(Exhibit 10m)
AGREEMENT
This AGREEMENT ("Agreement") entered into as of the 1st day of February, 1999,
by and between UNIFI, INC., a New York corporation, with its executive offices
in Greensboro, North Carolina (hereinafter, together with its wholly owned
subsidiaries, referred to as "UNIFI"), and XXXXXXX X. XXXXXXX, of Guilford
County, North Carolina (hereinafter referred to as "XX. XXXXXXX");
W I T N E S S E T H:
WHEREAS, XX. XXXXXXX has been an employee of UNIFI since 1971 and has served as
President and Chief Executive Officer since 1985;
WHEREAS, XX. XXXXXXX and UNIFI agreed that XX. XXXXXXX would resign his
employment with UNIFI;
WHEREAS, in consideration of his past services to UNIFI, UNIFI has agreed to pay
to XX. XXXXXXX the sum of Three Million Dollars ($3,000,000) pursuant to Section
1 of this Agreement and to provide him with the benefits, split dollar
insurance, stock options and deferred compensation described in Sections 2, 3,
4, 5, 7 and 8; and
WHEREAS, in consideration of UNIFI's agreement to pay him the sum of One Million
Dollars ($1,000,000) pursuant to Section 12(A) of this Agreement, XX. XXXXXXX
has agreed to certain covenants regarding the disclosure of confidential
information and noncompetition;
NOW, THEREFORE, in consideration of these premises and mutual agreements herein
contained, and intending to be legally bound hereby, the parties agree as
follows:
Section 1. Cash Payments - UNIFI agrees to pay XX. XXXXXXX the sum of Three
Million Dollars ($3,000,000). This amount shall be paid in thirty-six (36) equal
monthly installments of $83,333 each on UNIFI's regular salaried payroll dates,
with the first monthly installment being due and payable on February 28, 1999
and a like installment being due and payable on the same date of each calendar
month thereafter, to and including January 2002. These payments will be subject
to all applicable federal and state taxes. In the event of XX. XXXXXXX'x death
before January 31, 2002, the payments thereafter becoming due under this Section
1 will be paid to his estate. XX. XXXXXXX shall be entitled to the payments
provided for in this Section 1 even if he becomes employed by another company.
Section 2. Medical and Dental Insurance - UNIFI will continue to provide XX.
XXXXXXX the same medical and dental coverage provided to executive officers
covered by the terms of the Unifi, Inc. Employee Welfare Benefit Plan until the
earliest to occur of the last day of the month in which XX. XXXXXXX attains the
age of sixty-five (65) years or obtains employment with another company and
becomes eligible for substantially comparable benefits. XX. XXXXXXX shall be
eligible to continue to receive medical and dental benefits in order that he may
obtain coverage for himself and for his Dependents, as the term "Dependents" is
defined in the Medical Plan, and so that the following shall apply to coverage
of XX. XXXXXXX and his Dependents:
(A) As a condition of coverage of XX. XXXXXXX, he must pay for each month of
coverage an amount equal to the premium paid for such month by an active
employee for coverage under the Medical Plan. During the time when payments are
being made pursuant to Section 1, such premiums shall be paid by deductions from
such installments unless UNIFI in its sole discretion agrees otherwise.
Thereafter, such premiums shall be due on the first day of the month to which
they apply, but coverage will not be terminated unless any failure by XX.
XXXXXXX to pay
premiums on the due date continues for more than 30 days after written notice
thereof is given to XX. XXXXXXX.
(B) As a condition of coverage of a Dependent, XX. XXXXXXX must pay for each
month of coverage an amount equal to the premium paid for such month by an
active employee for coverage of a Dependent under the Medical Plan. During the
time when payments are being made pursuant to Section 1, such premiums shall be
paid by deductions from such installments unless UNIFI in its sole discretion
agrees otherwise. Thereafter, such premiums shall be due on the first day of the
month to which they apply, but coverage will not be terminated unless any
failure by XX. XXXXXXX to pay premiums on the due date continues for more than
30 days after written notice thereof is given to XX. XXXXXXX, or unless XX.
