION.
4.1 PAYMENT OF FEE. As compensation for the performance of the
Services during the Term, the Consultant shall receive a monthly fee as
specified in the Plan (each such fee, a "Monthly Fee"), together with
reimbursement of reasonable, out-of-pocket expenses incurred by the Consultant
during each such one-month period in connection with the performance of such
Services. In no event shall the sum of the aggregate of Monthly Fees paid to
the Consultant exceed $1,255,000. At the beginning of each month during the
Term of this
Agreement, the Consultant shall provide the Company with a written statement
(the "Consultant Xxxx") including the applicable Monthly Fee for the month in
which the Consultant Xxxx is rendered and an estimate of all reasonable,
out-of-pocket expenses incurred by the Consultant for the immediately
preceding one-month period. The Company shall pay the Monthly Fee in advance
(for the month in which the Consultant Xxxx is dated), and the Company shall
reimburse the Consultant for its out-of-pocket expenses shown on the
Consultant Xxxx, in both cases on or before 30 days after receipt of the
Consultant Xxxx. The actual, out-of-pocket expenses of the Consultant will
be calculated every six months and the difference between actual expenses
incurred by the Consultant to date and expenses paid to the Consultant to
date will be billed or reimbursed, as appropriate. Notwithstanding the
foregoing provisions of this Section 4.1, however, if the Company achieves
its Final Performance Goals (as described on Exhibit "B" attached hereto)
prior to having been billed and paid a total of $1,255,000 in Monthly Fees,
then the Consultant shall not charge, and the Company shall not be obligated
to pay, any Monthly Fees relating to any month after the month in which the
Company achieves its Final Performance Goals.
4.2 RECORD OF EXPENSES. The Consultant shall maintain, during the
Term of this Agreement and continuing for a period the longer of (a) one year
after the termination of this Agreement or (b) until the final resolution of any
dispute between the Company and the Consultant which is outstanding on such
anniversary date, its internal books and records pertaining to its expenses, in
sufficient detail and condition so as to permit reasonable convenient periodic
audits of such books and records by the Company or the Company's authorized
representative, at times and places mutually agreed upon by the Company and the
Consultant, so that the Company may verify the amount of any and all expenses
included in the Consultant Bills.
5. INTELLECTUAL PROPERTY. (a) As used herein the following definitions
shall apply:
"DELIVERABLES" shall mean software (source code, object code,
associated documentation and related data files, tools and utilities),
plans, methods, prototypes, circuitry, diagrams, drawings, designs,
specifications, proposals, technical descriptions, schematics, and other
technical information relating to the subject matter of the Services that
the Consultant provides to the Company pursuant to this Agreement.
"INTELLECTUAL PROPERTY RIGHTS" or "IP RIGHTS" shall mean all patent,
copyright, trade secret and other proprietary rights in Deliverables.
(b) The Consultant shall assign to the Company all IP rights created
or acquired by the Consultant during the Term of this Agreement which (i) are
specifically adapted for window manufacturing, or (ii) incorporate Confidential
Information of the Company. The foregoing shall not preclude the Consultant
from using general information and techniques developed during the Agreement on
behalf of other clients of the Consultant. The Consultant retains sole
ownership of all IP Rights in existence at the beginning of the term of this
Agreement, and all IP Rights created or acquired by the Consultant during the
term of this Agreement other than those which are to be owned by the Company as
provided above. The owning party shall have the exclusive right to file and
prosecute patent and copyright applications relating to the applicable IP
Rights.
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(c) The Consultant hereby grants to the Company, and those of its
subsidiaries, parents and affiliates which are engaged in the business of
building products manufacturing, a perpetual, paid-up, non-exclusive license,
without right of sublicense, under the Consultant-owned IP Rights to use
Deliverables provided by the Consultant pursuant to this Agreement for the
Company's, any such subsidiaries', parents' and affiliates' internal business
purposes only. The license granted herein shall be non-transferable without the
Consultant's prior written consent, provided that no such consent shall be
required for transfers to a successor of the Company or to a purchaser of all or
substantially all the assets of the business in which the IP Rights will be
used, provided such transferee is not a competitor of the Consultant.
