Exhibit 10.1

 

 

 

 

 

UNIFI, INC.

SECOND AMENDED AND RESTATED 2013 INCENTIVE COMPENSATION PLAN

 

 

 

 

 

 

 

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UNIFI, INC.

SECOND AMENDED AND RESTATED 2013 INCENTIVE COMPENSATION PLAN

TABLE OF CONTENTS

 

1.

  Purpose      B-1  

2.

  Definitions      B-1  

3.

  General      B-7  

4.

  Stock      B-7  

5.

  Eligibility      B-7  

6.

  Performance Shares      B-8  

7.

  Restricted Stock Awards      B-8  

8.

  Performance Share Units and Restricted Stock Units      B-9  

9.

  Stock Options      B-11  

10.

  Stock Appreciation Rights      B-13  

11.

  Director Awards      B-15  

12.

  Recoupment of Awards      B-15  

13.

  Continuing Securities Law Compliance      B-16  

14.

  Termination, Modification, Change      B-16  

15.

  Change in Capital Structure      B-16  

16.

  Corporate Events      B-17  

17.

  Dividend Equivalents      B-18  

18.

  Administration of the Plan      B-18  

19.

  Notice      B-19  

20.

  No Effect on Other Plans      B-20  

21.

  Interpretation      B-20  

22.

  Effective Date of the Plan; Limited Effect of Restatement      B-20  

 

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UNIFI, INC.

SECOND AMENDED AND RESTATED 2013 INCENTIVE COMPENSATION PLAN

1. Purpose. This Plan is an amendment and restatement of the Unifi, Inc. 2013
Incentive Compensation Plan. The effective date of this Plan is October 29,
2020, subject to shareholder approval of the amended and restated Plan. The Plan
is designed to support the overall compensation philosophy and objectives of the
Company to (a) attract and retain persons eligible to participate in the Plan;
(b) motivate Participants, by means of appropriate equity-based incentives, to
achieve performance goals; (c) provide incentive compensation opportunities that
are competitive with those of other similar companies; and (d) provide the
Company the ability to further align Participants’ interests with those of the
Company’s shareholders through compensation that is based on the Company’s
common stock; and thereby promote the long-term financial interest of the
Company, including the growth in value of the Company’s equity and the
enhancement of long-term shareholder return. The Plan is also intended to allow
for grants of stock incentives to compensate non-employee members of the
Company’s Board of Directors.

2. Definitions. As used in the Plan, the following terms have the meanings
indicated:

(a) “Act” means the Securities Exchange Act of 1934, as amended.

(b) “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such first Person.

(c) “Applicable Withholding Taxes” means the aggregate amount of federal, state
and local income and employment taxes that an Employer is required to withhold
in connection with any award of Performance Shares, any lapse of restrictions on
Restricted Stock, any compensatory dividends paid on Restricted Stock, any
vesting of Restricted Stock Units or Performance Share Units, or any exercise of
a Nonstatutory Stock Option or Stock Appreciation Right.

(d) “Award” means any Incentive Award or Director Award.

(e) “Beneficial Owner” (and variants thereof) has the meaning given in Rule
13d-3 promulgated under the Act and, only to the extent such meaning is more
restrictive than the meaning given in Rule 13d-3, the meaning determined in
accordance with Code section 318(a).

(f) “Board” means the Board of Directors of the Company.

(g) “Cause” shall have the meaning ascribed to it in any agreement to which a
Participant and the Company are parties, and if the Participant and the Company
are not parties to an agreement in which “cause” is defined, the term “Cause”
means (i) the continued willful failure by the Participant to substantially
perform the Participant’s duties to the Company, (ii) the willful engaging by
the Participant in gross misconduct materially and demonstrably injurious to the
Company or (iii) the Participant’s material breach of any noncompetition,
nonsolicitation, confidentiality or similar covenant to which the Participant
may be subject from time to time in connection with the Participant’s employment
with the Company.

(h) “Change of Control” means, the occurrence of any of the following events:

(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of
more than 50% of either (A) the combined fair market value of the then
outstanding stock of the Company (the “Total Fair Market Value”) or (B) the
combined voting power of the then outstanding securities entitled to vote
generally in the election of directors of the Company

 

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(the “Total Voting Power”); excluding, however, the following: (1) any
acquisition by the Company or any of its Controlled Affiliates, (2) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Controlled Affiliates, (3) any Person
who becomes such a Beneficial Owner in connection with a transaction described
in the exclusion within subsection (iv) below and (4) any acquisition of
additional stock or securities by a Person who owns more than 50% of the Total
Fair Market Value or Total Voting Power of the Company immediately prior to such
acquisition; or

(ii) any Person is or becomes the Beneficial Owner, directly or Indirectly, of
securities of the Company that, together with any securities acquired directly
or indirectly by such Person within the immediately preceding twelve-consecutive
month period, represent 30% or more of the Total Voting Power of the Company;
excluding, however, any acquisition described in subclauses (1) through (4) of
subsection (i) above; or