XXXXXXX is in breach of Section 10 or Section 11 of this Agreement.
(C) The terms of medical and dental coverage for XX. XXXXXXX and his Dependents
at any given time shall be the terms applicable to executive officers of UNIFI
and their Dependents at such time. It is explicitly understood and agreed that
any amendments to or alteration of the Medical Plan (including any amendment
terminating the Medical Plan) may be applicable to XX. XXXXXXX and his
Dependents without regard to whether the amendment or alteration was adopted or
made before or after the date XX. XXXXXXX entered into this Agreement. It is
explicitly understood and agreed that a Dependent will lose medical and dental
coverage as of the first day of the month next following XX. XXXXXXX'x
sixty-fifth (65th) birthday, regardless of the Dependent's age, unless the
Dependent has lost coverage earlier. In the event of XX. XXXXXXX'x death before
his sixty-fifth (65th) birthday, his Dependents will continue to be eligible for
medical and dental coverage as hereinabove provided until the first day of the
month next following XX. XXXXXXX'x sixty-fifth (65th) birthday.
(D) UNIFI will continue to provide XX. XXXXXXX group term life insurance
coverage in the amount of $750,000 until the earliest to occur of the last day
of the month in which XX. XXXXXXX attains the age of sixty-five (65) years or
obtains employment with another company and becomes eligible for a substantially
comparable life insurance benefit.
(E) In addition to the medical, dental and group life insurance benefits
described in Sections 2(A), (B), (C) and (D), XX. XXXXXXX shall be entitled to
all other benefits provided to executive officers of UNIFI (including, without
limitation, benefits under the portions of the Welfare Benefit Plan that provide
benefits in the event of disability and that provide accidental death and
dismemberment coverage) on the same basis and on the same terms as if XX.
XXXXXXX had continued his employment with UNIFI. XX. XXXXXXX'x entitlement to
benefits under this Section 2(E) shall continue until the earliest to occur of
the last day of the month in which XX. XXXXXXX attains the age of sixty-five
(65) years or obtains employment with another company and becomes eligible for
substantially comparable benefits or is in breach of Section 10 or Section 11 of
this Agreement.
Section 3. COBRA, etc. - It is understood that this Agreement does not waive or
abrogate XX. XXXXXXX'x entitlement to health insurance benefits under COBRA or
to vested retirement funds in UNIFI'S retirement plan. Any retirement benefits
to which XX. XXXXXXX is entitled shall be governed by the terms of the
retirement plan.
Section 4. Other Benefits
(A) XX. XXXXXXX agrees that no provision is granted for continued vacation pay,
automobile allowance, education renewal, tuition reimbursement, or mobile
telephone service after the date of this Agreement, and that he will return to
UNIFI all company property, documents, notes, software programs, data and any
other materials (including any copies thereof) in his possession.
(B) Until the date on which XX. XXXXXXX obtains full-time employment with
another company, XX. XXXXXXX will have the right to use UNIFI's airplanes and
apartments, provided that such use does not interfere with UNIFI's use of its
airplanes and apartments for business purposes and provided further that in
connection with such use by XX. XXXXXXX, he shall reimburse UNIFI in accordance
with the reimbursement policies then in effect for executive officers of UNIFI.
(C) Until the date on which XX. XXXXXXX obtains full-time employment with
another company, UNIFI will provide XX. XXXXXXX with an executive office (at
UNIFI's headquarters in Greensboro, North Carolina, or such other place as may
be mutually agreed upon by UNIFI and XX. XXXXXXX) and secretarial assistance.
