Exhibit 10.2
GIBRALTAR DEFERRED COMPENSATION PLAN
Plan Effective August 1, 2004
As Amended and Restated Effective January 1, 2009
PREAMBLE
This Gibraltar Deferred Compensation Plan, formerly known as the “Air Vent Deferred Compensation
Plan” (the “Plan”) was established effective August 1, 2004 to provide certain employees of
Gibraltar Steel Corporation of New York (the “Company”) and its Affiliates the opportunity to defer
receipt of taxable compensation and to provide for the notional investment of the compensation
deferred.
The Plan is intended to be unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees within the meaning of
Sections 201(2), 301(3) and 401(a) (1) of Title I of ERISA.
Except as otherwise provided herein, this amendment and restatement of the Plan, which is effective
January 1, 2009, is intended to comply with final regulations promulgated under Internal Revenue
Code (“Code”) Section 409A
This amendment and restatement of the Plan also provides for the merger into the Plan of the
Gibraltar 401(k) Restoration Plan.
SECTION 1. DEFINITIONS.
The following capitalized words and phrases shall have the following
meanings in the Plan unless a different meaning is clearly required by the context:
1.1. “Account”
means an account maintained on the books of the Company or its designee to
record a Participant’s entitlement to future payments under the Plan. Accounts are record keeping
devices only and do not reflect a segregation of funds.
1.2. “Account Balance”
means the total amount of Employee Deferrals, Employer Contributions
and Notional Earnings credited to a Participant’s Accounts at any given time.
1.3.
“Affiliate”
means an entity that is related to the Company within the meaning of Code
Section 414(b) or 414(c) (Gibraltar Industries, Inc. and entities subject to 80% or greater control
by Gibraltar Industries, Inc.). An entity is an “Affiliate” only during the time that it is related
to the Company within the meaning of Code Section 414(b) or 414(c)
1.4. “Beneficiary”
means a beneficiary designated by a Participant in accordance with Section
8 to receive the Participant’s Account Balance in the event the Participant dies before his Account
has been fully distributed.
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1.5. “Bonus”
means compensation that is normally payable to a Participant in a single sum in
the calendar year following the Service Year in which it was earned and is paid under an
arrangement determined by the Committee to constitute a bonus arrangement.
1.6. “Code”
means the Internal Revenue Code of 1986 as amended.
1.7. “Committee”
means the Committee appointed by the Board of Directors of the Company, or
its designee, that administers the Plan in accordance with Section 12.
1.8. “Company”
means Gibraltar Steel Corporation of New York.
1.9. “Deferral Election”
means an election filed with the Committee by a Participant in
accordance with Section 3 to defer payment of a portion of Regular Compensation and/or Bonus earned
with respect to services performed by the Participant during a given Service Year.
1.10. “Employee Deferral”
means the portion of Regular Compensation and/or Bonus that is
deferred under the Plan pursuant to a Participant’s Deferral Election.
1.11. “Employee Deferral Account”
means an Account maintained on the books of the Company or
its designee to record the Employee Deferrals and Notional Earnings thereon of a Participant. An
Employee Deferral Account may have such subaccounts as the Committee determines to be necessary or
convenient.
1.12. “Employer”
means the Company and each entity that on the date of reference is an
Affiliate.
1.13. “Employer Contribution”
means a contribution deemed to be made under the Plan by the
Employer on behalf of an employee that does not result from an Employee Deferral.
1.14. “Employer Contribution Account”
means an Account maintained on the books of the Company
or its designee to record Employer Contributions and Notional Earnings thereon. An Employer
Contribution Account may have such sub-accounts as the Committee determines to be necessary or
convenient.
1.15. “ERISA”
means the Employee Retirement Income Security Act of 1974 as amended.
1.16. “Irrevocable Date”
means the date on which a Participant’s Deferral Election becomes
irrevocable. The Irrevocable Date for a Deferral Election made in the calendar year preceding the
relevant Service Year is the December 31st preceding the relevant Service Year. The Irrevocable
Date for a Deferral Election made by a Newly Eligible Employee during the calendar year that is the
relevant Service Year is date on which the Deferral Election form is completed, signed and returned
to the Committee.
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1.17. “Newly Eligible Employee”
means an employee who becomes eligible to participate in the
Plan during a given Service Year and who was not eligible to participate in the Plan or in any
other nonqualifled deferred compensation plan sponsored by the Company or an Affiliate that is
described in Treas. Reg. §1.409AI(c)(2)(A) (account balance plans permitting employee elective
deferrals) during the 24 month period ending on the day before the day on which the employee
becomes eligible to participate in this Plan (other than the accrual of earnings).
1.18. “Notional Earnings”
means the hypothetical income, gain and/or loss deemed earned by a
Participant’s Accounts which are deemed to be invested in one or more Notional Funds as provided in
Section 5. Notional Earnings shall reflect any fees or expenses that would be imposed by or in
connection with the real investment fund that serves as the basis for the Notional Fund to the same
extent as if monies had actually been invested in such real investment fund.
1.19. “Notional Fund”
means a deemed investment fund that returns Notional Earnings equal to
the real income, gain or loss returned by a real investment fund, consisting of one or more stocks,
bonds, mutual funds or other publicly traded securities, which is tracked by the Notional Fund.
1.20. “Participant”
means an employee of the Company or an Affiliate who has become eligible
to participate in the Plan in accordance with Section 2, and includes a former Participant whose
Account Balance has not been completely paid from the Plan. The term “Participant” also includes an
individual who has a Restoration Plan Account, regardless of whether such individual has ever
become eligible to participate in the Plan in accordance with Section 2.
1.21. “Payment Event”
means an event that occurs on a single date such as a Participant’s
Separation from Service that triggers the payment of all or some of a Participant’s Account
Balance.
1.22. “Plan”
means this Gibraltar Deferred Compensation Plan formerly known as the “Air Vent
Deferred Compensation Plan” as set forth herein and as amended.
1.23. “Regular Compensation”
means salary that would be earned in a given Service Year and
otherwise paid in that year (or deemed earned and otherwise paid in a given Service Year in
accordance with Treas. Reg. §1.409A-2(a)(13) concerning a pay period that begins in one year and
ends in the next year). Regular Compensation shall be determined in the same manner as compensation
eligible for deferral under the Gibraltar 401(k) Plan except that Regular Compensation (i) is not
limited by Code Section 401(a)(17) (limit on pensionable compensation), (ii) is not reduced by
amounts deferred under this Plan, and (iii) does not include any Bonus.
1.24. “Restoration Plan Account”
means an Account maintained on the books of the Company or
its designee to record a Participant’s account balance under the
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Restoration Plan which was merged into this Plan effective December 31, 2008 as provided in Section
20. A Restoration Plan Account may have such sub-accounts as the Committee determines to be
necessary or convenient.
1.25. “Restoration Plan”
means the Gibraltar 401(k) Restoration Plan which was established
effective January 15, 2004 and which is merged into this Plan effective December 31, 2008 as
provided in Section 20.
1.26. “Separation from Service”
(a)
In General.
“Separation from Service” means the Participant retires, or otherwise
has a termination of employment with all Employers. However, the employment relationship is treated
as continuing intact while the individual is on military leave, sick leave, or other bona fide
leave of absence if the period of such leave does not exceed six months, or if longer, so long as
the individual retains a right to reemployment with an Employer under an applicable statute or by
contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable
expectation that the Participant will return to perform services for an Employer. If the period of
leave exceeds six months and the individual does not retain a right to reemployment under an
applicable statute or by contract, the employment relationship is deemed to terminate on the first
date immediately following such six-month period.
(b)
Service As An Independent Contractor.
If the Participant provides services to an
Employer as an independent contractor, the Participant will not be considered to have a Separation
from Service until the Participant has ceased providing services both as an employee and as an
independent contractor. The preceding sentence shall not apply to the extent that the Participant’s
sole activity as an independent contractor with respect to the Employer is to serve on the
Employer’s Board of Directors
(c)
Separation from Service in Connection with a Sale of Employer Assets.
Where as
part of a sale or other disposition of assets by an Employer (“Seller”) to an unrelated entity
(“Buyer”), an employee of the Seller would otherwise experience a Separation from Service with the
Seller, the Seller and the Buyer may specify whether an employee providing services to the Seller
immediately before the asset purchase transaction and providing services to the Buyer after and in
connection with the asset purchase transaction has experienced a Separation from Service for
purposes of this Section 1.26, provided that the asset purchase transaction results from bona fide,
arm’s length negotiations, all employees providing services to the Seller immediately before the
asset purchase transaction and providing services to the Buyer after and in connection with the
asset purchase transaction are treated consistently (regardless of position at the Seller) for
purposes of applying the provisions of any nonqualified deferred compensation plan,
and such
treatment is specified in writing no later than the closing date of the
asset
purchase transaction.
(d)
Application of Treasury Requlations.
The definition of “Separation from
Service” provided in this Section 1.26 is intended to follow the default rules of the
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definition of “Separation from Service” set forth at Treas. Reg. §1.409A-1(h) and shall be
construed accordingly.
1.27. “Service Year”
means the calendar year during which the Participant performs services
resulting in the earning of Regular Compensation or Bonus that is deferred pursuant to a Deferral
Election.
1.28. “Specified Employee”
means an Employee who is a “specified employee” within the meaning
of Code Section 409A(2)(B)(i) and Regulation § 1.409A-1(i) as determined by the Company in a
uniform manner for all nonqualified deferred compensation plans maintained by the Company under
written rules adopted by the Company for the identification of Specified Employees as may be in
effect and compliant with Regulation § 1.409A-1(i) on the date of the Employee’s Separation from
Service. If there are no written rules adopted by the Company for the identification of Specified
Employees in effect and compliant with Regulation § 1.409A-1(i) on the date of the Employee’s
Separation from Service, then the default rules of Regulation § 1.409A-1(i) shall apply. (In
general, Specified Employees are officers of the Company or an Affiliate who earned annual
compensation greater than the amount provided in Code section 416(i)(1)(A)(i) ($150,000 in 2008) or
the highest paid 50 of such officers, if less.)
SECTION 2. ELIGIBILITY TO PARTICIPATE.
2.1.
In General.
Any employee of an Employer who is on the United States payroll and
who is designated by the President of the Company with respect to a Service Year may be eligible to
make Employee Deferrals under the Plan with respect to that Service Year. However, an employee
shall not be eligible to participate in the Plan in a given Service Year unless the employee
receives an invitation from the Committee to participate in such Service Year. A Newly Eligible
Employee shall be deemed to have become eligible on the date the employee receives such an
invitation.
2.2.
Committee Discretion.
Notwithstanding Section 2.1, the Committee may use such
criteria it deems appropriate to determine which employees may be eligible to participate in the
Plan in a given Service Year including, but not limited to, setting a threshold for expected
compensation. Such criteria shall take into account that the Plan is maintained primarily for the
purpose of providing deferred compensation for a select group of management or highly compensated
employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
SECTION 3. EMPLOYEE DEFERRALS.
3.1.
Amounts That May Be Deferred.
A Participant may elect to defer receipt of up to
50% of his Regular Compensation earned during a given Service Year and/or up to 100% of his Bonus
earned during a given Service Year. For purposes of this Section 3.1, Regular Compensation is
deemed earned during a given Service Year if it is payable during that Service Year with respect to
services performed during a regular
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pay period that ends within that Service Year, and a Bonus is deemed earned during a given
Service Year if it is payable during a calendar year following that Service Year with respect to
services performed during that Service Year.
3.2.
When and How Deferral Elections Are Made.
A Participant shall make a Deferral
Election by completing and signing a Deferral Election form prescribed by the Committee and
returning the completed and signed form to the Committee on or before December 15 of the calendar
year preceding the Service Year in which the compensation will be earned. The December 15 date may
be extended in special circumstances in the discretion of the Committee but not beyond December 31.
The Deferral Election shall specify a whole number percentage of the Regular Compensation and/or
Bonus earned during the relevant Service Year that will be deferred. The Participant’s initial
Deferral Election shall also specify the time and manner of future payment of the amounts deferred
and Notional Earnings attributable thereto in accordance with Section 7.1.
3.3.
Special Rule for Newly Eligible Employees.
Notwithstanding Section 3.2, in the
case of a Newly Eligible Employee, the employee’s initial Deferral Election may be filed with the
Committee as late as 30 days after the employee has received an invitation to participate in the
Plan, and will become irrevocable immediately upon filing, provided that the Deferral Election will
not apply to Regular Compensation or Bonus earned with respect to services performed on or before
the date on which the Deferral Election becomes irrevocable.
3.4.
Deferral Elections Are Irrevocable.
(a)
General Rule.
A Deferral Election shall become irrevocable on the relevant
Irrevocable Date. Once a Deferral Election becomes irrevocable, it shall remain in effect according
to its terms until the last day of the Service Year to which it relates. A Deferral Election shall
remain Irrevocable and shall be given effect even if the employee transfers to an Affiliate that
has not adopted the Plan. An election to defer compensation (as distinguished from an election as
to time and form of future payment of the deferred compensation) shall be effective for only one
Service Year and the employee will have to make a new Deferral Election to defer compensation with
respect to any subsequent Service Year.
