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EXHIBIT 10.16
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE NORTH CAROLINA UNIFORM ARBITRATION ACT
NONCOMPETITION, SEVERANCE AND
EMPLOYMENT AGREEMENT
BETWEEN
DYERSBURG CORPORATION AND T. EUGENE MCBRIDE
This Noncompetition, Severance and Employment Agreement (this
"Agreement") is made and entered into as of this 30th day of June, 1999 by and
between T. Eugene McBride, an individual (the "Executive"), and Dyersburg
Corporation, a Tennessee corporation and textile company, headquartered in
Dyersburg, Tennessee (the "Company"). As used herein, the term "Company" shall
include the Company and any and all of its subsidiaries.
W I T N E S S E T H
WHEREAS, the Company's Board of Directors (the "Board") believes that
the Executive has been instrumental in the success of the Company;
WHEREAS, the Company desires to continue to employ the Executive as
Board Chairman and Chief Executive Officer and in such other capacities as the
Executive is currently employed as of the date hereof;
WHEREAS, the terms hereof are consistent with the executive
compensation objectives of the Company as established by the Board;
WHEREAS, the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Employment. Subject to the terms and conditions hereof, the Company
hereby employs the Executive and Executive hereby accepts such employment as
Board Chairman and Chief Executive Officer of the Company having such duties and
responsibilities as are set forth in Section 3 below.
2. Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified below.
"CAUSE" shall mean (a) fraud; (b) embezzlement; (c) conviction of the
Executive of any felony; (d) a material breach of, or the wilful failure or
refusal by the Executive to perform and discharge the Executive's duties,
responsibilities and obligations under this Agreement; (e) any act of moral
turpitude or willful misconduct by the Executive intended to result in personal
enrichment of the Executive at the expense of the Company, or any of its
affiliates or which has a material adverse impact on the Business or reputation
of the Company or any of its affiliates (such determination to be made by the
Board in its reasonable judgment); (f) intentional material damage to the
property or Business of the Company; (g) gross negligence; or (h) the
ineligibility of the Executive to perform his duties because of a ruling,
directive or other action by any agency of the United States or any state of the
United States having regulatory authority over the Company.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
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"CONFIDENTIAL INFORMATION" shall mean all business and other
information relating to the business of the Company, including without
limitation, technical or nontechnical data, programs, methods, techniques,
processes, financial data, financial plans, product plans, and lists of actual
or potential customers, which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by other Persons, and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be contractually subject to
protection under this Agreement whether or not such information constitutes a
trade secret and is separately protectable at law or in equity as a trade
secret. Confidential Information does not include confidential business
information which does not constitute a trade secret under applicable law two
years after any expiration or termination of this Agreement.
"DISABILITY" or "DISABLED" shall mean the Executive's inability as a
result of physical or mental incapacity to substantially perform his duties for
the Company on a full-time basis, with or without accommodation, for a period of
six (6) months.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"PERSON" shall mean any individual, corporation, bank, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or other entity.
3. Duties. During the term hereof, the Executive shall have such duties
and authority as are typical of a Board Chairman and Chief Executive Officer of
a company such as the Company, including, without limitation, those specified in
the Company's Bylaws. Executive agrees that during the Term hereof, he will
devote his full time, attention and energies to the diligent performance of his
duties. Executive shall not, without the prior written consent of the Company,
at any time during
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the Term hereof (i) accept employment with, or render services of a business,
professional or commercial nature to, any Person other than the Company, (ii)
engage in any venture or activity which the Company may in good faith consider
to be competitive with or adverse to the business of the Company or of any
affiliate of the Company, whether alone, as a partner, or as an officer,
director, employee or shareholder or otherwise, except that the ownership of not
more than 5% of the stock or other equity interest of any publicly traded
corporation or other entity shall not be deemed a violation of this Section, or
(iii) engage in any venture or activity which the Board may in good faith
consider to interfere with Executive's performance of his duties hereunder.
4. Term. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a term of three (3) years (the "Term")
commencing on the date hereof. In the event of a Change in Control, as defined
in the Change in Control Employment Agreement between the parties dated June
30, 1999, this Agreement shall immediately terminate and be superceded by such
Change in Control Employment Agreement. This Agreement must be reviewed by the
Board of Directors of the Company not less than six (6) months prior to the
expiration of its Term to be eligible to be renewed.
5. Termination. This Agreement may be terminated as follows:
5.1 The Company. The Company shall have the right to terminate
Executive's employment hereunder at any time during the Term hereof (i) for
Cause, (ii) if the Executive becomes Disabled, (iii) upon the Executive's death,
or (iv) without Cause.
5.1.1 If the Company terminates Executive's
employment under this Agreement pursuant to clauses (i), (ii) or (iii)
of Section 5.1, the Company's obligations hereunder shall cease as of
the date of termination.
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5.1.2 If the Company terminates Executive pursuant to
clause (iv) of Section 5.1, Executive shall be entitled to receive
immediately or in continued monthly installments as severance upon such
termination, aggregate compensation and benefits provided in Section 6
for the remainder of the Term or six (6) months, whichever is greater
(the "Severance Period"). For purposes of determining compensation
which is not fixed (such as a bonus), the amount of such unfixed
compensation shall be deemed to be equal to the average monthly amount
of such compensation over the Executive's period of employment with the
Company immediately prior to the termination (not to exceed three (3)
years) multiplied by the number of months of the Executive's Severance
Period.