Section 5. Split Dollar Insurance - Schedule A attached hereto lists the life
insurance policies on XX. XXXXXXX'x life currently owned by UNIFI under a Split
Dollar Arrangement (the "Policies"). The Policies are subject to the Executive
Split Dollar Life Insurance Agreement dated July 1, 1990 (the "Split Dollar
Agreement") between UNIFI and XX. XXXXXXX (except that Schedule A to this
Agreement shall be substituted for Schedule A to the Split Dollar Agreement)
and, accordingly, XX. XXXXXXX shall have the right to and UNIFI the obligation
to continue the Split Dollar Agreement with respect to the Policies until the
applicable Termination Date, provided that XX. XXXXXXX continues to make the
required premium contributions under the Split Dollar Agreement.
Section 6. Taxes - XX. XXXXXXX will be responsible for any federal, state or
local taxes which may be owed by him by virtue of the receipt of any portion of
the consideration herein provided.
Section 7. Option Grants - Regarding option grants:
(A) XX. XXXXXXX was granted options under the Unifi, Inc. 1992 Incentive Stock
Option Plan and the Unifi, Inc. 1996 Incentive Stock Option Plan. Stock option
agreements dated October 27, 1992, October 21, 1993, and September 22, 1994 were
entered into in relation to the respective stock option grants. All options
which have not been exercised shall be canceled and the respective stock option
agreements terminated. New stock options will be granted to XX. XXXXXXX under
the Unifi, Inc. 1996 Non-Qualified Stock Option Plan for the number of
unexercised shares and at the purchase price per share as set forth in the
above-referenced respective incentive stock option agreements. All such new
options shall vest and be exercisable immediately and shall terminate ten (10)
years from the date the above-referenced incentive stock options were granted.
(B) XX. XXXXXXX was previously granted options under the Unifi, Inc. 1992
Non-Qualified Stock Option Plan and the Unifi, Inc. 1996 Non-Qualified Stock
Option Plan. Stock option agreements dated October 27, 1992, October 21, 1993,
September 22, 1994, April 18, 1995, April 18, 1996, April 17, 1997, and October
22, 1998 were entered into in relation to the respective stock option grants.
The option agreements will be amended to provide that all unexercised options
under the respective agreements are fully vested and exercisable immediately and
shall
terminate ten (10) years from the date the above-referenced nonqualified stock
options were granted.
(C) In the event of XX. XXXXXXX'x death before termination of any of the options
described in (A) and (B) above, such options will continue in effect and may be
exercised by XX. XXXXXXX'x estate within six (6) months after his death.
Section 8. Deferral Agreement - The Deferral Agreement dated November 21, 1997,
between UNIFI and XX. XXXXXXX (the "Deferral Agreement") is hereby amended by
deleting paragraph 3 in its entirety and inserting in lieu thereof the
following:
A3. DEFERRAL. On January 2, 2003, the Executive or his designated beneficiary,
if the Executive should die before January 2, 2003, will be entitled to receive
the Deferral Shares and Accumulated Income in a lump sum. The Board of Directors
("Board") of UNIFI will consider any request by the Executive for an earlier
payment of the Deferral Shares and Accumulated Income, but any such earlier
payment will be in the sole discretion of the Board.
Section 9. 1999 Profit Sharing Plan Contribution - XX. XXXXXXX agrees that he is
not entitled to and waives his right to share in the contribution, if any, made
to UNIFI's Profit Sharing Plan and Trust (the "Profit Sharing Plan") for the
fiscal year ended June 30, 1999. XX. XXXXXXX hereby agrees to indemnify and hold
harmless UNIFI, its directors, officers and employees, as well as UNIFI's Profit
Sharing Plan and Trust, for any amounts that may be assessed against each and
every one of the foregoing for his not sharing in such contribution, if any, as
made to the Profit Sharing Plan for fiscal year ended June 30, 1999.
