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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 25, 1994
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-10542
UNIFI, INC.
(Exact name of registrant as specified its charter)
New York 11-2165495
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 19109 - 7201 West Friendly Road
Greensboro, NC 27419
(Address of principal executive offices) (Zip Code)
(910) 294-4410
(Registrant's telephone number, including area code)
Same
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
Class Outstanding at December 25, 1994
Common Stock, par value $.10 per share 68,212,035 Shares
Part I. Financial Information
UNIFI, INC.
Condensed Consolidated Balance Sheets
December 25, June 26,
1994 1994
(Unaudited) (Audited)
(Amounts in Thousands)
ASSETS
Current Assets:
Cash and Cash Equivalents $58,233 $80,653
Short-Term Investments 59,770 71,483
Accounts Receivable, Net 188,802 200,537
Inventories
Raw Materials and Supplies $58,308 $29,797
Work in Process 12,248 12,937
Finished Goods 52,815 57,545
$123,371 $100,279
Other Current Assets 1,588 3,605
Total Current Assets $431,764 $456,557
Property, Plant and Equipment $879,043 $848,637
Less: Accumulated Depreciation 366,448 336,375
$512,595 $512,262
Investments in Affiliates $11,616 $10,626
Other Assets $24,751 $23,807
Total Assets $980,726 $1,003,252
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes Payable $-- $25
Accounts Payable 87,325 83,831
Accrued Expenses 45,219 56,295
Income Taxes 10,257 12,132
Total Current Liabilities $142,801 $152,283
Long-Term Debt $230,000 $230,000
Deferred Income Taxes $34,699 $32,447
Shareholders' Equity
Common Stock $6,821 $7,043
Capital in Excess of Par 144,372 199,959
Retained Earnings 422,225 385,472
Cumulative Translation Adjustment (365) (3,060)
Reserve for Investments 173 (892)
Total Shareholders' Equity $573,226 $588,522
Total Liabilities and
Shareholders' Equity $980,726 $1,003,252
See Accompanying Notes to Condensed Consolidated Financial Statements.
UNIFI, INC.
Condensed Consolidated Statements of Income
(Unaudited)
For the Quarters Ended For the Six Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1994 1993 1994 1993
(Amounts in Thousands Except Per Share Data)
Net Sales $387,297 $351,516 $746,491 $676,871
Costs and Expenses:
Cost of Goods Sold $332,182 $298,952 $643,042 $578,582
Selling, General &
Administrative Exp. 10,287 10,185 19,961 19,758
Interest Expense 3,935 4,186 7,873 9,279
Interest Income (2,401) (2,007) (5,053) (4,720)
Other (Income)
Expense (2,259) (268) (2,838) (64)
$341,744 $311,048 $662,985 $602,835
Income Before Income $45,553 $40,468 $83,506 $74,036
Taxes
Income Taxes 17,433 16,107 32,697 29,863
Net Income $28,120 $24,361 $50,809 $44,173
Earnings Per Share:
Primary $.40 $.34 $.72 $.62
Fully Diluted $.39 $.34 $.70 $.61
Cash Dividends Per $.10 $.14 $.20 $.28
Share
Average Shares
Outstanding: Primary 70,216 71,027 70,584 71,059
Fully Diluted 77,970 78,806 78,337 78,824
See Accompanying Notes to Condensed Consolidated Financial Statements.
UNIFI, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months
Ended
Dec. 25, Dec. 26,
1994 1993
(Amounts in Thousands)
Cash and Cash Equivalents Provided by
Operating Activities $64,338 $52,048
Investing Activities:
Capital Expenditures $(45,161) $(79,373)
Sale of Capital Assets 623 --
Notes Receivable 4,702 (42)
Sale of Subsidiary 13,798 --
Sale of Investments 49,661 34,168
Purchase of Investments (40,455) (4)
Net Investing Activities $(16,832) $(45,251)
Financing Activities:
Issuance of Common Stock $410 $419
Borrowing of Debt -- 7,453
Repayment of Debt (25) (27,194)
Cash Dividend (14,056) (19,331)
Purchase and Retirement of Common Stock (56,219) --
Net Financing Activities $(69,890) $(38,653)
Currency Translation Adjustment $(36) $(16)
Increase (Decrease) in Cash $(22,420) $(31,872)
Cash and Cash Equivalents - Beginning 80,653 76,093
Cash and Cash Equivalents - Ending $58,233 $44,221
See Accompanying Notes to Condensed Consolidated Financial Statements.
UNIFI, INC.
Notes to Condensed Consolidated Financial Statements
(a)Basis of Presentation
The information furnished is unaudited and reflects all adjustments which
are, in the opinion of Management, necessary to present fairly the
financial position at December 25, 1994 and the results of operations and
cash flows for the periods ended December 25, 1994 and December 26, 1993.
Such adjustments consisted of normal recurring items. Interim results are
not necessarily indicative of results for a full year. It is suggested
that the condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's latest
annual report on Form 10-K.
