EXHIBIT 10.8 (c)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of January 1, 2002, between Xx. Xxxxx Xxxx,
(the "Employee") and American Woodmark Corporation, a Virginia corporation (the
"Company").
WHEREAS, the Company desires to assure that it will have the benefit of
the continued service and experience of the Employee, who is an integral part of
the Company's senior management, and the Employee is willing to enter into an
agreement to such end upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained, the parties agree as follows:
1. Employment. The Company hereby employs the Employee and the Employee
hereby accepts employment upon and agrees to the terms and conditions set forth
herein.
2. Term. The term of employment under this Agreement (the "Term") shall
commence upon execution of this Agreement by both parties and end on December
31, 2003; provided, however, that beginning on January 1, 2003, and each January
1 thereafter, the Term of this Agreement shall automatically be extended for one
additional calendar year unless, on or before November 1 of the preceding year,
either party gives notice that employment under this Agreement will not be so
extended; and further provided that if a Change of Control (as defined below)
occurs during the original or extended term of this Agreement, this Agreement
shall
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continue in effect for a period of 24 months beyond the month in which the
Change of Control occurred.
Notwithstanding the foregoing, as provided in Section 7(c), this
Agreement shall terminate immediately upon the Employee's death, disability or
retirement, or if the Employee voluntarily terminates his employment under
circumstances to which Section 7(d) does not apply.
3. Compensation.
a. Salary. During the Employee's employment hereunder, the Company
shall pay the Employee for all services rendered by the Employee a base salary
at an annual rate of at least $500,000, with upward annual adjustments as the
Company shall deem appropriate from time to time and as approved according to
the general practices of and under the authority levels required by the Company.
Such salary shall be payable to the Employee in accordance with the Company's
usual payroll practices for salaried employees.
b. Annual Cash Bonus. In addition to base salary, the Employee
shall be eligible to participate in the Company's annual incentive program with
a bonus opportunity of between 0% and 110% of the Employee's base salary. The
actual amount of such bonus for any fiscal year shall be related to the
achievement of certain performance objectives to be set at the beginning of each
fiscal year by the Board of Directors of the Company (the "Board"). Nothing in
this Agreement, however, shall be construed as a guarantee of an annual payment
of the annual cash bonus.
c. Other Executive Compensation Benefits. The Employee shall also
be covered by any other executive compensation policies, benefits, plans, or
programs as are
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afforded generally by the Company from time to time to its senior personnel,
including but not limited to grants of stock options and shareholder value units
and participation in the American Woodmark Corporation Pension Restoration Plan.
Nothing in this Agreement, however, shall be construed as a guarantee that the
Board or the Compensation Committee of the Board (the "Committee") will approve
any level of such benefits that are at the sole discretion of the Board or the
Committee.
d. Other Salaried Benefits. The Employee shall also be covered by
any employee benefit plans, policies, or programs as are generally available
from time to time to other salaried employees of the Company.
4. Duties. The Employee shall continue to perform his duties as
President and Chief Executive Officer of the Company and shall faithfully and to
the best of his ability perform such duties and responsibilities as may be
reasonably assigned by the Board.
5. Extent of Services. During the Employee's employment hereunder,
the Company expects and the Employee agrees that the Employee shall devote
sufficient time, attention and energy to the business of the Company so as to
adequately fulfill his assigned duties and responsibilities. Furthermore, the
Company and the Employee agree that the business of the Company shall take
reasonable priority over any other active business engaged in by the Employee.
6. Restrictive Covenants.
a. Non-competition Restriction. Except with the prior written
consent of the Company, the Employee shall not, either during his employment
hereunder or for the period of time after termination of his employment
hereunder during which the Employee accepts
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severance payments pursuant to Section 7(b) (if applicable), directly or
indirectly manage, operate, control, be employed by, participate in, consult
with, render services to, or be connected in any manner with the management,
operation, ownership or control of any business or venture in competition in the
United States with the business of the Company. For purposes of this Section
6(a), a business or venture shall be deemed to be in competition with the
business of the Company if that business or venture or any of its affiliates
manufactures, distributes, or otherwise engages in the design, sale, or
transportation of cabinets for residential use, including but not limited to,
such cabinet products intended for primary use in the kitchen or bathroom.
Nothing in this Section 6(a), however, shall prohibit the Employee from owning
securities of the Company or from owning as an inactive investor up to 5% of the
outstanding voting securities of any issuer which is listed on the New York or
American Stock Exchange or as to which trading is reported or quoted on the
NASDAQ system. If the Employee elects to directly or indirectly manage, operate,
control, be employed by, participate in, consult with, render services to, or be
connected in any manner with the management, operation, ownership or control of
any business or venture which is in competition in the United States with the
business of the Company, the Employee acknowledges that the Company is entitled
to immediately terminate any and all severance payments being made pursuant to
Section 7(b), if any, and other benefits payable under this Agreement as a
result of the Employee's termination of employment under the conditions set
forth in Section 7(b).
