Exhibit 10.3





Exhibit 10.3




AMENDED AND RESTATED

EMPLOYMENT AGREEMENT




EMPLOYMENT AGREEMENT (this “Agreement”), originally dated as of August 21, 2002, first
amended and restated in its entirety, as of July 27, 2004 (the “First Restatement Date”)
and further amended and restated in its entirety as of March 30, 2006, and further amended and
restated in its entirety as of April 1, 2008, and further amended and restated in its entirety as
of February 17, 2010 by and between ASSOCIATED MATERIALS LLC, a Delaware limited liability company
(as successor to Associated Materials Incorporated, a Delaware corporation) (the
“Company”), and ROBERT M. FRANCO, an individual residing in the State of Ohio (the
“Executive”).



WITNESSETH:




WHEREAS, the Executive previously served as President of Alside Supply Centers, a division of
the Company;



WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of March 16, 2002,
among Associated Materials Holdings Inc. (formerly known as Harvest/AMI Holdings Inc.)
(“Parent”), Simon Acquisition Corp. and the Company (the “Merger Agreement”), the
Company became a wholly-owned subsidiary of Parent upon consummation of the transactions
contemplated by the Merger Agreement (the “Merger”);



WHEREAS, since the Merger, the Executive has served as President of Alside Supply Centers;



WHEREAS, on March 4, 2004, all of the stock of Parent was exchanged for stock of AMH Holdings,
Inc. (“AMH”) as part of a series of corporate reorganization transactions, and Parent
became a wholly-owned subsidiary of AMH;



WHEREAS, on December 22, 2004, all of the stock of AMH was exchanged for stock of AMH II
Holdings, Inc. (“AMH II”) as part of a series of corporate reorganization transactions, and
Parent became an indirect wholly-owned subsidiary of AMH II;



WHEREAS, on December 28, 2007, Parent converted to a Delaware limited liability company known
as Associated Materials, LLC;



WHEREAS, the Company desires to continue to retain the services and employment of the
Executive on behalf of the Company, and the Executive desires to continue his employment with the
Company, upon the terms and conditions hereinafter set forth;



WHEREAS, pursuant to Section 12(g) of this Agreement, this Agreement may be amended in writing
by the parties hereto; and



WHEREAS, the Company and the Executive mutually desire to amend and restate this Agreement as
set forth herein.


 


 









 





NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for
good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto,
each intending to be legally bound hereby, agree as follows:



1. Employment. On the terms and subject to the conditions set forth herein, the
Company hereby employs the Executive as the President of AMI Distribution, and the Executive
accepts such employment, for the Employment Term (as defined in Section 3). During the Employment
Term, the Executive shall serve as the President of AMI Distribution and shall report to the
President and Chief Executive Officer of the Company, performing such duties as shall be reasonably
required of a president, and shall have such other powers and perform such other duties as may from
time to time be assigned to him by the President and Chief Executive Officer of the Company and the
Board of Directors of AMH II (the “Board”). To the extent requested by the Company’s
President and Chief Executive Officer or the Board, the Executive shall also serve on any committee
of the Board and/or as a director, officer or employee of AMH II or any other person or entity
which, from time to time, is a direct or indirect subsidiary of AMH II (AMH II and each such
subsidiary, person or entity, other than the Company, are hereinafter referred to collectively as
the “Affiliates,” and individually as an “Affiliate”). The Executive’s service as
a director of the Company or as a director, officer or employee of any Affiliate shall be without
additional compensation.



2. Performance. The Executive will serve the Company faithfully and to the best of
his ability and will devote his full business time, energy, experience and talents to the business
of the Company and the Affiliates; provided, however, that it shall not be a violation of this
Agreement for the Executive to manage his personal investments and business affairs, or to engage
in or serve such civic, community, charitable, educational, or religious organizations as he may
reasonably select so long as such service does not interfere with the Executive’s performance of
his duties hereunder.



3. Employment Term. Subject to earlier termination pursuant to Section 6, the
Executive’s term of employment hereunder shall begin on April 1, 2008 (hereinafter referred to as
the “Commencement Date”) and continue through the date which is two (2) years following the
Commencement Date; provided, however, that beginning on the first anniversary of the Commencement
Date, and on each subsequent anniversary of the Commencement Date, such term shall be automatically
extended by an additional one (1) year beyond the end of the then-current term, unless, at least
thirty (30) days before such first anniversary of the Commencement Date, or thirty (30) days before
any such subsequent anniversary of the Commencement Date, the Company gives written notice to the
Executive that the Company does not desire to extend the term of this Agreement, in which case, the
term of employment hereunder shall terminate as of the second anniversary of the Commencement Date
or the end of the then-current term, as applicable (the term of employment hereunder, including any
extensions, in accordance with this Section 3, shall be referred to herein as the “Employment
Term”).