(d) The Consultant shall, at its expense, defend or settle any claim,
action, or allegation brought against the Company that the Deliverables infringe
any patent, copyright, trade secret, or other proprietary right of any third
party or that the Company's use of the Deliverables violates any non-competition
or similar agreement or otherwise violates the rights of any third party and pay
any judgments awarded or settlements entered into, provided that the Company
must give written notice of any such claim, action, or allegation of
infringement (collectively, "Infringement Claim") to the Consultant within 30
days after the Company first receives notice thereof. The Company will promptly
grant to the Consultant, and the Consultant will have, the exclusive right to
defend any Infringement Claim and make settlements thereof at its own
discretion, and the Company may not settle or compromise any Infringement Claim,
except with prior written consent of the Consultant. The Company shall give
such assistance and information as the Consultant may reasonably require to
settle or oppose any Infringement Claim. If any such infringement occurs or may
occur, the Consultant shall, at its sole option and expense (a) procure for the
Company the right to continue use of the Deliverables or infringing part
thereof, (b) modify or amend the Deliverables or infringing part thereof, or (c)
replace the Deliverables with other Deliverables having substantially the same
or better capabilities. This paragraph sets forth the entire liability of the
Consultant to the Company with respect to infringement of any patent, copyright,
trade secret or other proprietary rights.
6. CONFIDENTIALITY.
6.1 CONFIDENTIAL INFORMATION. The Consultant and the Company
acknowledge that they may acquire certain information and materials that are the
confidential and proprietary information of the other (the "Confidential
Information"). The Consultant and the Company agree not to disclose or use the
Confidential Information except in the performance of this Agreement or with the
prior, express, written consent of the other. The Consultant and the Company
agree to take all actions reasonably necessary and satisfactory to the other to
protect the confidentiality of the Confidential Information (including, without
limitation, as either receiving party may deem appropriate, entering into
written agreements with each of its employees, representatives, agents and
subcontractors who perform services hereunder sufficient to carry out each
party's obligations under this Agreement).
6.2 NON-CONFIDENTIAL INFORMATION. The following shall not be
considered Confidential Information:
(a) Information previously known to the disclosee that is, or
subsequently becomes, rightfully and without breach of any obligation
to or agreement with the
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other party hereto, in the disclosee's possession without any obligation
restricting use or disclosure.
(b) Information in the public domain, through no act or omission of
the party to this Agreement required to keep such information confidential.
(c) Information received from a third party with a legal or
contractual right to disclose such information.
(d) Information independently developed by the disclosee without
reference to the Confidential Information.
6.3 PUBLICITY. The Consultant shall not use and shall keep its
employees from using the name of the Company and its affiliates with any third
party, without the prior express written consent of the Company.
6.4 OTHER AGREEMENTS. The Consultant and the Company expressly agree
that this Agreement is intended to replace and supersede all, if any, prior
agreements between the Consultant and the Company concerning confidentiality and
non-disclosure.
6.5 RELEASE OF OBLIGATIONS. Each party will be relieved of its
respective confidentiality obligations hereunder if, and only to the extent,
that any Confidential Information is disclosed pursuant to the lawful
requirement or request of a governmental agency, or disclosure is required by
operation of law, solely with respect to such Confidential Information required
to be so disclosed; PROVIDED that such party has given notice to the other party
and with sufficient time to enable the other party to seek a protective order
limiting disclosure and use of the Confidential Information so disclosed.
7. [INTENTIONALLY OMITTED]
8. RESTRICTIVE COVENANTS OF CONSULTANT.
8.1 NON-COMPETITION. For a period commencing on the Effective Date
and ending on the fifth anniversary of the earlier of (i) a Change in Control or
(ii) the date of termination of this Agreement pursuant to Section 9.1 or
Section 9.2 (the "Restricted Period"), the Consultant covenants and agrees that,
without the prior written consent of the Company, neither the Consultant nor its
principals shall, in the Territory (as defined below), working alone or in
conjunction with one or more other persons or entities, for compensation or not,
directly or indirectly, either for itself or himself or as a member of a
partnership or other association or as a stockholder, investor, lender, agent,
associate, employee or consultant of any person, partnership, corporation or
other association (other than through ownership for investment purposes of not
more than 5% of the outstanding shares of a corporation's capital stock which is
listed on a national securities exchange or quoted on any automated quotation
system), engage in the business of manufacturing, distribution and/or selling
any of the products produced and/or distributed by the Company at any time
during the Restricted Period. As used herein, the term "Territory" means any
county in any state of the United States. The parties intend that the covenants
contained in this Section 8.1 shall be deemed to be a series of separate
covenants, one
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for each county in each state of the United States and, except for geographic
coverage, each such separate covenant shall be identical in terms to the
covenant contained in this Section 8.1.