(iii) a change in the composition of the Board such that the individuals who, as
of the Effective Date, constitute the Board (such individuals shall be
hereinafter referred to as the “Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board; provided, however, for purposes of
this definition, that any individual who becomes a director subsequent to the
Effective Date, whose election, or nomination for election by the Company’s
shareholders, was made or approved by a vote of at least a majority of the
Incumbent Directors (or directors whose election or nomination for election was
previously so approved) shall be considered an Incumbent Director; but,
provided, further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 promulgated under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person or
legal entity other than the Board shall not be considered an Incumbent Director;
provided finally, however, that, as of any time, any member of the Board who has
been a director for at least twelve (12) consecutive months immediately prior to
such time shall be considered an Incumbent Director for purposes of this
definition, other than for the purpose of the first proviso of this definition;
or

(iv) there is consummated a merger or consolidation of the Company or any direct
or indirect subsidiary of the Company or a sale or other disposition of the
assets of the Company that have a total gross fair market value equal to or
greater than 40% of the total gross fair market value of the assets of the
Company immediately prior to such acquisition (“Corporate Transaction”);
excluding, however, such a Corporate Transaction pursuant to which all or
substantially all of the individuals and entities who are the Beneficial Owners,
respectively, of the outstanding Company Stock and Total Voting Power
immediately prior to such Corporate Transaction will Beneficially Own, directly
or indirectly, more than 50%, respectively, of the outstanding Company Stock and
the combined voting power of the then outstanding Company Stock and the combined
voting power of the then outstanding securities entitled to vote generally in
the election of directors of the company resulting from such Corporate
Transaction (including, without limitation, a company that, as a result of such
transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Corporate
Transaction of the outstanding Company Stock and Total Voting Power, as the case
may be.

Notwithstanding anything in this Section 2(h) to the contrary, an event that
does not constitute a change in the ownership of the Company, a change in the
effective control of the Company, or a change in the ownership of a substantial
portion of the assets of the Company, each as defined in Section 1.409A-3(i)(5)
of the Treasury Regulations, shall not constitute a Change of Control for
purposes of this Plan.

(i) “Code” means the Internal Revenue Code of 1986, as amended.

 

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(j) “Consultant” means a Service Provider who is not an Employee or Independent
Director.

(k) “Control” (and variants thereof) has the meaning specified in Rule 12b-2
promulgated under the Act.

(l) “Committee” means the Compensation Committee of the Board (or any successor
Board committee designated by the Board to administer the Plan), provided that,
if any member of the Compensation Committee does not qualify as (i) a
non-employee director for purposes of Rule 16b-3 promulgated under the Act, and
(ii) an independent director for purposes of the rules of the principal exchange
on which Company Stock is traded, the remaining members of the Committee who do
so qualify (but not less than two members) shall be constituted as a
subcommittee to act as the Committee for purposes of the Plan.

(m) “Company” means Unifi, Inc., a New York corporation, and any successor
corporation.

(n) “Company Stock” means the common stock of the Company, par value $0.10 per
share. In the event of a change in the capital structure of the Company (as
provided in Section 15), the shares resulting from the change shall be deemed to
be Company Stock within the meaning of the Plan.

(o) “Date of Grant” means (i) with respect to a Non-Option Award, the date on
which the Committee (or, with respect to a Director Award, the Board) grants the
award; (ii) with respect to a Nonstatutory Option or Stock Appreciation Right,
the date on which the Committee (or, with respect to a Director Award, the
Board) completes the corporate action necessary to create a legally binding
right constituting the Nonstatutory Stock Option or Stock Appreciation Right; or
(iii) with respect to an Incentive Stock Option, the date on which the Committee
completes the corporate action constituting an offer of stock for sale to a
Participant under the terms and conditions of the Incentive Stock Option. With
respect to any Award, the Committee (and, with respect to any Director Award,
the Board) may specify a future date on which the Award is to be granted or to
become effective.

(p) “Director Award” means any Nonstatutory Option, Stock Appreciation Right,
share of Restricted Stock, Vested Share, Vested Share Unit, Restricted Stock
Unit or Performance Share Unit awarded to an Independent Director under the
Plan.

(q) “Disability” means, as to an Incentive Stock Option, a Disability within the
meaning of Code section 22(e)(3). As to all other Awards, Disability (or
variants thereof) means, unless otherwise provided in the Grant Agreement with
respect to the Award,

(i) the Participant’s inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, or entitlement to and receipt of disability
benefits under a disability insurance program of the Company that pays benefits
on the basis of the foregoing definition;

(ii) the Participant is, by reason of a medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, receiving
either (A) income replacement benefits for a period of not less than three
(3) months under an accident and health plan covering employees of the Company
or (B) disability benefits under a disability insurance program that pays
benefits on the basis of the foregoing definition; or

(iii) The Participant is determined to be totally disabled by the Social
Security Administration.