5.1.3 In the event of such termination pursuant to
clause (iv) of Section 5.1, (A) all rights of Executive pursuant to
awards of share grants or options granted by the Company shall be
deemed to have vested and shall be released from all conditions and
restrictions, except for restrictions on transfer pursuant to the
Securities Act of 1933, as amended, and (B) the Executive shall be
deemed to be credited with service with the Company for such remaining
Term for the purposes of the Company's benefit plans; (C) the Executive
shall be deemed to have retired from the Company and shall be entitled
as of the termination date, or at such later time as he may elect to
commence receiving the total combined qualified and non-qualified
retirement benefit to which he is entitled hereunder, or his total
non-qualified retirement benefit hereunder if under the terms of the
Company's qualified retirement plan for salaried employees he is not
entitled to a qualified benefit, and (D) if any provision of this
Section 5.1.3 cannot, in whole or in part, be implemented and carried
out under the terms of the applicable compensation, benefit, or other
plan or
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arrangement of the Company because the Executive has ceased to be an
actual employee of the Company, because the Executive has insufficient
or reduced credited service based upon his actual employment by the
Company, because the plan or arrangement has been terminated or amended
after the effective date of this Agreement, or because of any other
reason, the Company itself shall pay or otherwise provide the
equivalent of such rights, benefits and credits for such benefits to
Executive, his dependents, beneficiaries and estate.
5.2 By Executive. Executive shall have the right to terminate
his employment hereunder if the Company materially breaches this
Agreement and such breach is not cured within 30 days after written
notice of such breach is given by Executive to the Company.
5.2.1 If Executive terminates his employment other
than pursuant to Section 5.2, the Company's obligations under this
Agreement shall cease as of the date of such termination and Executive
shall be subject to the confidentiality provisions set forth in Section
8 hereof for a period of one (1) year.
5.2.2 If Executive terminates his employment
hereunder pursuant to Section 5.2, Executive shall be entitled to
receive his base salary and other benefits due him through the
termination date, less applicable taxes and other deductions, and
receive immediately or in continued monthly installments as severance,
upon such termination, aggregate cash compensation and benefits
provided in Section 6 for the remainder of the Term or six (6) months,
whichever is greater. For purposes of determining compensation which is
not fixed (such as a bonus), the amount of such unfixed compensation
shall be deemed to be the equal to the average monthly amount of such
compensation over the three-
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year period immediately prior to the termination multiplied by the
number of months of the Executive's Severance Period.
5.2.3 In addition, in the event of such termination
pursuant to Section 5.2, (A) all rights of Executive pursuant to awards
of share grants or options granted by the Company shall be deemed to
have vested and shall be released from all conditions and restrictions,
except for restrictions on transfer pursuant to the Securities Act of
1933, as amended, and (B) the Executive shall be deemed to be credited
with service with the Company for such remaining Term for the purposes
of the Company's benefit plans, and (C) the Executive shall be deemed
to have retired from the Company and shall be entitled as of the
termination date, or at such later time as he may elect to commence
receiving the total combined qualified and non-qualified retirement
benefit to which he is entitled hereunder, or his total non-qualified
retirement benefit hereunder if under the terms of the Company's
qualified retirement plan for salaried employees he is not entitled to
a qualified benefit, and (D) if any provision of this Section 5.2.3
cannot, in whole or in part, be implemented and carried out under the
terms of the applicable compensation, benefit, or other plan or
arrangement of the Company because the Executive has ceased to be an
actual employee of the Company, because the Executive has insufficient
or reduced credited service based upon his actual employment by the
Company, because the plan or arrangement has been terminated or amended
after the effective date of this Agreement, or because of any other
reason, the Company itself shall pay or otherwise provide the
equivalent of such rights, benefits and credits for such benefits to
Executive, his dependents, beneficiaries and estate.
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6. Compensation. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that his salary pursuant to Section 6.1 shall be
payable not less frequently than monthly):
6.1 Annual Salary. During the Term hereof, the Company shall
pay to Executive a base salary established by the Board which for the first year
of the Term shall be not less than the salary of the Executive for the past
year. Executive's salary will be reviewed by the Board at the beginning of each
of its fiscal years and, in the sole discretion of the Board, may be increased
for such year.
6.2 Annual Incentive Bonus. During the Term hereof, the Board
may, in its sole discretion, pay to Executive an annual incentive cash bonus.
6.3 Long-Term Incentive Compensation Plan. During the Term
hereof, the Board may, in its sole discretion, pay to Executive long-term
incentive cash bonuses.
6.4 Stock Options and Restricted Stock. During the Term
hereof, the Board shall grant Executive options to purchase Company Common Stock
and restricted stock in accordance with the terms of the 1992 stock option plan
or any successor plan.