4. Compensation and Benefits.



(a) Salary. As compensation for his services hereunder and in consideration of the
Executive’s other agreements hereunder, during the Employment Term, the Company shall pay the
Executive a base salary, payable in equal installments in accordance with the Company’s payroll
procedures, at an annual rate of Three Hundred Thirty Thousand Dollars
($330,000), subject to annual review by the Board or its Compensation Committee, which may
increase, but not decrease, the Executive’s base salary.


 


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(b) Annual Incentive Bonus; Stock Options. The Executive shall be entitled to
participate in an annual incentive bonus arrangement established by the Company on terms and
conditions substantially as set forth in Exhibit A hereto. The Executive shall not be
entitled to participate in any other annual cash bonus plan, program or arrangement with respect to
any period to which the annual incentive bonus arrangement described in the immediately preceding
sentence applies. The Executive shall also be entitled to participate in the stock option plan
established by AMH II.



(c) Retirement, Medical, Dental and Other Benefits. During the Employment Term, the
Executive shall, in accordance with the terms and conditions of the applicable plan documents and
all applicable laws, be eligible to participate in the various retirement, medical, dental and
other employee benefit plans made available by the Company, from time to time, for its executives.



(d) Vacation; Sick Leave. During the Employment Term, the Executive shall be entitled
to not less than four (4) weeks of vacation during each calendar year and sick leave in accordance
with the Company’s policies and practices with respect to its executives.



(e) Business Expenses. The Company shall reimburse or advance payment to the
Executive for all reasonable expenses actually incurred by him in connection with the performance
of his duties hereunder in accordance with policies established by the Company from time to time
and subject to receipt by the Company of appropriate documentation.



5. Covenants of the Executive. The Executive acknowledges that in the course of his
employment with the Company he has and will become familiar with the Company’s and the Affiliates’
trade secrets and with other confidential information concerning the Company and the Affiliates,
and that his services are of special, unique and extraordinary value to the Company and the
Affiliates. Therefore, the Company and the Executive mutually agree that it is in the interest of
both parties for the Executive to enter into the restrictive covenants set forth in this Section 5
and that such restrictions and covenants are reasonable given the nature of the Executive’s duties
and the nature of the Company’s business.



(a) Noncompetition. During the Employment Term and for the two (2)-year period (the
“Restricted Period”) following termination of the Employment Term, the Executive shall not,
within any jurisdiction or marketing area in which the Company or any Affiliate is doing or is
qualified to do business, directly or indirectly, own, manage, operate, control, be employed by or
participate in the ownership, management, operation or control of, or be connected in any manner
with, any Business (as hereinafter defined), provided that the Executive’s ownership of securities
of two percent (2%) or less of any class of securities of a public company shall not, by itself, be
considered to be competition with the Company or any Affiliate. For purposes of this Agreement,
“Business” shall mean the manufacturing, production, distribution or sale of exterior
residential building products, including, without limitation, vinyl
siding, windows, fencing, decking, railings and garage doors, or any other business of a type
and character engaged in by the Company or an Affiliate during the Employment Term.


 


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(b) Nonsolicitation. During the Employment Term and for the Restricted Period
following termination of the Employment Term, the Executive shall not, directly or indirectly, (i)
employ, solicit for employment or otherwise contract for the services of any individual who is or
was an employee of the Company or any Affiliate during the Employment Term; (ii) otherwise induce
or attempt to induce any employee of the Company or an Affiliate to leave the employ of the Company
or such Affiliate, or in any way knowingly interfere with the relationship between the Company or
any Affiliate and any employee respectively thereof; or (iii) induce or attempt to induce any
customer, supplier, licensee or other business relation of the Company or any Affiliate to cease
doing business with the Company or such Affiliate, or interfere in any way with the relationship
between any such customer, supplier, licensee or business relation and the Company or any
Affiliate.



(c) Nondisclosure; Inventions. For the Employment Term and thereafter, (i) the
Executive shall not divulge, transmit or otherwise disclose (except as legally compelled by court
order, and then only to the extent required, after prompt notice to the Board of any such order),
directly or indirectly, other than in the regular and proper course of business of the Company and
the Affiliates, any customer lists, trade secrets or other confidential knowledge or information
with respect to the operations or finances of the Company or any Affiliates or with respect to
confidential or secret processes, services, techniques, customers or plans with respect to the
Company or the Affiliates (all of the foregoing collectively hereinafter referred to as,
“Confidential Information”), and (ii) the Executive will not use, directly or indirectly,
any Confidential Information for the benefit of anyone other than the Company and the Affiliates;
provided, however, that the Executive has no obligation, express or implied, to refrain from using
or disclosing to others any such knowledge or information which is or hereafter shall become
available to the general public other than through disclosure by the Executive. All Confidential
Information, new processes, techniques, know-how, methods, inventions, plans, products, patents and
devices developed, made or invented by the Executive, alone or with others, while an employee of
the Company which are related to the business of the Company and the Affiliates shall be and become
the sole property of the Company, unless released in writing by the Board, and the Executive hereby
assigns any and all rights therein or thereto to the Company.



