EXHIBIT (10i)
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT ("Agreement") between UNIFI, INC., a
New York Corporation (the "Company"), and Xxxxxx X. Xxxxx, III ("Executive")
effective the 23TH day of January, 2002 (the "Effective Date").
WITNESSETH:
WHEREAS, The Executive is a Executive Vice President, Chief Financial
Officer of the Company and is considered as an integral part of the Company's
management; and
WHEREAS, the Company's Board of Directors (hereinafter sometimes
referred to as the "Board") considers the establishment and maintenance of a
sound and vital management to be essential in protecting and enhancing the best
interests of the Company and its Shareholders, recognizes that the possibility
of a Change in Control exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company and its
Shareholders; and
WHEREAS, the Executive desires that in the event of any Change in
Control he will continue to have the responsibility and status he has earned;
and
WHEREAS, the Board has determined that it is appropriate to reinforce
and encourage the continued attention and dedication of the Executive, as a
member of the Company's management, to his assigned duties without distraction
in potentially disturbing circumstances arising from the possibility of a Change
in Control of the Company.
NOW, THEREFORE, in order to induce the Executive to remain in the
employment of the Company and in consideration of the Executive agreeing to
remain in the employment of the Company, subject to the terms and conditions set
out below, the Company agrees it will pay such amount, as provided in Section 4
of this Agreement, to the Executive, if the Executive's employment with the
Company terminates under one of the circumstances described herein following a
Change in Control of the Company, as herein defined.
Section 1. Term: This Agreement shall terminate, except to the extent
that any obligation of the Company hereunder remains unpaid as of such time,
upon the earliest of (i) November 1, 2005 if a Change in Control of the Company
has not occurred within such period; (ii) the termination of the Executive's
employment with the Company based on Death, Disability (as defined in Section
3(b)), Retirement (as defined in Section 3(c)), Cause (as defined in Section
3(d)) or by the Executive other than for Good Reason (as defined in Section
3(e)); and (iii) two years from the date of a Change in Control of the Company
if the Executive has not voluntarily terminated his employment for Good Reason
as of such time.
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Section 2. Change in Control: No compensation shall be payable under
this Agreement unless and until (a) there shall have been a Change in Control of
the Company, while the Executive is still an employee of the Company and (b) the
Executive's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a Change in Control
of the Company shall be deemed to have occurred if:(i) there shall be
consummated (x) any consolidation or merger of the Company in which the Company
is not the continuing or surviving legal entity or pursuant to which shares of
the Company's Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock of the surviving company immediately
after the merger, or (y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company; or (ii) the shareholders of the Company approved
any plan or proposal for the liquidation or dissolution of the Company; or (iii)
any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of twenty percent (20%) or more of the Company's outstanding Common Stock; or
(iv) during any period of two consecutive years, individuals who at the
beginning of such period constitute the entire Board of Directors shall cease
for any reason to constitute a majority thereof unless the election, or the
nomination for election by the Company's Shareholders, of each new Director was
approved by a vote of at least two-thirds of the Directors then still in office
who were Directors at the beginning of the period.
Section 3. Termination Following Change in Control: (a) If a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, the Executive shall be entitled to the compensation
provided in Section 4 upon the subsequent termination of the Executive's
employment with the Company by the Executive voluntarily for Good Reason or by
the Company unless such termination by the Company is as a result of (i) the
Executive's Death, (ii) the Executive's Disability (as defined in Section (3)(b)
below); (iii) the Executive's Retirement (as defined in Section 3(c) below);
(iv) the Executive's termination by the Company for Cause(as defined in Section
3(d) below); or (v) the Executive's decision to terminate employment other than
for Good Reason (as defined in Section 3(e) below).
(b) Disability: If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
with the Company on a full-time basis for one hundred twenty (120) consecutive
days or a period of one hundred eighty (180) days within twelve (12) consecutive
months (including days before and after the change of control) and within 30
days after written notice of termination is thereafter given by the Company the
Executive shall not have returned to the full-time performance of the
Executive's duties, the Company may terminate this Agreement for "Disability."
(c) Retirement: The term "Retirement" as used in this Agreement shall
mean termination in accordance with the Company's retirement policy or any
arrangement established with the consent of the Executive.