(b)
Cancellation Following Hardship or Emergency Distribution.
Notwithstanding Section
3.4(a), a Deferral Election will be cancelled and no longer effective for the remainder of a
Service Year in which the employee receives a payment on account of an unforeseeable emergency as
provided in Section 10 or in which the employee receives a hardship distribution within the meaning
of Treas. Reg. §1.401(k)-1(d)(3) from a 401(k) plan maintained by the Company or an Affiliate. The
cancellation shall begin with the first pay period ending at least 10 days after payment on account
of unforeseeable emergency or hardship distribution.
3.5.
Employee Deferral Account.
Employee Deferrals and all Notional Earnings
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attributable thereto shall be credited to the Participant’s Employee Deferral Account and shall be
fully vested at all times.
SECTION 4. EMPLOYER CONTRIBUTIONS.
4.1
.
In General.
An Employer may make Employer Contributions under the Plan on behalf
of any one or more eligible employees or no employees with respect to any given Service Year but
shall be under no obligation to do so unless and until the Employer has given an employee notice of
an Employer Contribution as required in Section 4.2. Employer Contributions may be made in any
amount and may be designed to function as matching contributions with respect to Employee Deferrals
or may be unrelated to Employee Deferrals. Employer Contributions may be subject to such vesting
restrictions (or none) as the Employer may elect. Employer Contributions shall not be dependent
upon an employee’s participation or nonparticipation under any other plan of any Employer.
4.2.
Notice to Employee.
Any Employer Contribution that will be made (or matching
contribution that may be made) on behalf of an Employee with respect to a given Service Year shall
be described to the employee in a written notice furnished to the employee by the Committee on or
before the employee’s Irrevocable Date for the relevant Service Year. Such notice shall describe
the amount of the Employer Contribution, the conditions if any under which it will be made, and any
vesting restriction applicable to the contribution.
4.3.
Employer Contribution Account.
Employer Contributions and all Notional Earnings
attributable thereto shall be credited to the employee’s Employer Contribution Account and shall
become vested as provided in the notice furnished to the employee in accordance with Section 4.2.
4.4.
Time and Form of Payment.
An Employer Contribution made on behalf of an employee
with respect to a given Service Year shall be paid at the same time and in the same form as any
Employee Deferral made by the Employee with respect to such
Service Year, as determined by the employee’s payment election then in effect. If an Employer
Contribution is made with respect to a Service Year for which no payment election is in effect, the
Employer Contribution (including all Notional Earnings attributable thereto) shall be paid in a
lump sum on the day following the six month anniversary of the employee’s Separation from Service.
SECTION 5. DEEMED INVESTMENT OF ACCOUNTS BY PARTICIPANTS.
5.1.
In General.
A Participant may elect to have his Account(s) deemed invested in
whole percentages in one or more Notional Funds selected by the Committee. In addition, a
Participant may elect to have future Employee Deferrals and Employer Contributions deemed invested
in any available Notional Fund in percentages different from the deemed investment of his existing
Account(s).
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5.2.
Changing
Deemed
Investments.
The Participant may change his
investment elections with respect to existing Account(s) and/or future contributions by submitting
appropriate directions to the recordkeeper for the Plan. The Committee shall provide the
Participant with instructions for contacting the recordkeeper to submit such directions via
telephone and/or internet. The Participant’s deemed investment directions shall be subject to such
rules and restrictions as the Committee and the recordkeeper may reasonably impose, however, in all
events, the Participant shall be permitted to change deemed investment directions at least once per
calendar month.
5.3.
Period of Deemed Investment.
Each Employee Deferral and Employer Contribution
deemed made on behalf of a Participant shall be deemed invested in one or more Notional Funds as
elected by the Participant or as provided in the default rule in Section 5.4 beginning within three
days after the deferral or contribution is deemed credited to the Participant’s Account (as
determined by the Committee) and ending on the date preceding the date of payment.
5.4.
Default Investments,.
During any period when a Participant fails to elect a
separate investment for future Employee Deferrals and Employer Contributions, such future deferrals
or contributions shall be deemed invested in the same manner as the Participant’s existing
Account(s). During any period when a Participant fails to elect an investment for his existing
Account(s), the Account(s) shall be deemed 100% invested in such Notional Fund as may be selected
by the Committee from time to time.
5.5.
Notional Funds Available for Investment.
The Committee shall select one or more
Notional Funds to be made available for deemed investment under this Section 5, and it may increase
or decrease the number of such funds, or substitute one fund for another fund, from time to time as
it determines in its discretion. The Committee shall advise each Participant in writing of the
Notional Funds available for deemed investment of the Participant’s Account(s) and future contributions and of any changes in the available
funds.
SECTION 6. VALUE OF PARTICIPANT ACCOUNTS.
6.1.
Value of Accounts.
The value of each Participant’s Accounts shall include the
Employee Deferrals and Employer Contributions credited thereto, increased or decreased by Notional
Earnings as provided in Section 5. The Accounts will be valued daily.
6.2.
Statement of Account.
Statements will be sent to Participants reflecting the
value of their Accounts following the end of each calendar year and at such other times as may be
determined by the Committee. Statements may be provided electronically under rules determined by
the Committee.
SECTION 7. PAYMENT OF A PARTICIPANT ACCOUNTS.
7.1.
In General.
A Participant’s Account Balance shall be paid in a single lump
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sum or, if elected by the Participant, in annual installments over a minimum of five (5) years and
a maximum of ten (10) years, beginning on the date of the Participant’s Separation from Service. If
the Participant elects a lump sum, the lump sum will be paid within 60 days following the
Participant’s Separation from Service. If the Participant elects installments, the first
installment will be paid within 60 days following the Participant’s Separation from Service date
and subsequent installments will be paid on the first and subsequent anniversaries of his
Separation from Service date.
7.2.
Six Month Delay for Specified Employees.
If a Participant is a Specified Employee
at the time of his Separation from Service then, notwithstanding Section 7.1, the lump sum payment
or first installment payment shall be made on the day following the six month anniversary of the
Participant’s Separation from Service date and subsequent installment payments, if any, shall be
made on the anniversaries of his Separation from Service date.
7.3.
Lump Sum Payment of Accounts Not Exceedinq $25,000.
If the value of a
Participant’s Accounts, determined as of the date of the Participant’s Separation from Service, is
$25,000 or less, payment shall occur in a lump sum notwithstanding that the Participant has elected
payment in installments.
7.4.
Accelerated Payment To Participants Who Experience A Change in Control
Event.
(a)
Discretion To Terminate Plan.
In the event that an Affected Participant (as
defined in Section 7.4(e)) ceases to be an employee of any Employer as a result of a Change in
Control Event (as defined in Section 7.4(f)), the Primary Obligor of the Affected Participant (as
defined in Section 7.4(d)) may, in its discretion, take irrevocable action to terminate and
liquidate the Plan with respect to the Affected Participant within the 30 days preceding or the 12
months following the Change in Control Event.
(b)
Requirement That All Plans Be Terminated For All Affected Participants.
The
Primary Obligor’s discretion to terminate and liquidate the Plan with respect to an Affected
Participant is subject to the requirement that all agreements, methods, programs, and other
arrangements sponsored by the Primary Obligor (and any entity related to the Primary Obligor within
the meaning of Code Section 414(b) or 414(c)) immediately after the Change in Control Event with
respect to which deferrals of compensation are treated as having been deferred under a single
“plan” under Treas. Reg. §1.409A-1(c)(2) (concerning the required aggregation of like kinds of
nonqualified deferred compensation “plans”), including this Plan, are terminated and liquidated
with respect to each of its Affected Participants, so that under the terms of the termination and
liquidation all of its Affected Participants are required to receive all amounts of compensation
deferred under the terminated agreements, methods, programs, and other arrangements within 12
months of the date on which the Primary Obligor irrevocably takes all necessary action to terminate
and liquidate the agreements, methods, programs, and other arrangements.
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(c)
Distribution of Account Balances.
In the event that the Primary Obligor takes
irrevocable action to terminate the Plan in accordance with Section 7.4(a), the Primary Obligor
shall distribute to each of its Affected Participants his or her respective Account Balance in a
lump sum within the time permitted under Treas. Reg. §1.409A3(J)(4)(ix)(B).
(d)
Definition of “Primary Obligor”.
For purposes of this Section 7.4, the “Primary
Obligor” with respect to a given Affected Participant is the entity that is primarily liable
immediately after the Change in Control Event for the payment of deferred compensation under the
Plan, to such Affected Participant. Such entity may be the Company, an Affiliate or the employer of
the Affected Participant after the Change in Control Event (or an affiliate of such employer), as
may be agreed by such entities in connection with the Change in Control Event.
(e)
Definition of “Affected Participant”.
For purposes of this Section 7.4, an
“Affected Participant” with respect to a given Primary Obligor is a Participant who ceases to be an
employee of any Employer as a result of a Change in Control Event and for whom the Primary Obligor
has primary liability after the Change in Control Event to pay the Participant’s Account Balance
under the Plan.
(f)
Definition of “Change in Control Event.”
A Change in Control Event is a change
in the ownership or effective control of a corporation, or a change in the ownership of a
substantial portion of the assets of a corporation within the meaning of Treas. Reg.
§1.409A-3(i)(5).
(g)
Application of Treasury Regulation.
This section 7.4 shall be construed to effect
the purpose of Treas. Reg. §1.409A-3(j)(4)(ix)(B).
SECTION 8. DESIGNATION OF BENEFICIARY.
A Participant may designate a Beneficiary or Beneficiaries
which designation shall be effective upon filing written notice with the Committee on the form
prescribed by the Committee for that purpose. If there is no designated Beneficiary, the
Beneficiary will be the Participant’s estate. If more than one Beneficiary designation has been
filed, the designation bearing the most recent date shall be deemed the governing designation and
all prior designations shall be deemed revoked. The Committee’s decision identifying the
Participant’s Beneficiary shall be final and binding on all persons provided it is made in good
faith.
SECTION 9. PAYMENT FOLLOWING THE DEATH OF PARTICIPANT.
9.1.
In General.
In the event of a Participant’s death before he or she has received
the full value of his Account (including where the Participant is receiving installment payments),
the balance of the Participant’s Account shall be paid to his Beneficiary as provided in this
Section 9.
9.2.
Death Before Separation from Service.
If the Participant dies before the
Participant’s Separation from Service, the Participant’s Account Balance shall be paid
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in a lump sum to the Participant’s Beneficiary in the calendar year following the calendar year in
which the Participant dies regardless of whether the Participant has elected a lump sum payment or
installment payments.
9.3.
Death After Separation from Service.
If a Participant dies after the
Participant’s Separation from Service but before the payment of his entire Account Balance, the
unpaid portion of his Account Balance shall be paid to his Beneficiary in a lump sum in the
calendar year following the calendar year in which the Participant dies if the Participant elected
a lump sum payment, and shall be paid to his Beneficiary in installments on the date or dates on
which each such installment would have been paid to the Participant if the Participant elected
installment payments.
9.4.
Investment of Accounts Pending Payment.
A Participant’s Account shall continue to be
invested pending distribution under this Section 9 in the same manner as the Account was
invested at the time of the Participant’s death provided, however, that to the extent a
Participant’s Account is payable to a Beneficiary in installments, as
provided in Section 9.3, the Beneficiary shall be given the same right as Participants to
change deemed investments in accordance with Section 5.
SECTION 10. UNFORESEEABLE EMERGENCY DISTRIBUTION.
10.1.
Right To Request Payment.
Notwithstanding anything in this Plan to the contrary,
a Participant may request payment of all or a portion of his Account Balance in the event of an
unforeseeable emergency by filing a written request with the Committee in a form acceptable to the
Committee for that purpose. A Participant requesting such payment will be required to submit
documentation of the unforeseeable emergency and proof that the loss is not covered by other means.
The Participant’s request may be granted solely in the absolute discretion of the Committee using
the criteria set forth in Treas. Reg. §1.409A-3(i)(3).
10.2.
Circumstances Where Payment Is Permitted.
A payment on account of unforeseeable
emergency will be made on a limited basis and only due to the Participant’s or dependant’s illness
or accident, casualty loss of the Participant’s property or similar circumstances arising out of
events beyond the control of the Participant within the meaning of Treas. Reg. §1.409A-3(i)(3) as
determined by the Committee in its discretion. No member of the Committee may vote on, or otherwise
influence, a decision of the Committee concerning such member’s request for a payment on account of
unforeseeable emergency.
10.3.
Effect of Payment.
Such a payment to a Participant shall have no effect on any
amounts remaining in the Participant’s Accounts, shall result in the cancellation of the
Participant’s current Deferral Election (if any) and the Participant shall not be permitted to
enter into a new Deferral Election until the next Service Year beginning after the payment.
SECTION 11. TAX WITHHOLDING.
There shall be deducted from all deferrals and
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payments under the Plan the amount of any taxes required to be withheld by any federal, state or
local government. FICA taxes required to be withheld at the time of a Employee Deferral or an
Employer Contribution in accordance with Code Section 3121(v) shall be paid from compensation
otherwise payable to the Participant and shall not be offset against the amount deferred or deemed
contributed hereunder. The Participants and their Beneficiaries, distributees, and personal
representatives will bear any and all federal, foreign, state, local or other income or other taxes
imposed on amounts deferred, contributed or paid under the Plan.