(b)Income Taxes
Deferred income taxes arise primarily from temporary differences between
financial and tax basis of assets and liabilities, principally property and
equipment.
The difference between the statutory federal income tax rate and the
effective tax rate is primarily due to results of foreign subsidiaries
which are taxed at rates below those of U.S. operations. The current
periods' operating results were more favorably impacted by foreign
operations than the prior periods' which contributed to the lower effective
tax rates.
(c)Per Share Information
Earnings per common share are computed on the basis of the number of shares
outstanding, adjusted for the dilutive effect of stock options outstanding.
The Convertible Notes do not meet the test of a common stock equivalent,
accordingly, conversion of these notes is only assumed for the calculation
of fully diluted earnings per share.
Computation of average shares outstanding (in 000's):
Quarters Ended Six Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1994 1993 1994 1993
Average Shares
Outstanding 69,706 70,434 70,077 70,387
Add: Dilutive Options 510 593 507 672
Primary Average Shares 70,216 71,027 70,584 71,059
Incremental Shares
Arising from Full
Dilution Assumption 7,754 7,779 7,753 7,765
Average Shares Assuming
Full Dilution 77,970 78,806 78,337 78,824
Computation of net income for per share data (in 000's):
Quarters Ended Six Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1994 1993 1994 1993
Net Income - Primary $28,120 $24,361 $50,809 $44,173
Add: Convertible
Subordinated Interest
Net of Tax 2,168 2,113 4,337 4,216
Net Income Assuming
Full Dilution $30,288 $26,474 $55,146 $48,389
(d)Common Stock
On January 19, 1995 the Company's Board of Directors declared a cash
dividend of 10 cents per share payable on February 10, 1995 to shareholders
of record on February 3, 1995.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following is Management's discussion and analysis of certain significant
factors that have affected the Company's operations and material changes in
financial condition during the periods included in the accompanying Condensed
Consolidated Financial Statements.
Results of Operations
Net sales increased from $351.5 million to $387.3 million in the quarter or
10.2% and for the six month period, sales increased 10.3% from $676.9 million
in 1993 to $746.5 million in 1994. We experienced volume increases of 13.3%
for the quarter and 15.3% for the year-to-date over the corresponding prior
year periods. Average unit price, based on overall product mix, decreased
2.8% for the quarter and 4.4% for the year-to-date compared to the
corresponding periods of the prior fiscal year.
Our domestic yarn products experienced both gains in sales dollars and units
for both the quarter and year-to-date. Continued excellent demand and price
increases in both our dyed and natural polyester yarns have been a key factor
in these increases for both the current quarter and the year-to-date. All
previously announced polyester price increases are now fully in place as we
enter our third fiscal quarter. Sales of our nylon and covered yarns have
remained solid with the exception of the ladies' hosiery market where we
continue to experience erratic demand, but going forward we feel that demand
for our other products will enable us to better utilize our full capacity
potential. Our spun yarn products have also benefited from strong demand for
both the quarter and the year-to-date. Volume has increased as a result of
production from the newest plant in Sanford, NC and subsequent capacity
increases to that facility. Our average unit sales price for our spun
operations has declined for the year-to-date period. However, slight
improvement was noted in the current quarter as our older sales contracts
began to expire late in the quarter. We anticipate increased volume in our
spun operations as a result of the continuing expansion in our Sanford, NC
facility and the recent acquisition of a spinning mill.
Our Irish operations have experienced increased volume for the quarter and a
slight decline for the year-to-date. Average selling prices, based on
product mix, are up for both periods in the current year. We are striving to
increase our selling prices commensurate with raw material increases and
continue to reposition our product mix to improve our margins. We anticipate
increased capacity in the third quarter with the addition of more texturizing
equipment.
Cost of goods sold as a percentage of net sales for the quarter increased
from 85.1% last year to 85.8% this year. For the respective year-to-date
periods, cost of goods sold as a percentage of net sales has increased from
85.5% to 86.1%. The increase in cost of sales as a percentage of net sales
is attributable to lower average sales prices, based on product mix and, for
the current quarter, was also adversely impacted by higher per unit raw
material costs. Fixed manufacturing costs improved on a per unit basis for
both the current quarter and the year-to-date due to the volume increases
noted above.
Selling, general and administrative expenses as a percentage of net sales
declined from 2.9% in the prior year quarter to 2.7% in the current quarter.
Our year-to-date results are consistent reflecting a decline from 2.9% in
1993 to 2.7% in 1994. In dollar terms selling, general and administrative
expenses were stable for the quarters increasing from $10.2 million in the
prior year quarter to $10.3 million in the current quarter. For the six
month period selling, general and administrative expenses increased slightly
from $19.8 million in 1993 to $20.0 million in 1994.