The Committee (or, with respect to a Director Award, the Board) shall determine
whether a Disability exists and the determination shall be conclusive.

 

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(r) “Effective Date” means the date described in Section 22.

(s) “Employee” means an individual employed by the Company or a Related Company
as a common-law employee.

(t) “Employer” means the Company or Related Company with respect to which an
Employee provides services.

(u) “Fair Market Value” means:

(i) if the Company Stock is at the time listed or admitted to trading on any
stock exchange, the “Fair Market Value” shall be the mean between the lowest and
highest reported sale prices of the Company Stock on the date in question on the
principal exchange on which the Company Stock is then listed or admitted to
trading. If no reported sale of Company Stock takes place on the date in
question on the principal exchange, then the mean between the lowest and highest
reported sale prices of the Company Stock on the closest date prior to the date
in question on the principal exchange shall be determinative of “Fair Market
Value”;

(ii) if the Company Stock is not at the time listed or admitted to trading on a
stock exchange, the “Fair Market Value” shall be the mean between the lowest and
highest reported sale prices of the Company Stock on the date in question in the
over-the-counter market, as such prices are reported in a publication of general
circulation selected by the Committee and regularly reporting the market price
of Company Stock in such market; or

(iii) if the Company Stock is not listed or admitted to trading on any stock
exchange or traded in the over-the-counter market, the “Fair Market Value” shall
be as determined in good faith by the Committee.

(v) “Fiscal Year” means the fiscal period used by the Company for reporting
taxes on its income under the Code.

(w) “Grant Agreement” means the written agreement between the Company and a
Participant containing the terms and conditions with respect to an Award.

(x) “Good Reason” shall have the meaning ascribed to it in any agreement to
which a Participant and the Company are parties, and if the Participant and the
Company are not parties to an agreement in which “good reason” is defined, the
term “Good Reason” means (i) a material reduction (without the Participant’s
express written consent) in the Participant’s title or responsibilities; (ii) a
material reduction in the Participant’s base salary or annual incentive
compensation opportunity; or (iii) the Company’s requiring the Participant to
relocate to an employment location that is more than fifty (50) miles from the
Participant’s then current employment location.

(y) “Independent Director” means a member of the Board who satisfies the
requirements for a non-employee director as provided in Section 16(b) of the
Act.

(z) “Incentive Award” means any Performance Share, Option, Stock Appreciation
Right, share of Restricted Stock, Vested Share, Vested Share Unit, Restricted
Stock Unit or Performance Share Unit awarded to a Service Provider under the
Plan.

(aa) “Incentive Stock Option” means an Option (i) intended to meet the
requirements of, and qualify for favorable federal income tax treatment under,
Code section 422 and (ii) that meets such requirements.

(bb) “Non-Option Award” means an Award other than an Option or Stock
Appreciation Right.

(cc) “Nonstatutory Stock Option” means an Option that does not meet the
requirements of Code section 422, or, even if meeting the requirements of Code
section 422, is not intended to be an Incentive Stock Option and is so
designated.

 

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(dd) “Option” means a right to purchase Company Stock granted under the Plan, at
a price determined in accordance with Section 9.

(ee) “Participant” means any Service Provider or Independent Director who
receives an Award under the Plan.

(ff) “Performance Criteria” means the performance of the Company, any Related
Company, any subsidiary, division, business unit thereof, or any individual
using one or more of the following measures or any other measures selected by
the Committee, in each case, either on an operating or GAAP basis where
applicable (or on the basis of such other standards as may replace or succeed
GAAP), adjusted to include or exclude one or more nonrecurring, operating,
non-operating or other items as applicable, and including measuring the
performance of any of the following relative to a defined peer group of
companies or an index: market value of the Company Stock; pre-tax profits; unit
production costs; asset growth; pre-tax earnings; debt to equity ratio; earnings
per share; revenues; operating income; operating costs and efficiencies;
operating cash flow; net income, before or after taxes; net income before income
taxes, incentive payments and accounting for minority interest; return on total
capital, equity, revenue or assets; market share; unit production and sales
volume; earnings before interest, taxes, depreciation, rent and amortization
expenses; earnings before interest, taxes, depreciation and amortization;
earnings before interest and taxes; any of the prior measures or earnings before
taxes and unusual or nonrecurring items as measured either against the annual
budget or as a ratio to revenue or return on total capital; net earnings; profit
margin; operating margin; operating income; net worth; cash flow; cash flow per
share; total shareholder return; revenues; capital expenditures; improvements in
capital structure; industry indices; expenses and expense ratio management; debt
reduction; profitability of an identifiable business unit or product; or levels
of expense, cost or liability by category, operating unit or any other
delineation. If the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company, or the
manner in which it conducts its business, or other events or circumstances
render the Performance Criteria unsuitable, the Committee may in its discretion
modify such Performance Criteria or the related minimum acceptable level of
achievement, in whole or in part, as the Committee deems appropriate and
equitable.

