Exhibit 10.11


 


SECOND AMENDED AND RESTATED


EMPLOYMENT AGREEMENT


 


This Second Amended and Restated Employment Agreement
(this “Agreement”) is entered into on September 6. 2005 to be
effective as of the Closing Date (the “Effective Date”), by and among
Panolam Industries International, Inc., a Delaware corporation (together
with its successors and assigns, the “Company”), Panolam Industries
Holdings, Inc., a Delaware corporation (together with its successors and
assigns, “Holdings”), and Robert J. Muller. Jr. (the “Executive”).
For the avoidance of doubt. Parent shall be considered a successor to Holdings
as of the Effective Date.


 


W  I  T  N  E  S  S  E  T
H:


 


WHEREAS, the Executive is currently employed as
President and Chief Executive Officer of the Company and of Holdings:


 


WHEREAS, the Company, Holdings, and the Executive
entered into that certain Amended and Restated Employment Agreement on December 18,
2003 (“Original Agreement”);


 


WHEREAS, the Company and Holdings desire to continue
the employment of the Executive with the Company and Holdings in connection
with the acquisition (the “Acquisition”) of Holdings by Panolam Holdings
Co. (“Parent”), pursuant to an Agreement and Plan of Merger dated July 16,
2005 among GS Holdings Co., a wholly-owned subsidiary of Parent, PIH
Acquisition Co., Holdings and TC Group, L.L.C. (the “Merger Agreement”),
and amend and restate in its entirely, the Original Agreement;


 


WHEREAS, the Executive desires to accept such
continued employment, subject to the terms and provisions of this Agreement;
and


 


WHEREAS, this Agreement is expressly contingent upon
the closing of the transactions contemplated by the Merger Agreement;


 


NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the Company,
Holdings and the Executive (collectively, the “Parties”) agree as
follows:


 


1.                          Definitions. Capitalized terms not
otherwise defined herein shall have the meanings set forth in Exhibit A.


 


2.                          Term of Employment. The Company and
Holdings hereby agree to employ the Executive under this Agreement, and the
Executive hereby accepts such employment, for the Term of Employment. The Term
of Employment shall commence as of the Effective Date and shall end on December 31,
2010; provided, however, that the Term of Employment shall
thereafter be automatically and indefinitely extended for additional one year
periods unless (x) Holdings and the Company give the  Executive, or (y) the Executive gives Holdings and the
Company, at least 180 days’ prior written notice electing not to so extend the
Term of


 

















 


Employment. Following such notice, the Term of Employment shall
terminate on the later of (a) December 31, 2010 and (b) the
180th day after the giving of such notice. Notwithstanding the foregoing, the
Term of Employment may be earlier terminated in strict accordance with the
provisions of Section 9.


 


3.                          Positions, Duties and Responsibilities.


 


(a)                      During
the Term of Employment, the Executive shall serve as the President and Chief
Executive Officer of the Company, of Holdings and of such of their Subsidiaries
as the Holdings Board may reasonably request; shall have all authorities,
duties and responsibilities customarily exercised by an individual  serving in those positions in enterprises
of a similar size and structure; shall be assigned no duties or
responsibilities that are materially inconsistent with, or that materially
impair his ability to discharge, the foregoing duties and responsibilities:
shall be the Chairman of the Company Board, the Chairman of the Holdings Board,
and the Chairman of the Board of such of their Subsidiaries as the Holdings
Board may reasonably request; and shall report solely and directly to the
Holdings Board.


 


(b)                     The
Executive shall devote substantially all of his business time and efforts to
the affairs of the Company and Holdings: provided, however, that
the Executive may also engage in the following activities: (i) serving
on the boards of a reasonable number of business entities, trade associations
and/or charitable organizations: (ii) engaging in charitable activities
and community affairs: (iii) accepting and fulfilling a reasonable number
of speaking engagements; and (iv) managing his personal investments and affairs:
provided that such activities do not in the aggregate materially
interfere with the proper performance of his duties and responsibilities
hereunder.


 


4.                          Base Salary. Commencing as of the
Effective Date, the Company shall pay the Executive an annualized Base Salary
of $550,000, payable in accordance with the regular payroll practices
applicable to senior executives of the Company and Holdings but no less
frequently than monthly. However, if during any calendar year that ends during
the Term of Employment, Actual EBITDA (as defined in Section 5) is (i) greater
than or equal to $50 million but less than $55 million. Base Salary for the
following year shall be $600,000, (ii) greater than or equal to $55
million but less than $60 million, Base Salary for the following year shall be
$650,000, or (iii) greater than or equal to $60 million. Base Salary for
the following year shall be $700,000. The Base Salary (including as increased
pursuant to the preceding sentence) shall not be decreased at any time during
the Term of Employment (including, without limitation, for the purpose of
determining benefits due under Section 9). The Executive shall not be
entitled to receive any additional consideration for service during the Term of
Employment as a member of the Holdings Board, the Company Board, or the Board
of any of their Subsidiaries.


 


5.                          Annual Bonus.  In respect of each
calendar year that ends during the Term of Employment, the Executive shall
receive an annual bonus from the Company determined as follows:


 


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(a)                      Target
Annual Bonus. Subject to Section 5(b), the annual bonus shall be based
on the Holdings EB1TDA (as calculated after considering both the Base Salary
and any bonus payable under this Section 5) (“Actual EBITA”) for
each calendar year that ends during the Term of Employment. If Actual EBITDA
for a given calendar year is (i) less than $50 million, the target annual
bonus (“Target Bonus”) for such calendar year shall equal 50% of Base
Salary in effect for such calendar year, (ii) greater than or equal to $50
million but less than $60 million, the Target Bonus for such calendar year
stall equal 75% of Base Salary in effect for such calendar year, or (iii) greater
than or equal to $60 million, the Target Bonus for such calendar year shall
equal 100% of Base Salary in effect for such calendar year.