(d) Nondisparagement. During the Employment Term and thereafter, the Executive shall
not take any action to disparage or criticize the Company or any Affiliate or their respective
employees, directors, owners or customers or to engage in any other action that injures or hinders
the business relationships of the Company or any Affiliate. Nothing contained in this Section 5(d)
shall preclude the Executive from enforcing his rights under this Agreement.



(e) Return of Company Property. All Confidential Information, files, records,
correspondence, memoranda, notes or other documents (including, without limitation, those in
computer-readable form) or property relating or belonging to the Company or an Affiliate, whether
prepared by the Executive or otherwise coming into his possession in the course of the performance
of his services under this Agreement, shall be the exclusive property of the Company and shall be
delivered to the Company, and not retained by the Executive
(including, without limitations, any copies thereof), promptly upon request by the Company
and, in any event, promptly upon termination of the Employment Term.


 


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(f) Enforcement. The Executive acknowledges that a breach of his covenants contained
in this Section 5 may cause irreparable damage to the Company and the Affiliates, the exact amount
of which would be difficult to ascertain, and that the remedies at law for any such breach or
threatened breach would be inadequate. Accordingly, the Executive agrees that if he breaches or
threatens to breach any of the covenants contained in this Section 5, in addition to any other
remedy which may be available at law or in equity, the Company and the Affiliates shall be entitled
to specific performance and injunctive relief to prevent the breach or any threatened breach
thereof without bond or other security or a showing that monetary damages will not provide an
adequate remedy.



(g) Scope of Covenants. The Company and the Executive further acknowledge that the
time, scope, geographic area and other provisions of this Section 5 have been specifically
negotiated by sophisticated commercial parties and agree that all such provisions are reasonable
under the circumstances of the activities contemplated by this Agreement. In the event that the
agreements in this Section 5 shall be determined by any court of competent jurisdiction to be
unenforceable by reason of their extending for too great a period of time or over too great a
geographical area or by reason of their being too extensive in any other respect, they shall be
interpreted to extend only over the maximum period of time for which they may be enforceable and/or
over the maximum geographical area as to which they may be enforceable and/or to the maximum extent
in all other respects as to which they may be enforceable, all as determined by such court in such
action.



6. Termination. The employment of the Executive hereunder shall automatically
terminate at the end of the Employment Term. The employment of the Executive hereunder and the
Employment Term may also be terminated at any time by the Company with or without Cause. For
purposes of this Agreement, except as otherwise provided in Section 8, “Cause” shall mean:
(i) embezzlement, theft or misappropriation by the Executive of any property of the Company or an
Affiliate; (ii) any breach by the Executive of the Executive’s covenants under Section 5; (iii) any
breach by the Executive of any other material provision of this Agreement which breach is not
cured, to the extent susceptible to cure, within thirty (30) days after the Company has given
notice to the Executive describing such breach; (iv) willful failure by the Executive to perform
the duties of his employment hereunder which continues for a period of fourteen (14) days following
written notice thereof by the Company to the Executive; (v) the conviction of, or a plea of nolo
contendere (or a similar plea) to, any criminal offense that is a felony or involves fraud, or any
other criminal offense punishable by imprisonment of at least one year or materially injurious to
the business or reputation of the Company involving theft, dishonesty, misrepresentation or moral
turpitude; (vi) gross negligence or willful misconduct on the part of the Executive in the
performance of his duties as an employee, officer or director of the Company or an Affiliate; (vii)
the Executive’s breach of his fiduciary obligations to the Company or an Affiliate; (viii) the
Executive’s commission of intentional, wrongful damage to property of the Company or an Affiliate;
(ix) any chemical dependence of the Executive which adversely affects the performance of his duties
and responsibilities to the Company or an Affiliate; or (x) the Executive’s violation of the
Company’s or an Affiliate’s code of ethics, code of business conduct or similar policies applicable
to the Executive. The existence or non-
existence of Cause shall be determined in good faith by the Board. The employment of the
Executive may also be terminated at any time by the Executive by notice of resignation delivered to
the Company not less than ninety (90) days prior to the effective date of such resignation.