Section 10. Disclosure of Confidential Information - XX. XXXXXXX agrees that:
(A) For a period of three (3) years from the date of this Agreement, he will not
disclose or make available to any person or other entity any trade secrets,
confidential information, as hereinafter defined, or "know-how" relating to
UNIFI's, its affiliates' and subsidiaries', businesses without written authority
from UNIFI's President or Board of Directors, unless he is compelled to disclose
it by judicial process.
Confidential Information shall mean all information about UNIFI, its affiliates
or subsidiaries, or relating to any of their products or any phase of their
operations, not generally known to their competitors or which is not public
information, which XX. XXXXXXX knows or acquired knowledge of during the term of
his employment. Confidential Information does not include information that
becomes available to XX. XXXXXXX from a source other than UNIFI, provided XX.
XXXXXXX does not have actual knowledge or reason to believe such source was
bound by a duty of confidentiality to UNIFI.
(B) Documents - Under no circumstances shall XX. XXXXXXX remove from UNIFI's
offices any of UNIFI's books, records, documents, customer lists, or any copies
of such documents without UNIFI's written consent, nor shall he make any copies
of UNIFI's books, records, documents, or customer lists for use outside of
UNIFI, except as specifically authorized in writing by the President or Board of
Directors of UNIFI.
Section 11. Non-Compete - Subject to the provisos of this Section 11, XX.
XXXXXXX hereby promises and agrees that, for a period of three (3) years from
the date of this Agreement he will not, directly or indirectly, without the
prior written consent of UNIFI's Board of Directors or its Compensation
Committee:
(A) Own any interest in (other than by ownership of less than ten percent (10%)
of any class of stock (or ownership interest) of a publicly or privately held
corporation or other business entity), act as a director, manage, operate,
control, be employed by, render advisory services to, represent, participate in,
or be connected with any business that is engaged in the business of producing,
manufacturing, distributing, and/or selling, in competition with UNIFI, in any
country in which UNIFI is engaged in the manufacturing, distribution or sales of
UNIFI Products or services on the date of this Agreement;
(B) Influence, attempt to influence or solicit any customer of UNIFI to
discontinue its purchase of, or divert its business with respect to, any UNIFI
Products or services manufactured and/or sold by UNIFI from UNIFI to himself or
any other person, firm, entity or corporation;
(C) Interfere with, disrupt, or attempt to disrupt the relationship, contractual
or otherwise, between UNIFI and any of its suppliers, principals, distributors,
lessors, licensors, licensees, or franchisees; or
(D) Solicit any employee or salesman of UNIFI, whose annual salary exceeds
$25,000, to work for himself or any other person, firm, entity or corporation
competing with UNIFI;
provided, however, that this Section 11 shall not prevent XX. XXXXXXX from:
(W) Engaging in any capacity in the business of producing, manufacturing,
distributing, and/or selling any of the UNIFI Products that UNIFI ceases to sell
to third parties after the date of this Agreement;
(X) Being employed or otherwise engaged by any entity whose primary business at
the time of his employment or engagement is not the sale of UNIFI Products to
third parties, even if that entity thereafter acquires or is acquired by another
entity whose primary business is the sale of UNIFI Products to third parties, if
XX. XXXXXXX'x primary duties and responsibilities are unrelated in any material
respect to the UNIFI Products; and
provided further that UNIFI's Board of Directors will not unreasonably withhold
its consent to XX. XXXXXXX'X:
(Y) Engaging in any capacity in the business of producing, manufacturing,
distributing, and/or selling POY yarns; or
(Z) Serving as a director of and/or being employed by any corporation,
partnership, sole proprietorship or other entity (or as a manager and/or
employee of any limited liability company) in the textile industry whose primary
business is not the sale of UNIFI Products to third parties.
For purposes of this Section 11, UNIFI Products means (a) false twist textured
polyester and nylon filament yarns; (b) yarn dyed false twist textured polyester
and nylon filament yarns; (c) twisted texturized polyester and nylon filament
yarns for sewing thread applications; (d) warped yarns and fibers (whether
produced through conventional and/or warp drawn methods); and (e) covered
spandex (whether covered by conventional or air covering methods).
