EMPLOYMENT CONTRACT dated as of April 20, 2000, between Worldtex,
Inc. ("Worldtex"), whose business address is Xxxxxxxx Park, Suite 106, 000
Xxxx Xxxxxxxxx, X.X., Xxxxxxx, Xxxxx Xxxxxxxx 00000, and Xxxxx X. Xxxxxx,
whose business address is Xxxxxxxx Xxxx, Xxxxx 000, 000 Xxxx Xxxxxxxxx, X.X.,
Xxxxxxx, Xxxxx Xxxxxxxx 00000 ("Employee").
Employee has been performing services in a senior executive
capacity for Worldtex pursuant to an existing employment contract dated as of
November 15, 1993 (the "Existing Contract"). As a result of the acquisition
by Xxxxxxx Xxxxxx and certain related persons (collectively, the "EGS
Parties") of the beneficial ownership of approximately 34.2% of the
outstanding shares of Worldtex common stock, a "Change in Control Event" as
defined under the Existing Contract occurred. Employee has asserted that, as
a result of such "Change in Control Event", he is entitled to terminate his
employment with Worldtex and receive a "Severance Benefit" (as such term is
defined in the Existing Contract). Worldtex has taken the position that
Employee is not entitled to the Severance Benefit. In order to settle the
matter and induce Employee to continue to perform services in a senior
executive capacity for Worldtex, Worldtex and Employee desire to terminate
the Existing Contract and enter into this Employment Contract, on the terms
and conditions hereinafter set forth.
Accordingly, in consideration of the premises and the mutual
agreements hereafter set forth, the parties hereby agree as follows:
1. TERMINATION OF EXISTING CONTRACT
The Existing Contract shall terminate effective as of the date of
this Employment Contract, and Worldtex shall take the following action:
(i) Worldtex shall pay to Employee within two business
days after the date of this Employment Contract, by wire transfer
of immediately available funds to an account designated by
Employee, the sum of $350,000;
(ii) Worldtex shall grant to Employee options to purchase
325,000 shares of Worldtex common stock at an exercise price per
share equal to $1.50 and otherwise substantially in accordance
with the grant letter attached as Exhibit B hereto.
2. TERM; NATURE OF SERVICES
(a) Worldtex agrees to employ Employee to perform services in a
senior executive capacity for a period commencing with the date of this
Agreement and continuing until terminated in accordance with Section 8
or Section 9 (the "Employment Period").
(b) Initially and for so long during the Employment Period as
is required by Worldtex's Board of Directors, Employee shall be
employed as President and Chief Executive Officer of Worldtex. In the
performance of his duties, Employee shall be subject to the direction
of the Board of Directors of Worldtex. Employee's principal services
shall be rendered in the Hickory, North Carolina area.
3. AGREEMENT TO SERVE
Employee agrees to his employment as described in Section 2 and
agrees to devote all of his business time and efforts during the Employment
Period to the performance of his duties under this Employment Contract;
PROVIDED, HOWEVER, that he shall be permitted to pursue personal and family
business and investment activities of a non-competitive nature so long as
such activities in the aggregate do not consume a material amount of business
time and effort and do not, in any event, interfere with the performance of
his duties under this Employment Contract.
4. COMPENSATION AND BENEFITS
(a) Employee's salary during the Employment Period shall be
fixed from time to time by the Compensation Committee of the Board of
Directors of Worldtex (the "Committee") but shall not be less than
$400,000 per annum.
(b) During the Employment Period, Employee shall be entitled
to: (i) reimbursement for reasonable travel, entertainment and other
expenses necessarily incurred in the performance of his duties
hereunder upon submission and approval of written statements in
accordance with Worldtex's standard policies as in effect from time to
time; (ii) reasonable vacations in accordance with Worldtex's then
current regular procedures governing executives; (iii) participation in
such group insurance, retirement and other group benefit programs as
from time to time may be extended generally to Worldtex executives;
(iv) medical, hospital and dental insurance benefits, which shall be at
least equal to those benefits that Employee received under the Existing
Contract; (v) use of an automobile comparable to that being used by him
as of the date of this Agreement, for which Worldtex agrees to pay all
insurance, maintenance and fuel costs and license and registration
fees; (vi) participation in all coverage under all compensation,
pension, welfare and fringe benefit plans, programs and policies of
Worldtex applicable to senior executives of Worldtex; and (vii) such
additional compensation, in the form of incentive compensation or
otherwise, and such participation in Worldtex stock option, stock
award, stock purchase or other stock plans, as the Committee may from
time to time provide.