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(d) Cause: The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of fraud,
misappropriation or embezzlement on the part of the Executive or malfeasance or
misfeasance by said Executive in performing the duties of his office, as
determined by the Board. Notwithstanding the foregoing, the Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been a meeting of the Board (after at least ten (10) days written notice to the
Executive and an opportunity for the Executive to be heard before the Board),
and the delivery to the Executive of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
said Board of Directors stating that in the good faith opinion of the Board the
Executive was guilty of conduct set forth in the second sentence of this Section
3(d) and specifying the particulars thereof in detail.
(e) Good Reason: The Executive may terminate the Executive's employment
for Good Reason at any time during the term of this Agreement. For purposes of
this Agreement "Good Reason" shall mean any of the following (without the
Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities
and status with the Company immediately prior to a Change in Control of
the Company; or a change in the Executive's titles or offices as in
effect immediately prior to a Change in Control of the Company; or any
removal of the Executive from or any failure to reelect the Executive
to any of the positions held prior to the Change of Control, except in
connection with the termination of his employment for Disability,
Retirement, or Cause, or as a result of the Executive's Death; or by
the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure
to increase (within 12 months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the
average percentage increase in base salary for all executive officers
of the Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's 401(k) Plan, group life insurance plan and medical, dental,
accident and disability plans) in which the Executive is participating
at the time of a Change in Control of the Company (or any other plans
providing the Executive with substantially similar benefits)
(hereinafter referred to as "Benefit Plans"), or the taking of any
action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Benefit Plan or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of a Change in Control of
the Company;
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(iv) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, Stock Option Plans or any other plan or arrangement to
receive and exercise stock options, restricted stock or grants thereof)
in which the Executive is participating at the time of a Change in
Control of the Company (or plans or arrangements providing him with
substantially similar benefits) (hereinafter referred to as "Securities
Plans") and the taking of any action by the Company which would
adversely affect the Executive's participation in or materially reduce
the Executive's benefits under any such Securities Plan;
(v) any failure by the Company to continue in effect any bonus
plan, automobile allowance plan, or other incentive payment plan in
which the Executive is participating at the time of a Change in Control
of the Company, or said Executive had participated in during the
previous calendar year;
(vi) a relocation of the Company's principal executive offices
to a location outside of North Carolina, or the Executive's relocation
to any place other than the location at which the Executive performed
the Executive's duties prior to a Change in Control of the Company,
except for required travel by the Executive on the Company's business
to an extent substantially consistent with the Executive's business
travel obligations at the time of a Change in Control of the Company;
(vii) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at
the time of a Change in Control of the Company;
(viii) any breach by the Company of any provision of this
Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment
which is not made pursuant to a Notice of Termination satisfying the
requirements of Section 3(f).
(f) Notice of Termination: Any termination by the Company pursuant to
Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement, no
such purported termination by the Company shall be effective without such Notice
of Termination.
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(g) Date of Termination: "Date of Termination" shall mean (a) if
Executive's employment is terminated by the Company for Disability, 30 days
after Notice of Termination is given to the Executive (provided that the
Executive shall not have returned to the performance of the Executive's duties
on a full-time basis during such 30 day period) or (b) if the Executive's
employment is terminated by the Company for any other reason, the date on which
a Notice of Termination is given; provided that if within 30 days after any
Notice of Termination is given to the Executive by the Company the Executive
notifies the Company that a dispute exists concerning the termination, the Date
of Termination shall be the date the dispute is finally determined, whether by
mutual agreement by the parties or otherwise or (c) the date the Executive
notifies the Company in writing that he is terminating his employment and
setting forth the Good Reason (as defined in Section 3(e)).
Section 4. Severance Compensation upon Termination of Employment. If
the Company shall terminate the Executive's employment other than pursuant to
Section 3(b), 3(c) or 3(d) or if the Executive shall voluntarily terminate his
employment for Good Reason, then the Company shall pay to the Executive as
severance pay an amount equal to 2.99 times the annualized aggregate annual
compensation paid to the Executive by the Company or any of its subsidiaries
during the five (5) calendar years (or the period of the Executive's employment
with the Company if the Executive has been employed with the Company for less
than five calendar years) preceding the Change in Control of the Company in
twenty-four equal monthly installments beginning on the regular payroll date for
salaried employees of the Company in the month of the Executive's Date of
Termination; provided, however, that if the severance payment under this Section
4, either alone or together with other payments which the Executive has the
right to receive from the Company, would constitute a "parachute payment" (as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code")), such severance payment shall be reduced to the largest amount as will
result in no portion of the severance payment under this Section 4 being subject
to the excise tax imposed by Section 4999 of the Code. The determination of any
reduction in the lump sum severance payment under this Section 4 pursuant to the
foregoing proviso shall be made by the Company's Independent Certified Public
Accountants, and their decision shall be conclusive and binding on the Company
and the Executive.
