Exhibit 10.3

 

RESTRICTED STOCK UNIT AGREEMENT

 

This Restricted Stock Unit Agreement (this “Agreement”) is made by and between
Unifi, Inc., a New York corporation (the “Company”), and______________, a key
employee (the “Grantee”) of the Company.

 

WITNESSETH:

 

WHEREAS, the Company has adopted the Unifi, Inc. Amended and Restated 2013
Incentive Compensation Plan (the “Plan”), which became effective on October 24,
2018; and

 

WHEREAS, the Compensation Committee (the “Committee”) of the Board of Directors
(the “Board”) of the Company has determined that it is desirable and in the best
interests of the Company to grant to the Grantee Restricted Stock Units (“RSUs”)
as an incentive for the Grantee to advance the interests of the Company;

 

NOW, THEREFORE, the parties agree as follows:

 

Section 1.Incorporation of Plan. The Plan is incorporated by reference and made
a part of this Agreement, and this Agreement shall be subject to the terms of
the Plan, as the Plan may be amended from time to time, provided that any such
amendment of the Plan must be made in accordance with Section 14 of the Plan.
Unless otherwise defined herein, capitalized terms used in this Agreement shall
have the meanings ascribed to them in the Plan.

 

Section 2.Grant of RSU; Notice of Grant. Pursuant to the Plan and subject to the
terms and conditions set forth herein and therein, the Company has granted to
the “Grantee,” and effective as of the “Grant Date,” a certain number of RSUs,
all as set forth on the Notice of Grant attached hereto as Annex A, which Notice
of Grant is incorporated by reference herein.  

 

Section 3.Terms of Restricted Stock Units.  The RSUs granted under this
Agreement are subject to the following terms, conditions and restrictions:

 

(a)No Ownership.  The Grantee shall not possess any incidents of ownership
(including, without limitation, dividend and voting rights) in shares of the
Company Stock in respect of the RSUs until such RSUs have been converted into
shares of Company Stock and such shares have been distributed to the Grantee in
the form of shares of Company Stock.

 

(b)Transfer of RSUs.  Except as provided in this Section 3(b), the RSUs and any
interest therein may not be sold, assigned, transferred, pledged, hypothecated
or otherwise disposed of, except by will or the laws of descent and distribution
and

--------------------------------------------------------------------------------

subject to the conditions set forth in the Plan and this Agreement. Any attempt
to transfer RSUs in contravention of this Section is void ab initio. RSUs shall
not be subject to execution, attachment or other process.

 

(c)Vesting and Conversion of RSUs.  If the Grantee remains in the continuous
employment of the Company from the Date of Grant through the applicable “Vesting
Date” listed below, the last of which is the “Final Vesting Date”, the
corresponding percentage of the total number of RSUs awarded under this
Agreement will become fully vested.  

 

Vesting Date

Percentage of RSUs Vested

[Date that is 31 days following the first anniversary of the Date of Grant]

25%

[Date that is the second anniversary of the Date of Grant]

25%

[Date that is the third anniversary of the Date of Grant]

50%

 

There shall be no vesting of the RSUs to result in a fraction under this vesting
schedule.  If the vesting schedule would otherwise result in a fractional RSU,
such RSU shall be rounded up to the next whole number, subject to the next
sentence with respect to the Final Vesting Date.  If the number of vested RSUs
is rounded up on any Vesting Date prior to the Final Vesting Date, the number of
RSUs in which the Grantee becomes vested on the Final Vesting Date shall be
adjusted so that the total number of vested RSUs equals the number of RSUs set
forth in the Notice of Grant.  For example, if the Grantee was awarded 750 RSUs
under this Agreement, the Grantee would become vested in 188, 188 and 374 RSUs
on the respective Vesting Dates listed above.

 

On each Vesting Date, the vested RSUs shall be converted into an equivalent
number of shares of Company Stock, and all such shares of Company Stock will be
distributed to the Grantee within 30 days following the applicable Vesting Date,
subject to the following possible deferral election by the Grantee.  The Grantee
may irrevocably elect, on or before the “Deferral Election Date” indicated on
Annex A, to instead receive distributions of shares of Company Stock upon the
Grantee’s “separation from service” (as such term is defined in Section 409A and
described in Section 7, a “Separation from Service”), in either a single
distribution or substantially equal annual distributions over a period of up to
five years following the Grantee’s Separation from Service.  Such an election
must be made by completing and submitting to the Company a Deferral Election
Form in substantially the form included as part of Annex B hereto.  