Interest expense decreased from $4.2 million in the 1993 quarter to $3.9
million in the current quarter. For the year-to-date we have experienced a
decline of $1.4 million from $9.3 million to $7.9 million. This reduction of
interest expense is attributed to the retirement of debt assumed in mergers
consummated in prior periods. Interest income has increased from $2.0
million in last year's second quarter to $2.4 million in the current quarter.
For the six month period, interest income has increased from $4.7 million to
$5.1 million in the current period. The increase in interest income is
attributed to higher returns on invested funds.
Other income, net increased from $268 thousand in the prior year quarter to
$2.3 million in the current year quarter and from $64 thousand to $2.8
million for the year-to-date. The majority of the increase in both the
current quarter and the year-to-date period resulted from the recognition of
a gain on the sale of an investment that had previously been deferred pending
collection of a note receivable balance.
The effective tax rate has decreased from 39.8% to 38.3% in the current
quarter and has decreased from 40.3% to 39.2% for the year-to-date. The
decrease in effective tax rates is attributed to the current period increase
in foreign subsidiaries earnings that are taxed at rates lower than U.S.
rates.
Earnings per share increased from $.34 per share to $.40 per share in the
current quarter and from $.62 per share to $.72 for the year-to-date.
Liquidity and Capital Resources
We ended the current quarter with working capital of $289.0 million of which
$118.0 million represents cash and cash equivalents and short-term
investments. This compares with working capital of $304.3 million and cash
reserves of $152.1 million at year end. Cash and cash equivalents generated
from operations amounted to $64.3 million for the six month period ended
December 25, 1994. Inventories increased $23.1 million from $100.3 million
at June 26, 1994 to $123.4 million at December 25, 1994. This is attributed
to several factors including overall per unit raw material price increases,
maintaining higher levels of raw yarn inventories in anticipation of
continued strong demand and capacity increases currently in progress. Our
net accounts receivable balance has declined from $200.5 million at June 26,
1994 to $188.8 million at December 25, 1994. This decline is due, in part,
to decreased days outstanding as enhanced collection efforts and portfolio
management have yielded improved results.
As noted above, our primary source of cash funds is from operating activities
which generated $64.3 million in cash and cash equivalents for the year-to-
date period ended December 25, 1994. In addition to operating activities,
the Company generated $27.7 million from net investment activity during this
six month period, including $13.8 million from the sale of its French
subsidiary. The primary uses of funds during the current six months were
capital expenditures for capacity expansions and upgrades totaling $45.2
million, the payment of the Company's cash dividends of $14.1 million and the
purchase and retirement of Company common stock of $56.2 million.
Management believes the current financial position of the Company in
connection with its operations and its access to debt and equity markets are
sufficient to meet its anticipated capital expenditure, strategic
acquisition, working capital and other financial needs.
Part II. Other Information
UNIFI, INC.
Item 4. Submission of Matters to a Vote of Security Holders
The Shareholders of the Company at their Annual Meeting held on the
20th day of October, 1994, considered and voted upon the elections of
four (4) Class 3 Directors of the Company.
The Shareholders elected management's nominees for the four (4) Class 3
Directors to serve until the Annual Meeting of the Shareholders in
1997, or until their successors are elected and qualified, as follows:
Votes in Votes
Names of Directors Favor Against Abstaining
William J. Armfield, IV 57,966,448 476,240 3,883,991
William T. Kretzer 57,925,298 517,390 3,883,991
G. Allen Mebane, IV 57,713,793 543,640 4,069,246
George R. Perkins, Jr. 57,966,448 472,240 3,887,991
The information set forth under the heading Election of Directors on
pages 2-5 of the Definitive Proxy Statement filed with the Commission
since the close of the registrant's fiscal year ending June 26, 1994,
and is incorporated herein by reference.
The Shareholders at their Annual Meetings in 1992 elected Class 1
Directors and in 1993 elected Class 2 Directors to serve until the
Annual Meeting of the Shareholders in 1995 and 1996 respectively, or
until their successors are elected and qualified, the following persons
were elected and are still serving as Class 1 and Class 2 Directors of
the Company:
Class 1 Class 2
Donald F. Orr Charles R. Carter
Timotheus R. Pohl Jerry W. Eller
Robert A. Ward Kenneth G. Langone
G. Alfred Webster
Lord Eric Sharp who was elected as a Class 2 Director in 1993 died in
May 1994. No one was elected to replace Lord Sharp and the number of
directors of the Corporation was reduced by one after his death.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10.1)Lease Agreement, dated March 2, 1987, between NationsBank,
Trustee under Unifi, Inc. Profit Sharing Plan and Trust,
Wachovia Bank and Trust Co., N.A., Independent Fiduciary, and
Unifi, Inc., filed herewith.
(10.2)Severance Compensation Agreement between Unifi, Inc. and
William T. Kretzer dated July 20, 1993, expiring on July 19,
1996 (similar agreements were signed with G. Allen Mebane,
William J. Armfield, IV, Robert A. Ward, Jerry W. Eller and
G. Alfred Webster), filed herewith.
(27) Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter ended
December 25, 1994.