(c) In addition, with respect to each fiscal year during the
Employment Period (commencing with the 2000 fiscal year), Worldtex
shall pay Employee for such fiscal year an amount equal to 2% of
Marginal Net Income of Worldtex and its subsidiaries (the "Worldtex
Group") for such fiscal year less any awards earned under the annual
award plan of Regal Manufacturing Company ("Regal") for such year.
"Marginal Net Income of the Worldtex Group" shall be the net income of
the Worldtex Group before all taxes and after interest charges (but at
an assumed interest rate of 4.5% per annum without regard to the actual
rate), if any, which exceed 12% of Net Assets Employed by the Worldtex
Group for the particular fiscal year. "Net Assets Employed by the
Worldtex Group," with respect to a particular fiscal year (the
"Applicable Year"), shall be the mean between (i) the tangible net
worth of the Worldtex Group as of the end of the Applicable Year and
(ii) the tangible net worth of the Worldtex Group as of the end of the
immediately preceding fiscal year. Marginal Net Income of the Worldtex
Group and Net Assets Employed by the Worldtex Group shall be determined
in accordance with generally accepted accounting principles by
Worldtex's Compensation Committee following the end of each such fiscal
year and payment of any amount due to Employee shall be made not later
than 30 days following the completion of the annual audit for such
fiscal year. In the event the Employment Period is terminated during a
fiscal year, the amount payable to Employee pursuant to the foregoing
provisions of this Section 4(c) with respect to such fiscal year shall
be in the same ratio to the amount which would have been payable for
the full fiscal year as the ratio of the number of days in such fiscal
year up to the date of termination to 365; and the amount due shall be
paid at the time prescribed for payment with respect to a full fiscal
year. In addition, Employee shall be entitled to receive such bonus
or bonuses, with respect to each calendar year or portion thereof
during which the Employment Period is in effect, as may be provided by
the Committee.
(d) Worldtex shall pay the premiums on the insurance policies
on the life of Employee listed on Exhibit A so as to maintain their
effectiveness during the Employment Period.
5. NON-COMPETITION
Employee agrees that he will not, directly or indirectly
(individually or for, with or through any other person, firm or corporation),
compete with Worldtex or any of its subsidiaries (i) during the Employment
Period with respect to any business carried on by Worldtex or any of its
subsidiaries or (ii) for a period of one year after the end of the Employment
Period with respect to any business carried on at the end of the Employment
Period by Worldtex or any of its subsidiaries.
(a) If, however, Worldtex wrongfully terminates the Employment
Period, the foregoing provisions of this Section 5 shall cease to apply
from and after such wrongful termination.
(b) Notwithstanding the foregoing, Employee shall be permitted
to own not in excess of one percent of any class of securities of any
publicly traded company, PROVIDED Employee is not part of any
controlling group and is solely a passive investor.
6. PATENTS, INVENTIONS
All of Employee's interest in patents, patent applications,
inventions, technological innovations, copyrights, developments and processes
now or hereafter during the Employment Period owned or developed by Employee
relating to the business of Worldtex or any affiliate of Worldtex, shall
belong to Worldtex, and without further compensation, but at Worldtex's
expense, forthwith upon request of Worldtex, Employee shall execute any and
all such assignments and other documents and take any and all such other
action as Worldtex may reasonably request in order to vest in Worldtex all
Employee's right, title and interest in and to such patents, patent
applications, inventions, technological innovations, copyrights, developments
or processes, free and clear of liens, charges and encumbrances.
7. CONFIDENTIAL INFORMATION
All confidential information which Employee may now have or may
obtain during the Employment Period relating to the business of Worldtex or
any affiliate thereof shall not be disclosed to any other person (except as
required by law) either during or after the termination of the Employment
Period without the prior written permission of Worldtex, and Employee shall
return all tangible evidence of such confidential information to Worldtex
prior to or at the termination of the Employment Period. Such information
shall not include any information otherwise publicly known.