6.5 Other Benefits. Executive shall be entitled to share in
any other employee benefits generally provided by the Company to its most highly
ranking executives for so long as the Company provides such benefits. The
Company also agrees to provide Executive with a life insurance policy in the
face amount of two times the Executive's base compensation with a
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maximum face amount of $500,000. Executive shall also be entitled to participate
in all other benefits accorded general Company employees. Executive shall have
the opportunity to continue his benefits under the medical, dental and life and
accident insurance plans during the Executive's Severance Period. Continued
medical coverage, if elected, shall run concurrently with the continuation
coverage rights under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (COBRA). Such medical benefits coverage shall cease if the
Executive and his qualified dependents become covered under another group health
plan and are not subject to any pre-existing condition limitations or become
entitled to receive benefits under Medicare.
7. Excess Parachute Payments. It is the intention of the parties hereto
that the severance payments and other compensation provided for herein are
reasonable compensation for Executive's services to the Company and shall not
constitute "excess parachute payments" within the meaning of Section 280G of the
Code and any regulations thereunder. In the event that the Company's independent
accountants acting as auditors for the Company on the date of a Change in
Control determine that the payments provided for herein constitute "excess
parachute payments," then the compensation payable hereunder shall be reduced to
the point that such compensation shall not qualify as "excess parachute
payments."
8. Confidentiality. Executive shall hold in a fiduciary capacity for
the benefit of the Company all Confidential Information relating to the Company
or any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies. After termination of Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or
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divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. Upon the termination or expiration of his employment
hereunder, Executive agrees to deliver promptly to the Company all Company
files, customer lists, management reports, memoranda, research, Company forms,
financial data and reports and other documents supplied to or created by him in
connection with his employment hereunder (including all copies of the foregoing)
in his possession or control and all of the Company's equipment and other
materials in his possession or control. In no event shall an asserted violation
of the provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
9. Noncompetition and Nonsolicitation Agreement. If this Agreement is
terminated by the Company pursuant to Section 5.1(iv) or by Executive pursuant
to Section 5.2.2, Executive shall not enter into an employment relationship or a
consulting arrangement with any other knitted apparel textile company of any
type headquartered or having a physical presence in the states of North
Carolina, South Carolina, Tennessee, and New York (hereinafter a "competitor")
during the Severance Period (the "Noncompete Period"). The obligations contained
in this Section 9 shall not prohibit Executive from being an owner of not more
than 5% of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of such
corporation.
9.1 During the Noncompete Period, Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of Company to leave the employ of Company, including but not limited to
a competitor, or in any way interfere with the relationship between Company and
any employee thereof, (ii) hire any person currently employed by the
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Company who was an employee of Company or any subsidiary at any time during the
time that Executive was employed by Company, or (iii) induce or attempt to
induce any customer, supplier, or other entity in a business relation of Company
to cease doing business with Company, or in any way interfere with the
relationship between any such customer, supplier, or business relation and
Company or do business with a competitor.
9.2. If, at the time of enforcement of this Section 9, a
court shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this Section 9 are reasonable.
9.3 In the event of the breach or a threatened breach by
Executive of any of the provisions of this Section 9, Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security). In
addition, in the event of an alleged breach or violation by Executive of this
Section 9, the Noncompete Period shall be tolled until such breach or violation
has been duly cured.
10. Assignment. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
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11. Notices. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
To the Company: Dyersburg Corporation
ATTENTION: Corporate Secretary
15720 John J. Delaney Drive, Suite 445
Charlotte, North Carolina 28277
To Executive: T. Eugene McBride
10609 Lederer Drive
Charlotte, North Carolina 28277
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
12. Provisions Severable. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
13. Remedies.
13.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company.
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13.2 All claims, disputes and other matters in question
between the Executive and the Company arising out of or related to the
interpretation of this Agreement or the breach of this Agreement, except as
specifically governed by the foregoing provisions where there may be irreparable
harm and damage to the Company which could not be compensated in damages, shall
be decided by arbitration in accordance with the rules of the American
Arbitration Association. This Agreement to arbitrate shall be specifically
enforceable under applicable law in any court having jurisdiction. The award
rendered by the arbitrator shall be final and judgment may be entered upon it in
accordance with the applicable law of any court having jurisdiction thereof.
13.3 If the Executive is reasonably required to engage legal
counsel to enforce his rights hereunder against the Company, Executive shall be
entitled to receive from the Company his reasonable attorneys' fees and costs;
provided that Executive shall not be entitled to receive those fees and costs
related to matters, if any, which were the subject of litigation or arbitration
and with respect to which a judgment is rendered against Executive.
14. Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
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15. Merger. This Agreement, together with the Change In Control
Employment Agreement between the parties hereto dated June 30, 1999,
constitutes the entire understanding of the parties as to the matters addressed
and all prior agreements and understandings, whether written or oral, are merged
herein.
16. Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by other parties hereto.
17. Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of North Carolina.
18. Binding Agreement. This agreement shall be binding upon the Company
and its successors and assigns and upon Executive and his executors, personal
representatives, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
/s/ T. Eugene McBride
--------------------------------
T. Eugene McBride
DYERSBURG CORPORATION
/s/ L. R. Jalenak
--------------------------------
By: Chairman, Compensation Committee
of the Board of Directors
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CHANGE IN CONTROL
EMPLOYMENT AGREEMENT
BETWEEN
DYERSBURG CORPORATION AND T. EUGENE MCBRIDE
This Change in Control Employment Agreement (this "Agreement") is made
and entered into as of this 30th day of June, 1999 by and between T. Eugene
McBride, an individual (the "Executive"), and Dyersburg Corporation, a Tennessee
corporation and textile company, headquartered in Dyersburg, Tennessee (the
"Company"). As used herein, the term "Company" shall include the Company and any
and all of its subsidiaries.