(gg) “Performance Goal” means an objectively determinable performance goal
established by the Committee that relates to one or more Performance Criteria.

(hh) “Performance Share” means a right to receive a share of Company Stock
subject to the satisfaction of performance conditions as set forth in Section 6.

(ii) “Performance Share Unit” means a right to receive Company Stock or cash
awarded upon the terms and subject to grant and vesting conditions as set forth
in Section 8.

(jj) “Person” shall have the meaning given in Section 3(a)(9) of the Act, as
modified by Sections 13(d) and 14(d) of the Act, and only to the extent such
meaning is more restrictive than the meaning given in Section 3(a)(9) of the Act
(as modified above), the meaning determined in accordance with Sections
1.409A-3(i)(5)(v)(B), (vi)(D) or (vii)(C) of the Treasury Regulations (or any
successor provisions), as applicable.

(kk) “Plan” means this Unifi, Inc. Second Amended and Restated 2013 Incentive
Compensation Plan, as it may be amended from time to time.

(ll) “Related Company” means, (i) for purposes of determining eligibility to
receive an Incentive Stock Option, any “parent corporation” with respect to the
Company within the meaning of Code section 424(e) or any “subsidiary
corporation” with respect to the Company within the meaning of Code section
424(f); (ii) for purposes of determining eligibility to receive a Nonstatutory
Stock Option or Stock Appreciation Right, any corporation or other entity in a
chain of corporations or other entities in which each corporation or other
entity has a controlling interest (within the

 

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meaning of Section 1.409A-1(b)(5)(E)(1) of the Treasury Regulations (or any
successor provision)) in another corporation or other entity in the chain,
beginning with a corporation or other entity in which the Company has a
controlling interest; and (iii) for all other purposes under the Plan, any
corporation, trade or business that would be required to be treated as a single
employer with the Company under Code sections 414(b) or (c), provided that, in
applying Code sections 1563(a)(1), (2) and (3) for purposes of determining a
controlled group of corporations, or in applying Section 1.414(c)-2 of the
Treasury Regulations for purposes of determining trades or businesses under
common control, the phrase “at least 50%” shall replace the phrase “at least
80%” each time it appears in those sections.

(mm) “Repricing” means, with respect to an Option or Stock Appreciation Right,
any of the following: (i) the lowering of the exercise price after the Date of
Grant; (ii) the taking of any other action that is treated as a repricing under
generally accepted accounting principles; or (iii) the cancellation of the
Option or Stock Appreciation Right at a time when its exercise price (or, with
respect to the Stock Appreciation Right, the Fair Market Value of the Company
Stock covered by the Stock Appreciation Right on the Date of Grant) exceeds the
Fair Market Value of the underlying Company Stock in exchange for any other
Award, unless the cancellation and exchange occurs in connection with a
Corporate Event (as defined in Section 16 below).

(nn) “Restricted Stock” means Company Stock awarded upon the terms and subject
to restrictions as set forth in Section 7.

(oo) “Restricted Stock Unit” means a right to receive Company Stock or cash
awarded upon the terms and subject to vesting conditions as set forth in
Section 8.

(pp) “Retirement” means, unless otherwise provided in the Grant Agreement for a
particular Award, a Participant’s termination of employment or other separation
from service on or after age 65.

(qq) “Rule 16b-3” means Rule 16b-3 promulgated under the Act, as amended from
time to time.

(rr) “Service Provider” means an Employee, Consultant or other natural person
employed by or providing bona fide services to the Company or a Related Company,
excluding any Independent Director.

(ss) “Stock Appreciation Right” means a right to receive Company Stock or cash
granted under Section 10.

(tt) “Tandem Right” means a kind of Stock Appreciation Right granted in
connection with a Nonstatutory Stock Option as described in Section 10.

(uu) “Ten Percent Shareholder” means a person who owns, directly or indirectly,
stock possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or any Related Company. Indirect ownership of
stock shall be determined in accordance with Code section 424(d).

(vv) “Treasury Regulations” mean the final, temporary or proposed regulations
issued by the Treasury Department and/or Internal Revenue Service as codified in
Title 26 of the United States Code of Federal Regulations. Any references made
in the Plan to specific Treasury Regulations shall also refer to any successor
or replacement regulations thereto.

(ww) “Vested Share” means a share of Company Stock awarded upon the terms set
forth in Section 11.

(xx) “Vested Share Unit” means a right to receive a share of Company Stock
awarded upon the terms set forth in Section 11.

 

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3. General. The following types of Awards may be granted under the Plan:
Performance Shares, shares of Restricted Stock, Vested Shares, Vested Share
Units, Restricted Stock Units, Performance Share Units, Options, or Stock
Appreciation Rights. Options granted under the Plan may be Incentive Stock
Options or Nonstatutory Stock Options.

4. Stock.

(a) Reserve. Subject to Section 15, the number of shares of Company Stock with
respect to which Awards may be granted under the Plan during the term of the
Plan beginning on the Effective Date shall be eight hundred fifty thousand
(850,000) shares of Company Stock, which shall be authorized but unissued
shares.