 


(b)                     Adjustments
to Annual Bonus. The annual bonus actually payable with respect to any
calendar year shall be equal to the Target Bonus adjusted as follows to reflect
the relationship between (i) Actual EBITDA for the calendar year in
question and (ii) the target EBITDA (“Target EBITDA”) established
for Holdings for such calendar year. The Target EBITDA for each calendar year
shall be established for Holdings during the last 45 days of the year preceding
such calendar year by the Holdings Board reasonably, in good faith, and in
consultation with the Executive, and shall be subject to later adjustment in
light of significant acquisitions, significant dispositions, significant
changes in accounting practices, and other significant occurrences to the
extent necessary to avoid material distortion of the benefits intended to be
provided under this Section 5. To the extent that Actual EBITDA is less
than Target EBITDA the actual bonus shall be the Target Bonus reduced by two
and one-half percent for each one percent of shortfall (e.g., if Actual
EBITDA is 90% of Target EBITDA, the Executive shall be paid a bonus equal to
75% of the Target Bonus): provided, however, that the Executive
stall not  be entitled to receive
any annual bonus for a year if (x) Actual EBITDA is not equal to at least 90%
of Target EBITDA for such year or (y) the Company or Holdings is not in
compliance with the restrictive covenants of the Credit Agreement or the
indenture. To the extent Actual EBITDA exceeds Target EBITDA, the actual bonus
shall be the Target Bonus increased by two and one-half percent for each one
percent of excess (e.g., if Actual EBITDA is 120% of Target EBITDA, the
Executive shall be paid a bonus equal to 150% of the Target Bonus).


 


(c)                      The
Executive shall be paid bonus amounts, if any, earned pursuant to this Section 5
promptly following certification of Holdings’ audited year-end consolidated
financial statements, and in no event later than April 30th of the
calendar year following the calendar year to which the bonus relates. Neither
Holding, nor the Company, nor any of their Subsidiaries shall, during the Term
of Employment adopt a  fiscal year
that is not a calendar year without the consent of the Executive, which consent
shall not be unreasonably withheld. Holdings and the Company agree to use
commercially reasonable efforts to assure timely availability of certified
consolidated financial statements in respect of each fiscal year that begins or
ends during the Term of Employment.


 


6.                          Initial Equity Arrangements.


 


(a)                      Stock
Purchase Agreement. In connection with the Acquisition, the Executive will
acquire shares of common stock of Parent having an initial agreed upon value of


 


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$2,000,000. Executive will acquire such shares pursuant to a tax-free
exchange of his existing shares of common stock of Holdings for shares of
common stock of Parent and pursuant to a Stock Purchase Agreement (the “Stock
Purchase Agreement”) to be entered into by and between Parent and the
Executive.


 


(b)                     Stock
Option Grant. As of the Effective Date, Parent shall grant the Executive a
time-vested option, in substantially the form attached hereto as Exhibit B,
to purchase a number of shares of common stock of Parent initially equal to
five percent (5%) of the shares of its common stock outstanding on a fully
diluted basis as of the Effective Date at an exercise price equal to the
purchase price per share of common stock to be paid by Executive pursuant to
the Stock Purchase Agreement.


 


7.                         Other Long-Term Incentives.


 


The Executive shall be eligible to receive additional
long-term compensation incentives during the Term of Employment at the
discretion of the Holdings Board. Such incentive awards shall be at a level,
and on terms and conditions, that are commensurate with his positions and
responsibilities at the Company and Holdings and appropriate in light of
corresponding awards that may be granted from time to time to other senior
executives of the Company and Holdings.


 


8.                         Other Benefits.


 


(a)                      Employee
Benefits. During the Term of Employment, the Executive shall be eligible to
participate in all employee benefit plans and programs made available generally
to senior executives of the Company or Holdings, including, without limitation,
pension, profit sharing, income deferral, savings and other retirement plans or
programs, accidental death and dismemberment protection, medical, dental and
hospitalization plans, life insurance, short- and long-term disability
programs, travel accident insurance, and any other employee welfare benefit
plans or programs that may from time to time be made available, including
any plans or programs that supplement the above-listed types of plans or
programs, whether funded or unfunded; provided, however, that
nothing in this Agreement shall be construed to require the Company or Holdings
to establish or maintain such plans or programs, except as expressly set forth
herein. The Executive’s participation in all such plans and programs shall be
at a level, and on terms and conditions, that are commensurate with his
positions and responsibilities at the Company and at Holdings and no less
favorable to him than to other senior executives of the Company or Holdings.
During the Term of Employment, no benefit or coverage available to the
Executive under any such plan or program shall be materially reduced without
his prior written consent, unless a substantially equivalent reduction is applied
generally to the other senior executives of the Company or Holdings. The
Executive shall be entitled to post-retirement welfare benefits on a basis no
less favorable than that applying to other senior executives of the Company and
Holdings during the Term of Employment.


 


(b)                     Fringe
Benefits, Perquisites and Vacations. During the Term of Employment, the
Executive shall participate in all fringe benefits and perquisites available to
senior executives of the Company or Holdings at levels, and on terms and conditions,
that are commensurate with his positions and responsibilities at the Company
and at Holdings and no less favorable than those applying to other senior
executives of the Company or Holdings; shall


 


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receive such additional fringe benefits and perquisites as the Company
or Holdings may, in their discretion, from time-to-time provide; and  shall be entitled to no less than 4 weeks’
paid vacation per year.


 


(c)                      Reimbursement
of Business and Other Expenses. The Executive is authorized to incur
reasonable expenses in carrying out his duties and responsibilities under this
Agreement, and the Company shall promptly reimburse him for all such expenses
(including, without limitation, first class air travel), subject to
documentation in accordance with reasonable policies of the Company or Holdings
previously communicated to the Executive by the Company or Holdings. The
Company shall also promptly reimburse the Executive (i) for all reasonable
expenses (including, without limitation, reasonable attorneys’ fees and other
charges of counsel) incurred by him in connection with the negotiation and
documentation of these employment arrangements and (ii) for annual
financial, estate and tax counseling that the Executive may choose to
obtain from professional providers of such services in an amount not to exceed
$10,000 for each calendar year.


 


9.                         Termination of Employment.


 


(a)                      Termination
Due to Death. The term of Employment is terminated upon the Executive’s
death. In the event that the Executive’s employment under this Agreement is
terminated due to his death, his estate or his beneficiaries (as the case may be)
shall be entitled to the following:


 


(i)                         Base
Salary for a period of 90 days following the date of death;


 


(ii)                      prompt
payment of a Pro-Rata Annual Bonus for the year in which his death occurs:


 


(iii)                   any Stock Option that becomes
exercisable solely with the passage of time, without satisfaction of any
performance criterion other than continued service, shall become exercisable as
of the date of death to the extent provided in the agreement granting such
Option, but at least to the extent that it was then scheduled to become
exercisable within six months following such date if the Executive’s employment
hereunder had continued; and


 


(iv)                  any
Stock Option that is, or becomes, exercisable as of the date of death shall
remain exercisable as provided in the agreement granting such Option, but must
be exercised no later than the second anniversary of such date.