UNIFI, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIFI, INC.
Date: WILLIS C. MOORE III
Willis C. Moore III
Vice President and Chief
Financial Officer (Mr. Moore is
the Principal Financial and
Accounting Officer and has been
duly authorized to sign on behalf
of the Registrant.)
STATE OF NORTH CAROLINA
LEASE AGREEMENT
COUNTY OF GUILFORD
THIS LEASE AGREEMENT made and entered into this 2nd day of March, 1987,
by and between NCNB NATIONAL BANK OF NORTH CAROLINA, Trustee under the Unifi,
Inc. Profit Sharing Plan and Trust, hereinafter called "Lessor"; WACHOVIA
BANK & TRUST COMPANY, N.A., hereinafter called "Independent Fiduciary"; and
UNIFI, INC., a New York corporation, hereinafter called "Lessee";
WITNESSETH:
THAT FOR and in consideration of the covenants and agreements
hereinafter set out, to be kept and performed by Lessee, Lessor has demised
and leased, and does hereby demise and lease, to Lessee for the term and upon
the conditions hereinafter set out, the following described real property
situated in Guilford County, North Carolina, to wit:
BEGINNING at a tack located in the center line of Friendly
Road, said tack being situate North 79 degrees 00 minutes 50
seconds East 278.75 feet along said centerline from a tack
marking the northwest corner of Lot No. 2 as shown on the
survey and recorded plat to which reference is hereinafter
made; runs thence from said beginning point along the center
line of Friendly Road North 79 degrees 00 minutes 50 seconds
East 658.72 feet to a tack located in the center line of
Friendly Road, said tack being situate North 79 degrees 00
minutes 50 seconds West 62.48 feet from the northwest corner
of property now or formerly belonging to W. A. Stern; runs
thence South 05 degrees 13 minutes 30 seconds West 775.88 feet
to an iron pipe, said iron pipe marking a control corner with
Lot No. 3; runs thence South 79 degrees 00 minutes 50 seconds
West 445.22 feet to an iron pipe, said iron pipe marking a
control corner with Lot No. 3; runs thence North 10 degrees 44
minutes 50 seconds West 745.00 feet to the point and place of
BEGINNING. The same being all of Lot No. 1 according to that
survey entitled "Survey for Hiltin Company", dated August 4,
1972 and prepared by Marvin L. Borum and Associates,
Registered Engineers, of Greensboro, North Carolina. For
reference see plat of property of Tri-City Terminals Inc.
recorded in the Office of the Register of Deeds of Guilford
County, North Carolina in Plat Book 43 at Page 53.
The above-described property is hereinafter referred to as "premises."
TO HAVE AND TO HOLD said described property and the privileges and
appurtenances thereto belonging to Lessee, its successors and assigns, upon
the following terms and conditions:
1. TERM. The original term of this Lease shall be for a period of
five (5) years, beginning on the 13th day of March, 1987 and, unless sooner
terminated as herein provided, shall continue until midnight on the
expiration of five (5) full years.
2. RENTAL: The rental consideration to be paid by the Lessee to
Independent Fiduciary in monthly installments in advance without notice or
demand, for the original term of this Lease shall be paid as follows:
(a) The sum of $18,171.00 shall be due and payable on the 13th day
of March, 1987, and a like amount of $18,171.00 shall be due and payable on
the 13th day of each calendar month thereafter, to and including the 13th day
of February, 1990; and
(b) The sum of $21,131.58 shall be due and payable on the 13th day
of March, 1990, and a like amount of $21,131.58 shall be due and payable on
the 13th day of each calendar month thereafter, to and including the 13th day
of February, 1992.
3. OPTIONS FOR TWO EXTENSIONS WITH RENT ADJUSTMENTS:
(a) Initial Extension Option. Provided this Lease is in full force
and effect, Lessee shall have the right to extend the term of this Lease for
the demised premises at the end of the original five (5) year term, for a
first renewal term of five (5) years, provided Lessee shall notify Lessor in
writing no later than 180 days prior to the expiration of the original term
of this Lease (to wit: the 13th day of September, 1991) that Lessee is
exercising its right to extend the Lease. Notwithstanding the foregoing, any
such extension shall be subject to the approval of the Independent Fiduciary.
(b) Second Extension Option. If (i) Lessee shall have exercised its
option for the initial renewal term pursuant to the provisions of Section
(a), and (ii) if this Lease shall be in full force and effect, Lessee shall
have the right to extend the term of this Lease for a second renewal term of
five (5) years, commencing on the day following the expiration of the initial
renewal term, provided Lessee shall notify Lessor in writing no later than
180 days prior to the expiration of the initial renewal term (to wit: the
13th day of September, 1996) that Lessee is exercising its right to extend
the Lease. Notwithstanding the foregoing, any such extension shall be
subject to the approval of the Independent Fiduciary.