8. TERMINATION - GENERAL
Notwithstanding anything herein contained:
(a) If, during the Employment Period, Employee shall (i) die,
(ii) become physically or mentally incapacitated or disabled for a
period of six consecutive months to an extent which renders Employee
unable to perform his services under this Employment Contract as
evidenced by the written confirmation of an independent physician
selected by Worldtex and not unreasonably rejected by Employee or his
legal representatives (such incapacity or disability being hereafter
referred to as "Disability") or (iii) be convicted of a felony relating
to the conduct of the business of Worldtex or any affiliate of Worldtex
or commit an act of personal dishonesty which was intended to
personally enrich Employee or members of his family at the financial
expense of Worldtex or any affiliate of Worldtex (such conviction or
commission of such an act being hereafter referred to as "Cause"), then
Worldtex shall have the right to give immediate notice of termination
of the Employment Period whereupon the same shall be deemed terminated.
(b) Employee shall have the right to give notice of termination
for any reason of the Employment Period as of a date (not earlier than
six months after such notice) to be specified in such notice.
(c) Worldtex shall have the right to give notice of termination
of the Employment Period for any reason other than those set forth
above in this Section 8, effective as of a date (not earlier than 30
days after such notice) to be specified in such notice.
(d) Employee (or his estate or legal representatives) shall be
entitled to receive, in the event of termination of the Employment
Period pursuant to Sections 8(a), 8(b) or 8(c), (i) salary at the
highest annual rate in effect at any time during the period of 12
months preceding the giving of notice of termination (the "then current
rate") to the last day of the calendar month in which termination shall
take effect and (ii) such bonus and other benefits, payable following
the end of the calendar year in which the Employment Period terminates,
as may be provided by the Committee. Benefits, or other amounts to
which Employee has become entitled during his employment, under Section
4 or any other program or plan of Worldtex ("Plan Benefits"), including
those which are payable at or following the termination of the
Employment Period shall be paid in accordance with the particular
program or plan, except as otherwise expressly provided in this
Employment Contract. In addition, in the case of a termination of the
Employment Period pursuant to Section 8(c), Employee shall be entitled
to receive upon effectiveness of such termination in a lump sum an
amount equal to three times the then current rate.
9. TERMINATION AFTER A CHANGE IN CONTROL EVENT
Upon the occurrence of a Change in Control Event, unless the
Employment Period shall previously have been terminated, the Employment
Period shall continue until the third anniversary of the date of the Change
in Control Event subject to termination as provided in Section 8 (but without
giving effect to Section 8(c)) and as hereafter provided in this Section 9.
(a) "Change in Control Event" shall mean:
(1) the date that any person or group deemed a person
under Sections 3(a)(9) and 13(d)(3) of the Securities Exchange
Act of 1934, other than Worldtex and its Subsidiaries as
determined immediately prior to that date, in a transaction or
series of transactions has become the beneficial owner, directly
or indirectly (with beneficial ownership determined as provided
in Rule 13d-3, or any successor rule, under such Act) of more
than 50% of the outstanding securities of Worldtex having the
right under ordinary circumstances to vote at an election of the
Board of Directors;
(2) the date on which one-third or more of the members of
the Board of Directors shall consist of persons other than
Current Directors (for these purposes, a "Current Director" shall
mean any member of the Board of Directors as of March 31, 2000
and any successor of a Current Director whose nomination or
election has been approved by a majority of the Current Directors
then on the Board of Directors); or
(3) the date of approval by the stockholders of Worldtex
of an agreement providing for (x) the merger or consolidation of
Worldtex with another corporation where the stockholders of
Worldtex, immediately prior to the merger or consolidation, would
not beneficially own, immediately after the merger or
consolidation, shares entitling such stockholders to 50% or more
of all votes (without consideration of the rights of any class of
stock to elect directors by a separate class vote) to which all
stockholders of the corporation issuing cash or securities in the
merger or consolidation would be entitled in the election of
directors or where the members of the Board of Directors of
Worldtex, immediately prior to the merger or consolidation, would
not, immediately after the merger or consolidation, constitute a
majority of the Board of Directors of the corporation issuing
cash or securities in the merger or consolidation or (y) the sale
or other disposition of all or substantially all the assets of
Worldtex.