(b) Share Use. The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments in the number of shares of
Company Stock available under Section 4(a) or in any award granted hereunder if
the number of shares of Company Stock actually delivered differs from the number
of shares previously counted in connection with an award, provided such counting
procedures comply with the requirements of this Section 4(b). Shares of Company
Stock subject to an award that is canceled, expired, forfeited, settled in cash
or is otherwise terminated without a delivery of shares of Company Stock to a
Participant will again be available for awards. Shares of Company Stock withheld
in payment of the exercise price or taxes relating to an award and shares of
Company Stock surrendered in payment of any exercise price or taxes relating to
an award shall be considered shares of Company Stock delivered to the
Participant and shall not be available for awards under the Plan. In addition,
if the amount payable upon exercise of a Stock Appreciation Right is paid in
Company Stock, the total number of shares of Company Stock subject to the Stock
Appreciation Right shall be considered shares of Company Stock delivered to the
Participant (regardless of the number of shares actually delivered to the
Participant) and shall not be available for awards under the Plan.

Shares of Company Stock delivered under the Plan in settlement, assumption or
substitution of outstanding awards under the plans or arrangements of another
entity shall not reduce the maximum number of shares of Company Stock available
for delivery under the Plan, to the extent that such settlement, assumption or
substitution is a result of the Company acquiring another entity (or an interest
in another entity).

Shares of Company Stock may be issued under this Plan without cash
consideration.

5. Eligibility.

(a) Incentive Awards. All present and future Service Providers of the Company or
any Related Company (whether now existing or hereafter created or acquired) who
have contributed or who can be expected to contribute significantly to the
Company or a Related Company shall be eligible to receive Incentive Awards under
the Plan. The Committee shall have the power and complete discretion, as
provided in Section 18, to select eligible Service Providers to receive
Incentive Awards and to determine for each Service Provider the nature of the
award and the terms and conditions of each Incentive Award.

(b) Director Awards. All present and future Independent Directors shall be
eligible to receive Director Awards under the Plan. The Board shall have the
power and complete discretion to select eligible Independent Directors to
receive Director Awards and to determine for each Independent Director the
nature of the award and the terms and conditions of each Director Award.

(c) No Contract of Employment or Services. The grant of an Award shall not
obligate the Company or any Related Company to pay any Service Provider or
Independent Director any particular amount of remuneration, to continue the
employment or services of the Service Provider

 

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or Independent Director after the grant or to make further grants to the Service
Provider or Independent Director at any time thereafter.

(d) Awards to International Employees. When granting Awards to Service Providers
or Independent Directors who are not United States residents, the Committee (or
with respect to Director Awards, the Board) shall have complete discretion and
authority to grant such Awards in compliance with all present and future laws of
the country or countries with laws that may apply to the grant of the Award or
the issuance of Company Stock pursuant to the Award. Such authorization shall
extend to and include establishing one or more separate sub-plans that include
provisions not inconsistent with the Plan that comply with statutory or
regulatory requirements imposed by the country or countries in which the
Participant resides.

6. Performance Shares.

(a) The Committee may grant Performance Shares to eligible Service Providers.
Whenever the Committee grants Performance Shares, a Grant Agreement shall be
given to the Service Provider stating the number of Performance Shares granted
and the terms and conditions to which the Award of Performance Shares is
subject, and, at that time, the Service Provider shall become a Participant.

(b) The Committee may reserve the right in a Grant Agreement to settle all or
any portion of an award of Performance Shares in cash instead of shares of
Company Stock, with the cash portion to be determined based on the Fair Market
Value as of the date of payment of the shares of Company Stock otherwise payable
under the award, or to allow the Participant to defer payment under the award,
subject to such terms as the Committee may determine in accordance with Code
section 409A.

(c) A Participant shall have no rights as a shareholder until shares of Company
Stock are issued under the Performance Share award and all requirements with
respect to the issuance of such shares have been satisfied.

(d) A Participant’s interest in an award of Performance Shares may not be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered.

(e) Each Participant who is an Employee may be required to agree at the time of
receiving an Award of Performance Shares, and as a condition thereof, to pay to
the Employer, or make arrangements satisfactory to the Employer regarding the
payment to the Employer of, Applicable Withholding Taxes. Until the amount has
been paid or arrangements satisfactory to the Employer have been made, the
Employer may delay issuing a stock certificate to the Participant. Payment to
the Employer in satisfaction of Applicable Withholding Taxes may be in cash. In
addition, (i) payment to the Employer in satisfaction of Applicable Withholding
Taxes may be made in shares of Company Stock (valued at their Fair Market Value
as of the date of payment) to which the Participant has good title, free and
clear of all liens and encumbrances; (ii) the Participant may elect to have his
or her Employer retain that number of shares of Company Stock (valued at their
Fair Market Value as of the date of such retention) that would satisfy all or a
specified portion of the Applicable Withholding Taxes; or (iii) unless
prohibited by law, the Participant may deliver irrevocable instructions to a
broker to deliver promptly to the Employer, from the sale or loan proceeds with
respect to the sale of Company Stock or a loan secured by Company Stock, the
amount necessary to pay the Applicable Withholding Taxes.