SECTION 12. ADMINISTRATION OF THE PLAN.
12.1.
In General.
The Plan shall be administered by the Committee. Whenever any action is
required or permitted to be taken in the administration of the Plan, the
Committee shall take such action unless the Committee’s power is expressly limited herein or
by operation of law. The Committee shall be the Plan “Administrator” (as such term is defined in
Section 3(16)(A) of ERISA). The Committee may delegate its duties and responsibilities as it, in
its sole discretion, deems necessary or appropriate to the execution of such duties and
responsibilities. Any reference in the Plan to action taken by the Committee includes such action
taken by the Committee’s delegate.
12.2.
Powers and Duties.
The Committee, or its delegates, shall maintain and keep (or
cause to be maintained and kept) such records as are necessary for the efficient operation of the
Plan or as may be required by any applicable law, regulation, or ruling and shall provide for the
preparation and filing of such forms, reports, information, and documents as may be required to be
filed with any governmental agency or department or with the Participants or Beneficiaries. The
Committee shall have all powers necessary to carry out the administrative provisions of the Plan
and to satisfy the requirements of any applicable law or laws. These powers shall include, by way
of illustration and not limitation, the exclusive powers and discretionary authority necessary to:
(1) construe and interpret the Plan; decide all questions of eligibility; decide all
questions of fact relating to claims for benefits; and determine the amount, time, manner,
method, and mode of payment of any benefits hereunder;
(2) direct the Employer, and/or the trustee of any trust established at the discretion
of the Company to provide for the payment of benefits under the Plan, concerning the amount,
time, manner, method, and mode of payment of any benefits hereunder;
(3) prescribe procedures to be followed and forms to be used by Participants and/or
other persons in filing applications or elections;
(4) prepare and distribute, in such manner as may be required by law or as the Committee
deems appropriate, information explaining the Plan; provided, however, that no such
explanation shall contravene the terms of this Plan or
Gibraltar Deferred Compensation Plan
Page 13 of 2009 Plan Restatement
increase the rights of any Participant or Beneficiary or the liabilities of any Employer;
(5) require from the Employer and Participants such information as shall be necessary
for the proper administration of the Plan;
(6) appoint and retain individuals to assist in the administration and construction of
the Plan, including such legal, clerical, accounting, and actuarial services as it may
require or as may be required by any applicable law or laws;
(7) approve the investment vehicles that will be offered as the Notional
Funds;
(8) approve any special elections and/or payouts permitted under Code Section 409A; and
(9) perform all functions otherwise imposed upon a plan administrator by ERISA.
Without intending to limit the generality of the foregoing, the Committee shall have the power to
amend the Plan, in whole or in part, in order to comply with applicable law; provided, however,
that no such amendment may increase the duties and obligations of any Employer without the consent
of any affected Employer.
12.3.
Limitation of Liability.
The members of the Committee, and any officer,
employee, or agent of the Company or any Employer shall not incur any liability individually or on
behalf of any other individuals or on behalf of the Company or any Employer for any act, or failure
to act, made in good faith in relation to the Plan. No bond or other security shall be required of
any such individual solely on account of any such individual’s power to direct the Employer to make
the payments required hereunder. The Company shall indemnify and/or maintain and keep in force
insurance in such form and amount as may be necessary in order to protect the members of the
Committee, their delegates and appointees (other than persons who are independent of the Company
and are rendering services to the Committee or to or with respect to the Plan) from any claim,
loss, damage, liability, and expense (including costs and attorneys’ fees) arising from their acts
or failures to act with respect to the Plan, except where such actions or failures to act involve
willful misconduct or gross negligence.
12.4.
Claims
Procedure.
If a Participant or the Participant’s designated
Beneficiary does not receive benefits to which he or she believes he or she is entitled, such
person may file a claim in writing with the Committee. The Committee establishes a claims procedure
with the following provisions:
(a)
Notification of Decision.
If the claim is wholly or partially denied, the
Committee will notify the claimant in writing within 90 days after the claim has been received
(unless special circumstances require an extension of up to 90 additional
Gibraltar Deferred Compensation Plan
Page 14 of 2009 Plan Restatement
days). The written notification must state the specific reasons for the denial of the claim and the
specific references to the Plan provisions upon which the denial is based. It must describe any
additional material the claimant may need to submit to the Committee to have the claim approved and
must give the reasons why the material is necessary. In addition, the notice must explain the claim
review procedure and be written in a manner calculated to be understood by the Participant or the
Beneficiary.
(b)
Claim Review Procedure.
If a Participant or Beneficiary receives a notice that the
claim has been denied, the claimant, or his or her authorized representative, may
appeal to the Committee for a review of the claim. The claimant must submit a request for a
review in writing to the Committee no later than 60 days after the date the written notice of the
claim denial is received. The claimant, or his or her representative, may then review Plan
documents that pertain to the claim and may submit issues and comments in writing to the Committee.
The Committee must give the claim for review a full and fair review and must deliver to the
claimant a written determination of the claim, including specific reasons for the decision, not
later than 60 days after the date the Committee received the request for review (unless special
circumstances require an extension of up to 60 additional days). The decision of the Committee will
be final and conclusive.
SECTION 13. NO ALIENATION OR ASSIGNMENT OF BENEFITS.
13.1.
In General.
An Employer shall, except as otherwise provided hereunder, pay all
amounts payable hereunder only to the person or persons entitled thereto hereunder, and all such
payments shall be made directly into the hands of each such person or persons and not into the
hands of any other person or corporation whatsoever, so that said payments may not be liable for
the debts, contracts or engagements of any such designated person or persons, or taken in execution
by attachment or garnishment or by any other legal or equitable proceedings, nor shall any such
designated person or persons have any right to alienate, arbitrate, execute, pledge, encumber, or
assign any such payments or the benefits or proceeds thereof.
13.2.
Incompetent Payee.
If the person entitled to receive payment is a minor, or a
person of unsound mind, whether or not adjudicated incompetent, the Employer, upon direction of the
Committee, may make any payment required under the Plan to such person or persons, corporation or
corporations as may be, or be acting as, parent or legal or natural guardian of such minor or
person of unsound mind. The signed receipt of such person or corporation shall be a full and
complete discharge to the Employer for any such payment.
13.3.
Qualified Domestic Relations Orders.
Notwithstanding the foregoing, the
Committee may assign and/or accelerate the payment of a Participant’s Account Balance in whole or
part to an individual other than the Participant as may be necessary to comply with a “qualified
domestic relations order” as defined by and under the terms provided in Code Section 414(p) and
regulations promulgated under Code Section 409A.
Gibraltar Deferred Compensation Plan
Page 15 of 2009 Plan Restatement
SECTION 14. PARTICIPANT’S RIGHTS UNSECURED.
The right of any Participant or other person to receive
payment under the provisions of the Plan shall be an unsecured claim against the general assets of
the Employer, and any successor entity in the event of a merger, consolidation, reorganization or
any other event which causes the Employer’s assets or business to be acquired by another entity. No
provision contained in the Plan or any grantor trust established by the Employer as a means of
providing
monies for the Plan shall be construed to give any Participant or other person at any time a
security interest in the Participant’s Accounts, any grantor trust or any other asset of the
Employer.
SECTION 15. PLAN IS NOT A CONTRACT OF EMPLOYMENT.
Nothing contained in the Plan nor any action
taken thereunder shall be construed as a contract of employment or as giving any Participant any
right to continued employment with the Employer.
SECTION 16. NO GUARANTEE OF TAX RESULT.
Participants are encouraged to review the Plan and its
provisions, and the manner of their participation in the Plan, with their personal tax advisors.
16.1.
In General.
Although the Plan is intended to defer income tax liability with
respect to Regular Compensation and Bonuses deferred under the Plan, no Employer guaranties that
deferrals under the Plan will in fact defer the incidence of income taxation.
16.2.
Application of Code Section 409A.
It is the intent of the Company that the Plan
as in effect between January 1, 2005 and December 31, 2008 inclusive shall be administered in
reasonable, good faith compliance with Code Section 409A, including IRS Notice 2005-1. Beginning
January 1, 2009, the Plan shall be administered in accordance with the provisions of this Plan
document which are intended to comply with final Treasury regulations promulgated under Code
Section 409A. The terms and provisions of the Plan and any related document shall, to the extent
practicable, be construed in a manner that avoids inclusion of any amount in the gross income of
any person under Code Section 409A. Without limiting the generality of the foregoing, to the extent
that this restatement of the Plan has the effect of changing the time or manner of payment of any
amount deferred or deemed earned under the Plan or the Restoration Plan prior to January 1, 2009,
such change shall not be effective until January 1, 2009.
16.3.
Limited Correction of Operational Errors.
It is the intention of each Employer
and each Participant that the rights and obligations existing under the Plan shall be construed in
a way that permits correction of operational errors to the extent permitted under Internal Revenue
Service Notice 2007-100 or any subsequent IRS guidance so as to avoid or reduce the imposition of
penalties under Code Section 409A and the Employers and Participants agree to take such actions as
may be necessary to comply with said notice (such as distributing excess deferrals and Notional
Earnings
Gibraltar Deferred Compensation Plan
Page 16 of 2009 Plan Restatement
attributable thereto or reimbursing the Plan for amounts improperly distributed).
16.4.
Protection of Company and Others.
No Employer, nor any officer, employee, or
director or agent of any Employer, nor any member of the Committee, shall have any liability to any
Participant on account of a deferral hereunder being taxable under Code Section 409A. To the extent
permitted by law, the Company shall indemnify and defend any officer, employee, director or agent
of any Employer, and any member of the Committee, from any claim based on a deferral becoming
taxable under Code Section 409A resulting from such person’s action taken, or action failed to be
taken, in connection with the Plan or any Employee Deferral.
SECTION 17. AMENDMENT OR TERMINATION OF PLAN.
The Plan may at any time be amended, modified or
terminated by the Company or a by person or entity authorized by the Company, including the
Committee to the extent authorized under Section 12.2. No amendment, modification or termination
shall, without the consent of a Participant, adversely affect such Participant’s Account Balance or
his prior elections provided, however, that in the event the Plan is terminated then Participant
Account Balances may be distributed on an accelerated basis to the extent permitted in Treas. Reg.
§1.409A-3(j)(4)(ix).
SECTION 18. GOVERNING LAW AND CONSTRUCTION.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Unless the context otherwise indicates, words of
the masculine gender include the feminine, the singular shall include the plural, and the plural
shall include the singular. Section and sub-section headings are inserted for convenience only and
shall not affect the meaning or construction of the Plan.
SECTION 19. RULE GOVERNING PAYMENT DATES.
In any circumstance where this Plan requires the payment
of an amount during a period of two or more days that overlaps two calendar years, the payee shall
have no right to determine the calendar year in which payment actually occurs.
SECTION 20. MERGER OF GIBRALTAR 401(K) RESTORATION PLAN INTO THIS PLAN.
The Gibraltar 401(k)
Restoration Plan (the “Restoration Plan”), which was established by Gibraltar Industries, Inc.
effective January 15, 2004, shall be merged into this Plan effective December 31, 2008. As of the
date of the merger, the account balance under the Restoration Plan of each individual who has an
account balance under the Restoration Plan shall be credited to a Restoration Plan Account
established under this Plan on behalf of such individual and invested in Notional Funds in
accordance with Section 5. Payment of a Participant’s Restoration Plan Account shall be made at the
time and in the manner elected by the Participant under the Restoration Plan subject to rules set
forth in Section 7.2, Section 7.3 and Section 7.4. The Restoration Plan shall be deemed to be
amended to provide for the merger of the Restoration Plan into this Plan through the execution of
this document and effective January 1, 2009 this document shall be the plan document for the
Restoration Plan.
Gibraltar Deferred Compensation Plan
Page 17 of 2009 Plan Restatement
IN WITNESS WHEREOF this plan document has been executed by an officer of the Company duly
authorized by its Board of Directors on the first day of December, 2008.
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GIBRALTAR STEEL CORPORATION OF NEW YORK
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BY
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/s/ Henning Kornbrekke
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TITLE
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President and Chief Operating Officer
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Gibraltar Deferred Compensation Plan
Page 18 of 2009 Plan Restatement
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Section 1. Definitions
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Section 2. Eligibility to Participate
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Section 3. Employee Deferrals
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Section 4. Employer Contributions
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Section 5. Deemed Investment of Accounts by Participants
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Section 6. Value of Participant Accounts
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Section 7. Payment of a Participant Accounts
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Section 8. Designation of Beneficiary
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Section 9. Payment Following the Death of Participant
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Section 10. Unforeseeable Emergency Distribution
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Section 11. Tax Withholding
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Section 12. Administration of the Plan
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Section 13. No Alienation Or Assignment of Benefits
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Section 14. Participant’s Rights Unsecured
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Section 15. Plan Is Not a Contract of Employment
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Section 16. No Guarantee of Tax Result
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Section 17. Amendment or Termination of Plan
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Section 18. Governing Law and Construction
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Section 19. Rule Governing Payment Dates
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Section 20. Merger of Gibraltar 401(k) Restoration Plan Into This Plan
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Exhibit
10.3
CHANGE IN CONTROL AGREEMENT
THIS CHANGE
IN CONTROL AGREEMENT, dated as of February 20, 2009, is entered into between
Gibraltar Industries, Inc., a Delaware corporation (the “Company”) and Kenneth W. Smith (the
“Executive”).