(b) "Severance Benefit" shall mean a lump sum cash amount equal
to 2.99 times Employee's "base amount" (as defined in Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"); PROVIDED, HOWEVER, that if any payment by Worldtex or its
affiliates to or for the benefit of Employee (whether payable pursuant
to the terms of this Employment Contract or otherwise) would not be
deductible by Worldtex or its affiliates for Federal income tax
purposes solely by reason of Section 280G of the Code, the amount
referred to in this clause (b) shall be reduced to such lesser amount
as shall permit all, or the maximum possible amount, of the payments by
Worldtex or its affiliates to or for the benefit of Employee to be so
deductible in accordance with such Section 280G. The determination of
any reduction in the amount referred to in the preceding sentence shall
be made by Employee in good faith with the reasonable advice of
Employee's tax advisor, and as so made shall be conclusive and binding
on Worldtex, its affiliates and Employee.
(c) If (i) Worldtex gives notice of termination of the
Employment Period or takes other action which effectively terminates
the Employment Period (other than for death, Disability or Cause)
during the period commencing upon the occurrence of a Change in Control
Event and ending on the third anniversary of the date of the Change in
Control Event (the "Post-Change Period") or (ii) Employee gives notice
of termination of the Employment Period during the Post-Change Period
after Employee determines in good faith that there has been any of the
following occurrences
(1) an assignment to Employee of duties or
responsibilities, or a change in reporting responsibilities or
titles (but not including naming another person Chairman of the
Board), which is inconsistent with his status immediately prior
to the Change in Control Event, or any other action by Worldtex
which results in a diminution in such status, excluding any
action which is both inadvertent and immaterial and is remedied
by Worldtex promptly after receipt of notice thereof from
Employee,
(2) a reduction in salary, or reduction in ratio of
supplemental compensation or fringe benefits to salary, from that
in effect immediately prior to the Change in Control Event,
(3) a material increase in the amount of travel required
of him or a requirement that he perform significant regular
services outside the Hickory, North Carolina area or transfer to
a location necessitating a change in his principal residence or
(4) a failure by Worldtex to have a successor corporation
assume Worldtex's obligations under this Employment Contract as
specified in Section 14,
then the Employment Period shall be deemed terminated upon the giving
of such notice or taking of such action and not later than 15 days
thereafter Worldtex shall pay to Employee the Severance Benefit (but
not the amount referred to in the last sentence of Section 8(d)).
Payment of the Severance Benefit shall be in lieu of any damages
Employee might otherwise assert for breach of this Employment Contract.
(d) The payment of Plan Benefits shall be unaffected by a
Change in Control Event and shall be made in accordance with the
particular program or plan.
(e) If Worldtex wrongfully terminates the Employment Period
prior to the occurrence of any Change in Control Event but after (i)
Worldtex enters into an agreement or arrangement the consummation of
which would result in a Change in Control Event or (ii) any person
(including Worldtex) publicly announces an intention to take or
consider taking actions which if consummated would result in a Change
in Control Event, then Employee's damages for such wrongful termination
shall be not less than the amount of the Severance Benefit if a Change
in Control Event occurs within the three-year period following such
termination.
10. INDEMNIFICATION
In addition to (and not in lieu of) any of Employee's rights to
indemnification or otherwise, contained in Worldtex's certificate of
incorporation and by-laws, or any other agreement, if any action, suit,
proceeding (including any arbitration proceeding) or claim shall be brought
or asserted with respect to the enforcement or interpretation of this
Employment Contract or any provision contained herein, Worldtex, to the full
extent permitted by applicable law and its certificate of incorporation and
by-laws as then in effect (or, if a Change in Control Event shall have
occurred, as in effect immediately prior to the Change in Control Event),
hereby indemnifies Employee for his reasonable attorneys' fees and other
expenses incurred in connection with such action, suit, proceeding or claim
and agrees to pay or reimburse the same promptly upon demand by Employee
regardless of the outcome thereof (plus interest at the applicable Federal
rate provided in Section 7872(f)(2) of the Code). Worldtex shall preserve and
make available to Employee all documents and information now or hereafter in
the possession of Worldtex which may be required by Employee for the
prosecution or defense of any such action, suit, proceeding or claim.