 


(b)                     Termination
Due to Disability. The Term of Employment may be terminated due to
Disability as provided in this Section 9(b). In the event that the
Executive’s employment under this Agreement is terminated due to Disability, he
shall be entitled to the following:


 


(i)                         to
receive, to age 65 and no less frequently than monthly, periodic disability
payments at a rate equal to 60% of the Base Salary in effect at the termination
of his employment, less the amount of any periodic disability benefits provided
(other than benefits attributable to his own unreimbursed contributions) under
any disability insurance plan or program of the Company, Holdings, or any of
their Affiliates;


 


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(ii)                      prompt
payment of a Pro-Rata Annual Bonus for the year in which his employment
terminates;


 


(iii)                   any Stock Option that becomes
exercisable solely with the passage of time, without satisfaction of any
performance criterion other than continued service, shall become exercisable as  of the Termination Date to the extent
provided in the agreement granting such Option, but at least to the extent that
it was then scheduled to become exercisable within six months following such
date if the Executive’s employment hereunder had continued;


 


(iv)                  any
Stock Option that is, or becomes, exercisable as of the Termination Date, shall
remain exercisable as provided in the agreement granting such Option, but at
least through the second anniversary of such date: and


 


(v)                     continued
participation, through the third anniversary of the Termination Date, in all
medical, dental, vision, hospitalization and life insurance coverages and in
all other employee welfare benefit plans, programs and arrangements in which he
or his family members were participating on the Termination Date, on terms and
conditions that are no less favorable than those that applied on such date.


 


No termination of the Executive’s employment for
Disability shall be effective unless (x) Holdings and the Company first give
the Executive, or (y) the Executive first gives Holdings and the Company, 15
days’ written notice of such termination pursuant to this Section 9(b).


 


(c)                      Termination
for Cause.


 


(i)                         No
termination of the Executive’s employment under this Agreement for Cause shall
be effective unless the provisions of this Section 9(c)(i) shall have
been complied with. The Executive shall be given written notice by the Holdings
Board of the intention to terminate him for Cause, such notice (A) to
state in detail the particular circumstances that constitute the grounds on
which the proposed termination for Cause is based and (B) to be given no
later than 180 days after the Holdings Board first learns of such
circumstances. The Executive shall have 15 days after receiving such notice in
which to cure such grounds, to the extent such cure is possible. If he fails to
fully cure such grounds within such period, the Executive shall then be
entitled to a hearing before the Holdings Board. Such hearing shall be held
within 20 days of his receiving such notice, provided that he requests a
hearing within 15 days of receiving such notice. If, within five days following
such hearing, Holdings Board gives written notice to the Executive confirming
that, in the judgment of at least two-thirds of the members of the Holdings
Board (excluding the Executive), Cause for terminating his employment on the
basis set forth in the original notice exists, his employment hereunder shall
thereupon be terminated for Cause, subject to de novo review, at the
Executive’s election, through arbitration in accordance with Section 15.


 


(ii)                      In
the event that the Executive’s employment hereunder is terminated for Cause in
accordance with Section 9(c)(i), (A) any Stock Option that is
exercisable as of the Termination Date shall expire 30 days after the
Termination Date, (B) any Stock Option that later becomes exercisable
shall expire 30 days after it becomes exercisable, (C) all other


 


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Stock Options shall expire upon termination of the Executive’s
employment, and (D) the Executive shall be entitled to the benefits
described in Section 9(f)(i).


 


(d)                     Termination
Without Cause. In the event that the Executive’s employment under this
Agreement is terminated in a Termination
Without Cause, he shall be entitled to:


 


(i)                         prompt
payment of a Pro Rata Annual Bonus for the year in which his employment
terminates;


 


(ii)                      a
prompt lump-sum payment equal to (A) the sum of his (x) Base Salary, at
the annualized rate in effect on the Termination Date, and (y) the
annual bonus award he earned for the year prior to the year of termination times
(B) the lesser of (x) 1095 and (y) the number of days in the period
that begins on the Termination Date and ends on December 31, 2010 (but in
no event less than 730), divided by (C) 365; provided that,
in connection with such payment, if the Company and Holdings execute a waiver
and release of claims against the Executive, then the Executive shall execute a
waiver and release of claims against the Company, Holdings or any of their
officers, directors, representatives, agents or Affiliates, in each case as
reasonably agreed by the Parties and excluding claims under this Agreement and
other contractual claims as appropriate;


 


(iii)                   any Stock Option that becomes
exercisable solely with the passage of time, without satisfaction of any
performance criterion other than continued service, shall become exercisable as
of the Termination Date to the extent provided in the agreement granting such
Stock Option, but only to the extent that it was then scheduled to become
exercisable within six months following such date if the Executive’s employment
hereunder had continued;


 


(iv)                  any
Stock Option (x) that is, or becomes, exercisable as of the Termination Date
shall remain exercisable as provided in the agreement granting such Stock
Option, but at least through the second anniversary of such date and (y) that
becomes exercisable in connection with an Approved Sale that occurs within one
year following the Termination Date shall remain exercisable as provided in the
agreement granting such Stock Option, but at least through the second
anniversary of the occurrence of such Approved Sale; and


 


(v)                     continued
participation, through the second anniversary of the Termination Date, in all
medical, dental, vision, hospitalization and life insurance coverages and in
all other employee welfare benefit plans, programs and arrangements in which he
or his family members were participating on the Termination Date, on terms and
conditions that are no less favorable than those that applied on such date, provided
that the Executive’s entitlements under this Section 9(d) shall
expire to the extent that equivalent coverages and benefits (determined on a
coverage-by-coverage and benefit-by-benefit basis) are provided under the
plans, programs or arrangements of a subsequent employer.