7. Restricted Stock Awards.

(a) The Committee may grant Restricted Stock to eligible Service Providers.
Whenever the Committee deems it appropriate to grant Restricted Stock, a Grant
Agreement shall be given to the Service Provider stating the number of shares of
Restricted Stock granted and the terms and

 

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conditions to which the Restricted Stock is subject, and, at that time, the
Service Provider shall become a Participant.

(b) The Committee shall establish as to each award of Restricted Stock the terms
and conditions upon which the restrictions set forth in paragraph (c) below
shall lapse. The terms and conditions may include the continued performance of
services or the achievement of performance conditions measured on an individual,
corporate or other basis, or any combination thereof. A Restricted Stock Award,
the vesting of which is not conditioned on the achievement Performance Goals or
other performance conditions, shall have a vesting period of not less than three
(3) years from the Date of Grant of the Restricted Stock Award. A Restricted
Stock Award, the vesting of which is conditioned on the achievement of
Performance Goals or other performance conditions, shall not vest less than one
(1) year from the Date of Grant. Notwithstanding the preceding two sentences,
the Committee may, in its discretion and without limitation, provide in the
Grant Agreement that restrictions will lapse prior to the expiration of the
service or performance period as a result of the Disability, death or Retirement
of the Participant or the occurrence of a Change of Control.

(c) No shares of Restricted Stock may be sold, assigned, transferred, pledged,
hypothecated or otherwise encumbered or disposed of until the restrictions on
the shares established by the Committee have lapsed or been removed.

(d) Upon the acceptance by a Participant of an award of Restricted Stock, the
Participant shall, subject to the restrictions set forth in subsection
(c) above, have all the rights of a shareholder with respect to the shares of
Restricted Stock, including, but not limited to, the right to vote the shares of
Restricted Stock and the right to receive all dividends and other distributions
paid thereon; provided, however, dividends and other distributions paid with
respect to shares of Restricted Stock may be paid to the Participant only to the
extent the restrictions on the shares of Restricted Stock have lapsed or been
removed, and any dividends and other distributions paid with respect to shares
of Restricted Stock that do not become vested shall be forfeited. Certificates
representing Restricted Stock may be held by the Company until the restrictions
lapse and, upon request, the Participant shall provide the Company with
appropriate stock powers endorsed in blank.

(e) Each Participant who is an Employee may be required to agree at the time of
receiving an Award of Restricted Stock, and as a condition thereof, to pay to
the Employer, or make arrangements satisfactory to the Employer regarding the
payment to the Employer of, Applicable Withholding Taxes. Until the amount has
been paid or arrangements satisfactory to the Employer have been made, the
Employer may delay issuing a stock certificate to the Participant. Payment to
the Employer in satisfaction of Applicable Withholding Taxes may be in cash. In
addition, (i) payment to the Employer in satisfaction of Applicable Withholding
Taxes may be made in shares of Company Stock (valued at their Fair Market Value
as of the date of payment) to which the Participant has good title, free and
clear of all liens and encumbrances; (ii) the Participant may elect to have his
or her Employer retain that number of shares of Company Stock (valued at their
Fair Market Value as of the date of such retention) that would satisfy all or a
specified portion of the Applicable Withholding Taxes; or (iii) unless
prohibited by law, the Participant may deliver irrevocable instructions to a
broker to deliver promptly to the Employer, from the sale or loan proceeds with
respect to the sale of Company Stock or a loan secured by Company Stock, the
amount necessary to pay the Applicable Withholding Taxes.

8. Performance Share Units and Restricted Stock Units.

(a) The Committee may grant Performance Share Units and Restricted Stock Units
to eligible Service Providers. Whenever the Committee deems it appropriate to
grant Performance Share Units or Restricted Stock Units, a Grant Agreement shall
be given to the Service Provider stating

 

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the number of Performance Share Units or Restricted Stock Units granted and the
terms and conditions to which the Performance Share Units or Restricted Stock
Units are subject, and, at that time, the Service Provider shall become a
Participant.

(b) The Committee shall establish as to each award of Performance Share Units
the terms and conditions upon which the Performance Share Units shall be earned,
vest and be paid. The issuance and vesting of Performance Share Units may be
conditioned on the achievement of performance conditions measured on an
individual, corporate, or other basis, or any combination thereof and on the
continued performance of services. The Committee shall establish as to each
award of Restricted Stock Units the terms and conditions upon which the
Restricted Stock Units shall vest and be paid. Vesting may be conditioned on the
continued performance of services or the achievement of performance conditions
measured on an individual, corporate, or other basis, or any combination
thereof. A Restricted Stock Unit, the vesting of which is not conditioned on the
achievement of Performance Goals or other performance conditions, shall not have
a vesting period of less than three (3) years from the Date of Grant of the
Restricted Stock Unit. A Performance Share Unit or Restricted Stock Unit, the
vesting of which is conditioned on the achievement of Performance Goals or other
performance conditions, shall not vest less than one (1) year from the Date of
Grant. Notwithstanding the foregoing, the Committee may, in its discretion and
without limitation, provide in the Grant Agreement that restrictions will expire
as a result of one or more of the Disability, death or Retirement of the
Participant or the occurrence of a Change of Control.