(c) Renewal Rent Determination. If the Lessee exercises the initial
extension option, the rental consideration for each month of the first three
(3) years of such extension will be the Fair Market Rental Value (which for
the purposes of this Lease Agreement is the net operating income increased by
the deduction, if any, taken for vacancy, hereinafter referred to as "FMRV")
as determined by an MAI appraisal for the first year of such extension
divided by twelve (12), and the rental consideration for each month of the
remaining two (2) years of such extension shall be the FMRV as determined by
an MAI appraisal for the fourth year of said extended term divided by twelve
(12).
If the Lessee exercises the second extension option, the rental
consideration for each month of the first three (3) years of such extension
will be the FMRV as determined by an MAI appraisal for the first year of such
extension divided by twelve (12), and the rental consideration for each month
of the remaining two (2) years of such extension shall be the FMRV as
determined by an MAI appraisal for the fourth year of said extended term
divided by twelve (12).
The Lessee shall, at its cost, deliver to the Lessor no later than
August 13, 1991, or prior to August 2, 1991, an MAI appraisal made within
twenty (20) days prior to the date of delivery determining the FMRV for the
first three (3) years of the first renewal term and for the last two years of
the first renewal term. The Lessee shall, at its cost, deliver to the Lessor
no later than August 13, 1996, or prior to August 2, 1996, an MAI appraisal
made within twenty (20) days prior to the date of delivery determining the
FMRV for the first three (3) years of the second renewal term and for the
last two (2) years of the second renewal term. The FMRV shall be computed
under the same formula used in arriving at the net operating income,
increased by the amount of deduction taken for vacancy, set forth in the
appraisal report (date of value estimate, May 28, 1995, and updated on June
24, 1986) prepared by John McCracken and Associates, Inc. In the event the
Lessee does not agree with the FMRV for the initial or second extension
options as determined by the MAI appraisal, the parties agree that the actual
FMRV for such extensions shall be determined by arbitration under the
provisions of Paragraph 21 of this Lease.
The rental consideration to be paid for both the initial extended term
and the second extended term shall be paid in monthly installments (rounded
off to the nearest dollar) in advance in the same manner as provided in
Paragraph 2 with reference to the payment of the rental consideration for the
original term of this Lease.
4. Use. Lessee shall use the said property in a careful manner in
connection with the normal operation of its business. No unlawful or
offensive use shall be made of the property. Lessee agrees to comply with
all laws, ordinances and governmental regulations relating to the use of said
property.
5. Maintenance and Repairs. Lessee shall, at its own expense,
maintain the building and demised premises in good condition and repair,
including, but not limited to, the foundation, exterior walls, plate glass,
roof, heating equipment, air conditioning equipment, plumbing, interior of
building, electrical system, and pavement and landscaping around said
building, subject to ordinary wear and tear. Repairs, as used in this
paragraph, do not mean replacement of such capital improvements as the roof,
heating and air conditioning equipment or other major items which might wear
out in their ordinary use during the term of this Lease. The Lessee shall
indemnify the Lessor against any mechanic lien or other liens rising out of
the making of any alterations, repairs, additions or improvements to the
premises by the Lessee.
The Lessor shall, at its expense, make all capital improvements, as
opposed to repairs, to the roof, heating and air-conditioning system, and
other major items in order to keep the same in good repair and operating
condition during the original term and any extended term of this Lease. The
parties agree that the cost of each capital improvement will be amortized
over the life of said improvement, hereinafter sometimes referred to as
"annual amortized cost", and the Lessee shall, while it is in possession of
the premises, during the life of such improvement pay to the Lessor annually
on the anniversary date of the completion of such capital improvement an
amount equal to the annual amortized cost. By way of illustration: If a
capital improvement which has a life expectancy of twenty (20) years and
costs $20,000.00, the annual amortized cost would be $1,000.00, and if the
improvement was completed on March 1, 1989, the Lessee would pay to the
Lessor on March 1, 1990 and on the 1st day of March each calendar year
thereafter while the Lessee is in possession of the premises, to and
including the 1st day of March, 1990, the sum of $1,000.00. Lessee has no
obligation to reimburse Lessor for any sums expended in making said capital
improvements that have not been paid prior to the termination of this Lease.
6. Insurance. Fire insurance and extended coverage on the leased
premises shall be the responsibility of the Lessee and the amount of coverage
shall be the full insurable value of the leased premises. The policy
proceeds shall be payable to the Lessor to the extent of the full insurable
value of the leased premises. Lessee will at all times during the term of
this Lease, at its own expense, maintain and keep in force a policy of
general public liability insurance against claims for personal injury, death
or property damage occurring in, on, or about the lease premises, or on or
about the streets, sidewalks or premises adjacent to the leased premises,
with the Lessor as named insured as its interests may appear. The minimum
limits of such general public liability insurance shall be Five Hundred
Thousand and No/100 ($500,000.00) Dollars for injury (or death) to any one
person, and One Million and No/100 ($1,000,000.00) for injury (or death) to
more than one person in any one accident or occurrence, and One Hundred
Thousand and No/100 ($100,000.00) Dollars in respect to property damage.