 


(e)                      Voluntary
Termination. In the event that the Executive terminates his employment
under this Agreement prior to the then-scheduled expiration of the Term of
Employment on his own initiative, other than by death, for Disability, or in a
Constructive Termination Without Cause, he shall have the same entitlements as
provided in Section 9(c) in


 


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the case of a termination for Cause. The Executive shall provide the
Company and Holdings 90 days’ prior written notice of his election to
voluntarily terminate his employment pursuant to this Section 9(e), except
that the Executive may terminate his employment hereunder immediately
after giving such notice if an event described in clauses (i)-(-) of the
definition of Constructive Termination Without Cause occurs and Executive has
given due notice and Holdings and the Company have not cured within the time
period set forth in the definition of Constructive Termination Without Cause. A
voluntary termination in accordance with this Section 9(e) shall not
be deemed a breach of this Agreement.


 


(f)                        Miscellaneous.


 


(i)                         On
any termination of the Executive’s employment under this Agreement, he shall be
entitled to:


 


(A)                   Base
Salary through the Termination Date;


 


(B)                     the
balance of any annual, long-term, or other incentive or bonus award earned,
accrued or owing to him (but not yet paid);


 


(C)                     any
amounts due under Section 8:


 


(D)                    a
lump-sum payment in respect of accrued but unused vacation days at his Base
Salary rate in effect on the Termination Date;


 


(E)                      other
or additional benefits, if any, in accordance with applicable plans, programs
and arrangements of the Company. Holdings and their Affiliates (including,
without limitation, Sections 6, 7, 10(b) and 1l(a), and the form of
agreement attached as Exhibit B); and


 


(F)                      payment
promptly when due, by check or (at his election) by wire transfer of
immediately available funds, of all amounts owed to him and payable as of the
Termination Date in connection with the termination.


 


(ii)                      In
the event that the Executive or any member of his family entitled thereto
hereunder, is precluded from continuing full participation in any employee
benefit plan, program or arrangement as provided in Sections 9(b)(v) or
9(d)(v), the Executive shall be provided with the after-tax economic equivalent
of any benefit or coverage foregone. For this purpose, the economic equivalent
of any benefit or coverage foregone shall be deemed to be the total cost to the
Executive of obtaining such benefit or coverage himself on an individual basis.
Payment of such after-tax economic equivalent shall be made quarterly in
advance, without discount.


 


(iii)                   In the event that the Executive’s
employment under this Agreement terminates in accordance with Section 3
pursuant to a notice of non extension:


 


(x)                        in
the case of non-extension pursuant to notice from the Executive, any Stock
Option that is or becomes exercisable as of the Termination Date shall


 


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remain exercisable as provided in the agreement granting such Stock
Option, but at least for six months following the Termination Date; and


 


(y)                      in
the case of non-extension pursuant to notice from the Company and Holdings, (I)
any Stock Option that is or becomes exercisable as of the Termination Date
shall remain exercisable as provided in the agreement granting such Stock
Option, but at least through the second anniversary of the Termination Date and
(II) any Stock Option that becomes exercisable in connection with an Approved
Sale that occurs within one year following the Termination Date shall remain
exercisable as provided in the agreement granting such Stock Option, but at
least through the second anniversary of the occurrence of such Approved Sale.


 


(iv)                  In
the event of any termination of the Executive’s employment under this
Agreement, the Executive shall be under no obligation to seek other employment
or otherwise mitigate the obligations of the Company, Holdings or any of their
Affiliates under this Agreement or otherwise, and there shall be no offset
against amounts due the Executive under this Agreement on account of (A) any
Claim that the Company, Holdings or any of their Affiliates may have against
him or (B) any remuneration or other benefit earned or received by the
Executive after such termination except as specifically provided in Section 9(d)(v).
Any amounts due under this Section 9 are considered to be reasonable by
the Company and Holdings, and are not in the nature of a penalty.


 


10.                    Approved Sale; Parachute Payment Protection.


 


(a)                      All
Stock Options shall, except to the extent otherwise provided in the agreement
of which a form of agreement is appended as Exhibit B, become fully
exercisable if an Approved Sale occurs either (x) during the Term of
Employment, or (y) in the event that the Executive’s employment hereunder has
been terminated (I) in a Termination Without Cause or (II) by expiration of the
Term of Employment in accordance with Section 2 pursuant to notice of
non-extension from the Company and Holdings, within one year after the
Termination Date.


 


(b)                     The
Executive, Company and Holdings covenant and agree to use their best
commercially reasonable efforts to structure any payment or benefit made to or
for the benefit of the Executive in connection with his employment by the
Company or Holdings (or the termination thereof) so as to avoid having any such
payment or benefit be subject to tax under Section 4999 of the Code (as an
“excess parachute payment”). In the event that, notwithstanding any efforts of
Holdings and the Company under this Section 10(b), any of the Executive’s
payments or benefits in connection with his employment with the Company or
Holdings (or the termination thereof) are subject to tax under Section 4999
of the Code, the Executive shall be entitled to an additional payment in cash
from the Company, immediately prior to the time that any such Section 4999
tax is due (through withholding or otherwise), of an amount sufficient to
ensure that the Executive receives the same net after-tax benefit (taking into
account all federal, state and local income and other taxes) that the Executive
would have received had no tax under Section 4999 (or any similar or
comparable state or local tax) been imposed. The amount and timing of any such
additional cash payment shall promptly be determined by Holdings’ independent
accounting firm and written notice thereof, along with a schedule detailing
such accounting firm’s calculations, shall be furnished to the Executive within
ten (10) days of such


 


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determination. If the Executive objects in a written notice received by
the Company and Holdings within ten (10) days of his receipt of the
accounting firm’s notice of its determination, then the Executive, Holdings and
the Company shall promptly agree on an accounting firm to make a final
determination of the amount and timing of such additional cash payment, with
the costs of such accounting firm to be paid by the non-prevailing party; if
the Parties fail to promptly agree upon such an accounting firm, the matter
shall be resolved in accordance with Section 15.