(c) Performance Share Units and Restricted Stock Units may be paid in cash,
Company Stock, or a fixed combination of Company Stock or cash as provided in
the Grant Agreement, or the Committee may reserve the right to determine the
manner of payment at the time the Performance Share Units or Restricted Stock
Units become payable. The delivery of Company Stock in payment of Performance
Share Units or Restricted Stock Units may be subject to additional conditions
established in the Grant Agreement.

(d) A Participant who receives Performance Share Units or Restricted Stock Units
payable in Company Stock shall have no rights as a shareholder until the Company
Stock is issued pursuant to the terms of the Grant Agreement and all
requirements with respect to the issuance of such shares have been satisfied.
The Committee may, in its discretion, provide that a Participant shall be
entitled to receive dividend equivalents on outstanding Performance Share Units
or Restricted Stock Units. Dividend equivalents may be (i) paid in cash,
(ii) credited to the Participant as additional Performance Share Units or
Restricted Stock Units, or (iii) a fixed combination of cash and additional
Performance Share Units or Restricted Stock Units as provided in the Grant
Agreement; provided, however, dividend equivalents with respect to Performance
Share Units may be paid to the Participant only to the extent the Performance
Goals or other performance conditions applicable to the Performance Share Units
are achieved and dividend equivalents with respect to Restricted Stock Units may
be paid to the Participant only if the Restricted Stock Units become vested, and
any dividends and other distributions paid with respect to Performance Share
Units or Restricted Stock Units that are not earned or become vested shall be
forfeited.

(e) A Participant’s interest in Performance Share Units or Restricted Stock
Units may not be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered.

(f) Whenever payments under Performance Share Units or Restricted Stock Units
are to be made in cash to a Participant who is an Employee, his or her Employer
shall be entitled to withhold therefrom an amount sufficient to satisfy any
Applicable Withholding Taxes. Each Participant who is an Employee may be
required to agree as a condition of receiving Performance Share Units or
Restricted Stock Units payable in the form of Company Stock to pay to his or her
Employer, or make arrangements satisfactory to the Employer regarding the
payment to the Employer of, Applicable Withholding Taxes. Until the amount has
been paid or arrangements

 

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satisfactory to the Employer have been made, the Employer may delay issuing a
stock certificate to the Participant. Payment to the Employer in satisfaction of
Applicable Withholding Taxes may be in cash. In addition, (i) payment to the
Employer in satisfaction of Applicable Withholding Taxes may be made in shares
of Company Stock (valued at their Fair Market Value as of the date of payment)
to which the Participant has good title, free and clear of all liens and
encumbrances; (ii) the Participant may elect to have his or her Employer retain
that number of shares of Company Stock (valued at their Fair Market Value as of
the date of such retention) that would satisfy all or a specified portion of the
Applicable Withholding Taxes; or (iii) unless prohibited by law, the Participant
may deliver irrevocable instructions to a broker to deliver promptly to the
Employer, from the sale or loan proceeds with respect to the sale of Company
Stock or a loan secured by Company Stock, the amount necessary to pay the
Applicable Withholding Taxes.

9. Stock Options.

(a) The Committee may grant Options to eligible Service Providers. Whenever the
Committee grants Options, a Grant Agreement shall be given to the Service
Provider stating the number of shares for which Options are granted, the Option
exercise price per share, whether the Options are Incentive Stock Options or
Nonstatutory Stock Options, the extent, if any, to which associated Stock
Appreciation Rights are granted, and the conditions to which the grant and
exercise of the Options are subject, and, at that time, the Service Provider
shall become a Participant.

(b) The exercise price of shares of Company Stock covered by an Option shall not
be, and shall never become, less than 100% of the Fair Market Value of the
shares on the Date of Grant, except as may be provided in Section 15 (regarding
certain changes affecting Company Stock). If the Participant is a Ten Percent
Shareholder and the Option is intended to qualify as an Incentive Stock Option,
the exercise price shall be not less than 110% of the Fair Market Value of such
shares on the Date of Grant.

(c) Options may be exercised in whole or in part at the times as may be
specified by the Committee in the Participant’s Grant Agreement; provided that
no Option may be exercised after the expiration of ten (10) years from the Date
of Grant. If the Participant is a Ten Percent Shareholder and the Option is
intended to qualify as an Incentive Stock Option, the Option may not be
exercised after the expiration of five (5) years from the Date of Grant.