7. Damage by Casualty. If the building located on the demised
premises shall be damaged by fire or other casualty covered by the extended
coverage provision of a standard fire insurance policy,
(a) Lessor shall repair such damage as soon as it is
reasonably possible to do so unless either Lessor or
Lessee shall elect to terminate this Lease under the
provisions of subparagraph (b) or (c) of this
Paragraph 7 in the event the provisions thereof are
applicable to such damage;
(b) If the cost of such repairs shall exceed fifty percent
(50%) of the reasonable replacement cost of said
building immediately prior to the occurrence of such
damage, Lessor and Lessee shall each have an option to
terminate this Lease by giving to the other written
notice of its election to do so within thirty (30)
days after the date such damage occurs, such
termination to be effective as of the date such damage
occurred;
(c) If the extent of the damage is such that the same
cannot, with reasonable diligence, be repaired within
ninety (90) days or within the number of days equal to
one-fourth the unexpired portion of the term,
whichever shall be less, after the date such damage
occurs, Lessor and Lessee shall each have an option to
terminate this Lease by giving to the other written
notice of its election to do so within thirty (30)
days after the date such damage occurs, such
termination to be effective as of the date such damage
occurred; and
(d) If this Lease is not terminated under the provisions
of subparagraph (b) or (c) of this Paragraph 7, the
rent provided for in Paragraph 2 and 3 hereof shall be
reduced proportionately with the diminution of the
usefulness of the demised premises for the period
between the date such damage occurs and the date such
damage is repaired.
8. Taxes. During the term of this Lease, Lessee shall be
responsible for all property taxes and similar assessments which may be
assessed or levied upon or in respect of the real estate subject to this
Lease. Lessee shall furnish to Lessor within thirty (30) days following the
end of each calendar year a statement that such taxes have been paid. Lessee
shall be responsible for all property taxes which may be assessed or levied
upon in respect of all personal property located upon the leased premises,
which belong to Lessee. The property taxes in respect of the real estate
subject to this Lease for the last calendar year of the term of this Lease
will be prorated on a per diem basis.
9. Utilities. Lessee will pay all utility bills connected with the
leased premises during the term of this Lease, including, but not limited to,
utility bills for heating, air conditioning and lighting of the demised
premises, electricity, telephone, water, sewage, and garbage disposal.
10. Janitorial Service. Lessee shall furnish, or cause to be
furnished, at Lessee's expense, janitorial services that will keep the leased
premises in a reasonable state of cleanliness for the business being operated
therein.
11. Default. The happening of any one or more of the following
listed events (hereinafter referred to singularly as "Event of Default")
shall constitute a breach of this Lease Agreement on the part of Lessee,
namely:
(a) The filing by, on behalf of, or against Lessee of
any petition of pleading to declare Lessee a
bankrupt, voluntary or involuntary, under any
bankruptcy law or act.
(b) The appointment by any court or under any law of
a receiver, trustee, or other custodian of the
property, assets, or business of Lessee.
(c) The assignment by Lessee of all or any part of
its property or assets for the benefit of
creditors.
(d) The failure of Lessee to pay any rent payable
under this Lease Agreement.
(e) The failure of Lessee to perform fully and
promptly any act required of it in the
performance of this Lease or otherwise to comply
with any term or provision thereof.
Upon the happening of any event of default and the failure of Lessee to
cure or remove the same within thirty (30) days, except in default in the
payment of rent which shall be ten (10) days, after written notice from
Lessor to do so, Lessor, at its election, may terminate this Lease or may
terminate Lessee's right to possession or occupancy only without terminating
this Lease by written notice to Lessee.
Upon termination of this Lease, whether by lapse of time or otherwise,
or upon any termination of Lessee's right to possession or occupancy of the
premises without terminating this Lease, Lessee shall promptly surrender
possession of and vacate the premises and deliver possession thereof to
Lessor, and Lessee hereby grants to Lessor full and free license to enter
into and upon the premises in such event and with or without process of law
to repossess the premises and to expel or remove Lessee and any others who
may be occupying the premises and to remove therefrom any and all property,
using for such purpose such force as may be necessary without being guilty of
or liable for trespass, eviction, or forcible entry or detainer and without
relinquishing Lessor's right to rent or any other right given to Lessor
hereunder or by operation of law.
If Lessor shall elect to terminate Lessee's right to possession only as
above provided, without terminating this Lease, Lessee shall nevertheless
remain obligated to pay the rent herein reserved for the full term hereof
except to the extent of any credit against said rent which Lessee is entitled
by law to receive for the reasonable rental value of said premises or for any
rents received by Lessor upon a re-letting of said premises as agent of
Lessee, but in the name of Lessor, or for any other credit to which Lessee is
entitled by law.