11. PAYMENT OBLIGATION ABSOLUTE
Worldtex's obligation to make payments provided for in this
Employment Contract and otherwise perform its obligations hereunder shall be
absolute and unconditional and shall not be affected by any setoff,
counterclaim, recoupment, defense or other circumstance or rights which
Worldtex may have against Employee or anyone else (including without
limitation any rights which Worldtex may have against Employee for violation
of Sections 5 or 7 of this Employment Contract, all of which shall be
required to be asserted in independent proceedings). Employee shall not be
required to mitigate the amount of any payment provided for herein by seeking
other employment or taking any other action nor, except as provided in
Section 19(d)(ii), shall the amount of any payment provided for herein be
reduced by amounts earned by Employee from other employment or otherwise
after the termination of the Employment Period.
12. ENTIRE AGREEMENT; SEVERABILITY
This Employment Contract sets forth the entire understanding of
the parties with respect to the subject matter herein and may be modified
only by a written instrument duly executed by each party. The invalidity or
unenforceability of any provision of this Employment Contract shall not
affect the validity or enforceability of any other provision.
13. NOTICES
Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be given by registered mail,
telex, telecopy (or like transmission) or delivery against receipt to the
party to whom it is to be given (i) at such party's address set forth in the
preamble to this Employment Contract or (ii) to such other address as the
party shall have furnished in writing in accordance with the provisions of
this Section 13. Any notice or other communication shall be deemed to have
been given as of the date so delivered or transmitted by telex or telecopy
(or like transmission) and the appropriate answerback received or three days
after the date so mailed.
14. ASSIGNMENT; ASSUMPTION
In the event of a future disposition of (or including) the
properties and business of Worldtex, substantially as an entirety, by merger,
consolidation, sale of stock or assets or otherwise, then Worldtex shall
require the acquiring or surviving corporation (which shall be substituted
for Worldtex hereunder) to expressly assume and agree to perform this
Employment Contract in the same manner and to the same extent that Worldtex
would have been required to perform it had no such disposition occurred.
Employee's rights under this Employment Contract shall not be transferable by
assignment or otherwise, shall not be subject to commutation or encumbrance
and shall not be subject to the claims of Employee's creditors.
15. BINDING EFFECT; INUREMENT
This Employment Contract shall be binding upon and inure to the
benefit of Worldtex, its successors and those who are its assigns under
Section 14.
16. ARBITRATION
Any controversy or claim arising out of or in connection with
this Employment Contract shall be settled by arbitration held in Charlotte,
North Carolina in accordance with the rules of the American Arbitration
Association then in effect, and judgment upon the award rendered may be
entered in any court having jurisdiction. Without limiting the provisions of
Section 10, the costs of the arbitration proceedings shall be borne by
Worldtex.
17. GOVERNING LAW
This Employment Contract shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflict of laws.
18. WITHHOLDING
Worldtex shall withhold from all amounts payable to Employee
under this Employment Contract all federal, state and local taxes required by
law to be withheld with respect to such payments.
19. SUPPLEMENTAL BENEFIT
(a) SUPPLEMENTAL RETIREMENT BENEFIT
Employee shall receive, upon his termination of employment for
any reason on or following his 65th birthday (his "Normal Payment
Date"), if he was in the employ of Worldtex or any of its subsidiaries
immediately prior to his 65th birthday, a benefit (the "Retirement
Benefit"), payable in monthly installments over the ten-year period
commencing upon his Normal Payment Date, in an aggregate amount equal
to the product obtained by multiplying (i) four hundred percent by (ii)
the highest total cash compensation (including base salary and bonus
but excluding any payments pursuant to Section 9 of this Agreement)
paid by Worldtex to Employee in any calendar year during his employment
by Worldtex. If Employee shall die following his Normal Payment Date
and shall then be entitled to all or any part of the Retirement
Benefit, the amount of the Retirement Benefit not theretofore paid to
him shall be paid in similar monthly installments to his beneficiaries.
(b) SUPPLEMENTAL DEATH OR DISABILITY BENEFIT
Employee's beneficiaries shall receive, following his death prior
to his 65th birthday, and Employee or his legal representatives shall
receive, following his retirement prior to his 65th birthday on account
of his Disability, if he was in the employ of Worldtex or any of its
subsidiaries at the time of death or Disability, a benefit, payable in
monthly installments over the ten-year period commencing with the month
following death or Disability, in an aggregate amount equal to the
product obtained by multiplying (i) four hundred percent by (ii) the
highest total cash compensation (including base salary and bonus but
excluding any payments pursuant to Section 9 of this Agreement) paid by
Worldtex to Employee in any calendar year during his employment by
Worldtex.