 


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7. Severance. Except as otherwise provided in Section 8, if the Executive’s
employment hereunder is terminated during the Employment Term by the Company or is terminated due
to expiration of the Employment Term following notice by the Company not to extend the Employment
Term in accordance with Section 3, in each case other than for Cause or due to disability (as
determined in the good faith discretion of the Board) or death, the Executive shall be entitled to
receive as severance (subject to Section 9): (i) an amount equal to the Executive’s base salary as
in effect immediately prior to the date of the Executive’s termination of employment for the longer
period of twelve (12) months or the remaining Employment Term, payable, commencing no later than
sixty (60) days following such termination, in equal installments in accordance with the Company’s
payroll procedures during such applicable period following the date of the Executive’s termination
(such period, the “Severance Period”); (ii) continued medical and dental benefits described
in Section 4(c) for the Severance Period, at the same rate of employee and Company shared costs of
such coverage as in effect from time to time for active employees of the Company; and (iii) a pro
rata portion (based on the number of days the Executive was employed by the Company during the
calendar year of termination) of any incentive bonus otherwise payable in accordance with Section
4(b) for the year of termination of the Executive’s employment, payable no earlier than the date on
which such bonus, if any, would have been paid under the applicable plan or policy of the Company
absent such termination of employment, but no later than March 15 of the calendar year immediately
following the calendar year of such termination. With respect to any such continued medical and
dental benefits described in clause (ii) of the first sentence of this Section 7 for which the
Executive is eligible, (I) if the Company cannot continue such benefits, the Company shall pay the
Executive for the cost of such benefits; (II) such benefits shall be discontinued in the event the
Executive becomes eligible for similar benefits from a successor employer (and the Executive’s
eligibility for any such benefits shall be reported by the Executive to the Company); and (III) the
Executive’s period of “continuation coverage” for purposes of Section 4980B of the Internal Revenue
Code of 1986, as amended (the “Code”), shall be deemed to commence on the date of the
Executive’s termination of employment.



8. Change in Control. This Section 8 will be binding upon the First Restatement Date,
but notwithstanding anything in this Agreement to the contrary, this Section 8 will not be
operative unless and until a Change in Control occurs. Upon the occurrence of a Change in Control
at any time during the Employment Term, this Section 8 shall become immediately operative without
further action; provided, however, that if, prior to a Change in Control, the Executive ceases for
any reason to be an employee of the Company and any Affiliate, the effectiveness of this Section 8
will immediately terminate without further action and be of no further effect. Certain capitalized
terms used in this Section 8 are defined for purposes of this Section 8 in Section 8(e).



(a) Termination Following a Change in Control. In the event of a Change in Control,
if the Executive’s employment is terminated by the Company or an Affiliate during the Post-Change
Period, the Executive shall be entitled to the benefits provided by
Section 8(c) unless such termination is the result of the occurrence of one or more of the
following events:


 


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	 	(i)	 	The Executive’s death;

	 
	 	(ii)	 	If the Executive becomes permanently disabled
within the meaning of, and begins actually to receive disability
benefits under, the long-term disability plan applicable to the
Executive immediately prior to the Change in Control; or

	 
	 	(iii)	 	Cause (as defined in Section 8(e)(i)).







If, during the Post-Change Period, the Executive’s employment is terminated by the Company
or an Affiliate as described in clause (i), (ii) or (iii) of this Section 8(a), the
Executive will not be entitled to the benefits provided by Section 8(c).



(b) Termination by Executive. In the event of a Change in Control, the Executive may
terminate employment with the Company during the Post-Change Period with the right to severance
compensation as provided in Section 8(c) upon the occurrence of one or more of the following events
(regardless of whether any other reason, other than death, permanent disability or Cause, for such
termination has occurred, including other employment):




	 	(i)	 	the failure to maintain the Executive in the position, or a
substantially equivalent or superior position, with the Company and/or with a
direct or indirect parent company of the Company that the Executive held
immediately prior to the Change in Control, which is not remedied by the
Company within 10 calendar days after receipt by the Company of notice from the
Executive of such failure;

	 
	 	(ii)	 	(A) a reduction in the Executive’s base salary pursuant to
Section 4(a) hereof or (B) the termination or significant reduction in the
aggregate of the Executive’s right to participate in employee benefit plans or
programs of the Company as in effect prior to the Change in Control (other than
Incentive Pay (as hereinafter defined) or any other bonus, incentive or stock
or equity-based compensation or benefits), in either case which is not remedied
by the Company within 10 calendar days after receipt by the Company of notice
from the Executive of such reduction or termination;

	 
	 	(iii)	 	a reduction or elimination of the Executive’s opportunity to
earn Incentive Pay pursuant to any plan or program in effect immediately prior
to the Change in Control which is not remedied by the Company within 10
calendar days after receipt by the Company of notice from the Executive of such
reduction or elimination (for the avoidance of doubt, changes in the value or
performance of the Company or an Affiliate or successor of either following the
Change in Control shall not be considered a reduction or elimination of the
Executive’s opportunity to earn Incentive Pay); or





 


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	 	(iv)	 	the Company requires the Executive to have his principal place
of work changed to any location that is more than 35 miles from the location
thereof immediately prior to the Change in Control, without his prior written
consent.