b. Non-solicitation Agreement. Except with the prior written consent of
the Company, the Employee shall not directly or indirectly hire or employ in any
capacity or solicit the employment of or offer employment to or entice away or
in any other manner persuade or
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attempt to persuade any person employed by the Company or any of its
subsidiaries to leave the employ of any of them. This Agreement shall remain in
full force and effect for a period of 18 months after the end of the Term.
c. Confidential Information. The Employee further agrees to keep
confidential, and not to use for his personal benefit or for any other person's
benefit, any and all proprietary information received by the Employee relating
to inventions, products, production methods, financial matters, sources of
supply, markets, marketing methods and customers of the Company in existence on
the date hereof or developed by or for the Company during the Term. This Section
6(c) shall remain in full force and effect after the Term without limit in point
of time, but shall cease to apply to information that legitimately comes into
the public domain.
d. Specific Enforcement. It is agreed and understood by the parties
hereto that, in view of the nature of the business of the Company, the
restrictions in Sections 6(a), (b) and (c) above are reasonable and necessary to
protect the legitimate interests of the Company, monetary damages alone are not
an adequate remedy for any breach of such provisions, and any violation thereof
would result in irreparable injuries to the Company. The Employee therefore
acknowledges that, in the event of his violation of any of such restrictions,
the Company shall be entitled to obtain from any court of competent jurisdiction
preliminary and permanent injunctive relief as well as damages and an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights
or remedies to which the Company may be entitled.
e. Severability and Extension. If the period of time or the area
specified in Section 7(a) above is determined to be unreasonable in any
proceeding, such period shall be
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reduced by such number of months or the area shall be reduced by the elimination
of such portion thereof, or both, so that such restrictions may be enforced for
such time and in such area as is determined to be reasonable. If the Employee
violates any of the restrictions contained in Section 7(a) above, the
restrictive period shall not run in favor of the Employee from the time of the
commencement of any such violation until such time as such violation shall
cease.
7. Termination of Employment and Severance Payments.
a. Termination for Cause. During the Term, the Company may terminate
the Employee's employment under this Agreement at any time for Cause (as
hereinafter defined) upon written notice specifying the Cause and the date of
termination. Payments under this Agreement shall cease as of the date of
termination for Cause. For purposes of this Agreement, "Cause" means neglect of
duty which is not corrected after 90 days' written notice thereof; misconduct,
malfeasance, fraud, or dishonesty which materially and adversely affects the
Company or its reputation in the industry; or the conviction for, or the
entering of a plea of Nolo Contendere to, a felony or a crime involving moral
turpitude.
b. Termination without Cause. During the Term, the Company may
terminate the Employee's employment under this Agreement at any time for any
reason other than Cause upon written notice specifying the date of termination.
If on an effective date that is during the Term, the Company terminates the
Employee's employment for reasons other than Cause (which includes but is not
limited to termination by the Company for what the Company believes to be Cause
when it is ultimately determined that the Employee was terminated without
Cause), then the Company shall pay the Employee severance payments equal to his
base salary for a period of 18 months. For purposes of the preceding sentence,
the Employee's base salary
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shall be equal to the greater of (i) the base salary in effect on the date of
termination or (ii) the Employee's highest base salary rate in effect during the
Term of this Agreement. Severance payments shall be made in accordance with the
Company's usual payroll practices for salaried employees over a period
consistent with the period of severance as defined above.
c. Termination in Event of Death, Disability, Retirement or
Voluntary Quit. If the Employee dies, becomes disabled, or retires during the
Term, or if the Employee voluntarily terminates his employment during the Term
under circumstances to which Section 7(d) does not apply, his employment under
this Agreement shall terminate immediately and payment of his base salary
hereunder shall cease as of the date of termination; provided, however, that the
Company shall remain liable for payment of any compensation owing but not paid
as of the date of termination for services rendered before termination of
employment. For purposes of this Agreement, the Employee shall be deemed to be
disabled if the Company determines, with the assistance of independent experts
selected by the Company, that the Employee is unable to perform his duties
hereunder for any period of three consecutive months or for six months in any
twelve-month period.
d. Termination on Change of Control. By delivering 15 days'
written notice to the Company, the Employee may terminate his employment under
this Agreement for any reason at any time within two years after a Change of
Control. For purposes of this Agreement, "Change of Control" means an event
described in (i), (ii), (iii), or (iv):
(i) The acquisition by a Group of Beneficial Ownership of 20% or
more of the Stock or the Voting Power of the Company, but excluding for
this purpose: (A) any acquisition of Stock by the Company (or a
subsidiary), or an employee benefit plan of the
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Company; (B) any acquisition of Stock by management employees of the
Company; or (C) the ownership of Stock by a Group that owns 10% or more
of the Stock or Voting Power of the Company on the date of this
Agreement; provided, however, that the acquisition of additional Stock
by any such Group other than management employees in an amount greater
than 5% of the then outstanding Stock shall not be excluded and shall
constitute a Change of Control.