2

 

--------------------------------------------------------------------------------

 

Upon any distribution of shares of Company Stock in respect of the RSUs, the
Company shall (i) issue (or make available via electronic means) to the Grantee
or the Grantee’s personal representative a stock certificate representing such
shares of Company Stock, or (ii) cause such number of shares to be registered in
the name of the Grantee or the Grantee’s personal representative via a
book-entry or other share registry process that is effective to constitute the
uncertificated delivery thereof, in either case free of any restrictions.  

 

(d)Additional Vesting Provisions.

 

(i)If, prior to the Final Vesting Date, the Grantee dies or has a Separation
from Service as a result of Disability, all RSUs shall become fully vested,
converted into an equivalent number of shares of Company Stock and distributed
to the Grantee in a single distribution within 30 days following the Grantee’s
death or such Separation from Service, as the case may be, in either case
without regard to any distribution deferral election.

 

(ii)If, after the Grantee attains age 65 but prior to the Final Vesting Date,
the Grantee has a Separation from Service due to an involuntary termination by
the Company without Cause (as defined below), all remaining unvested RSUs shall
become fully vested, and all RSUs shall be converted into an equivalent number
of shares of Company Stock and distributed to the Grantee in a single
distribution within 30 days following such Separation from Service, without
regard to any distribution deferral election.

 

(iii)If, prior to the Final Vesting Date, Grantee has a Separation from Service
for any reason not covered in Section 3(d)(i) or Section 3(d)(ii) above, then
the Grantee shall forfeit any unvested RSUs and shall not be entitled to receive
any shares of Company Stock under this Agreement with respect to such forfeited
RSUs.

 

(iv)Notwithstanding the foregoing, the Grantee shall immediately forfeit all
RSUs (whether or not vested) and any underlying shares of Company Stock for
which distribution has been deferred pursuant to Section 3(c) upon the Grantee’s
Separation from Service for Cause, whether before or after the Final Vesting
Date.

 

(v)In the event of a Change in Control (as defined in the Plan), all RSUs shall
become fully vested, be converted into shares of Company Stock and be
immediately distributed to the Grantee in a single distribution within 30 days
following the Change in Control, without regard to any distribution deferral
election.

 

(vi)For purposes of this Agreement, “Cause” means any of the following, as
determined in good faith by the Committee: (A) an act of embezzlement, theft or
misappropriation by the Grantee of any property of the Company or any Related
Company; (B) any breach by the Grantee of any material provision of any material
agreement to which the Grantee is a party with the Company or any Related
Company that is not cured, to the extent the breach is susceptible to being
cured,

3

 

--------------------------------------------------------------------------------

within fourteen (14) days after the Company gives express notice to the Grantee
describing such breach; (C) gross negligence by the Grantee in the discharge of
his or her lawful duties to the Company or any Related Company (after receiving
express notice from the Company specifying the manner in which he or she is
alleged to have been grossly negligent and having had the opportunity to cure
the same within thirty (30) days from receipt of such notice); (D) any act by
the Grantee constituting a felony or a crime that otherwise involves dishonesty
or misrepresentation; (E) the Grantee’s breach of any fiduciary duty, under
applicable law, to the Company or any Related Company, regardless of whether
such conduct constitutes gross negligence; or (F) any chemical or alcohol
dependence by the Grantee that materially and adversely affects the performance
of his or her duties or responsibilities to the Company or any Related
Company.  

Section 4.Equitable Adjustment.  The aggregate number of shares of Company Stock
subject to the RSUs shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of Company Stock
resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend or other increase or decrease in
such shares, effected without the receipt of consideration by the Company, or
other change in corporate or capital structure. The Committee shall make the
foregoing changes and any other changes, including changes in the classes of
securities available, to the extent reasonably necessary or desirable to
preserve the intended benefits under this Agreement in the event of any other
reorganization, recapitalization, merger, consolidation, spin-off, extraordinary
dividend or other distribution or similar transaction involving the Company.

 

Section 5.Taxes.  The Grantee, upon the distribution of the RSUs, shall pay to
the Company in cash the amount of any Applicable Withholding Taxes as provided
in the Plan. Notwithstanding the foregoing, the Grantee may satisfy the
Applicable Withholding Taxes in whole or in part, by electing (a) to deliver to
the Company shares of Company Stock owned by the Grantee at the time of the
distribution, (b) to have the Company withhold a portion of the RSUs to which
the Grantee would otherwise be entitled or (c) a combination of the
foregoing.  Any shares of Company Stock delivered or to be withheld in
satisfaction of any tax obligation of the Grantee shall have a value equal to
their Fair Market Value on the day the RSUs are distributed, as provided in the
Plan.