The Company believes that it is in the best interests of the Company and its shareholders to
provide the Executive with an incentive to continue his employment and to motivate the Executive to
maximize the value of the Company.
It is possible that from time to time the Company will consider the possibility of a change in
control. The Company recognizes that such consideration can be a distraction to the Executive and
can cause the Executive to consider alternative employment opportunities. The Company has
determined that it is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication and objectivity of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of the Company.
The Company believes that it is imperative to provide the Executive with certain benefits upon
termination of employment upon a Change in Control, which benefits are intended to provide the
Executive with financial security and provide sufficient incentive and encouragement to the
Executive to remain with the Company notwithstanding the possibility of a Change in Control.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follow:
1.
Definitions
. When used in this Agreement, the following terms shall have the following
meanings:
(a) “Act” means the Securities and Exchange Act of 1934, as amended.
(b) “Affiliate” means, with respect to any person or entity, any other person or entity
controlling, controlled by or under common control with such person or entity, where “control”
means the possession, directly or indirectly, of the power to direct the management and policies of
a person or entity, whether through the ownership of voting securities, contract or otherwise.
(c) “Annual Compensation” means the sum of: (i) the amount of the annual base salary of the
Executive which is in effect during the calendar year preceding the calendar year in which a Change
in Control occurs; and (ii) the highest annual bonus paid to the Executive by the Company during
the three (3) calendar year period preceding the calendar year in which a Change in Control occurs.
Annual Compensation shall include the amount of any compensation which is not paid to the
Executive as a result of an affirmative election made by the Executive to defer his receipt of any
compensation,
including without limitation, compensation and/or bonuses deferred pursuant to the Company’s
Management Stock Purchase Plan, compensation deferred under the Company’s 401(k) Restoration Plan
and compensation deferred pursuant to any applicable 401(k) plan, Section 125 plan, cafeteria plan
or other plan maintained by the Company under which the Executive, by making an affirmative
election, is permitted to defer his receipt of such compensation. Annual Compensation shall not
include the grant of stock options, restricted stock, restricted units, performance shares,
performance units and rights or other equity or equity based grants.
(d) “Board” means the Board of Directors of Gibraltar Industries, Inc.
(e) “Cause” means that the Company has determined (and provided the Executive a written
statement of its determination) that the Executive has engaged in egregious acts or omissions which
have resulted in material injury to the Company and its business.
(f) “Code” means the Internal Revenue Code of 1986, as amended.
(g) “Competitive Business” means any business engaged in the design, development, manufacture,
merchandising, distribution or sale of any products or services designed, developed, merchandised,
distributed, sold or provided by the Company or its Affiliates or its successor or its Affiliates
during the one (1) year period preceding and the one (1) year period following a Change in Control.
(h) “Change in Control” shall be deemed to have occurred if:
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(i)
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During any consecutive twelve-month period, any “person” or group
of persons (within the meaning of Section 13(d) of the Act) other than the
Company, an Affiliate of the Company, an employee benefit plan sponsored by the
Company or any of its Affiliates, or any one or more members of the Lipke family
becomes the “beneficial owner” (as defined in section 13(d) of the Exchange Act)
of thirty-five percent (35%) or more of the then outstanding Voting Stock through
a transaction or series of transactions which have not been arranged by or
consummated with the prior approval of the Board of Directors;
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(ii)
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a majority of the members of the Board of Directors is replaced
during any consecutive twelve-month period by Directors whose appointment or
election is not endorsed by a majority of the members of the Board of Directors
prior to the date of appointment or election;
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(iii)
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the Company enters into a Merger Sale Agreement; provided however,
that the entry into a Merger Sale Agreement shall only be deemed a “Change in
Control” if the Executive’s employment with the Company and all of its Affiliates
is terminated without Cause or he resigns for Good Reason during the period
beginning on the date the Merger Sale
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Agreement is executed and ending on the date the Merger Sale is consummated or
the Merger Sale Agreement is terminated; or
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(iv)
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the consummation of a Merger Sale.
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(i) “Excise Tax” means the excise tax imposed by Section 4999 of the Code and any interest or
penalties with respect to such tax.
(j) “Good Reason” means that: (i) one or more of the events described in the following
sentence has occurred; (ii) the Executive has, no later than ninety (90) days following the
occurrence of any such event, provided written notice to the Company that the event has occurred
and that the Executive intends to terminate his employment with the Company unless the Company,
within thirty (30) days following the receipt of such notice, the Company (or its successor) fully
and completely restores the Executive to the position which he would have been in had such event
not occurred; and (iii) the Company, or if applicable, its successor, such does not, within thirty
(30) days following the receipt of the written notice described in the foregoing clause, fully and
completely restore the Executive to the position he would have been in had such event not occurred.
The events referred to in the foregoing definition of Good Reason are as follows:
(A) the Executive’s annual base salary and/or annual bonus is reduced or
any other material compensation or benefits arrangement for the Executive
is materially reduced (and such reduction is unrelated to the Company’s, a
Company’s Affiliate’s or the Executive’s performance);
(B) the Executive’s duties or responsibilities are negatively, and
materially changed in a manner inconsistent with the Executive’s position
(including status, offices, titles, and reporting requirements) or
authority;
(C) the Company or its successor requires the Executive’s work location or
residence to be relocated more than 50 miles from its location as of the
date the Merger Sale Agreement is executed;
(D) the Company or its successor fails to offer the Executive a position
after the Change in Control comparable to that held by the Executive
immediately prior to the Change in Control.
(k) “Gross-Up Payment” has the meaning given to such term in Section 5 below.
(l) “Incapacity” means: (i) any physical or mental illness or disability of the Executive that
prevents him from performing his essential job functions in substantially the manner and to the
extent required prior to the commencement of such Incapacity for a
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period of six (6) consecutive months or an aggregate of six (6) months in any consecutive
twelve-month period; or (ii) the death of the Executive.
(m) “Merger Sale” means the consolidation, merger, or other reorganization of the Company,
other than: (i) a consolidation, merger or reorganization of the Company in which holders of Common
Stock immediately prior to the earlier of: (A) the Board of Director’s approval of such
consolidation, merger or other reorganization; or (B) the date of the stockholders meeting in which
such consolidation, merger or other reorganization is approved, continue to hold seventy percent
(70%) or more of the outstanding voting securities of the surviving entity immediately after the
consolidation, merger, or other reorganization; and (ii) a consolidation, merger or other
reorganization which is effected pursuant to the terms of a Merger Sale Agreement which provides
that the consolidation, merger or other reorganization contemplated by the Merger Sale Agreement
will not constitute a Change in Control for purposes of this Agreement.
(n) “Merger Sale Agreement” means an agreement in which the Company agrees to a Merger Sale.
(o) “Payment” has the meaning given such term in Section 5 below.
(p) “Underpayment” has the meaning given to such term in Section 5(d) below.
(q) “Voting Stock” means securities of the Company entitled to vote in the elections of
directors.
2.
Term Of Agreement
. This Agreement shall commence on the date first set forth above and,
subject to the provisions of Section 14 below, shall remain in effect until the earlier of: (a) the
first anniversary of a Change in Control; (b) the termination of the Executive’s employment by
reason of the Executive’s Incapacity; or (c) the termination of the Executive’s employment for any
reason prior to a Change in Control.
3.
Obligations Of The Company Upon
A Change In Control
. (a) Upon the occurrence,
prior to the termination of this Agreement as provided for by Section 2 above, of any Change in
Control other than a Change in Control described in Section 1(h)(iii), the Executive shall be
entitled to receive the following payments and benefits from the Company:
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(i)
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the restrictions imposed upon the sale, transfer or other
conveyance of any restricted stock held by the Executive pursuant to the terms of
any restricted stock agreement or any other plan or agreement shall terminate;
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(ii)
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any and all compensation which is payable at a time and in a manner
which constitutes a “deferral of compensation” within the meaning of U.S.
Treasury Regulation §1.409A-1(b)(1) shall be paid to the
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Executive in one lump sum payment within thirty (30) days following the
occurrence of a Change in Control;
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(iii)
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as currently provided for by the Gibraltar Industries, Inc.
Management Stock Purchase Plan, the amount required to be paid to the Executive
with respect to restricted stock unit awards credited to the Executive’s Account
under the terms of the Management Stock Purchase Plan shall be paid to the
Executive in one lump sum payment on the date the Change in Control occurs;
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(iv)
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any options and stock appreciation rights held by the Executive
shall vest and become fully exercisable and any other equity based incentive
compensation awards held by the Executive, including but not limited to
performance unit awards, shall become payable (whether in stock or cash) as
provided for by the terms of such awards; and
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(v)
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any common stock of the Company which has not been issued to the
Executive under the terms of any long term equity based incentive compensation
plan which was adopted by the Board of Directors prior to the date the Change in
Control occurs, but which common stock would have been issued to the Executive
under the terms of such long term equity based incentive compensation plan if the
Change in Control had not occurred and the Executive had met all the applicable
performance goals established by the Board of Directors in order to receive such
common stock under such long term equity based incentive compensation plan shall,
effective as of the date the Change in Control occurs, be issued to the
Executive, free and clear of all restrictions on the sale, transfer or conveyance
of such common stock.
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(b) Upon the occurrence of a Change in Control described in Section 1(h)(iii), the
Executive (or, if applicable, his beneficiary or his estate) shall be entitled to receive the
payments and benefits described in Section 3(a) above; provided that: (i) the date on
which such payments and benefits are provided to the Executive shall not be later than
the end of the thirty (30) day period beginning on the date on which the Change in
Control described in Section 1(h)(iii) occurs; and (ii) each payment and/or provision to
the Executive of each of the payments and benefits described in
Section 3(a) above shall be deemed to be a separate payment for purposes of the short term deferral rules of Section 409A of the Code.
4.
Obligations Of The Company Upon Termination Of Employment Following A Change In Control
.
If a Change in Control described in Section 1(h)(iii) occurs or if the Executive’s employment is terminated by the
Company without “Cause” or by the Executive for Good Reason at any time during the one year period
immediately following a Change in Control described in Section
1(h)(i), (ii), or (iv), in addition to the payments and
benefits which the Executive is entitled to pursuant to Section 3 above: (a) within ten
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(10) days following the
termination of the Executive’s employment, the Executive shall be paid the amount of any of the regularly
scheduled installments of his annual base salary which were due to be paid for the period ending with the date the
Executive’s employment is terminated to the extent that such payments are unpaid as of the end of such ten (10)
day period; and (b) the Company shall pay to the Executive in one lump sum payment no later than the end of the
thirty day period beginning on the date the Change in Control described in Section 1(h)(iii) occurs or the date the
Executive’s employment with the Company is terminated by the
Company without “Cause” or by the Executive
for Good Reason (whichever the case may be), an amount equal to the sum of: (A) the Executive’s accrued and
unpaid vacation pay determined as of the date the Executive’s employment is terminated; and (B) an amount equal
to: (I) the Executive’s Annual Compensation defined in Section 1(c) above; multiplied by: (II) two (2). For
purposes of this Agreement, each of the payments required to be made pursuant to the preceding provisions of this
Section 4 shall be deemed to be a separate payment for purposes of the short term deferral rules of Section 409A
of the Code.
5.
Gross-Up Payment
. (a) Notwithstanding anything in this Agreement to the
contrary, in the event it is determined that any payment or distribution by the Company to or for
the benefit of the Executive, under this Agreement or otherwise (a “Payment”), would be subject to
the Excise Tax, then the Company shall pay the Executive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes and including any Excise Tax, imposed upon
the Gross-Up Payment) the Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
(b) Subject to the provisions of Section 5(c) hereof, all determinations required to be made
under this Section 5, including whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by any nationally recognized firm of certified public accountants
(the “Accounting Firm”) which shall provide detailed supporting calculations to the Company and the
Executive within 60 business days following the occurrence of a Change in Control. If the
Accounting Firm has performed services for the entity that caused the Change of Control or any of
its Affiliates, the Executive may select an alternative accounting firm from any nationally
recognized firm of certified public accountants. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax return. Any
determination by the Accounting Firm shall be binding upon the Company and the Executive. When
calculating the amount of the Gross-Up Payment, the Executive shall be deemed to pay:
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(i)
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Federal income taxes at the highest applicable marginal rate of
Federal income taxation for the calendar year in which the Gross-Up Payment is to
be made; and
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(ii)
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any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in which the Gross-Up
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Payment is to be made, net of the maximum reduction in Federal income taxes
which could be obtained from deduction of such state and local taxes if paid in
such year.