The parties intend to limit XX. XXXXXXX'x right to compete only to the extent
necessary to protect UNIFI from unfair competition. The parties recognize,
however, that reasonable people
may differ in making such a determination. Consequently, the parties hereby
agree that, if the scope or enforceability of any of the restrictive covenants
in this Section 11 or in Section 10 above is in any way disputed at any time,
the dispute shall be submitted to arbitration, as provided under Section 19 of
this Agreement, and the arbitrator will determine whether the activities in
which XX. XXXXXXX is engaging (or proposes to engage) are covered by Sections 10
or 11 and, if covered, whether they subject (or would subject) UNIFI to unfair
competition. If the arbitrator determines that the activities are covered and do
(or would) subject UNIFI to unfair competition, then such activities shall be
subject to the restrictions of Sections 10 and 11, and XX. XXXXXXX shall not
engage in such activities. If the arbitrator determines that the activities are
not covered or do not (or would not) subject UNIFI to unfair competition, then
such activities shall not be subject to the restrictions of Sections 10 and 11,
and XX. XXXXXXX shall be free to engage in such activities.
Section 12. Consideration; Breach
(A) In consideration of XX. XXXXXXX'x covenants with respect to the disclosure
of confidential information and noncompetition, as provided in Sections 10 and
11 of this Agreement, UNIFI agrees to pay XX. XXXXXXX the sum of One Million
Dollars ($1,000,000). This amount shall be paid in thirty-six (36) equal monthly
installments of $27,777 each on UNIFI's regular salaried payroll dates, with the
first monthly installment being due and payable on February 28, 1999 and a like
installment being due and payable on the same date of each calendar month
thereafter, to and including January 2002. These payments will be subject to all
applicable federal and state taxes. In the event of XX. XXXXXXX'x death before
January 31, 2002, the payments thereafter becoming due under this Section 12(A)
will be paid to his estate. XX. XXXXXXX shall be entitled to the payments
provided for in this Section 12(A) even if he becomes employed by another
company.
(B) XX. XXXXXXX acknowledges that compliance with Sections 10 and 11 of this
Agreement is necessary to protect UNIFI's businesses and goodwill; a breach of
said Sections will do irreparable and continual damage to UNIFI and an award of
monetary damages would not be adequate to remedy such harm; therefore, in the
event he breaches or threatens to breach this Agreement, UNIFI shall be entitled
to both a preliminary and permanent injunction in order to prevent the
continuation of such harm and monetary damages, insofar as they can be
determined, including, without limitation, all reasonable costs and attorney's
fees incurred by UNIFI in enforcing the provisions of this Agreement. Nothing in
this Agreement, however, shall prohibit UNIFI from also pursuing any other
remedies.
(C) For purposes of this Section 12, XX. XXXXXXX shall be deemed to be in breach
of Sections 10 and/or 11 only if UNIFI first gives him written notice of the
conduct alleged to constitute a violation of Sections 10 and/or 11 and if,
within 30 days after receipt of such written notice, XX. XXXXXXX then fails
either to cease such conduct or to demand arbitration pursuant to the last
paragraph of Section 11 of this Agreement. If XX. XXXXXXX demands arbitration
and if the arbitrator determines that the conduct identified by UNIFI is covered
by Sections 10 or 11 and subjects UNIFI to unfair competition, then XX. XXXXXXX
shall be deemed to be in breach of Sections 10 and/or 11 only if such conduct
continues for more than 30 days following the decision of the arbitrator.
(D) Notwithstanding any breach of this Agreement by XX. XXXXXXX, UNIFI shall
continue to make the payments provided for in Section 1 of this Agreement and in
Section 12(A) of this Agreement, in each case without deduction or offset.