 

Section 6.No Right to Continued Employment.  Nothing contained herein shall be
deemed to confer upon the Grantee any right to continue in the employment of the
Company.

 

Section 7.Section 409A.

 

(a)It is intended that this Agreement comply in all respects with the
requirements of Section 409A of the Code and applicable Treasury Regulations and
other generally applicable guidance issued thereunder (collectively, “Section
409A”), and this Agreement shall be interpreted for all purposes in accordance
with this intent.

 

4

 

--------------------------------------------------------------------------------

(b)Notwithstanding any other term or provision of this Agreement (including any
term or provision of the Plan incorporated herein by reference), the parties
hereto agree that, from time to time, the Company may, without prior notice to
or consent of the Grantee, amend this Agreement to the extent determined by the
Company, in the exercise of its discretion in good faith, to be necessary or
advisable to prevent the inclusion in the Grantee’s gross income pursuant to the
applicable Treasury Regulations of any compensation intended to be deferred
hereunder. The Company shall notify the Grantee as soon as reasonably
practicable of any such amendment affecting the Grantee.

 

(c)If the amounts payable under this Agreement are subject to any taxes,
penalties or interest under Section 409A, the Grantee shall be solely liable for
the payment of any such taxes, penalties or interest.

 

(d)Except as otherwise specifically provided herein, the time and method for
payment of the RSUs as provided in Section 3 and the Deferral Election Form
shall not be accelerated or delayed for any reason, unless to the extent
necessary to comply with, or as may be permitted under, Section 409A.

 

(e)If the Grantee is deemed on the date of a Separation from Service to be a
“specified employee” (within the meaning of that term under Section
409A(a)(2)(B) of the Code and determined using any identification methodology
and procedure selected by the Company from time to time, or the default
methodology and procedure specified under Code Section 409A, if none has been
selected by the Company), then with regard to any payment or the provision of
any benefit that is “nonqualified deferred compensation” within the meaning of
Section 409A and that is paid as a result of the Grantee’s Separation from
Service, such payment or benefit shall not be made or provided prior to the date
that is the earlier of (i) the expiration of the six (6)-month period measured
from the date of such Separation from Service of the Grantee, and (ii) the date
of the Grantee’s death (the “Delay Period”).  Upon the expiration of the Delay
Period, all payments and benefits delayed pursuant to this provision (whether
they would have otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid or reimbursed to the Grantee in a lump sum,
and any remaining payments and benefits due under this Agreement shall be paid
or provided in accordance with the normal payment dates specified for them
herein.  For purposes of Section 409A, a distribution of shares of Company Stock
following conversion of an RSU shall constitute a “payment” thereof.

 

Section 8.Recoupment of RSUs/Shares of Stock.  Notwithstanding any provision in
the Plan or this Agreement to the contrary, all RSUs and underlying shares of
Company Stock awarded pursuant to this Agreement shall be subject to recoupment
by the Company pursuant to the Company’s Compensation Recoupment Policy, as it
may be amended from time to time (or any successor policy thereto) (the
“Recoupment Policy”).  The terms of the Recoupment Policy are hereby
incorporated by reference into this Agreement.

 

5

 

--------------------------------------------------------------------------------

Section 9.General Matters.

 

(a)Heirs and Successors.  This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns, and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company’s assets and business.  Subject to the
terms of the Plan, any benefits distributable to the Grantee under this
Agreement that are not distributed at the time of the Grantee’s death shall be
distributed, at the time and in the form determined in accordance with the
provisions of this Agreement and the Plan, to the beneficiary designated by the
Grantee in writing filed with the Company in such form and at such time as the
Committee shall require.  If a deceased Grantee failed to designate a
beneficiary, or if the designated beneficiary of the deceased Grantee dies
before the Grantee or before complete distribution of the benefits due under
this Agreement, the amounts to be distributed under this Agreement shall be
distributed to the legal representative or representatives of the estate of the
last to die of the Grantee and any designated beneficiary.

 

(b)Amendments by the Committee.  The Committee may, at any time prior to the
Final Vesting Date, amend this Agreement, provided that no amendment may, in the
absence of written consent by the Grantee, adversely affect the rights of the
Grantee under this Agreement prior to the date of such amendment.