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(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten business days after
the Executive knows of such claim. The notification shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The Executive shall not pay
such claim for at least thirty days after the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
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(i)
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give the Company any information reasonably requested by the
Company relating to such claim;
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(ii)
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take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company;
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(iii)
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cooperate with the Company in good faith in order to effectively
contest such claim; and
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(iv)
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permit the Company to participate in any proceedings relating to
such claim;
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provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest. The Company shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this Section
5(c), the Company shall control all proceedings taken in connection with such contest. The
Company, at its sole option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim. The Company may, at
its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall pay the amount of
such payment to the Executive and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest or penalties, imposed with respect to
such payment
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and with respect to any imputed income with respect to such payment; and provided, further that any
extension of the statue of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is limited solely to
such contested amount. The Company’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) As a result of the uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments which
should have been made will not have been made (“Underpayment”). In the event that the Company
exhausts it remedies pursuant to Section 5(c), and the Executive is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment and the Company
shall promptly pay the Executive the amount of such Underpayment.
(e) If, after the Company has paid a claim pursuant to Section 5(c) the Executive becomes
entitled to a refund with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 5(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon by the taxing authority after deducting
any taxes applicable thereto). The amount of such payment shall be considered part of the Gross-Up
Payment and subject to gross-up for any taxes (including interest or penalties) associated
therewith.
(f) The Gross-Up Payment shall be paid to the Executive no later than the Executive’s taxable
year following the taxable year of the Executive in which the Excise Taxes with respect to which
the Gross-Up Payment is payable are paid by the Executive.
6.
At-Will Employment; Withholding
. (a) The Company and the Executive acknowledge
that the Executive’s employment is and shall continue to be at-will, as defined under applicable
law. If the Executive’s employment terminates for any reason, including without limitation any
termination prior to a Change in Control, the Executive shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by this Agreement, or as may
otherwise be available in accordance with the Company’s established employee plans and policies at
the time of such termination.
(b) All payments made pursuant to this Agreement will be subject to withholding of applicable
income and employment taxes.
7.
Non-Compete Period
. (a) If the Executive’s employment is terminated during
the one year period following a Change in Control, the Executive agrees that during the one-year
period following such termination, he will not, and will cause each of his Affiliates not to, for
any reason whatsoever, directly or indirectly, either individually or as an owner, partner,
officer, director, manager, employee, lender, consultant or adviser or otherwise, engage
in any Competitive Business anywhere in the United States of America. The ownership by the
Executive of up to 2% of any class of securities of any
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company which has a class of securities
registered under Section 12 of the Securities Exchange Act of 1934, as amended, shall not
constitute a breach of this covenant.
(b) The parties acknowledge and agree that damages in the event of a breach of any of the
provisions of this Section 7 would be difficult, if not impossible, to ascertain and it is
therefore agreed that the Company (or its successor), in addition to and without limiting any other
remedy or right it may have, shall have the right to an injunction or other equitable relief in any
court of competent jurisdiction enjoining any such breach. The Executive further agrees that the
Company (or its successor) shall not be required to post a bond or other security in connection
with the issuance of any such injunction.
(c) Notwithstanding anything in this Section 7 to the contrary, if at any time, in any
judicial proceeding, any of the restrictions stated in this Section 7 are found by a final order of
a court of competent jurisdiction to be unreasonable or otherwise unenforceable under circumstances
then existing, the Executive and the Company agree that the period, scope or geographical area, as
the case may be, shall be reduced to the extent necessary to enable the court to enforce the
restrictions to the extent such provisions are allowable under law, giving effect to the agreement
and intent of the parties that the restrictions contained herein shall be effective to the fullest
extent permissible. The Executive agrees that the restrictions contained in this Section 7 are
reasonable in all respects. The provisions of this Section 7 shall survive the term of this
Agreement.
8.
Nondisclosure
. The Executive shall not (other than in the good faith performance of his
services to the Company or its Affiliates before termination of employment) disclose or make known
to anyone other than employees of the Company and its Affiliates, or use for the benefit of himself
or any other person, firm, operation, or entity unrelated to the Company, any knowledge,
information, or materials, whether tangible or intangible, belonging to the Company, about the
products, services, know-how, customers, business plans, or financial, marketing, pricing,
compensation, and other proprietary matter relating to the Company. Promptly upon the termination
of the Executive’s employment with the Company, the Executive shall deliver to the Company any and
all confidential information in his possession. The provisions of this Section 8 shall survive the
term of this Agreement.
9.
Successors
. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of any such succession
will be a breach of this Agreement and entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to had the Company
terminated the Executive for any reason other than Cause or Incapacity on the succession date (and
assuming a Change in Control had occurred prior to such succession date).
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10.
Non-Assignability
. This Agreement is personal in nature and neither of the parties
shall, without the consent of the other, assign or transfer this Agreement or any rights or
obligations under it, except as provided in Section 8. Without limiting the foregoing, the
Executive’s right to receive payments under this Agreement shall not be assignable or transferable,
whether by pledge, creation of a security interest, or otherwise, other than a transfer by his or
her will or by the laws of descent or distribution, and, in the event of any attempted assignment
or transfer by the Executive contrary to this Section, the Company shall have no liability to pay
any amount so attempted to be assigned or transferred.
11.
Notice Of Termination
. In the event that, following a Change in Control, the Company
terminates the Executive’s employment for Cause or the Executive terminates his employment with the
Company for Good Reason, the party terminating such employment shall send notice to the other party
given in accordance with Section 11 below, within thirty (30) days of the date of such termination
of Employment. The notice shall be in writing and shall (i) state the specific termination
provision in the Agreement relied upon and (ii) to the extent applicable, set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination under such provision.
12.
Notices
. For the purpose of this Agreement, notices and all other communications
provided for shall be in writing and shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight courier addressed as follows:
If to the Executive:
Kenneth W. Smith
3556 Lakeshore Road
Buffalo, NY 14219
If to the Company:
Gibraltar Industries, Inc.
3556 Lakeshore Road
Buffalo, NY 14219
or to such other address as either party may have furnished to the other in writing. Notices of
change of address shall be effective only upon receipt.
13.
Governing Law
. The validity, interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of New York without reference to principles of
conflict of laws.
14.
Settlement of Disputes; Arbitration
. If there has been a Change in Control and any
dispute arises between the Executive and the Company as to the validity, enforceability, and/or
interpretation of any right or benefit afforded by this Agreement such dispute shall
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be resolved by
binding arbitration proceedings in accordance with the rules of the American Arbitration
Association. The arbitrators shall presume that the rights and/or benefits afforded by this
Agreement that are in dispute are valid and enforceable and that the Executive is entitled to such
rights and/or benefits. The Company shall be precluded from asserting that such rights and/or
benefits are not valid, binding, and enforceable and shall stipulate before such arbitrators that
the Company is bound by all the provisions of this Agreement. The burden of overcoming by clear
and convincing evidence the presumption that the Executive is entitled to such rights and/or
benefits shall be on the Company. Punitive damages shall not be awarded. The results of any
arbitration shall be conclusive on both parties and shall not be subject to judicial interference
or review on any ground whatsoever, including without limitation any claim that the Company was
wrongfully induced to enter into this Agreement to arbitrate such a dispute. The Company shall pay
or reimburse the Executive for legal fees and expenses incurred as a result of any dispute
resolution process entered into by the Executive to enforce this Agreement.
15.
Survival of Certain Obligations
. Notwithstanding anything to the contrary contained in
Section 2 above, if a Change in Control occurs and, prior to the first anniversary of the Change in
Control, the Executive becomes entitled to payment of any amount or provision of any benefits
provided for by Sections 3, 4, 5 or 14 above, the Company’s obligation to pay the Executive any
such amounts or provide the Executive any such benefits shall survive until all such amounts and
benefits have been paid or provided to the Executive.
16.
Miscellaneous
. (a) This Agreement contains the entire understanding with the
Executive with respect to its subject manner and supersedes any and all prior agreements or
understandings, written or oral, relating to the subject matter. No provisions of this Agreement
may be amended unless such amendment is agreed to in writing signed by the Executive and the
Company.
(b) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
(c) This Agreement may be executed in one or more counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same Agreement.
(d) The captions of this Agreement are not part of its provisions and shall have no force or
effect.
(e) If and to the extent that any provision of this Agreement would result in the payment or
deferral of compensation in a manner which does not comply with the
provisions of Section 409A of the Code and the Treasury regulations promulgated thereunder,
such provisions shall, to the maximum extent possible, be construed and interpreted in a manner
which will cause such provisions to be implemented in a manner which complies with the applicable
requirements of Section 409A and the Treasury
11
regulations promulgated thereunder so as to avoid
subjecting the Executive to taxation under Section 409A(a)(i)(A) of the Code. If any payment
provided for by this Agreement could, as a result of the period of time within which such payment
is required to be made, be paid to the Executive in one of two consecutive taxable years of the
Executive, the Executive shall have no right to determine the taxable year in which such payment is
made.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of
the day and year first above set forth.
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GIBRALTAR INDUSTRIES, INC.
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By:
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/s/ Henning Kornbrekke
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/s/ Knneth W. Smith
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Name:
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Henning Kornbrekke
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Name: Kenneth W. Smith
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Title:
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President
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12
Exhibit
10.4
CHANGE IN CONTROL AGREEMENT
THIS
CHANGE IN CONTROL AGREEMENT, dated as of February 20, 2009, is entered into between
Gibraltar Industries, Inc., a Delaware corporation (the “Company”) and Timothy J. Heasley (the
“Executive”).
The Company believes that it is in the best interests of the Company and its shareholders to
provide the Executive with an incentive to continue his employment and to motivate the Executive to
maximize the value of the Company.
It is possible that from time to time the Company will consider the possibility of a change in
control. The Company recognizes that such consideration can be a distraction to the Executive and
can cause the Executive to consider alternative employment opportunities. The Company has
determined that it is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication and objectivity of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of the Company.
The Company believes that it is imperative to provide the Executive with certain benefits upon
termination of employment upon a Change in Control, which benefits are intended to provide the
Executive with financial security and provide sufficient incentive and encouragement to the
Executive to remain with the Company notwithstanding the possibility of a Change in Control.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follow:
1.
Definitions
. When used in this Agreement, the following terms shall have the following
meanings:
(a) “Act” means the Securities and Exchange Act of 1934, as amended.
(b) “Affiliate” means, with respect to any person or entity, any other person or entity
controlling, controlled by or under common control with such person or entity, where “control”
means the possession, directly or indirectly, of the power to direct the management and policies of
a person or entity, whether through the ownership of voting securities, contract or otherwise.
(c) “Annual Compensation” means the sum of: (i) the amount of the annual base salary of the
Executive which is in effect during the calendar year preceding the calendar year in which a Change
in Control occurs; and (ii) the highest annual bonus paid to the Executive by the Company during
the three (3) calendar year period preceding the calendar year in which a Change in Control occurs.
Annual Compensation shall include the amount of any compensation which is not paid to the
Executive as a result of an affirmative election made by the Executive to defer his receipt of any
compensation,
including without limitation, compensation and/or bonuses deferred pursuant to the Company’s
Management Stock Purchase Plan, compensation deferred under the Company’s 401(k) Restoration Plan
and compensation deferred pursuant to any applicable 401(k) plan, Section 125 plan, cafeteria plan
or other plan maintained by the Company under which the Executive, by making an affirmative
election, is permitted to defer his receipt of such compensation. Annual Compensation shall not
include the grant of stock options, restricted stock, restricted units, performance shares,
performance units and rights or other equity or equity based grants.
(d) “Board” means the Board of Directors of Gibraltar Industries, Inc.
(e) “Cause” means that the Company has determined (and provided the Executive a written
statement of its determination) that the Executive has engaged in egregious acts or omissions which
have resulted in material injury to the Company and its business.
(f) “Code” means the Internal Revenue Code of 1986, as amended.
(g) “Competitive Business” means any business engaged in the design, development, manufacture,
merchandising, distribution or sale of any products or services designed, developed, merchandised,
distributed, sold or provided by the Company or its Affiliates or its successor or its Affiliates
during the one (1) year period preceding and the one (1) year period following a Change in Control.
(h) “Change in Control” shall be deemed to have occurred if:
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(i)
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During any consecutive twelve-month period, any “person” or group
of persons (within the meaning of Section 13(d) of the Act) other than the
Company, an Affiliate of the Company, an employee benefit plan sponsored by the
Company or any of its Affiliates, or any one or more members of the Lipke family
becomes the “beneficial owner” (as defined in section 13(d) of the Exchange Act)
of thirty-five percent (35%) or more of the then outstanding Voting Stock through
a transaction or series of transactions which have not been arranged by or
consummated with the prior approval of the Board of Directors;
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(ii)
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a majority of the members of the Board of Directors is replaced
during any consecutive twelve-month period by Directors whose appointment or
election is not endorsed by a majority of the members of the Board of Directors
prior to the date of appointment or election;
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(iii)
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the Company enters into a Merger Sale Agreement; provided however,
that the entry into a Merger Sale Agreement shall only be deemed a “Change in
Control” if the Executive’s employment with the Company and all of its Affiliates
is terminated without Cause or he resigns for Good Reason during the period
beginning on the date the Merger Sale
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Agreement is executed and ending on the date the Merger Sale is consummated or
the Merger Sale Agreement is terminated; or
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(iv)
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the consummation of a Merger Sale.