(c) Change in Control Severance. If, following the occurrence of a Change in Control,
the Company or an Affiliate terminates the Executive’s employment during the Post-Change Period
other than as described in clause (i), (ii) or (iii) of Section 8(a), or if the Executive
terminates his employment pursuant to Section 8(b), the Executive shall not be entitled to the
severance compensation described in Section 7, and, subject to Section 9, the Company will (i) pay
or cause to be paid to the Executive the amounts described in Sections 8(c)(1), 8(c)(2), 8(c)(3),
and 8(c)(6) in a lump-sum no later than sixty (60) days after the Termination Date; (ii) pay or
cause to be paid to the Executive the amount described in Section 8(c)(4), such amount to be
payable no earlier than the date on which such Incentive Pay, if any, would have been paid under
the applicable plan or policy of the Company absent such termination of employment, but no later
than March 15 of the calendar year immediately following the calendar year of the Termination Date;
and (iii) provide the Executive the benefits described in Section 8(c)(5) for the period described
therein. The foregoing to the contrary notwithstanding, if the Executive is entitled to payments
under this Section 8(c) following a Change in Control that does not constitute a “change in the
ownership or effective control” of the relevant company or a “change in the ownership of a
substantial portion of the assets” of the relevant company, as such terms are used in Code Section
409A(a)(2)(A)(v), then an amount equal to the amount that would have been paid under Section 7(i)
had a Change in Control not occurred shall be paid in installments during the Severance Period, and
the remaining amounts described in clause (i) of this Section 8(c) above (reduced by the amount so
paid in installments) shall be paid in a lump-sum.




	 	(1)	 	A lump sum payment in an amount equal to all Base Pay and
Incentive Pay (other than for the calendar year of such termination of
employment) owed to the Executive for periods on or prior to the Termination
Date.

	 
	 	(2)	 	A lump sum payment in an amount equal to two times the
Executive’s base salary pursuant to Section 4(a) (at the rate in effect
immediately prior to the Termination Date).

	 
	 	(3)	 	A lump sum payment equal to two times Incentive Pay (in an
amount equal to the highest amount of Incentive Pay earned by the Executive in
any calendar year during the three calendar years immediately preceding the
calendar year in which the Change in Control occurred).

	 
	 	(4)	 	In the event that the Termination Date occurs after June 30 in
any calendar year, a lump sum payment equal to one times Incentive Pay for such
calendar year, multiplied by a fraction, the numerator of which is the number
of days between (and including) January 1 of the calendar year in which the
Termination Date occurs and the Termination Date, and the denominator of which
is 365.





 


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	 	(5)	 	For a period of 24 months following the Termination Date (the
“Continuation Period”), the Company will provide the Executive with
medical, dental and life insurance benefits consistent with the terms in effect
for such benefits for active employees of the Company during the Continuation
Period. If and to the extent that any benefit described in this Section
8(c)(5) is not or cannot be paid or provided under any Company plan or program,
then the Company will pay or provide for the payment to the Executive, his
dependants and beneficiaries, of such employee benefits. Without otherwise
limiting the purposes of Section 8(d), employee benefits otherwise receivable
by the Executive pursuant to this Section 8(c)(5) will be reduced to the extent
comparable welfare benefits are actually received by the Executive from another
employer during the Continuation Period following the Executive’s Termination
Date, and any such benefits actually received by the Executive shall be
reported by the Executive to the Company. The foregoing to the contrary
notwithstanding, to the extent required in order to comply with Section 409A of
the Code, in no event shall any such benefits be provided beyond the end of the
second calendar year that begins after the Executive’s “separation from
service” within the meaning of Section 409A of the Code.

	 
	 	(6)	 	The Company will pay to the Executive the cost of employee
outplacement services for the Executive in the amount of $30,000.






(d) No Mitigation Obligation; Effect on Other Rights The payment of the severance
compensation by the Company to the Executive in accordance with the terms of this Section 8 is
hereby acknowledged by the Company to be reasonable, and the Executive will not be required to
mitigate the amount of any payment provided for in this Section 8 by seeking other employment or
otherwise, except as expressly provided in the last sentence of Section 8(c)(5). This Section 8
will not affect any rights (other than any rights to severance, termination, retention or similar
compensation or benefits) that the Executive may have pursuant to any agreement, plan or policy of
the Company or a subsidiary thereof providing employee benefits, which rights shall be governed by
the terms thereof.