12. Inspection. At all reasonable times, the Independent Fiduciary
and its authorized representatives may inspect the leased property.
13. Sublease. It is understood and agreed that if the Lessee
sublets all or any part of the premises or assigns this Lease, it shall, in
either event, remain fully liable to Lessor for full performance of this
Lease Agreement.
14. Alterations. Lessee, at its own expense, may make reasonable
alterations to the improvements located upon the leased premises, with the
prior written consent of Lessor, which will not be unreasonably withheld.
15. Property of Lessee. All of the equipment or other property
installed in or attached to the premises by Lessee shall be and remain the
property of the Lessee and may be removed by the Lessee upon the expiration
of the lease period.
16. Eminent Domain. In the event that any portion of the premises
shall be taken by any public authority under the power of eminent domain or
like power, which taking shall have significant effect on the operation of
the business conducted by the Lessee, this Lease Agreement may be terminated
at the option of the Lessee within sixty days of the earlier of the
following:
(a) Specific written notice from Lessor to Lessee advising
of the proposed taking and giving all pertinent
details with regard thereto; or
(b) Service of process upon Lessee in a suit of
condemnation.
Failure of Lessee to exercise its option of cancellation within such
sixty (60) days period shall constitute a forfeiture by Lessee of its right
to termination. Damages awarded by the condemning authority shall belong
solely to Lessor.
In making the determination as to whether such taking shall have
significant effect on the operation of the business conducted by Lessee,
Lessor and Lessee shall discuss such and both will apply reasonable judgment.
If Lessor and Lessee are unable to agree, then the matter will be determined
by three (3) persons who are qualified to make such determination, one of
which is selected by Lessor, one of which is selected by Lessee, and the
other which is selected by the first two. The determination by these three
(3) people will be binding upon Lessor and Lessee.
17. Warranty of Quiet Enjoyment. Lessor covenants that its has full
power and lawful authority to execute this Lease Agreement and that upon
compliance by Lessee with the terms and provisions hereof, Lessee shall have
enjoyment of the premises during the term hereof.
18. NOTICE: Any notice provided herein shall be deemed sufficient
to have been duly served if the same shall be in writing and mailed, postage
prepaid, until another address is furnished, addressed as follows:
Lessor Lessee
Wachovia Bank & Trust Unifi, Inc.
Company, N.A., Independent P. O. Box 19109
Fiduciary Greensboro, NC 27419-9109
Trust Department
Winston-Salem, NC 27150
AND
NCNB National Bank of
North Carolina, Trustee
Trust Department
Charlotte, NC 28255
19. Holding Over. In the event the Lessee remains in possession of
the premises after the expiration of the original term without exercising the
rights granted in Paragraph 3, the Lessee shall not acquire any right, title
or interest in or to said premises. Lessee, as a result of such holding
over, shall occupy the premises as a tenant from month to month with rental
consideration as provided in Paragraph 2 or 3, and subject to all conditions,
privileges and obligations set forth in this Lease during such holding over
period and the Lessor or Lessee shall have the right of canceling said month
to month tenancy by giving the other thirty (30) days written notice to
vacate.
20. Attorney Fees. Upon the occurrence of any events of default by
the Lessee, the Lessor may employ an attorney to enforce its rights and
remedies and the Lessee hereby agrees to pay to the Lessor the sum of 15% of
the outstanding rental owing on this Lease or 15% of any recovery for said
Breach, whichever amount is the larger as reasonable attorney fees plus all
other reasonable expenses incurred by the Lessor in enforcing any of the
Lessees' rights and remedies hereunder.
21. Arbitration. Any controversy which may arise between the Lessor
and Lessee regarding the rights, duties, liabilities and FMRV for the initial
and second extension options will be settled by arbitration. Such
arbitration shall be before three (3) disinterested arbitrators, one named by
the Lessor, one named by the Lessee, and one named by the two (2) thus
chosen. The arbitrators shall determine the controversy and their
determination shall be binding upon both parties. Each party shall pay one-
half of the costs of such arbitration.
22. Interpretation. The provisions of this Lease Agreement shall
constitute the entire agreement between the parties. All singular nouns,
pronouns shall include plural and all masculine nouns and pronouns shall
include the feminine and neuter. This Lease Agreement shall be construed in
accordance with the laws of the State of North Carolina. If any provision of
this Lease Agreement shall be determined to be void, such determination shall
not affect any other provision hereof, and all other provisions shall remain
in full force and effect. This Lease Agreement shall inure to the benefit of
and be binding upon the parties hereto, their successors, heirs, executors,
administrators and assigns.
23. Memorandum of Lease. A Memorandum of Lease will be executed by
the parties hereto in a form appropriate for recordation upon the public
records. The Memorandum of Lease shall include such provisions of this Lease
Agreement as may reasonably be requested by either party hereto, but shall
not include the amount of rental payments hereunder.