8.2 NO SOLICITATION. During the Restricted Period, the Consultant
covenants and agrees that neither it nor its principals shall, directly or
indirectly through any affiliate, employee, agent or representative, interfere
with, or take any action that would have the effect of interfering with, the
contractual and other relationships between the Company or any of its affiliates
and any of its or their employees. During the Restricted Period, the Company
covenants and agrees that neither it nor its principals shall, directly or
indirectly through any affiliate, employee, agent or representative, interfere
with, or take any action that would have the effect of interfering with, the
contractual and other relationships between the Consultant or any of its
affiliates and any of its or their employees.
8.3 TOLLING. If the Consultant violates any covenant contained in
this Section, then the Restricted Period shall be tolled for the period
commencing on the commencement of such violation and ending upon the earlier of
(a) such time as such violation shall be cured by the Consultant to the
reasonable satisfaction of the Company or (b) final adjudication (including
appeals) of any action filed for injunctive relief or damages arising out of
such violation.
8.4 REFORMATION. If, in any judicial proceeding, the court shall
refuse to enforce any covenant contained in this Section hereof as written
because the duration thereof is too long, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding the duration of
such covenant shall be deemed reduced to the extent necessary to permit
enforcement of such covenant. If, in any judicial proceeding, the court shall
refuse to enforce any covenant contained in this Section hereof as written
because such covenant is more extensive (whether as to geographic area, scope of
business or otherwise) than necessary to protect the business and goodwill of
the Company or any of its affiliates, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding, the geographic
area, scope of business or other aspect shall be deemed reduced to the extent
necessary to permit enforcement of such covenant.
9. TERMINATION.
9.1 TERMINATION BY THE COMPANY. (a) The Company may terminate this
Agreement immediately following written notice to the Consultant of its decision
to terminate this Agreement:
(i) for Cause (as defined below),
(ii) upon the occurrence of a Change in Control (as defined below) of the
Company.
As used herein, "Cause" means (i) the failure by the Consultant as of the
expiration of the Interim Performance Term (as defined herein) to achieve on
behalf of the Company less than 75% of the Interim Performance Goals (as
described in EXHIBIT "C" attached hereto) for such Interim Performance Term
[such achievement to be calculated within fifteen days following the expiration
of the Interim Evaluation Period (as defined herein) based on the Aggregate
Weighted Percentage of Performance Achieved (as defined in EXHIBIT "D" attached
hereto) of the
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Company during the Interim Evaluation Period; or (ii) the engaging by the
Consultant or its employees or agents in willful, reckless or negligent
misconduct which is materially injurious to the Company, monetarily or
otherwise, and the failure of the Consultant to (x) cease, or cause to be
ceased, such misconduct within 10 days, and (y) remedy the adverse effect of
such misconduct within 90 days, after receipt of written notice from the
Company of such misconduct. As used herein, "Change in Control" means that
more than 50% of the voting interests in the Company, or more than 50% of the
assets thereof, are sold or transferred, directly or indirectly, to an entity
or person other than to Reliant Partners, L.P. and/or FW Strategic Partners,
L.P. and their direct and indirect general and limited partners as of the
date hereof or to a person that is not controlled by, controlling or under
common control with (being greater that 50% voting control) one or more of
the foregoing.
(b) As used herein, the following terms shall have the meaning
provided below:
"Interim Evaluation Period" shall mean the three-month period
immediately following the expiration of the Interim Performance Term.
"Interim Performance Term" shall mean the period commencing on
the Effective Date and ending on the date which is nine months from
the Effective Date.