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(i) “Excise Tax” means the excise tax imposed by Section 4999 of the Code and any interest or
penalties with respect to such tax.
(j) “Good Reason” means that: (i) one or more of the events described in the following
sentence has occurred; (ii) the Executive has, no later than ninety (90) days following the
occurrence of any such event, provided written notice to the Company that the event has occurred
and that the Executive intends to terminate his employment with the Company unless the Company,
within thirty (30) days following the receipt of such notice, the Company (or its successor) fully
and completely restores the Executive to the position which he would have been in had such event
not occurred; and (iii) the Company, or if applicable, its successor, such does not, within thirty
(30) days following the receipt of the written notice described in the foregoing clause, fully and
completely restore the Executive to the position he would have been in had such event not occurred.
The events referred to in the foregoing definition of Good Reason are as follows:
(A) the Executive’s annual base salary and/or annual bonus is reduced or
any other material compensation or benefits arrangement for the Executive
is materially reduced (and such reduction is unrelated to the Company’s, a
Company’s Affiliate’s or the Executive’s performance);
(B) the Executive’s duties or responsibilities are negatively, and
materially changed in a manner inconsistent with the Executive’s position
(including status, offices, titles, and reporting requirements) or
authority;
(C) the Company or its successor requires the Executive’s work location or
residence to be relocated more than 50 miles from its location as of the
date the Merger Sale Agreement is executed;
(D) the Company or its successor fails to offer the Executive a position
after the Change in Control comparable to that held by the Executive
immediately prior to the Change in Control.
(k) “Gross-Up Payment” has the meaning given to such term in Section 5 below.
(l) “Incapacity” means: (i) any physical or mental illness or disability of the Executive that
prevents him from performing his essential job functions in substantially the manner and to the
extent required prior to the commencement of such Incapacity for a
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period of six (6) consecutive months or an aggregate of six (6) months in any consecutive
twelve-month period; or (ii) the death of the Executive.
(m) “Merger Sale” means the consolidation, merger, or other reorganization of the Company,
other than: (i) a consolidation, merger or reorganization of the Company in which holders of Common
Stock immediately prior to the earlier of: (A) the Board of Director’s approval of such
consolidation, merger or other reorganization; or (B) the date of the stockholders meeting in which
such consolidation, merger or other reorganization is approved, continue to hold seventy percent
(70%) or more of the outstanding voting securities of the surviving entity immediately after the
consolidation, merger, or other reorganization; and (ii) a consolidation, merger or other
reorganization which is effected pursuant to the terms of a Merger Sale Agreement which provides
that the consolidation, merger or other reorganization contemplated by the Merger Sale Agreement
will not constitute a Change in Control for purposes of this Agreement.
(n) “Merger Sale Agreement” means an agreement in which the Company agrees to a Merger Sale.
(o) “Payment” has the meaning given such term in Section 5 below.
(p) “Underpayment” has the meaning given to such term in Section 5(d) below.
(q) “Voting Stock” means securities of the Company entitled to vote in the elections of
directors.
2.
Term Of Agreement
. This Agreement shall commence on the date first set forth above and,
subject to the provisions of Section 14 below, shall remain in effect until the earlier of: (a) the
first anniversary of a Change in Control; (b) the termination of the Executive’s employment by
reason of the Executive’s Incapacity; or (c) the termination of the Executive’s employment for any
reason prior to a Change in Control.
3.
Obligations Of The Company Upon
A Change In Control
. (a) Upon the occurrence,
prior to the termination of this Agreement as provided for by Section 2 above, of any Change in
Control other than a Change in Control described in Section 1(h)(iii), the Executive shall be
entitled to receive the following payments and benefits from the Company:
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(i)
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the restrictions imposed upon the sale, transfer or other
conveyance of any restricted stock held by the Executive pursuant to the terms of
any restricted stock agreement or any other plan or agreement shall terminate;
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(ii)
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any and all compensation which is payable at a time and in a manner
which constitutes a “deferral of compensation” within the meaning of U.S.
Treasury Regulation §1.409A-1(b)(1) shall be paid to the
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Executive in one lump sum payment within thirty (30) days following the
occurrence of a Change in Control;
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(iii)
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as currently provided for by the Gibraltar Industries, Inc.
Management Stock Purchase Plan, the amount required to be paid to the Executive
with respect to restricted stock unit awards credited to the Executive’s Account
under the terms of the Management Stock Purchase Plan shall be paid to the
Executive in one lump sum payment on the date the Change in Control occurs;
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(iv)
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any options and stock appreciation rights held by the Executive
shall vest and become fully exercisable and any other equity based incentive
compensation awards held by the Executive, including but not limited to
performance unit awards, shall become payable as provided for by the terms of
such awards; and
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(v)
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any common stock of the Company which has not been issued to the
Executive under the terms of any long term equity based incentive compensation
plan which was adopted by the Board of Directors prior to the date the Change in
Control occurs, but which common stock would have been issued to the Executive
under the terms of such long term equity based incentive compensation plan if the
Change in Control had not occurred and the Executive had met all the applicable
performance goals established by the Board of Directors in order to receive such
common stock under such long term equity based incentive compensation plan shall,
effective as of the date the Change in Control occurs, be issued to the
Executive, free and clear of all restrictions on the sale, transfer or conveyance
of such common stock.
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(b) Upon the occurrence of a Change in Control described in Section 1(h)(iii), the
Executive (or, if applicable, his beneficiary or his estate) shall be entitled to receive the
payments and benefits described in Section 3(a) above; provided that: (i) the date on
which such payments and benefits are provided to the Executive shall not be later than
the end of the thirty (30) day period beginning on the date on which the Change in
Control described in Section 1(h)(iii) occurs; and (ii) each payment
and/or provision to the Executive of each of the payments and benefits described in Section 3(a) above shall be deemed to be a separate payment for purposes of the short term deferral rules of Section 409A of the Code.
4.
Obligations Of The Company Upon Termination Of Employment Following A
Change In Control
. If a Change in Control described in Section
1(h)(iii) occurs or if the Executive’s employment is terminated
by the Company without “Cause” or by the
Executive for Good Reason at any time during the one year period immediately following a Change in Control described in Section 1(h)(i), (ii) or (iv), in addition to the
payments and benefits which the Executive is entitled to pursuant to Section 3 above: (a) within ten
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(10) days following the termination of the Executive’s employment, the Executive shall be paid the amount of any of the regularly scheduled installments of his
annual base salary which were due to be paid for the period ending with the date the Executive’s employment is terminated to the extent that such payments are unpaid as of the end of such ten (10) day period; and (b) the Company shall pay to the Executive in
one lump sum payment no later than the end of the thirty (30) day
period beginning on the date the Change in Control described in
Section 1(h)(iii) occurs or the date the Executive’s employment is terminated by the Company without “Cause” or by the
Executive for Good Reason (whichever the case may be), an amount equal to the sum of: (i) the Executive’s accrued and unpaid vacation pay determined as of the date the Executive’s employment is terminated; and (ii) an amount equal to the Executive’s
Annual Compensation defined in Section 1(c) above. For purposes of
this Agreement, each of the payments required to be made pursuant to
the preceding provisions of this Section 4 shall be deemed to be a separate payment for purposes of the short term deferral
rules of Section 409A of the Code.
5.
Gross-Up Payment
. (a) Notwithstanding anything in this Agreement to the
contrary, in the event it is determined that any payment or distribution by the Company to or for
the benefit of the Executive, under this Agreement or otherwise (a “Payment”), would be subject to
the Excise Tax, then the Company shall pay the Executive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes and including any Excise Tax, imposed upon
the Gross-Up Payment) the Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
(b) Subject to the provisions of Section 5(c) hereof, all determinations required to be made
under this Section 5, including whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by any nationally recognized firm of certified public accountants
(the “Accounting Firm”) which shall provide detailed supporting calculations to the Company and the
Executive within 60 business days following the occurrence of a Change in Control. If the
Accounting Firm has performed services for the entity that caused the Change of Control or any of
its Affiliates, the Executive may select an alternative accounting firm from any nationally
recognized firm of certified public accountants. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax return. Any
determination by the Accounting Firm shall be binding upon the Company and the Executive. When
calculating the amount of the Gross-Up Payment, the Executive shall be deemed to pay:
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(i)
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Federal income taxes at the highest applicable marginal rate of
Federal income taxation for the calendar year in which the Gross-Up Payment is to
be made; and
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(ii)
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any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in Federal
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income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
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(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten business days after
the Executive knows of such claim. The notification shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The Executive shall not pay
such claim for at least thirty days after the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
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(i)
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give the Company any information reasonably requested by the
Company relating to such claim;
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(ii)
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take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company;
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(iii)
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cooperate with the Company in good faith in order to effectively
contest such claim; and
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(iv)
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permit the Company to participate in any proceedings relating to
such claim;
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provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest. The Company shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this Section
5(c), the Company shall control all proceedings taken in connection with such contest. The
Company, at its sole option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim. The Company may, at
its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall pay the amount of
such payment to the Executive and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest or penalties, imposed with respect to
such payment and with respect to any imputed income with respect to such payment; and provided,
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further that any extension of the statue of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. The Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) As a result of the uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments which
should have been made will not have been made (“Underpayment”). In the event that the Company
exhausts it remedies pursuant to Section 5(c), and the Executive is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment and the Company
shall promptly pay the Executive the amount of such Underpayment.
(e) If, after the Company has paid a claim pursuant to Section 5(c) the Executive becomes
entitled to a refund with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 5(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon by the taxing authority after deducting
any taxes applicable thereto). The amount of such payment shall be considered part of the Gross-Up
Payment and subject to gross-up for any taxes (including interest or penalties) associated
therewith.
(f) The Gross-Up Payment shall be paid to the Executive no later than the Executive’s taxable
year following the taxable year of the Executive in which the Excise Taxes with respect to which
the Gross-Up Payment is payable are paid by the Executive.
6.
At-Will Employment; Withholding
. (a) The Company and the Executive acknowledge
that the Executive’s employment is and shall continue to be at-will, as defined under applicable
law. If the Executive’s employment terminates for any reason, including without limitation any
termination prior to a Change in Control, the Executive shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by this Agreement, or as may
otherwise be available in accordance with the Company’s established employee plans and policies at
the time of such termination.
(b) All payments made pursuant to this Agreement will be subject to withholding of applicable
income and employment taxes.
7.
Non-Compete Period
. (a) If the Executive’s employment is terminated during
the one year period following a Change in Control, the Executive agrees that during the one-year
period following such termination, he will not, and will cause each of his Affiliates not to, for
any reason whatsoever, directly or indirectly, either individually or as an owner, partner,
officer, director, manager, employee, lender, consultant or adviser or otherwise, engage in any
Competitive Business anywhere in the United States of America. The ownership
by the Executive of up to 2% of any class of securities of any
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company which has a class of
securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, shall
not constitute a breach of this covenant.
(b) The parties acknowledge and agree that damages in the event of a breach of any of the
provisions of this Section 7 would be difficult, if not impossible, to ascertain and it is
therefore agreed that the Company (or its successor), in addition to and without limiting any other
remedy or right it may have, shall have the right to an injunction or other equitable relief in any
court of competent jurisdiction enjoining any such breach. The Executive further agrees that the
Company (or its successor) shall not be required to post a bond or other security in connection
with the issuance of any such injunction.
(c) Notwithstanding anything in this Section 7 to the contrary, if at any time, in any
judicial proceeding, any of the restrictions stated in this Section 7 are found by a final order of
a court of competent jurisdiction to be unreasonable or otherwise unenforceable under circumstances
then existing, the Executive and the Company agree that the period, scope or geographical area, as
the case may be, shall be reduced to the extent necessary to enable the court to enforce the
restrictions to the extent such provisions are allowable under law, giving effect to the agreement
and intent of the parties that the restrictions contained herein shall be effective to the fullest
extent permissible. The Executive agrees that the restrictions contained in this Section 7 are
reasonable in all respects. The provisions of this Section 7 shall survive the term of this
Agreement.
8.
Nondisclosure
. The Executive shall not (other than in the good faith performance of his
services to the Company or its Affiliates before termination of employment) disclose or make known
to anyone other than employees of the Company and its Affiliates, or use for the benefit of himself
or any other person, firm, operation, or entity unrelated to the Company, any knowledge,
information, or materials, whether tangible or intangible, belonging to the Company, about the
products, services, know-how, customers, business plans, or financial, marketing, pricing,
compensation, and other proprietary matter relating to the Company. Promptly upon the termination
of the Executive’s employment with the Company, the Executive shall deliver to the Company any and
all confidential information in his possession. The provisions of this Section 8 shall survive the
term of this Agreement.
9.
Successors
. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of any such succession
will be a breach of this Agreement and entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to had the Company
terminated the Executive for any reason other than Cause or Incapacity on the succession date (and
assuming a Change in Control had occurred prior to such succession date).
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10.