(e) Certain Defined Terms. The following terms have the following meanings when used
in this Section 8:




	 	(i)	 	“Cause” means that, prior to any termination pursuant
to Section 8(b), the Executive shall have:







	 	(1)	 	been convicted of a criminal violation
involving fraud, embezzlement or theft;

	 
	 	(2)	 	committed intentional wrongful damage to
property of the Company or any Affiliate; or





 


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	 	(3)	 	committed intentional wrongful disclosure of
confidential information of the Company or any Affiliate.

	 
	 	 	 	Nothing herein will limit the right of the Executive or his
beneficiaries to contest the validity of any determination by the
Company to terminate the Executive for Cause.







	 	(ii)	 	“Change in Control” means (A) a stock sale, merger,
consolidation, combination, reorganization or other transaction involving the
Company resulting in less than fifty percent (50%) of the combined voting power
of the surviving or resulting entity being owned by the owner or owners of the
Company immediately prior to such transaction; (B) a stock sale, merger,
consolidation, combination, reorganization or other transaction involving AMH
II, AMH or Parent resulting in less than fifty percent (50%) of the combined
voting power of the surviving or resulting entity being owned by the
shareholders or owners of AMH II, AMH or Parent, as applicable, immediately
prior to such transaction or (C) the liquidation or dissolution of the Company,
AMH II, AMH or Parent or the sale or other disposition of all or substantially
all of the assets or business of the Company, AMH II, AMH or Parent (other
than, in the case of either clause (A), (B) or (C) above, in connection with
any employee benefit plan of the Company or an Affiliate).

	 
	 	(iii)	 	“Incentive Pay” means an annual cash bonus or annual
cash incentive compensation, in addition to base salary, made or to be made in
regard to services rendered in any year or other period pursuant to any bonus,
incentive, profit-sharing, performance, discretionary pay or similar agreement,
policy, plan, program or arrangement (whether or not funded) of the Company or
an Affiliate, or any successor thereto; provided that the Incentive Pay
shall not include any stock options or other stock-based compensation or any
special management bonuses paid in connection with any debt offering or
recapitalization of AMH II and/or another Affiliate. For the avoidance of
doubt, as of the date hereof, Incentive Pay shall mean the annual incentive
bonus arrangement described in Section 4(b).

	 
	 	(iv)	 	“Post-Change Period” means the period of time
commencing on the date of the first occurrence of a Change in Control and
continuing until the second anniversary of the occurrence of such Change in
Control.

	 
	 	(v)	 	“Termination Date” means the date on which the
Executive’s employment with the Company or an Affiliate is terminated.






9. Termination of Compensation and Benefits; Execution of Release; Coordination of
Provisions. If the Executive’s employment terminates otherwise than in a termination entitling
him to severance pay and benefits pursuant to Section 7 or Section 8, the Executive shall not be
entitled to any severance, termination pay or similar compensation or benefits, provided that the
Executive shall be entitled to any benefits then due or accrued in accordance



 


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with the applicable employee benefit plans of the Company or applicable law, including
“continuation coverage” under the Company’s group health plans for purposes of Section 4980B of the
Code. As a condition of receiving any severance compensation for which the Executive otherwise
qualifies under Section 7 or Section 8, the Executive agrees to execute within sixty (60) days
following the date of the Executive’s termination of employment a general release of the Company
and the Affiliates and their respective officers, directors and employees from any and all claims,
obligations and liabilities of any kind whatsoever, including, without limitation, those arising
from or in connection with the Executive’s employment or termination of employment with the Company
or this Agreement (including, without limitation, civil rights claims), in such form as is
requested by the Company, such release to be delivered, and to have become fully irrevocable, on or
before the end of such sixty (60)-day period. It is expressly agreed and understood that if such a
release has not been executed and delivered and become fully irrevocable by the end of such sixty
(60)-day period, no amounts or benefits under Section 7 or 8 shall be or become payable (except
that any continued medical, dental or life insurance benefits may be provided during such sixty
(60)-day period pursuant to Section 7 or 8, as the case may be, but will cease to be provided on
the last day of such period). Any severance compensation and benefits to which the Executive may
be entitled under Section 8 shall be in lieu of any severance compensation or benefits to which the
Executive may be entitled under Section 7. The Executive acknowledges and agrees that, except as
specifically described in Section 7 and Section 8, all of the Executive’s rights to any
compensation, benefits (other than base salary earned through the date of termination of employment
and any benefits due or accrued prior to termination of employment in accordance with the
applicable employee benefit plans of the Company or applicable law), bonuses or severance from the
Company or any Affiliate after termination of the Employment Term shall cease upon such
termination.