W I T N E S S E T H
WHEREAS, the Company's Board of Directors (the "Board") believes that
the Executive has been instrumental in the success of the Company;
WHEREAS, the Company desires to continue to employ the Board Chairman
and Chief Executive Officer and in such other capacities as the Executive is
currently employed as of the date hereof and on the same at-will terms as the
Executive is currently employed;
WHEREAS, the Company is concerned that in the event of a possible or
threatened change in control of the Company, uncertainties necessarily arise and
the Executive may have concerns about the continuation of his employment status
and responsibilities and may be approached by others offering competing
employment opportunities, and the Company therefore desires to provide the
Executive assurance as to the continuation of his employment status and
responsibilities in such event;
WHEREAS, the Company further desires to assure that, if a possible or
threatened change in control should arise and the Executive should be involved
in deliberations or negotiations in connection therewith, the Executive would be
in a secure position to consider and participate in such
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transaction as objectively as possible in the best interests of the Company and,
to this end, desires to protect the Executive from any direct or implied threat
to his financial well being;
WHEREAS, the Executive is willing to continue to serve as such but
desires assurance that in the event of such a threatened or actual change in
control he will continue to have the employment status and responsibilities he
could reasonably expect absent such event and in the event of a change in
control he will have fair and reasonable severance protection on the basis of
his service to the Company to that time;
WHEREAS, the terms hereof are consistent with the executive
compensation objectives of the Company as established by the Board;
WHEREAS, the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Operation of Agreement. This Agreement shall constitute a valid and
binding contract between the parties immediately upon its execution and
supersedes any and all prior employment or other similar agreements which would
be effective in the event of an actual change in control of the Company.
Nevertheless, the Executive and the Company shall have no obligations hereunder
until, and only upon the occurrence of, a "Change in Control" (as such term is
defined in Section 2); further provided that the Executive shall have been in
the position of Board Chairman and Chief Executive Officer immediately before
such Change in Control. The first date on which a Change in Control occurs shall
be the "Effective Date" for purposes of this Agreement. Before a
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Change in Control, as the case may be, the Company's employment obligations to
the Executive shall not be affected by this Agreement and it is clearly
understood and agreed that the Executive shall have no right on account of this
Agreement to be retained in the employ of the Company or to be retained in any
particular position in the Company and is employed at-will, unless and until a
Change in Control has occurred.
2. Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified below.
"CHANGE IN CONTROL" shall mean:
(i) The acquisition, directly or indirectly, by any Person
(other than (a) any employee plan established by the Company, (b) an
underwriter temporarily holding securities pursuant to an offering of
such securities, or (c) a corporation owned, directly or indirectly, by
stockholders of the Company in substantially the same proportions as
their ownership of the Company), of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company) representing an
aggregate of 20% or more of the combined voting power of the Company's
then outstanding voting securities; or an increase in ownership of 10%
or more by an existing shareholder (as of the date of this Agreement)
of the combined voting power of the Company's then outstanding voting
securities;
(ii) During any period of up to two consecutive years,
individuals who, at the beginning of such period, constitute the Board
cease for any reason to constitute at least a majority thereof,
provided that any person who becomes a director subsequent to the
beginning of such period and whose nomination for election is approved
by at least two-thirds of the directors then still in office who were
either directors at the beginning of such
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period or whose election or nomination for election was previously so
approved (other than a director (a) whose initial assumption of office
is in connection with an actual or threatened election contest relating
to the election of the directors of the Company, as such terms are used
in Rule 14a-11 of Regulation 14A under the Exchange Act, or (b) who was
designated by a Person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii), (iv) or
(v) hereof) shall be deemed a director as of the beginning of such
period;
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than (a)
a merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of any Company, at
least 51% of the combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (b) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the
beneficial owner (as defined in clause (i) above), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company) representing 25% or more of the combined
voting power of the Company's then outstanding voting securities; or
(iv) The stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition of the Company of all or
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substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 75% of the combined voting power of the
voting securities of which are owned by persons in substantially the
same proportions as their ownership of the Company immediately prior to
such sale; or
(v) The occurrence of any other event or circumstance which is
not covered by (i) through (iv) above which the Board determines
affects control of the Company and, in order to implement the purposes
of this Agreement as set forth above, adopts a resolution that such
event or circumstance constitutes a Change in Control for the purposes
of this Agreement.