(ii) Individuals who constitute the Board of Directors of the
Company on the date of this Agreement (the "Incumbent Board") cease to
constitute at least a majority of the Board of Directors of the
Company, provided that any director whose nomination was approved by a
majority of the Incumbent Board shall be considered a member of the
Incumbent Board unless such individual's initial assumption of office
is in connection with an actual or threatened election contest.
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, in which the
owners of 100% of the Stock or Voting Power of the Company do not,
following such reorganization, merger or consolidation, beneficially
own, directly or indirectly, more than 50% of the Stock or Voting Power
of the corporation resulting from such reorganization, merger or
consolidation.
(iv) A complete liquidation or dissolution of the Company or the
sale or other disposition of all or substantially all of the assets of
the Company.
(v) For purposes of this Agreement, "Group" means any
individual, entity or group within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Act"); "Beneficial Ownership" has the meaning in Rule 13d-3
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promulgated under the Act; "Stock" means the then outstanding shares of
common stock of the Company; and "Voting Power" means the combined
voting power of the outstanding voting securities entitled to vote
generally in the election of directors.
x. Xxxxxxxxx Payments. If the Employee terminates his employment
within two years after a Change of Control pursuant to Section 7(d), or if the
Company terminates the Employee's employment for any reason other than Cause (as
defined in Section 7(a)) either within three months before or within two years
after a Change of Control, the Employee shall be entitled to a severance payment
under this Section 7(e) equal to 2.99 times the sum of (i) the Employee's annual
base salary in effect at the termination of employment or, if greater, the
Employee's largest annual base salary rate in effect during the term of this
Agreement, plus (ii) an amount equal to the greater of the average of the
bonuses paid to the Employee for the three fiscal years preceding the year in
which employment is terminated or 60% of the maximum eligible annual cash bonus
for the year of termination. This severance payment shall be made to the
Employee in a single lump sum within 10 business days of the date of the
Employee's termination of employment. Notwithstanding the preceding sentence, if
the independent accountants acting as auditors for the Company on the date of
the Change of Control determine that such single payment, together with other
compensation received by the Employee that is contingent on a Change of Control,
would constitute "excess parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended, and regulations thereunder,
the single payment to the Employee shall be reduced to the maximum amount which
may be paid without such payments in the aggregate constituting "excess
parachute payments."
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8. Vacation. During the Term, the Employee shall be entitled to a vacation
in each calendar year in accordance with the Company's policy; during this
vacation, his compensation shall be paid in full.
9. Insurance. In accordance with Section 3(d), while he is employed by the
Company, the Employee and his eligible dependents as insureds shall be covered
under existing insurance policies on the same terms and conditions as offered to
all full-time salaried employees. In accordance with Company policy, coverage
under the Company's insurance policies terminates on the date that employment
terminates. If the Company terminates the Employee's employment during the Term
of this Agreement for any reason except Cause, or if the Employee terminates his
employment within two years following a Change of Control as contemplated by
Section 7(d), the Company shall reimburse the Employee for the required COBRA
premiums to the extent the Company subsidizes the premium for active salaried
employees for a period not to exceed 18 months so long as the Employee is not
eligible for coverage under any other group medical plan. If the Employee
becomes eligible for coverage under another group medical plan, the Company
shall cease reimbursement for COBRA premiums on the date the Employee first
becomes eligible for coverage under the other plan. The Company's reimbursement
for COBRA premiums shall include a gross-up amount for tax liability at the
Employee's incremental tax rate. Nothing in this Section 9 shall be interpreted
to prohibit the Company from changing or terminating any benefit package or
program at any time and from time to time so long as the benefits hereunder,
considered in the aggregate, are comparable at any given time to the benefits
provided to similarly situated employees of the Company at that time.
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10. Notice. All notices, requests, demands and other communications
hereunder shall be in writing and shall be effective upon the mailing thereof by
registered or certified mail, postage prepaid, and addressed as set forth below:
a. If to the Company:
Xx. Xxxx Xxxxxxxx
Senior Vice President
American Woodmark Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
b. If to the Employee:
Xx. Xxxxx Xxxx
000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Any party may change the address to which notices are to be sent by giving
the other party written notice in the manner herein set forth.
11. Waiver of Breach. Waiver by either party of a breach of any provision
of this Agreement by the other shall not operate as a waiver of any subsequent
breach by such other party.
12. Entire Agreement. This Agreement contains the entire agreement of the
parties in this matter and supersedes any other agreement, oral or written,
concerning the employment or compensation of the Employee by the Company. It may
be changed only by an agreement in writing signed by both parties hereto.
13. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Virginia, without regard to its choice of law provisions.
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14. Benefit. This Agreement shall inure to the benefit of, and shall be
binding upon, and shall be enforceable by and against the Company, its
successors and assigns, and the Employee, his heirs, beneficiaries and legal
representatives.
IN WITNESS WHEREOF, the Employee and the Company have executed this
Agreement as of the day and year above written.
AMERICAN WOODMARK CORPORATION
By: ____________________________________
Xx. Xxxx Xxxxxxxx
Senior Vice President and CFO
EMPLOYEE
____________________________________
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