10. Limitation on Payments and Benefits. Notwithstanding any provision of this
Agreement to the contrary, no amount or benefit shall be paid or provided under this Agreement to
an extent or in a manner that would result in payments or benefits (or other compensation) not
being fully deductible by the Company or an Affiliate for federal income tax purposes because of
Section 280G of the Code, or any successor provision thereto (or that would result in the Executive
being subject to the excise tax imposed by Section 4999 of the Code, or any successor provision
thereto). The determination of whether any such payments or benefits to be provided under this
Agreement or otherwise would not be so deductible (or whether the Executive would be subject to
such excise tax) shall be made at the expense of the Company, if requested by either the Executive
or the Company, by a firm of independent accountants or a law firm selected by the Company and
reasonably acceptable to the Executive. In the event that any payment or benefit intended to be
provided under this Agreement or otherwise would constitute a “parachute payment,” as defined in
Section 280G of the Code, the Executive shall be entitled to designate the payments and/or benefits
(beginning with cash payments) to be reduced or modified so that the Company or an Affiliate is not
denied any federal income tax deductions for any such parachute payment because of Section 280G of
the Code (or so that the Executive is not subject to the excise tax imposed by Section 4999 of the
Code). The Company shall provide the Executive with all information reasonably requested by the
Executive to permit the Executive to make such designation. In the event that the Executive fails
to make such designation within 10 business days of the date his employment with the Company or an
Affiliate terminates, the Company may effect such reduction in any manner it deems appropriate
(beginning with cash payments).


 


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11. Notice. Any notices required or permitted hereunder shall be in writing and shall
be deemed to have been given when personally delivered or when mailed, certified or registered
mail, or sent by reputable overnight courier, postage prepaid, to the addresses set forth as
follows:



	 	 	 
	If to the Company:

	 	Associated Materials LLC
	 

	 	3773 State Road
	 

	 	Cuyahoga Falls, Ohio 44223
	 
	 	 
	With copies to:

	 	Harvest Partners, LLC
	 

	 	280 Park Avenue, 33rd Floor
	 

	 	New York, New York 10017
	 

	 	Attention: Ira D. Kleinman
	 
	 	 
	and

	 	Investcorp International Inc.
	 

	 	280 Park Avenue, 36th Floor
	 

	 	New York, New York 10017
	 

	 	Attention: Lars Haegg
	 
	 	 
	and

	 	Gibson, Dunn, & Crutcher, LLP
	 

	 	200 Park Avenue
	 

	 	New York, New York 10166
	 
	 	 
	If to the Executive:

	 	Robert M. Franco
	 

	 	AMI Corporate Offices






or to such other address as shall be furnished in writing by either party to the other party;
provided that such notice or change in address shall be effective only when actually received by
the other party.



12. General.



(a) Governing Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York applicable to contracts executed
and to be performed entirely within said State.



(b) Construction and Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or impaired, and the
parties undertake to implement all efforts which are necessary, desirable and sufficient to amend,
supplement or substitute all and any such invalid, illegal or unenforceable provisions with
enforceable and valid provisions which would produce as nearly as may be possible the result
previously intended by the parties without renegotiation of any material terms and conditions
stipulated herein.



(c) Assignability. The Executive may not assign his interest in or delegate his
duties under this Agreement. This Agreement is for the employment of the Executive, personally,
and the services to be rendered by him under this Agreement must be rendered by him and no other
person. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the
Company and its successors and assigns. Without limiting



 


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the foregoing and notwithstanding anything else in this Agreement to the contrary, the Company
may assign this Agreement to, and all rights hereunder shall inure to the benefit of, any
subsidiary of the Company or any person, firm or corporation resulting from the reorganization of
the Company or succeeding to the business or assets of the Company by purchase, merger,
consolidation or otherwise.



(d) Warranty by the Executive. The Executive represents and warrants to the Company
that the Executive is not subject to any contract, agreement, judgment, order or decree of any
kind, or any restrictive agreement of any character, that restricts the Executive’s ability to
perform his obligations under this Agreement or that would be breached by the Executive upon his
performance of his duties pursuant to this Agreement.



(e) Compliance with Rules and Policies. The Executive shall perform all services in
accordance with the lawful policies, procedures and rules established by the Company and the Board.
In addition, the Executive shall comply with all laws, rules and regulations that are generally
applicable to the Company or its subsidiaries and their respective employees, directors and
officers.



(f) Withholding Taxes. All amounts payable hereunder shall be subject to the
withholding of all applicable taxes and deductions required by any applicable law.



(g) Entire Agreement; Modification. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof, supersedes all prior agreements
and undertakings, both written and oral, and may not be modified or amended in any way except in
writing by the parties hereto.



(h) Duration. Notwithstanding the Employment Term hereunder, this Agreement shall
continue for so long as any obligations remain under this Agreement.



(i) Survival. The covenants set forth in Section 5 and the parties’ respective rights
and obligations under Section 8 shall survive and shall continue to be binding upon the Executive
and the Company, as the case may be, notwithstanding the termination or expiration of this
Agreement or the termination of the Executive’s employment following a Change in Control for any
reason whatsoever.