 

(c)Administration.  The authority to manage and control the operation and
administration of this Agreement has been vested in the Committee, and the
Committee shall have all powers with respect to this Agreement that it has with
respect to the Plan.  Any interpretation of the Agreement by the Committee, and
any decision made by it with respect to the Agreement, are final and binding.

 

(d)Governing Law.  This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of North Carolina without
reference to principles of conflict of laws.

 

(e)Resolution of Disputes.  Any disputes arising under or in connection with
this Agreement shall be resolved by binding arbitration before a single
arbitrator, to be held in North Carolina in accordance with the commercial rules
and procedures of the American Arbitration Association. Judgment upon the award
by the arbitrator shall be final and subject to appeal only to the extent
permitted by law. Each party shall bear such party’s own expenses incurred in
connection with any arbitration; provided, however, that the cost of the
arbitration to the Grantee, including, without limitation, reasonable attorneys’
fees of the Grantee, shall be borne by the Company if the Grantee is the
prevailing party in the arbitration. Anything to the contrary notwithstanding,
each party hereto has the right to proceed with a court action for injunctive
relief or relief from violations of law not within the jurisdiction of an
arbitrator.  If any costs of the arbitration borne by the Company in accordance
herewith would constitute compensation to the Grantee for Federal tax purposes,
then (i) the amount of any such costs reimbursed to the Grantee in one

6

 

--------------------------------------------------------------------------------

taxable year shall not affect the amount of such costs reimbursable to the
Grantee in any other taxable year, (ii) the Grantee’s right to reimbursement of
any such costs shall not be subject to liquidation or exchange for any other
benefit, and (iii) the reimbursement of any such costs incurred by the Grantee
shall be made as soon as administratively practicable, but in any event within
ten (10) days, after the date the Grantee is determined to be the prevailing
party in the arbitration.  The Grantee shall be responsible for submitting
claims for reimbursement in a timely manner to enable payment within the
timeframe provided herein.

 

(f)Notices.  Any notice or other communication required or permitted under this
Agreement, to be effective, shall be in writing and, unless otherwise expressly
provided herein, shall be deemed to have been duly given (i) on the date
delivered in person, (ii) on the date indicated on the return receipt if mailed
postage prepaid, by certified or registered U.S. Mail, with return receipt
requested, (iii) on the date transmitted by facsimile or e-mail, if sent by 5:00
P.M., Eastern Time, and confirmation of receipt thereof is reflected or
obtained, or (iv) if sent by Federal Express, UPS or other nationally recognized
overnight courier service or overnight express U.S. Mail, with service charges
or postage prepaid, then on the next business day after delivery to the courier
service or U.S. Mail (in time for and specifying next day delivery).  In each
case (except for personal delivery), any such notice or other communication
shall be sent, as appropriate, (v) to the Grantee at the last address or
facsimile number specified in the Grantee’s records with the Company, or such
other address or facsimile number as the Grantee may designate in writing to the
Company, or (vi) to the Company, Attention:  General Counsel, at its corporate
headquarters address or main facsimile number at such address or such other
address as the Company may designate in writing to the Grantee.

 

(g)Failure to Enforce Not a Waiver.  The failure of either party hereto to
enforce at any time any provision of this Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.

 

(h)Counterparts.  This Agreement may be executed in multiple counterparts, each
of which shall be an original but all of which together shall represent one and
the same agreement.

 

(i)Modifications; Entire Agreement; Headings.  This Agreement cannot be changed
or terminated orally. This Agreement and the Plan contain the entire agreement
between the parties relating to the subject matter hereof.  The section headings
herein are intended for reference only and shall not affect the interpretation
hereof.

 

 

[Signatures Follow on Next Page]

 

 

7

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this Agreement, including the
Notice of Grant attached hereto as Annex A, effective as of the Grant Date set
forth on Annex A.

 

 

 

 

 

 

Grantee:

 

 

 

 

 

 

 

UNIFI, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

Annex A

 

NOTICE OF GRANT OF

RESTRICTED STOCK UNITS

 

The following employee of Unifi, Inc. has been granted Restricted Stock Units
pursuant to the Unifi, Inc. Amended and Restated 2013 Incentive Compensation
Plan in accordance with terms as set forth in this Notice of Grant and the
Restricted Stock Unit Agreement to which this Notice of Grant is attached.

 

The terms below shall have the following meanings when used in the Restricted
Stock Unit Agreement.

