(Exhibit 10r)
SEVERANCE COMPENSATION AGREEMENT
THIS AGREEMENT ("Agreement") between UNIFI, INC., a New York corporation (the
"Company"), and XXXXX X. XXXXX ("Executive") effective the 1st day of October,
1998.
WITNESSETH:
WHEREAS, XXXXX X. XXXXX is a Vice President of the Company and is President of
Unifi Textured Yarns Europe, Ltd. ("UTYE"), a wholly-owned subsidiary of the
Company located in Letterkenny, Ireland; he had been the General Manager of UTYE
for a number of years prior to becoming President in 1993, and is considered as
an integral part of the Company's Management; and
WHEREAS, the Company's Board of Directors 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 Company's Board of Directors 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) July 20, 2001 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.
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 corporation 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 corporation 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 six months (including months 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.
(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 of
Directors. 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 Company's Board of Directors (after reasonable notice to the Executive
and an opportunity for the Executive, together with the Executive's counsel, 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 Profit Sharing 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;
(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.
(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 upon final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having
been perfected) 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 in a
lump sum, in cash, on the fifth day following the Date of Termination, 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 calendar
years preceding the Change in Control of the Company; provided, however, that if
the lump sum 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 lump sum
severance payment shall be reduced to the largest amount as will result in no
portion of the lump sum 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.
(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 Unifi, Inc.'s Profit Sharing
Plan and Trust, Unifi, Inc.'s Retirement Savings Plan and any other 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 11 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:
If to the Company:
Unifi, Inc.
P. O. Xxx 00000
Xxxxxxxxxx, XX 00000-0000
ATTENTION: Xx. Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
If to the Executive:
Xx. XXXXX X. XXXXX
Unifi Textured Yarns Europe, Ltd.
Letterkenny, County Donegal, Ireland
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 of Directors of the Company 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. Confidentiality: The Executive shall retain in confidence any and
all confidential information known to the Executive concerning the Company and
its business so long as such information is not otherwise publicly disclosed.
IN WITNESS WHEREOF, Unifi, Inc. has caused this Agreement to be signed
by a member of the Company's Compensation Committee who is an outside director
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: XXXXXX X. XXXX (SEAL)
Compensation Committee
XXXXX X. XXXXX (SEAL)
XXXXX X. XXXXX
Vice President