 


11.                    Indemnification and Insurance.


 


(a)                      The
Company and Holdings jointly and severally agree that (i) if the Executive
is made a party, or is threatened to be made a party, to any Proceeding by
reason of the fact that he is or was a director, officer, employee, agent,
manager, consultant or representative of the Company, Holdings or any of their
Affiliates, or is or was serving at the request of the Company, Holdings or any
of their Affiliates, or in connection with his service hereunder, as a
director, officer, member, employee, agent, manager, consultant or
representative of another Person, or (ii) if any Claim is made, or is
threatened to be made, that arises out of or relates to the Executive’s service
in any of the foregoing capacities, then the Executive shall promptly be
jointly and severally indemnified and held harmless by the Company and
Holdings, to the fullest extent legally permitted, or authorized, by the
certificate of incorporation, bylaws, other organizational documents, or Board
resolutions of Holdings, the Company or any of their Subsidiaries, against any
and all costs, expenses, liabilities and losses (including, without limitation,
judgments, interest, expenses of investigation, penalties, fines, ERISA excise
taxes or penalties, reasonable attorneys’ fees, and amounts paid or to be paid
in settlement) incurred or suffered by the Executive in connection therewith
and such indemnification shall continue as to the Executive even if he has
ceased to be a director, officer, member, employee, agent, manager, consultant
or representative of the Company, Holdings or other Person and shall inure to
the benefit of the Executive’s heirs, executors, administrators and legal
representatives. The Company and Holdings jointly and severally agree to
advance to the Executive all costs and expenses incurred by him in connection
with any such Proceeding or Claim to the fullest extent legally permitted, or
authorized, by their certificates of incorporation, bylaws or other
organizational documents or Board resolutions within 15 days after receiving
written notice requesting such an advance, which notice (x) shall include an
undertaking by the Executive to repay the amount advanced if he is ultimately
determined not to be entitled to indemnification against such costs and
expenses and (y) shall be accompanied by reasonable documentation of the costs
and expenses for which advancement is sought. No amendment by either the
Company or Holdings, at any time on or after the Effective Date, of the
provisions of the Company’s or Holdings’ certificates of incorporation or
bylaws shall he effective to reduce any of the Executive’s rights to
indemnification, or advancement of costs and expenses, under this Section 11
(a).


 


(b)                     During
the Term of Employment and for a period of six years thereafter, a directors
and officers’ liability insurance policy (or policies) shall be kept in place
providing comprehensive coverage to the Executive to the extent that such
coverage is then provided by the Company, Holdings or any of their Subsidiaries
for any other present or former senior executive or director of the Company or
Holdings with respect to such senior executive’s or director’s service as such.


 


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12.                    Restrictive Covenants.


 


(a)                      For
a period of one (1) year following any termination of the Executive’s
employment under this Agreement (x) in a Termination Without Cause or (y) by
expiration of the Term of Employment in accordance with Section 2 pursuant
to a notice of non-extension, the Executive shall not knowingly perform material
services for, or knowingly have any material involvement (whether as a
director, officer, employee, agent, representative, partner, security holder,
consultant or otherwise) with, any Person that competes directly and materially
with the Company, Holdings or any of their Subsidiaries in the Decorative
Laminates Business anywhere in the world; provided, however, that
the Executive may in any event (i) perform services that do not
directly relate to business activities that compete directly and materially
with the Company. Holdings or any of their Subsidiaries in the Decorative
Laminates Business and (ii) own up to 5% (measured by value) of the
outstanding securities of any publicly-traded entity.


 


(b)                     During
the Term of Employment and for a period of one (1) year following any
termination of the Executive’s employment under this Agreement to which Section 12(a) does
not apply, and including (for avoidance of doubt) any voluntary termination to
which Section 9(e) applies, and except during the Term of Employment
in connection with the performance of his duties hereunder, the Executive shall
not knowingly perform services for, or have any involvement (whether as a
director, officer, employee, agent, representative, partner, security holder,
consultant or otherwise) with, any Person that materially competes with any
business of the Company, Holdings or any of their Subsidiaries in the
Decorative Laminates Business; provided, however, that the Executive may in
any  event (i) perform services
that do not directly relate to business activities that compete with the
Company, Holdings or any of their Subsidiaries in the Decorative Laminates
Business and (ii) own up to 5% (measured by value) of the outstanding
securities of any publicly-traded entity.


 


(c)                      During
the Term of Employment and thereafter, the Executive shall maintain in
confidence and shall not directly, indirectly or otherwise, without the prior
written consent of the Company or Holdings, divulge, use, disseminate, disclose
or make accessible to any other Person any confidential, non-public or
proprietary document, record or information (or any portion of any computer
program, notebook or similar depository in which confidential, nonpublic or
proprietary information is contained) concerning the business or affairs of the
Company or Holdings that he has acquired in the course of his employment with
the Company or Holdings except (x) to the Company, Holdings, any of
their then-current Affiliates, or any authorized (or apparently authorized)
agent or representative of any of the foregoing, (y) in connection with
performing his duties under this Agreement or (z) when required to do so by law
or by a court, governmental agency, legislative body, arbitrator or other
Person with apparent jurisdiction to order him to divulge, disclose or make accessible
such document, record or information; provided that the restrictions set
forth in this Section 12(c) shall not apply to any document, record
or information that (i) has previously been disclosed to the public, or is
in the public domain, other than as a result of the Executive’s breach of this Section 12(c),
or (ii) is known or generally available within any trade or industry of
the Company, Holdings or any of their Affiliates.


 


(d)                     For
a period of one (1) year following any termination of his employment under
this Agreement to which Section 12(a) applies, and for a period of
two (2) years following


 


11

















 


any termination of his employment under this Agreement to which Section 12(b) applies,
the Executive shall not (A) directly or indirectly solicit, or accept if
offered to him (with or without solicitation), on his own behalf or on behalf
of any other Person, the services of any individual who is an employee of the
Company or Holdings (other than an employee who within the previous two years
has been the Executive’s personal assistant or secretary), or solicit any of
the Company’s or Holdings’ employees to terminate employment with the Company
or Holdings or (B) directly or indirectly solicit, or accept if offered to
him (with or without solicitation), on his own behalf or on behalf of any other
Person, business of any supplier or customer of the Company or Holdings, or any
Person who has been solicited within the previous year to become a customer by
the Company or Holdings, in connection with any business that competes with as
business of the Company or Holdings, or directly or indirectly solicit any
customer or supplier the Company or Holdings to terminate its relationship with
the Company or Holdings.


 


(e)                      In
the event of any actual or threatened breach by the Executive of any of the
provisions of Section 12(a), 12(b), 12(c) or 12(d), the Company and
Holdings shall be entitled to seek an injunction, through arbitration in
accordance with Section 15 or from any court with jurisdiction over the
matter and the Executive, restraining the Executive from violating such
provision. Costs and attorneys’ fees relating to any court proceeding shall be
treated as provided in Section 15.