Section 13. Releases and Waivers of Each Party
(A) XX. XXXXXXX hereby fully and unconditionally releases and discharges all
claims and causes of action which he or his heirs, personal representatives or
assigns ever had or now have or hereafter may have (based on events transpiring
on or before the date hereof) against UNIFI, its subsidiaries and their
respective officers, directors, employees, counsel and agents, in each case past
or present, of whatsoever kind and nature, in law, equity or otherwise, arising
out of or in any way connected with his employment, association or other
involvement with UNIFI.
(B) UNIFI hereby fully and unconditionally releases and discharges all claims
and causes of action which it ever had or now has or hereafter may have (based
on events transpiring on or before the date hereof) against XX. XXXXXXX, in each
case past or present, of whatsoever kind and nature, in law, equity or
otherwise, arising out of or in any way connected with his employment,
association or other involvement with UNIFI.
(C) The foregoing releases and waiver do not extend to rights, benefits,
obligations and claims that expressly accrue under and pursuant to the terms of
this Agreement or under and pursuant to the terms of the Split-Dollar Agreement
(as amended hereby), the Deferral Agreement (as amended hereby), the option
agreements (as amended hereby) and the Profit Sharing Plan (subject to the
provisions of Section 9 of this Agreement).
Section 14. Waiver of Rights - If, in one or more instances, either party fails
to insist that the other party perform any of the terms of this Agreement, such
failure shall not be construed as a waiver by such party of any past, present,
or future right granted under this Agreement, and the obligations of both
parties under this Agreement shall continue in full force and effect.
Section 15. Notices - Any notice required or permitted to be given under this
Agreement shall be sufficient, if in writing and if sent by registered or
certified mail, postage prepaid, or telecopier to:
Xxxxxxx X. Xxxxxxx
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopier: (336) _________
and to:
UNIFI, Inc.
Attn: Xxxxxx X. Xxxxx, III
0000 X. Xxxxxxxx Xxxxxx (27410)
P. O. Xxx 00000
Xxxxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Section 16. Assignment - The rights and obligations of UNIFI under this
Agreement shall inure to the benefit of and be binding upon its successors and
assigns; provided, however, that this Agreement is not assignable by UNIFI.
UNIFI agrees that it will not merge into, consolidate with, or sell all or
substantially all of its assets to any other corporation or business
organization unless such successor or purchaser specifically agrees to assume
and be bound by all of the terms and conditions of this Agreement or
arrangements are made between UNIFI and XX. XXXXXXX
to secure UNIFI's obligations under this Agreement. This Agreement may not be
assigned or otherwise transferred voluntarily or involuntarily by XX. XXXXXXX.
Section 17. Applicable Law - This Agreement shall be interpreted and construed
under the laws of North Carolina.
Section 18. Entire Agreement - This instrument contains the entire agreement of
the parties, except that XX. XXXXXXX acknowledges that he continues to be
subject to his Noncompetition Covenant with Parkdale America, LLC dated June 30,
1997. This Agreement may not be changed or altered, except by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
Section 19. Arbitration - In the event of any differences of opinion or
disputes, between XX. XXXXXXX and UNIFI, with respect to the construction or
interpretation of this Agreement or the alleged breach thereof, which cannot be
settled amicably by agreement of the parties, such disputes shall be submitted
to and determined by arbitration by a single arbitrator in the City of
Greensboro, North Carolina, in accordance with the rules of the American
Arbitration Association and judgment upon the award shall be final, binding and
conclusive upon the parties and may be entered in the highest court, state or
federal, having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under their
respective hands and seals as of the day and year first above written.
XXXXXXX X. XXXXXXX (SEAL)
XXXXXXX X. XXXXXXX
Witness:
X. X. XXXXX III
UNIFI, INC.
By: G. XXXXX XXXXXX
G. Xxxxx Xxxxxx, Chairman
and Chief Executive Officer
Attest:
XXXXXXXX XXXXXXX, XX.
Xxxxxxxx Xxxxxxx, Xx., Secretary
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