 

Grantee

[_____________]

Address of Grantee

7201 W. Friendly Avenue

Greensboro, NC 27410

Grant Date

[_______________]

Deferral Election Date

[_____________]

Aggregate Number of RSUs Granted

[______]

 

--------------------------------------------------------------------------------

Annex B

 

DEFERRAL ELECTION FORM AND INSTRUCTIONS

 

* * * INSTRUCTIONS * * *

 

You have been granted Restricted Stock Units (“RSUs”) pursuant to the Restricted
Stock Unit Award Agreement to which this Annex B is attached as a part thereof
(the “Agreement”).  Unless otherwise defined herein or in the attached Deferral
Election Form, capitalized terms have the meanings given them in the Agreement,
which also includes Annex A attached thereto.

 

Payment of RSUs is made in shares of Company Stock after the vesting of the RSUs
as described in the Agreement.  You are taxed at ordinary income rates on the
value of the shares of Company Stock at the time of such payment, which is the
time that shares are distributed to you pursuant to the Agreement.  Following
such a distribution, you can sell some or all the shares at any time, subject to
any applicable securities law restrictions.  Or, in connection with a
distribution, you can choose to have the Company withhold an appropriate number
of the shares to satisfy your tax obligation.

 

As a general rule, your vested RSUs under the Agreement will be converted to
shares of Company Stock that will be distributed to you in a single distribution
within 30 days following the applicable Vesting Date.  However, under Section
3(c) of the Agreement, you may elect instead to defer receipt of such shares of
Company Stock until your Separation from Service, and then have the shares
distributed to you in either a single distribution or substantially equal annual
distributions over a period of up to five years following your Separation from
Service.  Such an election must be made by completing and submitting to the
Company the attached Deferral Election Form on or before the Deferral Election
Date.

 

However, if you become vested in your RSUs prior to a Vesting Date due to
certain Separation from Service events as described in Section 3(d) of this
Agreement or a Change in Control of the Company, you will receive your shares of
Company Stock in a single distribution within 30 days following the date of such
event, regardless of any deferral election that you may have made.

 

There may be advantages and disadvantages to making a deferral election,
depending on your individual situation and future events, including future tax
rates.  You should consider your particular tax and financial situation before
making a deferral election.  You are encouraged to consult your personal tax or
financial planning advisor in making a decision.

 

For a Deferral Election to be effective,

you must complete and return the attached form

NO LATER THAN THE DEFERRAL ELECTION DATE

TO the office of the general counsel

 

--------------------------------------------------------------------------------

UNIFI, INC. RESTRICTED STOCK UNITS

DEFERRAL ELECTION FORM

 

Name of Grantee: [__________________]

 

All capitalized terms not defined herein have the meanings assigned to them in
your [_________], 2[__] Restricted Stock Unit Agreement.  Please check and
initial the one option being elected.

 

DO NOT DEFER DISTRIBUTION:

 

___________ I hereby elect to receive my shares of Company Stock in a single
distribution within 30 days following the applicable Vesting Date.  

 

TO DEFER DISTRIBUTION:

 

 

I hereby elect to receive distribution of my shares of Company Stock pursuant to
my [_________], 20[__] Restricted Stock Unit Agreement, in payment of my vested
RSUs thereunder, as follows:

 

___________ single distribution within 30 days following the date of my
Separation from Service

OR

 

___________ ____ (maximum of 5) equal annual installment distributions,
commencing within 30 days following my Separation from Service for the first
installment and with each subsequent distribution on the respective anniversary
dates of my Separation from Service.

 

I understand and acknowledge that:

 

•

If I become vested in all or a portion of my RSUs prior to the applicable
Vesting Date due to certain events as described in Section 3(d) of my Restricted
Stock Units Agreement or a Change in Control of the Company, my shares of
Company Stock will be distributed to me in a single distribution within 30 days
following the date of such event.

 

 

•

If at any time I have a Separation from Service for Cause, I will forfeit all
RSUs (whether or not vested) and all underlying shares of Company Stock that
have not been distributed to me, including those deferred under this Deferral
Election Form.

 

 

•

My deferrals will be subject to all requirements of Section 409A of the Internal
Revenue Code and provisions of the Plan as amended to comply with Section 409A.

 

 

--------------------------------------------------------------------------------

I understand that this election is irrevocable.  I also understand that I am
making this election in accordance with the terms of the Plan and that the terms
of the Plan will be used to resolve any ambiguity or inconsistency that may
arise in connection with this election.

 

 

 

 

Signature of Grantee

 

Date