 


13.                    Assignability; Binding Nature.


 


(a)                      This
Agreement shall be binding upon and inure to the benefit of the Executive, the
Company, Holdings and their respective successors, heirs (in the case of the
Executive) and assigns.


 


(b)                     No
rights or obligations of the Company or Holdings under this Agreement may be
assigned or transferred by the Company or Holdings (each a “Transferring
Entity”), except that such rights or obligations may be assigned or
transferred pursuant to a merger, consolidation or other combination in which
the Transferring Entity is not the continuing entity, or a sale or liquidation
of all or substantially all of the business and assets of the Transferring
Entity, provided that the assignee or transferee is the successor to all
or substantially all of the business and assets of the Transferring Entity and
such assignee or transferee expressly assumes the liabilities, obligations and
duties of the Transferring Entity as set forth in this Agreement. In the event
of any sale of business and assets or liquidation as described in the preceding
sentence, the Transferring Entity shall use its best commercially reasonable
efforts to cause such assignee or transferee to promptly and expressly assume
the liabilities, obligations and duties of the Transferring Entity hereunder.


 


(c)                      No
rights or obligations of the Executive under this Agreement may be
assigned or transferred by the Executive other than his rights to compensation
and benefits, which may be transferred only by will or operation of law,
except as provided in Section 17(e) or as may subsequently be
agreed by the Parties.


 


12

















 


14.                    Representations.


 


(a)                      The
Company and Holdings each represent and warrant that: (i) it is fully
authorized by action of its Board (and of any other Person or body whose action
is required) to enter into this Agreement and to perform its obligations
under it; (ii) the execution, delivery and performance of this Agreement
by it does not violate any applicable law, regulation, order, judgment or
decree or any agreement, plan or corporate governance document to which it is a
party or by which it is bound; and (iii) upon the execution and deliver of
this Agreement by the Executive, the Company and Holdings, this Agreement shall
be a valid and binding obligation of it, enforceable against it in accordance
with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally.


 


(b)                     The
Executive represents and warrants that: (i) delivery and performance of
this Agreement by him does not violate any applicable law,  regulation, order, judgment or decree or
any agreement to which the Executive is a party or by which he is bound; and (ii) upon
the execution and delivery of this Agreement by the Executive, the Company and
Holdings, the Agreement shall be the valid and binding obligation of the
Executive, enforceable against him in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement creditors’ rights
generally.


 


15.                  Resolution of
Disputes.


 


Any Claim arising out of or relating to this
Agreement, the Original Agreement, the agreement of which the form of
agreement is appended as Exhibit B, the Executive’s employment with the
Company or Holdings, or the termination thereof (collectively, “Covered
Claims”) shall (except as otherwise provided in Section 12(e) with
respect to certain requests for injunctive relief) be resolved by binding
confidential arbitration, to be held in New York City, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and
this Section 15. Judgment upon the award rendered by the arbitrators) may be
entered in any court having jurisdiction thereof. The Company and Holdings
jointly and severally agree to advance, promptly upon written request
accompanied by reasonable documentation, 50% of any costs and expenses,
including without limitation attorneys’ fees, incurred by the Executive or his
beneficiaries or other transferees in connection with resolving any such
Covered Claim, provided that any amounts so advanced shall be promptly
repaid to the extent that the recipient is ultimately determined not to be
entitled to be indemnified with respect to such amounts pursuant to the
following sentence. Upon the final resolution of any Covered Claim, the Company
and Holdings shall be jointly and severally required to indemnify the Executive
(and his beneficiaries and other transferees) for all reasonable costs and
expenses, including without limitation reasonable attorneys’ fees, incurred in
resolving such claim, but only to the extent that the indemnified Person has
prevailed on such claim. Pending the resolution of any Covered Claim, the
Executive (and his beneficiaries and other transferees) shall continue to
receive all undisputed payments and benefits due under this Agreement, except
to the extent that the arbitrators otherwise provide.


 


13

















 


16.                  Notices.


 


Any notice, consent, demand, request or order
communication given to a Person in connection with this Agreement shall be in
writing and shall be deemed to have been given to such Person (a) when
delivered personally to such Person or (b) provided that a written
acknowledgment of receipt is obtained, five days after being sent by prepaid
certified or registered mail, or two days after being sent by a nationally
recognized overnight courier, to the address (if any) specified below for such
Person (or to such other address as such Person shall have specified by ten (10) days
advance notice given in accordance with this Section 16) or (c) in
the case of the Company and Holdings, on the first business day after it is
sent by facsimile to the facsimile number set forth below (or to such other
facsimile number as shall have been specified by ten (10) days advances
notice given in accordance with this Section 16), with a confirmatory copy
sent by certified or registered mail or by overnight courier in accordance with
this Section 16.


 


	
  If to the Company:

  	
   

  	
  Panolam Industries
  International, Inc.

  20 Progress Drive

  Shelton, CT 06484

  Attn: Secretary

  Facsimile: (203) 225-0051

  
	
   

  	
   

  	
   

  
	
  If to Holdings:

  	
   

  	
  Panolam Industries
  Holdings, Inc.

  20 Progress Drive

  Shelton, CT 06484

  Attn: Secretary

  Facsimile #: (203) 225-0051

  
	
   

  	
   

  	
   

  
	
  If to the Executive:

  	
   

  	
  To the address of his
  principal residence as it appears in the Company’s records, with a copy to
  him (during the Term of Employment) at the Company’s principal executive
  office.

  
	
   

  	
   

  	
   

  
	
  If to a beneficiary or transferee

  of the Executive:

  	
   

  	
  To the address most recently specified by the
  Executive, beneficiary or transferee through notice given in accordance with
  this Section 16.

  



 


17.                  Miscellaneous.


 


(a)                      Entire
Agreement. This Agreement, and the agreements of which forms are attached
hereto, contain the entire understanding and agreement among the Executive, the
Company and Holdings concerning the subject matter hereof and supersede all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, among them with respect thereto, including without
limitation the Original Agreement.


 


(b)                     Severability.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law so
as to achieve the purposes of this Agreement.


 


14

















 


(c)                      Amendment
or Waiver. No provision in this Agreement may be amended unless such
amendment is set forth in a writing that specifically refers to this Agreement
and is signed by the Parties. No waiver by any Person of any breach of any
condition or provision contained in this Agreement shall be deemed a waiver of
any similar or dissimilar condition or provision at the same or any prior or
subsequent time. To be effective, any waiver must be set forth in a writing
that specifically refers to the condition or provision that is being waived and
is signed by the waiving Person.