"CAUSE" shall mean (a) material criminal fraud, (b) gross negligence,
(c) material dereliction of duties, (d) intentional material damage to the
property or business of the Company, or (e) the commission of a material felony,
in each case, as determined in the reasonable discretion of the Board, but only
if (1) the Executive has been provided with written notice of any assertion that
there is a basis for termination for cause which notice shall specify in
reasonable detail specific facts regarding any such assertion, (2) such written
notice is provided to the Executive a reasonable time before the Board meets to
consider any possible termination for cause, (3) at or prior to the meeting of
the Board to consider the matters described in the written notice, an
opportunity is provided to the Executive and his counsel to be heard before the
Board with respect to the matters described in the written notice, (4) any
resolution or other Board action held with respect to any deliberation regarding
or decision to terminate the Executive for cause is duly adopted by a vote of a
majority of the entire Board of the Company at a meeting of the Board called and
held and (5) the Executive is promptly provided with a copy of the resolution or
other corporate action taken with respect to such termination. No act or failure
to act by the Executive shall be considered willful unless done or
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omitted to be done by him not in good faith and without reasonable belief that
his action or omission was in the best interests of the Company. The
unwillingness of the Executive to accept any or all of a change in the nature or
scope of his position, authorities or duties, a reduction in his total
compensation or benefits, a relocation that he deems unreasonable in light of
his personal circumstances, or other action by or request of the Company in
respect of his position, authority, or responsibility that he reasonably deems
to be contrary to this Agreement, may not be considered by the Board to be a
failure to perform or misconduct by the Executive.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
"CONFIDENTIAL INFORMATION" shall mean all business and other
information relating to the business of the Company, including without
limitation, technical or nontechnical data, programs, methods, techniques,
processes, financial data, financial plans, product plans, and lists of actual
or potential customers, which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by other Persons, and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be contractually subject to
protection under this Agreement whether or not such information constitutes a
trade secret and is separately protectable at law or in equity as a trade
secret. Confidential Information does not include confidential business
information which does not constitute a trade secret under applicable law two
years after any expiration or termination of this Agreement.
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"DISABILITY" or "DISABLED" shall mean the Executive's inability as a
result of physical or mental incapacity to substantially perform his duties for
the Company on a full-time basis, with or without accommodation, for a period of
six (6) months.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"INVOLUNTARY TERMINATION" shall mean the termination of Executive's
employment by the Employee following a Change in Control which, in the sole
judgment of the Executive, is due to (i) a change of the Executive's
responsibilities, position (including status as Board Chairman and Chief
Executive Officer of the Company, its successor or ultimate parent entity,
office, title, reporting relationships or working conditions) authority or
duties (including changes resulting from the assignment to the Executive of any
duties inconsistent with his positions, duties or responsibilities as in effect
immediately before the Change in Control); or (ii) a change in the terms or
status (including the rolling three-year termination date) of this Agreement; or
(iii) a reduction in the Executive's compensation or benefits; or (iv) a forced
relocation of the Executive outside the Charlotte, North Carolina, metropolitan
area; or (v) a significant increase in the Executive's travel requirements; or
(vi) the breach by the Company of any provision of this Agreement.
"PERSON" shall mean any individual, corporation, bank, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or other entity.
"TERMINATION" shall mean termination, prior to the expiration of the
Term, of the employment of the Executive with the Company for any reason other
than death, disability (as described above), cause (as described above), or
Voluntary Termination. Any termination of the Executive's employment shall be
communicated by a written notice of termination to the other party to this
Agreement (a "Notice of Termination") specifying the date on which the
termination is effective ("Termination Date").
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"VOLUNTARY TERMINATION" shall mean the termination by Executive of
Executive's employment following a Change in Control which is not the result of
any of clauses (i) through (vi) set forth in the definition of Involuntary
Termination above.
3. Duties. During the Term hereof, the Executive shall exercise such
position and authority and duties as are commensurate with the position and
authority being exercised and duties being performed by the Executive
immediately prior to the Effective Date, which services shall be performed at
the location where the Executive was employed immediately prior to the Effective
Date or at such other location as the Company may reasonably require, provided,
however, that the Executive shall not be required to accept any such other
location that he deems unreasonable in the light of his personal circumstances.
Executive agrees that during the Term hereof, he will devote his full time,
attention and energies to the diligent performance of his duties. Executive
shall not, without the prior written consent of the Company, at any time during
the Term hereof (i) accept employment with, or render services of a business,
professional or commercial nature to, any Person other than the Company, (ii)
engage in any venture or activity which the Company may in good faith consider
to be competitive with or adverse to the business of the Company or of any
affiliate of the Company, whether alone, as a partner, or as an officer,
director, employee or shareholder or otherwise, except that the ownership of not
more than 5% of the stock or other equity interest of any publicly traded
corporation or other entity shall not be deemed a violation of this Section, or
(iii) engage in any venture or activity which the Board may in good faith
consider to interfere with Executive's performance of his duties hereunder.
4. Term. Unless earlier terminated as provided herein, this Agreement
shall be for a rolling term of three (3) years (the "Term") commencing on the
Effective Date, continuing to be effective until changed by the Board. This
Agreement shall be deemed to extend each day for an
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additional day automatically and without any action on behalf of either party
hereto until Executive turns sixty-two; upon Executive's sixty-second birthday,
such Term shall be converted to a fixed term of three years and shall expire
(without any action on behalf of either party hereto) on Executive's sixty-fifth
birthday; this Agreement shall terminate upon the expiration of such Term.
