Exhibit (10n)
SEVERANCE COMPENSATION AGREEMENT
THIS AGREEMENT ("Agreement") between UNIFI, INC., a New York
corporation (the "Company"), and WILLIAM T. KRETZER ("Executive")
effective the 20th day of July, 1996.
WITNESSETH:
WHEREAS, WILLIAM T. KRETZER is presently the President and
Chief Executive Officer of the Company, to which he was elected
in 1985, and has been an Officer or Executive Officer since 1975;
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) three years from
July 20, 1996 if a Change in Control of the Company has not
occurred within such three year 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
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the
entire membership of the Company's Board of Directors at a
meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard
before the Board), finding 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. Box 19109
Greensboro, NC 27419-9109
ATTENTION: Mr. William T. Kretzer
President and Chief Executive Officer
If to the Executive:
Mr. William T. Kretzer
3039 Lake Forest Drive
Greensboro, NC 27408
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: DONALD F. ORR (SEAL)
Compensation Committee
WILLIAM T. KRETZER (SEAL)
WILLIAM T. KRETZER
President and
Chief Executive Officer