9.2 TERMINATION BY THE CONSULTANT. The Consultant may terminate this
Agreement:
(i) in the event that the Company fails to remit payment to the Consultant
within 30 days following receipt of any Consultant Xxxx, provided that the
Consultant gives the Company written notice of such failure to pay and the
Company fails to cure such nonpayment within 30 days after receipt of such
notice, or
(ii) upon the occurrence of a Change in Control of the Company, provided
that such termination will not be effective until at least 90 days
following the date that the Change of Control of the Company occurs.
9.3 POST-TERMINATION OBLIGATIONS. (a) Upon the effective date of
termination of this Agreement (whether upon expiration of the Term or
otherwise), (i) the Company shall pay the Monthly Fee and shall reimburse the
Consultant for its out-of-pocket expenses, both in accordance with Section 4
hereof, through the effective date of termination; (ii) the Company shall
reimburse the Consultant for reasonable out-of-pocket costs and expenses
incurred by it in complying with the terms of this Section 9.3; and (iii) the
Consultant shall deliver to the Company all records in the possession of the
Consultant relating to the business and affairs of the Company, together with
all items of property owned by the Company and in the Consultant's possession.
(b) In addition, following the termination of this Agreement upon the
expiration of the Term pursuant to Section 1, the Consultant, for four years
after such termination, will make available to the Company at the Company's
request consultant services not to exceed eight days or $25,000 in Consultant
fees annually in order to assist the Company in its efforts to
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maintain the performance goals achieved under the Plan and to continue
improving the Company's manufacturing performance. If additional services
are needed or additional projects are identified, the Consultant shall
provide such additional services as are requested by the Company at a cost
per consultant month to be agreed to by the parties but in any event not to
exceed $23,000.
(c) Termination of this Agreement shall not release the Consultant or
the Company from liability for failure to perform any of the duties or
obligations of either of them under this Agreement that have already accrued,
and the payment of any amounts in connection with the termination shall not
constitute a release of the Consultant or the Company, as the case may be, from
any such accrued liabilities.
(d) After the effective date of termination and except as set forth
in this Section 9.3 and except for the obligations set forth in Sections 5, 6, 7
and 8, neither party shall have any further obligation to the other party hereto
under this Agreement.
10. REPRESENTATIONS AND WARRANTIES.
10.1 CONSULTANT REPRESENTATIONS. The Consultant is a corporation
existing and in good standing under the laws of the State of Texas. This
Agreement has been duly authorized, executed and delivered by the Consultant and
constitutes the legal, valid and binding obligation of the Consultant,
enforceable against the Consultant in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights generally and to
general equitable principles. The Consultant has all necessary corporate power
and authority to perform its obligations hereunder.
10.2 COMPANY REPRESENTATIONS. The Company is a corporation existing
and in good standing under the laws of the State of Delaware. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Consultant enforceable against
the Company in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights generally and to general equitable
principles. The Company has all necessary corporate power and authority to
perform its obligations hereunder.
10.3 LIMITATION OF LIABILITY. EXCEPT FOR THE EXPRESS WARRANTIES
SPECIFIED IN SECTIONS 10.1 AND 10.2, NEITHER THE CONSULTANT NOR THE COMPANY
MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
CONSULTANT WILL NOT BE RESPONSIBLE FOR ANY MODIFICATION OF THE DELIVERABLES MADE
BY COMPANY OR ITS CONSULTANTS. IN NO EVENT SHALL CONSULTANT BE LIABLE FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RESULTING FROM USE OF A DELIVERABLE.
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11. INDEMNIFICATION. Each party agrees to indemnify and hold the other
harmless against any losses, claims, damages or liabilities incurred by the
other party based upon acts performed or omitted to be performed by such party
as the result of its willful misconduct, negligence, intentional breach of this
Agreement or fraud, unless such act or omission also constitutes willful
misconduct, negligence, intentional breach or fraud on the part of the
indemnitee.
12. AMENDMENTS. This Agreement may be amended only by a written
instrument duly executed by both parties hereto.
13. ENTIRE AGREEMENT. This Agreement embodies the entire Agreement
between the parties hereto concerning the subject matters mentioned herein and
supersedes all previous discussions, correspondence, understandings and
agreements, whether written or oral, with respect to such matters.