 


(d)                     Headings.
The headings of the Sections and sub-sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning
or construction of any provision of this Agreement.


 


(e)                      Beneficiaries/References.
The Executive shall be entitled, to the extent permitted under applicable law
to select and change a beneficiary or beneficiaries to receive any compensation
or benefit under this Agreement, following the Executive’s death by giving the
Company and Holdings written notice thereof. In the event of the Executive’s
death or a judicial determination of his incompetence, references in this
Agreement to the Executive shall be deemed, where appropriate, to refer to his
beneficiary, transferee, estate or other legal representative.


 


(f)                        Survivorship.
Except as otherwise set forth in this Agreement, the respective rights and
obligations of the Parties hereunder shall survive any termination of the
Executive’s employment under this Agreement.


 


(g)                     Withholding
Taxes. The Company and Holdings may withhold from any amounts or
benefits payable under this Agreement, or under any of the agreements of which
forms are attached hereto, any taxes that are required to be withheld pursuant
to any applicable law or regulation.


 


(h)                     Timing
of Payments. The timing of any payment due under Section 9(d) is
subject to any restrictions imposed by the Company’s or Holdings’ credit
agreements; provided  that (i) the Company and Holdings shall
use their best commercially reasonable efforts to obtain waivers from their
lenders in the event any such payment is so restricted, (ii) the Company,
or Holdings, shall make any such payment at the earliest time, and to the
fullest extent, permitted under such restrictions and waivers, (iii) no
portion of any such payment shall be delayed more than 18 months, and (iv) any
amount whose payment is delayed shall accrue interest at an annual rate of 10%.


 


(i)                         Guarantee
of Performance. Holdings unconditionally guarantees, without limitation or
qualification, the prompt performance by the Company of each and every
obligation of the Company under this Agreement.


 


(j)                         Governing
Law. This Agreement shall be governed, construed, performed and enforced in
accordance with its express terms, and otherwise in accordance with the laws of
the State of New York, without reference to principles of conflict of laws.


 


15

















 


(k)                      Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall be deemed to be one
and the same instrument.


 


(l)                         Effectiveness
Contingent Upon Closing of Merger Agreement. This Agreement shall become
effective only upon the closing of the transactions contemplated by the Merger
Agreement. In the event the Merger Agreement is terminated in accordance with
its terms for whatever reason, this Agreement shall become null and void.


 


[SIGNATURE PAGE FOLLOWS)


 


16

















 


IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.


 


	
   

  	
   

  	
  Panolam Industries International, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Jeffrey M. Muller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey
  M. Muller

  
	
   

  	
   

  	
  Title:

  	
  General
  Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Panolam Industries Holdings, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Jeffrey M. Muller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey
  M. Muller

  
	
   

  	
   

  	
  Title:

  	
  General
  Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Executive:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Robert J. Muller, Jr.

  	
   

  
	
   

  	
   

  	
  Robert
  J. Muller, Jr.

  



 


17

















 


EXHIBIT A


 


DEFINITIONS


 


“Actual EBITDA” shall
have the meaning specified in Section 5.


 


“Affiliate” of a
Person shall mean a Person that directly or indirectly controls, is controlled
by, or is under common control with, the Person specified.


 


“Agreement” shall mean
this Second Amended and Restated Employment Agreement, which includes for all
purposes the agreements of which forms of agreement are appended as Exhibits.


 


“Approved Sale” shall
have the meaning set forth in, and be determined in accordance with, the
Stockholder Agreement.


 


“Base Salary” shall
mean the salary provided for in Section 4 or any increased salary granted
to the Executive pursuant to Section 4.


 


“Board” shall mean, in
the case of a corporation, the corporation’s board of directors and, in the
case of any other entity, the analogous governing Person or body.


 


“Cause” shall mean: (i) the
Executive willfully steals or embezzles a not insignificant amount of the
property (tangible or intangible) of Holdings or the Company in circumstances
that would render him, in the judgment of a reasonable person, manifestly unfit
to continue as Chief Executive Officer and President of the Company or
Holdings; (ii) the Executive engages in conduct that constitutes willful
gross neglect or willful gross misconduct and that (x) results in significant
economic harm to the Company or Holdings or (y) results, and reasonably should
be expected to result, in acute public embarrassment to the Company or
Holdings; (iii) willful and unjustified failure of the Executive to act in
accordance with any material, reasonable and lawful written instruction given
to him  by the Holdings Board (which
instruction has been approved by at least two-thirds of the members of the
Holdings Board (excluding Executive)) concerning material aspects of the
Executive’s duties for the Company or Holdings and excluding matters outside
the Executive’s direct personal control; (iv) the Executive is convicted
of a felony; (v) any willful and material breach by the Executive of Section 12(b) or
12(e); or (vi) any willful material breach by the Executive of the Stock
Purchase Agreement or the stock option agreement of which a form of
agreement is attached as Exhibit B.


 


“Claim” shall mean any
claim, demand, request, investigation, dispute, controversy, threat, discovery
request, or request for testimony or information.


 


“Closing Date” shall
mean the date on which the closing of the transactions contemplated by the
Merger Agreement shall occur.


 


“Code” shall mean the
Internal Revenue Code of 1986, as amended. Any reference to a particular section of
the Code shall include any provision that modifies, replaces or supersedes such
section.


 

















 


“Company” shall have
the meaning set forth in the Preamble to this Agreement.


 


“Company Board” shall
mean the Board of the Company.