Non-Assignability
. This Agreement is personal in nature and neither of the parties
shall, without the consent of the other, assign or transfer this Agreement or any rights or
obligations under it, except as provided in Section 8. Without limiting the foregoing, the
Executive’s right to receive payments under this Agreement shall not be assignable or transferable,
whether by pledge, creation of a security interest, or otherwise, other than a transfer by his or
her will or by the laws of descent or distribution, and, in the event of any attempted assignment
or transfer by the Executive contrary to this Section, the Company shall have no liability to pay
any amount so attempted to be assigned or transferred.
11.
Notice Of Termination
. In the event that, following a Change in Control, the Company
terminates the Executive’s employment for Cause or the Executive terminates his employment with the
Company for Good Reason, the party terminating such employment shall send notice to the other party
given in accordance with Section 11 below, within thirty (30) days of the date of such termination
of Employment. The notice shall be in writing and shall (i) state the specific termination
provision in the Agreement relied upon and (ii) to the extent applicable, set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination under such provision.
12.
Notices
. For the purpose of this Agreement, notices and all other communications
provided for shall be in writing and shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight courier addressed as follows:
If to the Executive:
Timothy J. Heasley
3556 Lakeshore Road
Buffalo, NY 14219
If to the Company:
Gibraltar Industries, Inc.
3556 Lakeshore Road
Buffalo, NY 14219
or to such other address as either party may have furnished to the other in writing. Notices of
change of address shall be effective only upon receipt.
13.
Governing Law
. The validity, interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of New York without reference to principles of
conflict of laws.
14.
Settlement of Disputes; Arbitration
. If there has been a Change in Control and any
dispute arises between the Executive and the Company as to the validity, enforceability,
and/or interpretation of any right or benefit afforded by this Agreement such dispute shall
10
be resolved by binding arbitration proceedings in accordance with the rules of the American
Arbitration Association. The arbitrators shall presume that the rights and/or benefits afforded by
this Agreement that are in dispute are valid and enforceable and that the Executive is entitled to
such rights and/or benefits. The Company shall be precluded from asserting that such rights and/or
benefits are not valid, binding, and enforceable and shall stipulate before such arbitrators that
the Company is bound by all the provisions of this Agreement. The burden of overcoming by clear
and convincing evidence the presumption that the Executive is entitled to such rights and/or
benefits shall be on the Company. Punitive damages shall not be awarded. The results of any
arbitration shall be conclusive on both parties and shall not be subject to judicial interference
or review on any ground whatsoever, including without limitation any claim that the Company was
wrongfully induced to enter into this Agreement to arbitrate such a dispute. The Company shall pay
or reimburse the Executive for legal fees and expenses incurred as a result of any dispute
resolution process entered into by the Executive to enforce this Agreement.
15.
Survival of Certain Obligations
. Notwithstanding anything to the contrary contained in
Section 2 above, if a Change in Control occurs and, prior to the first anniversary of the Change in
Control, the Executive becomes entitled to payment of any amount or provision of any benefits
provided for by Sections 3, 4, 5 or 14 above, the Company’s obligation to pay the Executive any
such amounts or provide the Executive any such benefits shall survive until all such amounts and
benefits have been paid or provided to the Executive.
16.
Miscellaneous
. (a) This Agreement contains the entire understanding with the
Executive with respect to its subject manner and supersedes any and all prior agreements or
understandings, written or oral, relating to the subject matter. No provisions of this Agreement
may be amended unless such amendment is agreed to in writing signed by the Executive and the
Company.
(b) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
(c) This Agreement may be executed in one or more counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same Agreement.
(d) The captions of this Agreement are not part of its provisions and shall have no force or
effect.
(e) If and to the extent that any provision of this Agreement would result in the payment or
deferral of compensation in a manner which does not comply with the provisions of Section 409A of
the Code and the Treasury regulations promulgated thereunder, such provisions shall, to the maximum
extent possible, be construed and interpreted in a manner which will cause such provisions to be implemented in a manner which
complies with the applicable requirements of Section 409A and the Treasury
11
regulations promulgated thereunder so as to avoid subjecting the Executive to taxation under Section 409A(a)(i)(A) of the
Code. If any payment provided for by this Agreement could, as a result of the period of time
within which such payment is required to be made, be paid to the Executive in one of two
consecutive taxable years of the Executive, the Executive shall have no right to determine the
taxable year in which such payment is made.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of
the day and year first above set forth.
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GIBRALTAR INDUSTRIES, INC.
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By:
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/s/ Henning Kornbrekke
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/s/ Timothy J. Heasley
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Name:
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Henning Kornbrekke
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Name: Timothy J. Heasley
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Title:
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President
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Exhibit
10.5
CHANGE IN CONTROL AGREEMENT
THIS
CHANGE IN CONTROL AGREEMENT, dated as of February 20, 2009, is entered into between
Gibraltar Industries, Inc., a Delaware corporation (the “Company”) and Paul M. Murray (the
“Executive”).
The Company believes that it is in the best interests of the Company and its shareholders to
provide the Executive with an incentive to continue his employment and to motivate the Executive to
maximize the value of the Company.
It is possible that from time to time the Company will consider the possibility of a change in
control. The Company recognizes that such consideration can be a distraction to the Executive and
can cause the Executive to consider alternative employment opportunities. The Company has
determined that it is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication and objectivity of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of the Company.
The Company believes that it is imperative to provide the Executive with certain benefits upon
termination of employment upon a Change in Control, which benefits are intended to provide the
Executive with financial security and provide sufficient incentive and encouragement to the
Executive to remain with the Company notwithstanding the possibility of a Change in Control.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follow:
1.
Definitions
. When used in this Agreement, the following terms shall have the following
meanings:
(a) “Act” means the Securities and Exchange Act of 1934, as amended.
(b) “Affiliate” means, with respect to any person or entity, any other person or entity
controlling, controlled by or under common control with such person or entity, where “control”
means the possession, directly or indirectly, of the power to direct the management and policies of
a person or entity, whether through the ownership of voting securities, contract or otherwise.
(c) “Annual Compensation” means the sum of: (i) the amount of the annual base salary of the
Executive which is in effect during the calendar year preceding the calendar year in which a Change
in Control occurs; and (ii) the highest annual bonus paid to the Executive by the Company during
the three (3) calendar year period preceding the calendar year in which a Change in Control occurs.
Annual Compensation shall include the amount of any compensation which is not paid to the
Executive as a result of an affirmative election made by the Executive to defer his receipt of any
compensation,
including without limitation, compensation and/or bonuses deferred pursuant to the Company’s
Management Stock Purchase Plan, compensation deferred under the Company’s 401(k) Restoration Plan
and compensation deferred pursuant to any applicable 401(k) plan, Section 125 plan, cafeteria plan
or other plan maintained by the Company under which the Executive, by making an affirmative
election, is permitted to defer his receipt of such compensation. Annual Compensation shall not
include the grant of stock options, restricted stock, restricted units, performance shares,
performance units and rights or other equity or equity based grants.
(d) “Board” means the Board of Directors of Gibraltar Industries, Inc.
(e) “Cause” means that the Company has determined (and provided the Executive a written
statement of its determination) that the Executive has engaged in egregious acts or omissions which
have resulted in material injury to the Company and its business.
(f) “Code” means the Internal Revenue Code of 1986, as amended.
(g) “Competitive Business” means any business engaged in the design, development, manufacture,
merchandising, distribution or sale of any products or services designed, developed, merchandised,
distributed, sold or provided by the Company or its Affiliates or its successor or its Affiliates
during the one (1) year period preceding and the one (1) year period following a Change in Control.
(h) “Change in Control” shall be deemed to have occurred if:
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(i)
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During any consecutive twelve-month period, any “person” or group
of persons (within the meaning of Section 13(d) of the Act) other than the
Company, an Affiliate of the Company, an employee benefit plan sponsored by the
Company or any of its Affiliates, or any one or more members of the Lipke family
becomes the “beneficial owner” (as defined in section 13(d) of the Exchange Act)
of thirty-five percent (35%) or more of the then outstanding Voting Stock through
a transaction or series of transactions which have not been arranged by or
consummated with the prior approval of the Board of Directors;
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(ii)
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a majority of the members of the Board of Directors is replaced
during any consecutive twelve-month period by Directors whose appointment or
election is not endorsed by a majority of the members of the Board of Directors
prior to the date of appointment or election;
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(iii)
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the Company enters into a Merger Sale Agreement; provided however,
that the entry into a Merger Sale Agreement shall only be deemed a “Change in
Control” if the Executive’s employment with the Company and all of its Affiliates
is terminated without Cause or he resigns for Good Reason during the period
beginning on the date the Merger Sale
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Agreement is executed and ending on the date the Merger Sale is consummated or
the Merger Sale Agreement is terminated; or
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(iv)
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the consummation of a Merger Sale.
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(i) “Excise Tax” means the excise tax imposed by Section 4999 of the Code and any interest or
penalties with respect to such tax.
(j) “Good Reason” means that: (i) one or more of the events described in the following
sentence has occurred; (ii) the Executive has, no later than ninety (90) days following the
occurrence of any such event, provided written notice to the Company that the event has occurred
and that the Executive intends to terminate his employment with the Company unless the Company,
within thirty (30) days following the receipt of such notice, the Company (or its successor) fully
and completely restores the Executive to the position which he would have been in had such event
not occurred; and (iii) the Company, or if applicable, its successor, such does not, within thirty
(30) days following the receipt of the written notice described in the foregoing clause, fully and
completely restore the Executive to the position he would have been in had such event not occurred.
The events referred to in the foregoing definition of Good Reason are as follows:
(A) the Executive’s annual base salary and/or annual bonus is reduced or
any other material compensation or benefits arrangement for the Executive
is materially reduced (and such reduction is unrelated to the Company’s, a
Company’s Affiliate’s or the Executive’s performance);
(B) the Executive’s duties or responsibilities are negatively, and
materially changed in a manner inconsistent with the Executive’s position
(including status, offices, titles, and reporting requirements) or
authority;
(C) the Company or its successor requires the Executive’s work location or
residence to be relocated more than 50 miles from its location as of the
date the Merger Sale Agreement is executed;
(D) the Company or its successor fails to offer the Executive a position
after the Change in Control comparable to that held by the Executive
immediately prior to the Change in Control.
(k) “Gross-Up Payment” has the meaning given to such term in Section 5 below.
(l) “Incapacity” means: (i) any physical or mental illness or disability of the Executive that
prevents him from performing his essential job functions in substantially the manner and to the
extent required prior to the commencement of such Incapacity for a
3
period of six (6) consecutive months or an aggregate of six (6) months in any consecutive
twelve-month period; or (ii) the death of the Executive.
(m) “Merger Sale” means the consolidation, merger, or other reorganization of the Company,
other than: (i) a consolidation, merger or reorganization of the Company in which holders of Common
Stock immediately prior to the earlier of: (A) the Board of Director’s approval of such
consolidation, merger or other reorganization; or (B) the date of the stockholders meeting in which
such consolidation, merger or other reorganization is approved, continue to hold seventy percent
(70%) or more of the outstanding voting securities of the surviving entity immediately after the
consolidation, merger, or other reorganization; and (ii) a consolidation, merger or other
reorganization which is effected pursuant to the terms of a Merger Sale Agreement which provides
that the consolidation, merger or other reorganization contemplated by the Merger Sale Agreement
will not constitute a Change in Control for purposes of this Agreement.
(n) “Merger Sale Agreement” means an agreement in which the Company agrees to a Merger Sale.
(o) “Payment” has the meaning given such term in Section 5 below.
(p) “Underpayment” has the meaning given to such term in Section 5(d) below.
(q) “Voting Stock” means securities of the Company entitled to vote in the elections of
directors.
2.
Term Of Agreement
. This Agreement shall commence on the date first set forth above and,
subject to the provisions of Section 14 below, shall remain in effect until the earlier of: (a) the
first anniversary of a Change in Control; (b) the termination of the Executive’s employment by
reason of the Executive’s Incapacity; or (c) the termination of the Executive’s employment for any
reason prior to a Change in Control.
3.
Obligations Of The Company
Upon A Change In Control
. (a) Upon the occurrence,
prior to the termination of this Agreement as provided for by Section 2 above, of any Change in
Control other than a Change in Control described in Section 1(h)(iii), the Executive shall be
entitled to receive the following payments and benefits from the Company:
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(i)
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the restrictions imposed upon the sale, transfer or other
conveyance of any restricted stock held by the Executive pursuant to the terms of
any restricted stock agreement or any other plan or agreement shall terminate;
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(ii)
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any and all compensation which is payable at a time and in a manner
which constitutes a “deferral of compensation” within the meaning of U.S.
Treasury Regulation §1.409A-1(b)(1) shall be paid to the
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Executive in one lump sum payment within thirty (30) days following the
occurrence of a Change in Control;
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(iii)
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as currently provided for by the Gibraltar Industries, Inc.