14. NOTICES. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be deemed to
have been duly delivered three business days after mailing by certified mail,
when delivered by hand, or one day after sending by overnight delivery service,
to the respective addresses of the parties set forth on the signature page
hereto.
15. ASSIGNMENT. Neither party may assign this Agreement, or any interest
in it, by operation of law or otherwise, without the prior written consent of
the other party, which consent will not be unreasonably withheld; PROVIDED,
HOWEVER, that either party may assign its rights and obligations under this
Agreement to its successor without the consent of the other party in the event
that it shall effect a reorganization, consolidate with, or merge into, any
other entity or transfer all or substantially all of its properties or assets to
any other entity if the shareholders of the assigning party immediately prior to
such reorganization, consolidation, merger or transfer constitute a majority of
the shareholders of such new entity. This Agreement shall inure to the benefit
of and be binding upon the Company and the Consultant and their respective
successors and permitted assigns.
16. SEVERABILITY. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
17. WAIVER. No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by a duly authorized representative
of each party. The failure of either party to require the performance of any
term or obligation of this Agreement, or the waiver by either party of any
breach of this Agreement, shall not prevent any subsequent enforcement of such
term or obligation or be deemed a waiver of any subsequent breach.
18. HEADINGS. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
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19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together
constitute one and the same instrument.
20. GOVERNING LAW. This Agreement shall be construed and enforced under
and be governed in all respects by the substantive laws of the State of Texas,
without regard to the conflict of laws principles thereof.
21. DISPUTE RESOLUTION. In the event of any dispute between the Company
and the Consultant, the Consultant and the Company agree that prior to
submitting any such dispute to the Mediators (as defined herein) in accordance
with this Section they shall attempt to resolve disputes in an informal and
timely manner. In the event, however, that a dispute cannot be resolved
informally, the Consultant and the Company hereby designate the individuals in
the positions named below as "Mediators," who shall have the responsibility for
settling formal disputes. The Mediators agree to use reasonable best efforts to
confer with one another within one week after the formal dispute has been
submitted. If the Mediators are not able to resolve the dispute within two
weeks after its submission, then the dispute will be submitted to the Board of
Directors of the Company which shall resolve the dispute fully and finally.
Neither party may have recourse to the judicial system to resolve any such
dispute.
Consultant's Mediator: Xxx Xxxxxxxxx, Senior Vice President of North
American Operations, Xxxxxx Group, Inc.
Company's Mediator: Xxxxx X. Xxxxx, President
22. STATUS. The Consultant shall be deemed to be an independent
contractor. The Consultant shall not have the authority to act for or represent
the Company in any way and shall not otherwise be deemed to be an agent of the
Company. Similarly, the Company shall not have the authority to act for or
represent the Consultant in any way and neither shall be deemed to be an agent
of the Consultant. Nothing contained herein shall create or constitute the
Company and the Consultant as members of any partnership, joint venture,
association, syndicate, unincorporated business, or other separate entity, nor
shall be deemed to confer on any of them any express, implied, or apparent
authority to incur any obligation or liability on behalf of such other entity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly
executed by its duly authorized representative effective as of the Effective
Date.
ADDRESS: RELIANT BUILDING PRODUCTS, INC.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------------
Title: President
----------------------------
ADDRESS: XXXXXX GROUP, INC.
One Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000 By: /s/ Xxxxxxx X. Xxxxxx
Attention: Xxx Xxxxxxxxx --------------------------------
Title: Chief Executive Officer
----------------------------
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EXHIBIT B
FINAL PERFORMANCE GOALS (1)
PERFORMANCE BASELINE FINAL WEIGHTING
CRITERIA PERFORMANCE FACTOR
GOALS
----------------------------------------------------------------------
Gross Profit $42 MM $56 MM 15%
----------------------------------------------------------------------
Order Fill Rate 86% 98% 10%
----------------------------------------------------------------------
On-time Delivery 79% 98% 10%
----------------------------------------------------------------------
Order Lead Time 10 days 5 days 15%
----------------------------------------------------------------------
Labor Productivity 0.1146 0.1357 25%
----------------------------------------------------------------------
Material Cost Reduction n/a $2.0 MM 15%
----------------------------------------------------------------------
Capital Turnover 1.86 2.17 10%
----------------------------------------------------------------------
DEFINITIONS:
As used in this Exhibit B and in Exhibit C, the following terms shall
have meanings ascribed to them below:
GROSS PROFIT DOLLARS means gross profit dollars realized over the
evaluation period.