(j) Waiver. No waiver by either party hereto of any of the requirements imposed by
this Agreement on, or any breach of any condition or provision of this Agreement to be performed
by, the other party shall be deemed a waiver of a similar or dissimilar requirement, provision or
condition of this Agreement at the same or any prior or subsequent time. Any such waiver shall be
express and in writing, and there shall be no waiver by conduct. Pursuit by either party of any
available remedy, either in law or equity, or any action of any kind, does not constitute waiver of
any other remedy or action. Such remedies are cumulative and not exclusive.



(k) Counterparts. This Agreement may be executed in two or more counterparts, all of
which taken together shall constitute one instrument.


 


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(l) Section References. The words Section and paragraph herein shall refer to
provisions of this Agreement unless expressly indicated otherwise.



IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed
this Agreement as of the day and year first written above.



	 	 	 	 	 
	 	ASSOCIATED MATERIALS LLC

 	 
	Date: February 17, 2010           	By:  	/s/ Thomas N. Chieffe 	 
	 	 	Name:  	Thomas N. Chieffe 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	ROBERT M. FRANCO



	 
	Date: February 17, 2010           	/s/ Robert M. Franco	 
	 	 	 
	 	 	 



 


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Exhibit A




Annual Incentive Bonus





The Executive’s annual incentive bonus for each calendar year during the Employment Term shall
be a percentage of the Executive’s base salary based upon the achievement by AMH II of annual
EBITDA Hurdles, or such other financial measures as may be established by the Board or its
Compensation Committee, with respect to the applicable calendar year, as follows:



	 	 	 
	Achievement of EBITDA Hurdles	 	Percentage of Base Salary
	 
	 	 
	Less than threshold
	 	Zero
	 
	 	 
	Threshold
	 	20.00%
	 
	 	 
	Target
	 	60.00%
	 
	 	 
	Maximum
	 	100.00%






If the actual EBITDA for a particular calendar year is between two EBITDA Hurdles, the
applicable percentage of base salary shall be determined by linear interpolation based on the
difference between such EBITDA Hurdles. For the avoidance of doubt, in no event shall the annual
incentive bonus exceed 100% of base salary. For purposes of the Executive’s annual incentive bonus
and the computation thereof:




	1.	 	Base salary shall mean the annual rate of base salary in effect under this Agreement as of
December 31 of the calendar year to which the bonus relates.

	 
	2.	 	“EBITDA Hurdle” means threshold, target and maximum amounts of EBITDA with respect to a
calendar year, as determined in good faith by the Board or its Compensation Committee. EBITDA
Hurdles shall be adjusted consistent with the definition of EBITDA, in the discretion of the
Board or its Compensation Committee.

	 
	3.	 	EBITDA shall mean the consolidated net income of AMH II, adjusted to exclude deduction of
interest expense (net of interest income), income taxes, depreciation and amortization and the
Harvest Fee pursuant to the Management Agreement, dated as of April 19, 2002, between Harvest
Partners, Inc. and Associated Materials Incorporated, as amended from time to time, and to
exclude gain or loss from sale of capital assets, and including deduction of all bonuses paid
or accrued with respect to the Executive and all other officers and employees of AMH II and
its subsidiaries (including, without limitation, the Executive’s bonus hereunder), for the
relevant calendar year, calculated otherwise in accordance with generally accepted accounting
principles, subject to any adjustments made in good faith by the Board or its Compensation
Committee. EBITDA shall be determined by the Company’s management, subject to audit or review
by AMH II’s external accountants and approval, in good faith, by the Board or its Compensation
Committee. EBITDA shall exclude, without duplication, any transaction- or merger-related
costs which are expensed rather than capitalized; any revenue, expense, gain or loss from
operations divested during the relevant calendar year; the effect of inventory write-ups
made due to purchase accounting; and any other non-recurring, extraordinary items subject to
approval, in good faith, by the Board or its Compensation Committee. EBITDA shall be
adjusted to reflect acquisitions, divestitures and other similar transactions involving AMH
or its subsidiaries, in the discretion of the Board or its Compensation Committee.






 


 









 




Exhibit A




	4.	 	Any annual incentive bonus to which the Executive is entitled under this Agreement for any
calendar year shall be paid in a cash lump-sum within thirty days following the close of AMH
II’s books and completion of AMH II’s annual audit by its external accountants for such
calendar year but in any event shall not be paid later than March 15 of the calendar year
immediately following the calendar year to which the bonus relates.






The Executive’s entitlement to an annual incentive bonus shall be determined by the Board or its
Compensation Committee in good faith in accordance with this Exhibit A.




 


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