The NCNB National Bank of North Carolina, as Trustee, the Wachovia Bank
& Trust Company, N.A., as Independent Fiduciary, and Unifi, Inc. entered into
an Independent Fiduciary Agreement on the 3rd day of September, 1986, as
amended, under which the legal title to the premises would be in the Trustee,
with the Independent Fiduciary having the exclusive authority and
responsibility for the disposition, management and control of said premises;
that the Independent Fiduciary negotiated this lease Agreement and has
directed the Trustee to enter into this Lease Agreement all in accordance
with the aforesaid Independent Fiduciary Agreement.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
signed and attested and the corporate seals attached by the proper officials
of the respective parties hereto, the day and year first above written.
TRUSTEE OF THE UNIFI, INC.
PROFIT SHARING PLAN AND TRUST
NCNB NATIONAL BANK OF NORTH CAROLINA
BY: GLENDA G. STEEL
Vice President
ATTEST:
ADA M. GASTON
Assistant Secretary
INDEPENDENT FIDUCIARY UNDER THE
UNIFI, INC. PROFIT SHARING PLAN
AND TRUST
WACHOVIA BANK & TRUST COMPANY, N.A.
BY: JOE O. LONG
Vice President
ATTEST:
NANCY P. BLEDSOE
Assistant Secretary
UNIFI, INC.
BY: ROBERT A. WARD
Executive Vice-President
ATTEST:
C. CLIFFORD FRAZIER, JR.
Secretary
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
I, MARTHA N. LEE, a Notary Public of said County and State, do hereby
certify that ADA M. GASTON, personally came before me this day and
acknowledged that she is the Assistant Secretary of the NCNB NATIONAL BANK OF
NORTH CAROLINA, and that by authority duly given and as the act of the
corporation, the foregoing instrument was signed in its name by its Vice
President, sealed with its corporate seal, and attested by her as its
Assistant Secretary.
Witness my hand and notarial seal this the 4th day of March, 1987.
MARTHA N. LEE
Notary Public
My Commission Expires:
2-27-91
STATE OF NORTH CAROLINA
COUNTY OF FORSYTH
I, BONNIE D. BINDER, a Notary Public of said County and State, do hereby
certify that NANCY P. BLEDSOE, personally came before me this day and
acknowledged that she is the Assistant Secretary of the WACHOVIA BANK & TRUST
COMPANY, N.A., and that by authority duly given and as the act of the
corporation, the foregoing instrument was signed in its name by its Vice
President, sealed with its corporate seal, and attested by her as its
Assistant Secretary.
Witness my hand and notarial seal this the 2nd day of March, 1987.
BONNIE D. BINDER
Notary Public
My Commission Expires:
12-10-90
STATE OF NORTH CAROLINA
COUNTY OF GUILFORD
I, GRETCHEN WEST (THOMPSON), a Notary Public of said County and State,
do hereby certify that C. CLIFFORD FRAZIER, JR., personally came before me
this day and acknowledged that he is the Secretary of UNIFI, INC., and that
by authority duly given and as the act of the corporation, the foregoing
instrument was signed in its name by its Executive Vice President, sealed
with its corporate seal, and attested by him as its Secretary.
Witness my hand and notarial seal this the 6th day of March, 1987.
GRETCHEN WEST (THOMPSON)
Notary Public
My Commission Expires:
10-12-87
SEVERANCE COMPENSATION AGREEMENT
THIS AGREEMENT ("Agreement") between UNIFI, INC., a New York corporation
(the "Company"), and WILLIAM T. KRETZER ("Executive") dated the 20th day of
July, 1993.
WITNESSETH THAT:
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 and
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 members of the Company's Management, including the Executive, to their
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 the date hereof 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 malfiscence
or misfiscence by said Executive in performing the duties of his office.
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 average of the aggregate
annual compensation paid to the Executive during the five calendar years
preceding the Change in Control of the Company by the Company and any of its
subsidiaries; 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 existing rights, or rights which would accrue solely
as a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or arrangement.
(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) your commencement of full time employment with a new
employer, all life insurance, medical, health and accident, and disability
plans, programs or arrangements in which you were entitled to participate
immediately prior to the Date of Termination, provided that your 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.
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 voluntarily, retire,
become permanently and totally disabled, or die. This Agreement shall also
terminate if Executive's employment as an officer of the Company shall have
been terminated for any reason by the Board of Directors of the Company as
constituted prior to any Change in Control of the Company, as herein defined.
SECTION 9. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
SECTION 10. 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 11. 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 the Chairman of the Company's Compensation Committee pursuant to
resolutions duly adopted by the Board of Directors and its seal affixed
hereto and the Executive has hereunto affixed his hand and seal effective as
of the date first above written.
UNIFI, INC.
BY: KENNETH G. LANGONE
Chairman of the Compensation
Committee
WILLIAM T. KRETZER
William T. Kretzer
President and
Chief Executive Officer