Either party may, by notice to the other, cause this Agreement to cease to
extend automatically and, upon such notice, the Term of this Agreement shall be
the three years following the date of such notice, and this Agreement shall
terminate upon the expiration of such Term.
5. Termination. The Executive's employment may be terminated as
follows:
5.1 The Company. The Company shall have the right to terminate
Executive's employment hereunder at any time during the Term hereof (i) for
Cause, (ii) if the Executive becomes Disabled, (iii) upon the Executive's death,
or (iv) without Cause.
5.1.1 If the Company terminates Executive's
employment under this Agreement pursuant to clauses (i), (ii) or (iii)
of Section 5.1, the Company's obligations hereunder shall cease as of
the date of termination; provided, however, if Executive is terminated
for Cause after a Change in Control, then such termination shall be
treated as a Voluntary Termination as contemplated in Section 5.2.3
below.
5.1.2 If the Company terminates Executive pursuant to
clause (iv) of Section 5.1, Executive shall be entitled to receive
immediately or in installments over a period of three (3) years at the
election of the Executive as severance upon such termination, aggregate
compensation and benefits provided in Section 6 equal to three times
Executive's annual compensation being paid at the time of termination.
For purposes of determining compensation which is not fixed (such as a
bonus), the annual amount of such unfixed
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compensation shall be deemed to be equal to the average of such
compensation over the three-year period immediately prior to the
termination.
5.1.3 In the event of such termination pursuant to
clause (iv) of Section 5.1, (a) all rights of Executive pursuant to
awards of share grants or options granted by the Company shall be
deemed to have vested and shall be released from all conditions and
restrictions, except for restrictions on transfer pursuant to the
Securities Act of 1933, as amended, and (b) the Executive shall be
deemed to be credited with service with the Company for such remaining
Term for the purposes of the Company's benefit plans; (c) the Executive
shall be deemed to have retired from the Company and shall be entitled
as of the termination date, or at such later time as he may elect to
commence receiving the total combined qualified and non-qualified
retirement benefit to which he is entitled hereunder, or his total
non-qualified retirement benefit hereunder if under the terms of the
Company's qualified retirement plan for salaried employees he is not
entitled to a qualified benefit, and (d) if any provision of this
Section 5.1.3 cannot, in whole or in part, be implemented and carried
out under the terms of the applicable compensation, benefit, or other
plan or arrangement of the Company because the Executive has ceased to
be an actual employee of the Company, because the Executive has
insufficient or reduced credited service based upon his actual
employment by the Company, because the plan or arrangement has been
terminated or amended after the effective date of this Agreement, or
because of any other reason, the Company itself shall pay or otherwise
provide the equivalent of such rights, benefits and credits for such
benefits to Executive, his dependents, beneficiaries and estate.
5.2 By Executive. Executive shall have the right to terminate
his employment hereunder if (i) the Company materially breaches this Agreement
and such breach is not cured within
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30 days after written notice of such breach is given by Executive to the
Company; (ii) there is a Voluntary Termination; or (iii) there is an Involuntary
Termination.
5.2.1 If Executive terminates his employment other
than pursuant to clauses (i), (ii) or (iii) of Section 5.2, the
Company's obligations under this Agreement shall cease as of the date
of such termination and Executive shall be subject to the
confidentiality provisions set forth in Section 8 hereof and the
noncompetition provisions set forth in Section 9 hereof for a period of
one (1) year.
5.2.2 If Executive terminates his employment
hereunder pursuant to either clause (i) or clause (iii) of Section 5.2,
Executive shall be entitled to receive his base salary and other
benefits due him through the termination date, less applicable taxes
and other deductions, and receive immediately in a lump sum as
severance, aggregate cash compensation provided in Section 6 equal to
three times Executive's annual compensation being paid at the time of
termination or in installments over a period of three (3) years at the
election of the Executive. For purposes of determining compensation
which is not fixed (such as a bonus), the annual amount of such unfixed
compensation shall be deemed to be the equal to the average of such
compensation over the three-year period immediately prior to the
termination.
5.2.3 If within one (1) year of a Change in Control
Executive terminates his employment pursuant to clause (ii) of Section
5.2, Executive shall be entitled to receive his base salary and other
benefits due him through the termination date less applicable taxes and
other deductions and receive immediately in a lump sum as severance
aggregate compensation and benefits provided in Section 6 equal to one
times Executive's annual compensation being paid at the time of
Voluntary Termination or in installments over the
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course of one (1) year at the election of the Executive. For purposes
of determining compensation which is not fixed (such as a bonus), the
annual amount of such unfixed compensation shall be deemed to be the
equal to the average of such compensation over the three-year period
immediately prior to the termination.