 


“Constructive Termination
Without Cause” shall mean a termination by the Executive of his employment
under this Agreement on 30 days’ written notice given by him to the Company and
Holdings following the occurrence of any of the following events without the
Executive’s express prior written consent, unless the Company or Holdings shall
have fully cured all grounds for such termination within 20 days after the
Executive gives notice thereof:


 


i.                              any reduction in his Base Salary or Target Annual Bonus; or any material
reduction in any employee benefit or perquisite enjoyed by him (other than as part of
an across-the-board reduction applying to senior executives of the Company and
Holdings generally);


 


ii.                           any material breach (A) by the Company or
Holdings of any of their material obligations under Section 4, 5, 6, 7, 8,
10(b) or 11, (B) by Holdings or any of its Affiliates of any of their
material obligations under the Stock Purchase Agreement; or (C) by
Holdings of any of its material obligations under of the stock option agreement
of which a form of agreement is attached as Exhibit B;


 


iii.                        any failure to elect or appoint the Executive
to any of the positions described in Section 3(a) or to continue him
in each such position; any material diminution in the Executive’s duties or
responsibilities or the assignment to him of duties or responsibilities that
materially impair his ability to perform the duties or responsibilities
then assigned to him or normally assigned to the president and chief executive
officer of an enterprise of the size and structure of the Company or Holdings:
or any change in the reporting structure so that the Executive reports to someone
other than the Holdings Board;


 


iv.                       any relocation of the Company’s or Holdings’
principal office, or of the Executive’s own principal office as assigned to him
by the Company and Holdings, to a location more than 50 miles from Shelton,
Connecticut or from Wilton, Connecticut; or


 


v.                          the failure of the Company or Holdings to obtain the assumption in
writing of its obligations under this Agreement by any successor to all or
substantially all of its business or assets within 15 days after any merger,
consolidation, sale, liquidation or similar transaction.


 


“Covered Claims” shall
have the meaning specified in Section 15.


 


“Credit Agreement”
shall mean that certain Senior Secured First Lien Credit Agreement to be entered
into by and among the Company and various lenders listed therein, as the same may be
amended, refinanced or replaced from time to time, the initial proceeds from
which shall be used to fund a portion of the purchase price under the Merger
Agreement.


 


“Decorative Laminates
Business” shall mean the business of producing or distributing (a) high-pressure
decorative laminates (analogous to formica), (b) particle board with
melamine (or an analogous) plastic facing, or (c) fiberglass reinforced
plastics (FRP) of the type manufactured by the Company.


 


A-2

















 


“Disability” shall mean the Executive’s
inability to perform his duties hereunder on a fulltime basis for a period
of 180 consecutive days during any 365 day period or an aggregate of 180 days
in any consecutive 270 day period, as a result of physical or mental incapacity
as determined by a medical doctor selected by mutual agreement between the
Company and Holdings on the one hand, and the Executive on the other. If the
Parties cannot agree on a medical doctor, the Company and Holdings on the one
hand, and the Executive on the other, shall each select a medical doctor and
the two doctors shall select a third who shall be the approved medical doctor
for this purpose.


 


“EBITDA” shall mean, for a given calendar year,
Holdings’ consolidated earnings before interest expense and income tax expense
adjusted by (x) adding thereto (without duplication) the sum of (i) management
fees, (ii) depreciation and amortization expense and other non-cash
charges, (iii) extraordinary losses, (iv) any loss on the sale of
assets, (v) any non-cash compensation related to stock options or other
equity compensation or payment arrangements, and (vi) any loss during such
period from any change in accounting, from any discontinued operations or the
disposition thereof, or from any prior period adjustments, in each case that
were deducted in arriving at consolidated earnings before interest expense and
income tax expense for such calendar year, and (y) subtracting therefrom
the sum of (i) any interest income, (ii) any extraordinary
gains, (iii) any gain on the sale of assets, and (iv) any net gain
during such calendar year from any change in accounting, from any discontinued
operations or the disposition thereof, or from any prior period adjustments, in
each case that were added in arriving at consolidated earnings before interest
expense and income tax expense for such calendar year, all as reflected on
Holdings’ audited consolidated financial statements for such calendar year when
such statements are first certified by Holdings’ independent accountants.


 


“Effective Date”  shall have the meaning set forth in the Preamble to this
Agreement.


 


“Executive” shall have the meaning set forth in
the Preamble as modified by Section 17(e).


 


“Holdings” shall have the meaning set forth in
the Preamble to this Agreement.


 


“Holdings Board” shall mean the Board of
Holdings.


 


“Indenture” shall mean the indenture to be
entered into in connection with the issuance by the Company of Senior
Subordinated Notes due 2013, the proceeds from which shall be used to fund a
portion of the purchase price under the Merger Agreement.


 


“Parties” shall mean the Company, Holdings and
the Executive.


 


“Person” shall mean any individual,
corporation, partnership, limited liability company, joint venture, trust,
estate, board, committee, agency, body, employee benefit plan, or other person
or entity.


 


“Proceeding” shall mean any threatened or
actual action, suit or proceeding, whether civil, criminal, administrative,
investigative, appellate or other.


 


A-3

















 


“Pro Rata Annual Bonus” shall mean an amount
equal to the product obtained by multiplying (x) the average of (i) the
amount of the annual bonus, if any, that the Executive earned for the calendar
year immediately preceding the year in which his employment hereunder
terminated, and (ii) 75% of his annualized Base Salary as of the
Termination Date times (y) a fraction, the numerator of which is the number of
days the Executive was employed by the Company or Holdings during the calendar
year in which the Termination Date occurred and the denominator of which is
365.


 


“Stock Option” shall mean any compensatory
option granted to the Executive to acquire securities of Parent, Holdings, the
Company or any of their Subsidiaries; any compensatory stock appreciation
right, phantom stock option or analogous right granted to the Executive by
Parent, Holdings, the Company or any of their Subsidiaries; and any option or
right received in respect of any of the foregoing options or rights.


 


“Stockholder Agreement” shall mean the
stockholder agreement to be entered into by and among Parent and the various
stockholders of Parent in connection with the closing of the equity financing
contemplated by the Merger Agreement, as the same may be amended from time
to time.


 


“Subsidiary” of any Person shall mean any
Person of which such Person owns, directly indirectly, more than half of the
equity ownership interests (measured either by value or by ability to elect or
control the Board).


 


“Target Bonus” shall have the meaning specified
in Section 5.


 


“Target EBITDA” shall have the meaning
specified in Section 5.


 


“Term of Employment” shall mean the period
specified in Section 2.


 


“Termination Date” shall mean the date on which
the Executive’s employment under this Agreement terminates in accordance with
this Agreement.


 


“Termination Without Cause” shall mean any
termination of the Executive’s employment under this Agreement, other than (v) voluntary
termination in accordance with Section 9(e), (w) due to his death, (x) for
Disability in accordance with Section 9(b), (y) for Cause in accordance
with Section 9(c), or (z) by expiration of the Term of Employment due to
non-extension of such Term in accordance with Section 2; “Termination
Without Cause” accordingly includes any “Constructive Termination Without
Cause.”


 


A-4