(c) INVOLUNTARY TERMINATION
Upon involuntary termination of Employee's employment prior to
his 65th birthday (other than for death or Disability or for Cause),
the Retirement Benefit shall be computed as though the date of
involuntary termination were Employee's Normal Payment Date and such
Retirement Benefit (the "Vested Benefit") shall be deemed vested. A
portion of the Vested Benefit which is in the same ratio to the full
Vested Benefit as the ratio of the number of Employee's full years of
service with Worldtex and Regal prior to termination of employment with
Worldtex to the number of full years Employee would have worked with
Worldtex and Regal had he continued in Worldtex's employ up to his 65th
birthday shall be payable in monthly installments over the ten-year
period commencing on the date of termination.
(d) EARLY RETIREMENT
Upon voluntary retirement prior to Employee's 65th birthday
(other than following Disability), the Vested Benefit shall be computed
as though the date of voluntary retirement were Employee's Normal
Payment Date and shall become payable as follows:
(i) The portion of the Vested Benefit which would have
been payable pursuant to Section 19(c) had Employee been
involuntarily terminated on the date of voluntary retirement
shall be payable in monthly installments over the period of ten
years commencing on such date. If Employee shall die during such
ten-year period, any part of such portion of the Vested Benefit
not theretofore paid to him shall be paid in similar monthly
installments to his beneficiaries.
(ii) The remaining portion of the Vested Benefit shall be
payable in monthly installments over the period of ten years
commencing on the date of voluntary retirement (i) provided that
Employee enters into and continues to perform a ten-year
consulting agreement with Worldtex (a "Consulting Agreement")
containing provisions substantially as set forth in Section 19(e)
and such additional or different provisions (not materially more
burdensome to Employee) as may be specified by the Committee and
(ii) provided further that the portion of the Vested Benefit
payable under this Section 19(d)(ii) shall be subject to
reduction to the extent the Employee realizes income from regular
employment during the term of the Consulting Agreement.
(e) CONSULTING AGREEMENT
Any Consulting Agreement to which Employee is a party shall
contain the following provisions unless the Committee shall otherwise
specify:
(i) Unless Disability has occurred, Employee shall be
obligated to devote the equivalent of 15 business days to his
consulting duties during any yearly period to the extent his
physician advises his health permits.
(ii) Such consultation shall be rendered at such times as
Employee shall reasonably advise the Board of Directors are
appropriate giving effect to his then regular personal and other
business activities. Worldtex's chief executive officer shall
give Employee reasonable advance notice of any requirements for
consultation and he shall use his reasonable best efforts to
perform such consultation on the schedule requested. Where
Employee is required to render any service on a particular day,
he shall receive credit for a full day's service.
(iii) Employee shall be entitled to reimbursement for
expenses reasonably and necessarily incurred by him in connection
with the performance of his consulting duties, in accordance with
Worldtex's then applicable procedures, including without
limitation reimbursement for travel and related expenses to and
from whatever may be his then current place of residence or place
where he may be conducting other business activities.
(iv) In the event of death or Disability during the term
of the Consulting Agreement, any unpaid part of the portion of
the Vested Benefit payable pursuant to Section 19(d)(ii) shall
become payable in monthly installments to Employee's
beneficiaries. Upon termination of the Consulting Agreement for
Cause, however, no further amounts shall be payable pursuant to
Section 19(d)(ii).
(f) NO MITIGATION OR OFFSET
Employee shall not be obligated to mitigate the amount of any
payment provided for under this Section 19 by seeking other employment
or taking any other action nor, except as provided in Section
19(d)(ii), shall the amount of any payment provided for herein be
reduced by amounts earned by Employee from other employment or
otherwise after termination or retirement.
IN WITNESS WHEREOF, the parties have duly executed this
Employment Contract as of the date first above written.
WORLDTEX, INC.