5.2.4 In addition, in the event of such termination
pursuant to any of clauses (i) through (iii) of this Section 5.2, (a)
all rights of Executive pursuant to awards of share grants or options
granted by the Company shall be deemed to have vested and shall be
released from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as amended, and (b)
the Executive shall be deemed to be credited with service with the
Company for such remaining Term for the purposes of the Company's
benefit plans, and (c) the Executive shall be deemed to have retired
from the Company and shall be entitled as of the termination date, or
at such later time as he may elect to commence receiving the total
combined qualified and non-qualified retirement benefit to which he is
entitled hereunder, or his total non-qualified retirement benefit
hereunder if under the terms of the Company's qualified retirement plan
for salaried employees he is not entitled to a qualified benefit, and
(d) if any provision of this Section 5.2.4 cannot, in whole or in part,
be implemented and carried out under the terms of the applicable
compensation, benefit, or other plan or arrangement of the Company
because the Executive has ceased to be an actual employee of the
Company, because the Executive has insufficient or reduced credited
service based upon his actual employment by the Company, because the
plan or arrangement has been terminated or amended after the effective
date of this Agreement, or because of any other reason, the Company
itself shall pay or otherwise provide the equivalent of such rights,
benefits and credits for such benefits to Executive, his dependents,
beneficiaries and estate.
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6. Compensation. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that his salary pursuant to Section 6.1 shall be
payable not less frequently than monthly):
6.1 Annual Salary. During the Term hereof, the Company shall
pay to Executive a base salary established by the Board which for the first year
of the Term shall be not less than his annual salary immediately prior to the
Effective Date. During the Term, the Executive's annual base salary shall be
reviewed at least annually and shall be increased from time to time to reflect
increases in the cost of living and such other increases as shall be consistent
with increases in annual base salary awarded in the ordinary course of business
to other key executives; provided, however, that following a Change in Control,
the base salary shall be increased annually by a percentage at least equal to
the average annual increase over the past three years.
6.2 Annual Incentive Bonus. During the Term hereof, the
Executive shall receive an annual incentive cash bonus at least equal to the
average of such compensation over the three (3) year period immediately prior to
the fiscal year in which the Effective Date occurs. The annual incentive cash
bonus shall be payable within 30 days after the end of each fiscal year.
6.3 Long-Term Incentive Compensation Plan. During the Term
hereof, the Executive shall be eligible to participate on a reasonable basis,
and to continue his existing participation in the Long-Term Incentive
Compensation Plan, and any other incentive compensation plan which provides
opportunities to receive compensation in addition to his annual base salary
which are the greater of (i) the opportunities provided by the Company for
executives with
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comparable duties or (ii) the opportunities under any such plans in which he was
participating immediately prior to the Effective Date.
6.4 Stock Options and Restricted Stock. During the Term
hereof, the Board shall grant Executive options to purchase Company Common Stock
and restricted stock in accordance with the terms of the 1992 stock option plan
or any successor plan.
6.5 Welfare Benefits, Medical, Dental and Life Insurance.
6.5.1 During the Term, the Executive shall be
entitled to receive and participate in salaried employee benefits
(including, but not limited to, medical, dental, and life and accident
insurance) and perquisites which are the greater of (i) the employee
benefits and perquisites provided by the Company to executives with
comparable duties or (ii) the employee benefits and perquisites to
which he was entitled or in which he participated immediately prior to
the Effective Date.
6.5.2 In the event of a Change in Control, if the
Executive's employment is terminated under this Agreement pursuant to
clause (iv) under Section 5.1 or clauses (i), (ii), or (iii) of Section
5.2, the Executive shall have the opportunity to continue his benefits
under the medical, dental and life and accident insurance plans for a
period of up to three years following his termination. Continued
medical coverage, if elected, shall run concurrently with the
Executive's continuation coverage rights under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA). Such medical benefits
coverage shall cease if the Executive and his qualified dependents
become covered under another group health plan and are not subject to
any pre-existing condition limitations or are or become entitled to
receive benefits under Medicare.
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6.6 Other Benefits. Executive shall be entitled to share in
any other employee benefits generally provided by the Company to its most highly
ranking executives for so long as the Company provides such benefits. The
Company also agrees to provide Executive with a life insurance policy in the
face amount of two times the Executive's base compensation with a maximum face
amount of $500,000. Executive shall also be entitled to participate in all other
benefits accorded general Company employees.
7. Excess Parachute Payments. It is the intention of the parties hereto
that the severance payments and other compensation provided for herein are
reasonable compensation for Executive's services to the Company and shall not
constitute "excess parachute payments" within the meaning of Section 280G of the
Code and any regulations thereunder. In the event that the Company's independent
accountants acting as auditors for the Company on the date of a Change in
Control determine that the payments provided for herein constitute "excess
parachute payments," then the compensation payable hereunder shall be reduced to
the point that such compensation shall not qualify as "excess parachute
payments."
8. Confidentiality. Executive shall hold in a fiduciary capacity for
the benefit of the Company all Confidential Information relating to the Company
or any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies. After termination of Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. Upon the termination or expiration
of his employment hereunder, Executive agrees to deliver promptly to the Company
all Company files, customer lists, management reports,
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memoranda, research, Company forms, financial data and reports and other
documents supplied to or created by him in connection with his employment
hereunder (including all copies of the foregoing) in his possession or control
and all of the Company's equipment and other materials in his possession or
control. In no event shall an asserted violation of the provisions of this
Section 8 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
9. Noncompetition and Nonsolicitation Agreement. If this Agreement is
terminated by the Company pursuant to Section 5.1(iv) or by Executive pursuant
to Section 5.2(i) or (iii), Executive shall not enter into an employment
relationship or a consulting arrangement with any other knitted apparel textile
company of any type headquartered or having a physical presence in the states of
North Carolina, South Carolina, Tennessee, and New York (hereinafter a
"competitor") within three (3) years of the anniversary of the date of the
Change in Control (the "Noncompete Period"). The obligations contained in this
Section 9 shall not prohibit Executive from being an owner of not more than 5%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation.