Section 5. No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights: (a) The Executive shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the Date of Termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's rights under any employment agreement or other
contract, plan or employment arrangement with the Company.
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(c) The Company shall, upon the termination of the Executive's
employment other than by Death, Disability (as defined in Section 3(b)),
Retirement (as defined in Section 3(c)) or Cause (as defined in Section 3(d)),
or the termination of the Executive's employment by the Executive without Good
Reason, maintain in full force and effect, for the Executive's continued benefit
until the earlier of (a) two years after the Date of Termination or (b)
Executive's commencement of full time employment with a new employer, all life
insurance, medical, health and accident, and disability plans, programs or
arrangements in which he was entitled to participate immediately prior to the
Date of Termination, provided that his continued participation is possible under
the general terms and provisions of such plans and programs. In the event the
Executive is ineligible under the terms of such plans or programs to continue to
be so covered, the Company shall provide substantially equivalent coverage
through other sources.
(d) The Executive's account and rights in and under any retirement
benefit or incentive plans, shall remain subject to the terms and conditions of
the respective plans as they existed at the time of the termination of the
Executive's employment.
Section 6. Successor to the Company: (a) The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement expressly, absolutely and unconditionally 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 it if no such succession or
assignment had taken place. Any failure of the Company to obtain such agreement
prior to the effectiveness of any such succession or assignment shall be a
material breach of this Agreement and shall entitle the Executive to terminate
the Executive's employment for Good Reason. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor or assign to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 6 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law. If at any time
during the term of this Agreement the Executive is employed by any corporation a
majority of the voting securities of which is then owned by the Company,
"Company" as used in Sections 3, 4 and 10 hereof shall in addition include such
employer. In such event, the Company agrees that it shall pay or shall cause
such employer to pay any amounts owed to the Executive pursuant to Section 4
hereof.
(b) If the Executive should die while any amounts are still payable to
him hereunder, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's legatee, or
other designee or, if there be no such designee, to the Executive's estate. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives or attorney-in-fact, executors or administrators, heirs,
distributees and legatees.
Section 7. Notice: For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
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If to the Company:
Unifi, Inc.
P. O. Xxx 00000
Xxxxxxxxxx, XX 00000-0000
ATTENTION: General Counsel
(currently Xxxxxxx X. XxXxx)
If to the Executive:
Xx. Xxxxxx X. Xxxxx, III
0000 Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
Section 8. Miscellaneous: (a) The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
(b) Any payment or delivery required under this Agreement shall be
subject to all requirements of the law with regard to withholding (including
FICA tax), filing, making of reports and the like, and Company shall use its
best efforts to satisfy promptly all such requirements.
(c) Prior to the Change in Control of the Company, as herein defined,
this Agreement shall terminate if Executive shall resign, retire, become
permanently and totally disabled, or die. This Agreement shall also terminate if
Executive's employment as an executive officer of the Company shall have been
terminated for any reason by the Board as constituted more than three (3) months
prior to any Change in Control of the Company, as defined in Section 2 of this
Agreement.
Section 9. Legal Fees and Expenses: The Company shall pay all legal
fees and expenses which the Executive may incur as a result of the Company's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
Section 10. Disclosure of Confidential Information. Executive agrees
that:
(A) During the term of this Agreement and for a period of five (5)
years after his Date of Termination, he will not disclose or
make available to any person or other entity any trade
secrets, Confidential Information, or "know-how" relating to
the Company's, its affiliates' and subsidiaries', businesses
without written authority from the Board, unless he is
compelled to disclose it by judicial process.
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Confidential Information - shall mean all information about
the Company, its affiliates or subsidiaries, or relating to
any of their products, services or any phase of their
operations, not generally known to their Competitors or which
is not public information, which Executive knows or acquired
knowledge of during the term of his employment with the
Company.