By
------------------------------------
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Xxxxx X. Xxxxxx
EXHIBIT A
DESCRIPTION OF LIFE INSURANCE POLICIES
Policy
NUMBER FACE AMOUNT
------ -----------
General American Life 16,043,180 $2,000,000
Insurance Company
First Colony Life Insurance 5,463,051 $1,000,000
Company
First Colony Life Insurance 5,413,272 $2,000,000
Company
EXHIBIT B
WORLDTEX, INC.
XXXXXXXX XXXX - XXXXX 000
000 XXXX XXXXXXXXX, X.X.
XXXXXXX, XXXXX XXXXXXXX 00000
[DATE]
[NAME]
x/x Xxxxxxxx, Xxx.
Xxxxxxxx Xxxx - Xxxxx 000
000 Xxxx Xxxxxxxxx, X.X.
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Dear [NAME]:
We are pleased to inform you that the Compensation Committee of the
Board of Directors of Worldtex, Inc. (the "Company") has today granted you an
option pursuant to the Company's 1992 Stock Incentive Plan, as amended (the
"Plan"), to purchase an aggregate of [_______________] shares of the Common
Stock of the Company on the following terms and conditions:
1. The purchase price per share of the shares of Common Stock
subject to this option is [_______________] per share.
2. This option shall expire at the close of business on
[____________________]. [Fifth anniversary] Subject to acceleration in the
event of a Change of Control (as defined in the Plan), you must remain in the
employ of the Company or a Related Company (as defined in the Plan) for one
year from the date hereof before you can exercise any part of this option.
Thereafter this option will become exercisable in installments as follows:
[_______________] shares on [____________________]; an additional
[_______________] shares on [____________________]; and the final
[_______________] shares on [____________________]. [33 1/3% per year]
3. This option is not intended to qualify as an "Incentive Stock
Option" within the provisions of Section 422 of the Internal Revenue Code.
4. The option price shall be payable by you at the time this option
is exercised, either (i) in cash or (ii) by delivering shares of Common Stock
of the Company which you have owned for a least six months prior to such
exercise, or a combination of cash and such shares, having an aggregate value
equal to the aggregate option price of the shares as to which this option is
exercised (basing the value of any such shares of Common Stock on the fair
market value of the Common Stock on the date of exercise). No shares of
Common Stock shall be issued pursuant to exercise of this option until full
payment therefor has been made.
5. In tandem with this option, the Company has also granted you
today a limited Stock Appreciation Right, which entitles you to elect to
receive within sixty days following the occurrence of a Change of Control, in
lieu of exercising this option, a payment equal in value to the product of
the number of shares of Common Stock as to which you elect to exercise this
limited Stock Appreciation Right multiplied by the excess of the Change of
Control Price (as defined in the Plan) over $[_______________] [strike
price]. If the Change of Control occurs more than six months from today this
payment will be made to you in cash. Otherwise, payment will be made in
shares of Common Stock.
6. This option and related Stock Appreciation Right may be exercised
only by you and may not be transferred except by will or the laws of descent
and distribution. In the event of your death, your legal representatives may
exercise this option as to the shares of Common Stock which were immediately
purchasable by you at the date of death, within 12 months following the date
of death (even if such date is later than [____________________]. [Fifth
anniversary.]
7. Upon termination of your employment (upon retirement in
accordance with the Company's retirement policy or for any reason beyond your
control other than your death), your option privileges shall be limited to
the shares of Common Stock which were immediately purchasable by you at the
date of such termination and such option privileges shall expire unless
exercised within three months after the date of such termination and prior to
the close of business on [____________________]. [Fifth anniversary.] If
your employment is terminated for reasons within your control, including,
without limitation, cause and voluntary resignation, all rights under this
option shall expire on the date of such termination.
8. Notwithstanding anything in this letter, the Company shall not be
obligated to issue any shares of Common Stock upon any exercise of this
option or related Stock Appreciation Right if such issuance would violate any
applicable law, including the Securities Act of 1933.
9. Nothing herein shall restrict the right of the Company or any
Related Company to terminate your employment at any time, with or without
cause.
10. This option and related Stock Appreciation Right is subject to
all of the other terms, provisions and conditions of the Plan, a copy of
which has been furnished to you and other copies of which may be obtained by
you from the Company.
Very truly yours,
WORLDTEX, INC.
By
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