ORDER FILL RATE means the number of orders that ship complete as a
percentage of total orders shipped.
ON-TIME DELIVERY means the frequency in which the Operating Company ships
orders on a date which is consistent with the delivery date that was promised to
the customer.
ORDER LEAD TIME means the average length of time from receipt of an order
to the shipment of such order.
--------------------
(1) All measures, with the exception of capital turnover, refer to the
residential window business only. Baselines are estimates and will be
verified during the 3 months following the Effective Date. The parties agree
to amend this Exhibit B to reflect the actual baselines as so verified. In
addition, the parties agree to amend this Exhibit B to appropriately reflect
any acquisitions made by the Company.
LABOR PRODUCTIVITY means the result obtained by dividing the number of
units shipped during a specified period by the indirect and direct labor costs
during such period.
MATERIAL COST REDUCTION means that number calculated in accordance with the
following: (i) the goal and actual improvements will be a function of both the
per unit material cost reduction on existing products and the per unit material
cost avoidance for new products, times the number of effected window units sold;
and (ii) values are calculated on a discrete project/initiative basis.
CAPITAL TURNOVER means (i) in the case of the baseline, the result obtained
by dividing (x) 1997E net sales by (y) invested capital, as of the Effective
Date; and (ii) in the case of the final goal, the result obtained by dividing
(xx) net sales during the final evaluation period by the average invested
capital during the final evaluation period (invested capital is derived from the
entire business of the Company (i.e., does not exclude non-residential window
operations)).
EXHIBIT C
INTERIM PERFORMANCE GOALS(2)
PERFORMANCE BASELINE(3) INTERIM WEIGHTING FINAL
CRITERIA PERFORMANCE FACTOR GOAL
GOAL
-------------------------------------------------------------------------------------------
Order Fill Rate 84% 50% of the variance 25%
between the baseline
and the final goal
-------------------------------------------------------------------------------------------
On-time Delivery 86% 60% of the variance 25%
between the baseline
and the final goal
-------------------------------------------------------------------------------------------
Order Lead Time 8 days 67% of the variance 25%
between the baseline
and the final goal
-------------------------------------------------------------------------------------------
Successful N/A N/A 25%
Consolidation of Living
Windows (50% of
revenue retained)
-----------------
(2) Only the performance of the Xxxxx and Fresno facilities are incorporated
into the numerical interim performance goals and corresponding baselines and
are to be calculated in measuring interim performance. All measures refer to
the residential window business only.
(3) Baselines are estimates and will be verified and mutually agreed to by
the Consultant and the Company during the 60 days following the Effective
Date. The parties agree to amend this Exhibit C to reflect the actual
baselines as so verified and agreed upon.
(4) Interim Performance Goals are subject to changes actually agreed upon by
the Consultant and the Company in writing during the 60 days following the
Effective Date.
EXHIBIT D
METHOD OF DETERMINING
AGGREGATE WEIGHTED PERCENTAGE OF PERFORMANCE ACHIEVED
"Aggregate Weighted Percentage of Performance Achieved" shall be determined
as follows:
1. divide (i) the actual level of performance achieved during the
applicable evaluation period for each performance criterion minus the baseline
for such performance criterion, by (ii) the applicable performance goal for such
performance criterion for the applicable evaluation period minus the baseline
for such performance criterion (such quotient being hereinafter referred to as
the "Percentage of Performance Achieved"); PROVIDED, HOWEVER, that any
Percentage of Performance Achieved in excess of 125% shall be deemed to be 125%;
2. multiply the Percentage of Performance Achieved for each performance
criterion by the applicable weighting factor (such product being hereinafter
referred to as the "Weighted Percentage of Performance Achieved"); and
3. add the Weighted Percentages of Performance Achieved for all
performance criteria (the "Aggregate Weighted Percentage of Performance
Achieved"); PROVIDED, HOWEVER, that if the Aggregate Weighted Percentage of
Performance Achieved is in excess of 100%, it shall be deemed to be 100%.