Management Stock Purchase Plan, the amount required to be paid to the Executive
with respect to restricted stock unit awards credited to the Executive’s Account
under the terms of the Management Stock Purchase Plan shall be paid to the
Executive in one lump sum payment on the date the Change in Control occurs;
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(iv)
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any options and stock appreciation rights held by the Executive
shall vest and become fully exercisable and any other equity based incentive
compensation awards held by the Executive, including but not limited to
performance unit awards, shall become payable as provided for by the terms of
such awards; and
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(v)
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any common stock of the Company which has not been issued to the
Executive under the terms of any long term equity based incentive compensation
plan which was adopted by the Board of Directors prior to the date the Change in
Control occurs, but which common stock would have been issued to the Executive
under the terms of such long term equity based incentive compensation plan if the
Change in Control had not occurred and the Executive had met all the applicable
performance goals established by the Board of Directors in order to receive such
common stock under such long term equity based incentive compensation plan shall,
effective as of the date the Change in Control occurs, be issued to the
Executive, free and clear of all restrictions on the sale, transfer or conveyance
of such common stock.
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(b) Upon the occurrence of a Change in Control described in Section 1(h)(iii), the
Executive (or, if applicable, his beneficiary or his estate) shall be entitled to receive the
payments and benefits described in Section 3(a) above; provided that: (i) the date on
which such payments and benefits are provided to the Executive shall not be later than
the end of the thirty (30) day period beginning on the date on which the Change in
Control described in Section 1(h)(iii) occurs; and (ii) each payment
and/or provision to the Executive of each of the payments and benefits described in Section 3(a) above shall be deemed to be a separate payment for purposes of the short term deferral rules of Section 409A of the Code.
4.
Obligations Of The Company Upon Termination Of Employment Following A
Change In Control
. If a Change in Control described in Section
1(h)(iii) occurs or if the Executive’s employment is terminated
by the Company without “Cause” or by the
Executive for Good Reason at any time during the one year period immediately following a Change in Control described in Section 1(h)(i), (ii) or (iv), in addition to the
payments and benefits which the Executive is entitled to pursuant to Section 3 above: (a) within ten
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(10) days following the termination of the Executive’s employment, the Executive shall be paid the amount of any of the regularly scheduled installments of his
annual base salary which were due to be paid for the period ending with the date the Executive’s employment is terminated to the extent that such payments are unpaid as of the end of such ten (10) day period; and (b) the Company shall pay to the Executive in
one lump sum payment no later than the end of the thirty (30) day
period beginning on the date the Change in Control described in
Section 1(h)(iii) occurs or the date the Executive’s employment is terminated by the Company without “Cause” or by the
Executive for Good Reason (whichever the case may be), an amount equal to the sum of: (i) the Executive’s accrued and unpaid vacation pay determined as of the date the Executive’s employment is terminated; and (ii) an amount equal to the Executive’s
Annual Compensation defined in Section 1(c) above. For purposes of this Agreement, each of the payments required to be made pursuant to the preceding provisions of this Section 4 shall be deemed to be a separate
payment for purposes of the short term deferral
rules of Section 409A of the Code.
5.
Gross-Up Payment
. (a) Notwithstanding anything in this Agreement to the
contrary, in the event it is determined that any payment or distribution by the Company to or for
the benefit of the Executive, under this Agreement or otherwise (a “Payment”), would be subject to
the Excise Tax, then the Company shall pay the Executive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes and including any Excise Tax, imposed upon
the Gross-Up Payment) the Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
(b) Subject to the provisions of Section 5(c) hereof, all determinations required to be made
under this Section 5, including whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by any nationally recognized firm of certified public accountants
(the “Accounting Firm”) which shall provide detailed supporting calculations to the Company and the
Executive within 60 business days following the occurrence of a Change in Control. If the
Accounting Firm has performed services for the entity that caused the Change of Control or any of
its Affiliates, the Executive may select an alternative accounting firm from any nationally
recognized firm of certified public accountants. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax return. Any
determination by the Accounting Firm shall be binding upon the Company and the Executive. When
calculating the amount of the Gross-Up Payment, the Executive shall be deemed to pay:
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(i)
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Federal income taxes at the highest applicable marginal rate of
Federal income taxation for the calendar year in which the Gross-Up Payment is to
be made; and
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(ii)
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any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in Federal
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income taxes which could be obtained from deduction of such state and local
taxes if paid in such year.
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(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten business days after
the Executive knows of such claim. The notification shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The Executive shall not pay
such claim for at least thirty days after the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
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(i)
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give the Company any information reasonably requested by the
Company relating to such claim;
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(ii)
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take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company;
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(iii)
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cooperate with the Company in good faith in order to effectively
contest such claim; and
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(iv)
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permit the Company to participate in any proceedings relating to
such claim;
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provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest. The Company shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this Section
5(c), the Company shall control all proceedings taken in connection with such contest. The
Company, at its sole option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim. The Company may, at
its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall pay the amount of
such payment to the Executive and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest or penalties, imposed with respect to
such payment and with respect to any imputed income with respect to such payment; and provided,
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further that any extension of the statue of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. The Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) As a result of the uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments which
should have been made will not have been made (“Underpayment”). In the event that the Company
exhausts it remedies pursuant to Section 5(c), and the Executive is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment and the Company
shall promptly pay the Executive the amount of such Underpayment.
(e) If, after the Company has paid a claim pursuant to Section 5(c) the Executive becomes
entitled to a refund with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 5(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon by the taxing authority after deducting
any taxes applicable thereto). The amount of such payment shall be considered part of the Gross-Up
Payment and subject to gross-up for any taxes (including interest or penalties) associated
therewith.
(f) The Gross-Up Payment shall be paid to the Executive no later than the Executive’s taxable
year following the taxable year of the Executive in which the Excise Taxes with respect to which
the Gross-Up Payment is payable are paid by the Executive.
6.
At-Will Employment; Withholding
. (a) The Company and the Executive acknowledge
that the Executive’s employment is and shall continue to be at-will, as defined under applicable
law. If the Executive’s employment terminates for any reason, including without limitation any
termination prior to a Change in Control, the Executive shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by this Agreement, or as may
otherwise be available in accordance with the Company’s established employee plans and policies at
the time of such termination.
(b) All payments made pursuant to this Agreement will be subject to withholding of applicable
income and employment taxes.
7.
Non-Compete Period
. (a) If the Executive’s employment is terminated during
the one year period following a Change in Control, the Executive agrees that during the one-year
period following such termination, he will not, and will cause each of his Affiliates not to, for
any reason whatsoever, directly or indirectly, either individually or as an owner, partner,
officer, director, manager, employee, lender, consultant or adviser or otherwise, engage in any
Competitive Business anywhere in the United States of America. The ownership
by the Executive of up to 2% of any class of securities of any
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company which has a class of
securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, shall
not constitute a breach of this covenant.
(b) The parties acknowledge and agree that damages in the event of a breach of any of the
provisions of this Section 7 would be difficult, if not impossible, to ascertain and it is
therefore agreed that the Company (or its successor), in addition to and without limiting any other
remedy or right it may have, shall have the right to an injunction or other equitable relief in any
court of competent jurisdiction enjoining any such breach. The Executive further agrees that the
Company (or its successor) shall not be required to post a bond or other security in connection
with the issuance of any such injunction.
(c) Notwithstanding anything in this Section 7 to the contrary, if at any time, in any
judicial proceeding, any of the restrictions stated in this Section 7 are found by a final order of
a court of competent jurisdiction to be unreasonable or otherwise unenforceable under circumstances
then existing, the Executive and the Company agree that the period, scope or geographical area, as
the case may be, shall be reduced to the extent necessary to enable the court to enforce the
restrictions to the extent such provisions are allowable under law, giving effect to the agreement
and intent of the parties that the restrictions contained herein shall be effective to the fullest
extent permissible. The Executive agrees that the restrictions contained in this Section 7 are
reasonable in all respects. The provisions of this Section 7 shall survive the term of this
Agreement.
8.
Nondisclosure
. The Executive shall not (other than in the good faith performance of his
services to the Company or its Affiliates before termination of employment) disclose or make known
to anyone other than employees of the Company and its Affiliates, or use for the benefit of himself
or any other person, firm, operation, or entity unrelated to the Company, any knowledge,
information, or materials, whether tangible or intangible, belonging to the Company, about the
products, services, know-how, customers, business plans, or financial, marketing, pricing,
compensation, and other proprietary matter relating to the Company. Promptly upon the termination
of the Executive’s employment with the Company, the Executive shall deliver to the Company any and
all confidential information in his possession. The provisions of this Section 8 shall survive the
term of this Agreement.
9.
Successors
. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of any such succession
will be a breach of this Agreement and entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to had the Company
terminated the Executive for any reason other than Cause or Incapacity on the succession date (and
assuming a Change in Control had occurred prior to such succession date).
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10.
Non-Assignability
. This Agreement is personal in nature and neither of the parties
shall, without the consent of the other, assign or transfer this Agreement or any rights or
obligations under it, except as provided in Section 8. Without limiting the foregoing, the
Executive’s right to receive payments under this Agreement shall not be assignable or transferable,
whether by pledge, creation of a security interest, or otherwise, other than a transfer by his or
her will or by the laws of descent or distribution, and, in the event of any attempted assignment
or transfer by the Executive contrary to this Section, the Company shall have no liability to pay
any amount so attempted to be assigned or transferred.
11.
Notice Of Termination
. In the event that, following a Change in Control, the Company
terminates the Executive’s employment for Cause or the Executive terminates his employment with the
Company for Good Reason, the party terminating such employment shall send notice to the other party
given in accordance with Section 11 below, within thirty (30) days of the date of such termination
of Employment. The notice shall be in writing and shall (i) state the specific termination
provision in the Agreement relied upon and (ii) to the extent applicable, set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination under such provision.
12.
Notices
. For the purpose of this Agreement, notices and all other communications
provided for shall be in writing and shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight courier addressed as follows:
If to the Executive:
Paul M. Murray
3556 Lakeshore Road
Buffalo, NY 14219
If to the Company:
Gibraltar Industries, Inc.
3556 Lakeshore Road
Buffalo, NY 14219
or to such other address as either party may have furnished to the other in writing. Notices of
change of address shall be effective only upon receipt.
13.
Governing Law
. The validity, interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of New York without reference to principles of
conflict of laws.
14.
Settlement of Disputes; Arbitration
. If there has been a Change in Control and any
dispute arises between the Executive and the Company as to the validity, enforceability,
and/or interpretation of any right or benefit afforded by this Agreement such dispute shall
10
be
resolved by binding arbitration proceedings in accordance with the rules of the American
Arbitration Association. The arbitrators shall presume that the rights and/or benefits afforded by
this Agreement that are in dispute are valid and enforceable and that the Executive is entitled to
such rights and/or benefits. The Company shall be precluded from asserting that such rights and/or
benefits are not valid, binding, and enforceable and shall stipulate before such arbitrators that
the Company is bound by all the provisions of this Agreement. The burden of overcoming by clear
and convincing evidence the presumption that the Executive is entitled to such rights and/or
benefits shall be on the Company. Punitive damages shall not be awarded. The results of any
arbitration shall be conclusive on both parties and shall not be subject to judicial interference
or review on any ground whatsoever, including without limitation any claim that the Company was
wrongfully induced to enter into this Agreement to arbitrate such a dispute. The Company shall pay
or reimburse the Executive for legal fees and expenses incurred as a result of any dispute
resolution process entered into by the Executive to enforce this Agreement.
15.
Survival of Certain Obligations
. Notwithstanding anything to the contrary contained in
Section 2 above, if a Change in Control occurs and, prior to the first anniversary of the Change in
Control, the Executive becomes entitled to payment of any amount or provision of any benefits
provided for by Sections 3, 4, 5 or 14 above, the Company’s obligation to pay the Executive any
such amounts or provide the Executive any such benefits shall survive until all such amounts and
benefits have been paid or provided to the Executive.
16.
Miscellaneous
. (a) This Agreement contains the entire understanding with the
Executive with respect to its subject manner and supersedes any and all prior agreements or
understandings, written or oral, relating to the subject matter. No provisions of this Agreement
may be amended unless such amendment is agreed to in writing signed by the Executive and the
Company.
(b) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
(c) This Agreement may be executed in one or more counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same Agreement.
(d) The captions of this Agreement are not part of its provisions and shall have no force or
effect.
(e) If and to the extent that any provision of this Agreement would result in the payment or
deferral of compensation in a manner which does not comply with the provisions of Section 409A of
the Code and the Treasury regulations promulgated thereunder, such provisions shall, to the maximum
extent possible, be construed and
interpreted in a manner which will cause such provisions to be implemented in a manner which
complies with the applicable requirements of Section 409A and the Treasury
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regulations promulgated
thereunder so as to avoid subjecting the Executive to taxation under Section 409A(a)(i)(A) of the
Code. If any payment provided for by this Agreement could, as a result of the period of time
within which such payment is required to be made, be paid to the Executive in one of two
consecutive taxable years of the Executive, the Executive shall have no right to determine the
taxable year in which such payment is made.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of
the day and year first above set forth.
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GIBRALTAR INDUSTRIES, INC.
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By:
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/s/ Henning Kornbrekke
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/s/ Paul M. Murray
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Name:
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Henning Kornbrekke
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Name: Paul M. Murray
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Title:
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President
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