(B) Documents - under no circumstances shall Executive remove from
the Company' offices any of the Company's books, records,
documents, files, computer discs or information, reports,
presentations, customer lists, or any copies of such documents
for use outside of his employment with the Company, except as
specifically authorized in writing by the Board.
Section 11. Non-Compete. Executive agrees that during the period of
employment and for a period of two (2) years after his Date of Termination he
will not, directly or indirectly:
(A) Seek employment or consulting arrangements with or offer
advice, suggestions, or input to any Competitor of the
Company; or
(B) Own any interest in, other than ownership of less than two
percent (2%) of any class of stock of a publicly held
corporation, manage, operate, control, be employed by, render
advisory services to, act as a consultant to, participate in,
assess or be connected with any Competitor of the Company,
unless approved by the Board; or
(C) Solicit, induce, or attempt to induce any past or current
customer of the Company (a) to cease doing business in whole
or in part with or through the Company; or (b) to do business
with any other person, firm, partnership, corporation, or
other entity which sales products or performs services
materially similar to or competitive with those provided by
the Company; or
(D) Initiate, encourage or solicit for employment any person who
is now employed or during the term of this Agreement becomes
employed by the Company (or whose activities or services are
dedicated to the Company).
Competitor - shall mean any individual, partnership, joint
venture, firm, corporation, limited liability company,
business trust, association, trust or other enterprise
(whether or not incorporated) engaged in the business of
developing, producing, manufacturing, selling and/or
distributing a product or providing services similar to any
product produced or service provided by the Company, its
affiliates or subsidiaries.
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Section 12. Remedy for violation of Sections 10 and 11. The Executive
acknowledges that the Company has no adequate remedy at law and will be
irreparably harmed if the Executive breaches or threatens to breach the
provisions of Sections 10 or 11 of this Agreement, and therefore, agrees that
the Company shall be entitled to injunctive relief to prevent any breach or
threatened breach of such Sections and that the Company shall be entitled to
specific performance of the terms of such Sections in addition to any other
legal or equitable remedy it may have. Nothing in this Agreement shall be
construed as prohibiting the Company from pursuing any other remedies at law or
in equity that it may have or any other rights that it may have under any other
agreement.
Section 13. Arbitration. Any dispute or controversy between the Company
and the Executive, whether arising out of or relating to this Agreement, the
breach of this Agreement, or otherwise, shall be settled by arbitration
administered by the American Arbitration Association ("AAA") in accordance with
its Commercial Arbitration Rules then in effect, and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Any arbitration shall be held before a single arbitrator who shall be
selected by the mutual agreement of the Company and the Executive, unless the
parties are unable to agree to an arbitrator, in which case, the arbitrator will
be selected under the procedures of the AAA. The arbitrator shall have the
authority to award any remedy or relief that a court of competent jurisdiction
could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such dispute
relief until the arbitration award is rendered or the controversy is otherwise
resolved. Except as necessary in court proceedings to enforce this arbitration
provision or an award rendered hereunder, or to obtain interim relief, neither a
party nor an arbitrator may disclose the existence, content or results of any
arbitration hereunder without the prior written consent of the Company and the
Executive. The Company and the Executive acknowledge that this Agreement
evidences a transaction involving interstate commerce. Notwithstanding any
choice of law provision included in this Agreement, the United States Federal
Arbitration Act shall govern the interpretation and enforcement of this
arbitration provision. The arbitration proceeding shall be conducted in
Greensboro, North Carolina or such other location to which the parties may
agree. The Company shall pay the costs of any arbitrator appointed hereunder.
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IN WITNESS WHEREOF, Unifi, Inc. has caused this Agreement to be signed
by an officer of the Company and a member of the Company's Compensation
Committee pursuant to resolutions duly adopted by the Board of Directors and its
seal affixed hereto and the Executive has hereunto affixed his hand and seal
effective as of the date first above written.
UNIFI, INC.
By: XXXXXXX X. XXXXX
---------------------------------------
Xxxxxxx X. XxXxx
Vice President, Secretary &
General Counsel
By: XXXXXX X. XXX
---------------------------------------
Xxxxxx X. Xxx,
Chairman of the Compensation Committee
of the Board of Directors
EXECUTIVE
XXXXXX X. XXXXX, III (Seal)
--------------------------------------------
Xxxxxx X. Xxxxx, III
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