9.1 During the Noncompete Period, Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of Company to leave the employ of Company, including but not limited to
a competitor, or in any way interfere with the relationship between Company and
any employee thereof, (ii) hire any person currently employed by the Company who
was an employee of Company or any subsidiary at any time during the time that
Executive was employed by Company, or (iii) induce or attempt to induce any
customer, supplier, or other entity in a business relation of Company to cease
doing business with Company, or in any
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way interfere with the relationship between any such customer, supplier, or
business relation and Company or do business with a competitor.
9.2 If, at the time of enforcement of this Section 9, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this Section 9 are reasonable.
9.3 In the event of the breach or a threatened breach by
Executive of any of the provisions of this Section 9, Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security). In
addition, in the event of an alleged breach or violation by Executive of this
Section 9, the Noncompete Period shall be tolled until such breach or violation
has been duly cured.
10. Trust. The Company shall establish an irrevocable trust to fund the
maximum amount of obligations which could reasonably be expected to become
payable hereunder under any circumstances (which may be a "rabbi trust" if so
requested by Executive), which trust (i) shall have as trustee an individual
acceptable to Executive, (ii) shall be fully funded upon the earlier of a Change
in Control or the approval of any regulatory application filed by a potential
acquiror of the Company seeking to acquire control of the Company, and (iii)
shall contain such other terms and
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conditions as are reasonably necessary in Executive's determination to ensure
the Company's compliance with its obligations hereunder.
11. Assignment. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
12. Notices. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
To the Company: Dyersburg Corporation
ATTENTION: Corporate Secretary
15720 John J. Delaney Drive, Suite 445
Charlotte, North Carolina 28277
To Executive: T. Eugene McBride
10609 Lederer Drive
Charlotte, North Carolina 28277
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
13. Provisions Severable. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
14. Remedies.
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14.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company. All claims, disputes
and other matters in question between the Executive and the Company arising out
of or related to the interpretation of this Agreement or the breach of this
Agreement shall be decided under and governed by the laws of the State of North
Carolina.
14.2 The Company is aware that upon the occurrence of a Change
in Control, the Board or a stockholder of the Company may then cause or attempt
to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
may take, or attempt to take, other action to deny the Executive the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the parties that the
Executive not be required to incur the legal fees and expenses associated with
the protection or enforcement of his rights under this Agreement by litigation
or other legal action because such costs would substantially detract from the
benefits intended to be extended to the Executive hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of incurring such
costs. Accordingly, if at any time after the Effective Date, it should appear to
the Executive that the Company is or has acted contrary to or is failing or has
failed to comply with any of its obligations under this Agreement for the reason
that it regards this Agreement to be void or
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unenforceable or for any other reason, or that the Company has purported to
terminate his employment for cause or is in the course of doing so in either
case contrary to this Agreement, or in the event that the Company or any other
person takes any action to declare this Agreement void or unenforceable, or
institutes any litigation or other legal action designed to deny, diminish or to
recover from the Executive the benefits provided or intended to be provided to
him hereunder, and the Executive has acted in good faith to perform his
obligations under this Agreement, the Company irrevocably authorizes the
Executive from time to time to retain counsel of his choice at the expense of
the Company to represent him in connection with the protection and enforcement
of his rights hereunder, including without limitation representation in
connection with termination of his employment contrary to this Agreement or with
the initiation or defense of any litigation or other legal action, whether by or
against the Executive or the Company or any director, officer, stockholder or
other person affiliated with the Company, in any jurisdiction. The reasonable
fees and expenses of counsel selected from time to time by the executive as
hereinabove provided shall be paid or reimbursed to the Executive by the Company
on a regular, periodic basis upon presentation by the Executive of a statement
or statements prepared by such counsel representing other officers or key
executives of the Company in connection with the protection and enforcement of
their rights under similar agreements between them and the Company, and, unless
in his sole judgment, use of common counsel could be prejudicial to him or would
not be likely to reduce the fees and expenses chargeable hereunder to the
Company, the Executive agrees to use his best efforts to agree with such other
officers or executives to retain common counsel.
15. Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of
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any such term or condition or of any other term or condition of this Agreement,
unless such waiver is contained in a writing signed by the party making the
waiver.
16. Merger. This Agreement, together with Noncompetition, Severance and
Employment Agreement between the parties dated June 30, 1999, constitutes the
entire understanding of the parties as to the matters addressed and all prior
agreements and understandings, whether written or oral, are merged herein.
17. Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by other parties hereto.
18. Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of North Carolina.
19. Binding Agreement. This Agreement shall be binding upon the Company
and its successors and assigns and upon Executive and his executors, personal
representatives, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
/s/ T. Eugene McBride
--------------------------------
T. Eugene McBride
DYERSBURG CORPORATION
/s/ L. R. Jalenak
--------------------------------
By: Chairman, Compensation Committee
of the Board of Directors
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