(d) Options shall not be transferable except to the extent specifically provided
in the Grant Agreement in accordance with applicable securities laws, provided
in no event shall Options be transferable to third-party financial institutions.
Incentive Stock Options, by their terms, shall not be transferable except by
will or the laws of descent and distribution and shall be exercisable, during
the Participant’s lifetime, only by the Participant.

(e) Options that are intended to qualify as Incentive Stock Options shall be
granted only to Employees who meet the eligibility requirements of Section 5.

(f) Options that are intended to qualify as Incentive Stock Options shall, by
their terms, not be exercisable after the first to occur of (i) ten (10) years
from the Date of Grant (five (5) years if the Participant to whom the Option has
been granted is a Ten Percent Shareholder), (ii) three (3) months following the
date of the Participant’s termination of employment with the Company and all
Related Companies for reasons other than Disability or death, or (iii) one (1)
year following the date of the Participant’s termination of employment on
account of Disability or death.

(g) Options that are intended to qualify as Incentive Stock Options shall, by
their terms, be exercisable in any calendar year only to the extent that the
aggregate Fair Market Value (determined as of the Date of Grant) of the Company
Stock with respect to which Incentive Stock Options are exercisable for the
first time during the Plan Year does not exceed $100,000 (the “Limitation
Amount”). Incentive Stock Options granted under the Plan and all other plans of
the

 

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Company and all Related Companies shall be aggregated for purposes of
determining whether the Limitation Amount has been exceeded. The Committee may
impose any conditions as it deems appropriate on an Incentive Stock Option to
ensure that the foregoing requirement is met. If Incentive Stock Options that
first become exercisable in a Plan Year exceed the Limitation Amount, the excess
Options shall be treated as Nonstatutory Stock Options to the extent permitted
by law.

(h) A Participant who purchases shares of Company Stock under an Option shall
have no rights as a shareholder until the Company Stock is issued pursuant to
the terms of the Grant Agreement and all requirements with respect to the
issuance of such shares have been satisfied.

(i) Options may be exercised by the Participant giving written notice of the
exercise to the Company, stating the number of shares the Participant has
elected to purchase under the Option. The notice shall be effective only if
accompanied by the exercise price in full in cash; provided, however, the
Participant (i), unless prohibited by law, may deliver a properly executed
exercise notice together with irrevocable instructions to a broker to deliver
promptly to the Company, from the sale or loan proceeds with respect to the sale
of Company Stock or a loan secured by Company Stock, the amount necessary to pay
the exercise price and, if required by the terms of the Option or the Committee
in its discretion, Applicable Withholding Taxes, (ii) may deliver shares of
Company Stock for which the holder thereof has good title, free and clear of all
liens and encumbrances (valued at their Fair Market Value on the date of
exercise) in satisfaction of all or any part of the exercise price, (iii) may
cause to be withheld from the Option shares, shares of Company Stock (valued at
their Fair Market Value on the date of exercise) in satisfaction of all or any
part of the exercise price, or (iv) may use any other methods of payment as the
Committee, at its discretion, deems appropriate. Until the Participant has paid
the exercise price and any Applicable Withholding Taxes, no stock certificate
shall be issued.

(j) Each Participant who is an Employee may be required to agree as a condition
of the exercise of an Option to pay to his or her Employer, or make arrangements
satisfactory to his or her Employer regarding the payment to the Employer of,
Applicable Withholding Taxes. Until the amount has been paid or arrangements
satisfactory to the Employer have been made, no stock certificate shall be
issued upon the exercise of an Option. Payment to the Employer in satisfaction
of Applicable Withholding Taxes may be in cash. In addition, (i) payment to the
Employer in satisfaction of Applicable Withholding Taxes may be made in shares
of Company Stock (valued at their Fair Market Value as of the date of payment)
to which the Participant has good title, free and clear of all liens and
encumbrances; (ii) the Participant may elect to have his or her Employer retain
that number of shares of Company Stock (valued at their Fair Market Value as of
the date of such retention) that would satisfy all or a specified portion of the
Applicable Withholding Taxes; or (iii) unless prohibited by law, the Participant
may deliver irrevocable instructions to a broker to deliver promptly to the
Employer, from the sale or loan proceeds with respect to the sale of Company
Stock or a loan secured by Company Stock, the amount necessary to pay the
Applicable Withholding Taxes.

(k) Unless specifically provided in the discretion of the Committee in a writing
that references and supersedes this Section 9(k), (i) no Modification shall be
made in respect to any Option if such Modification would result in the Option
constituting a deferral of compensation, and (ii) no Extension shall be made in
respect to any Option if such Extension would result in the Option having an
additional deferral feature from the Date of Grant, in each case within the
meaning of applicable Treasury Regulations under Code section 409A. Subject to
the remaining part of this paragraph (k), (A) a “Modification” means any change
in the terms of the Option (or change in the terms of the Plan or applicable
Grant Agreement) that may provide the holder of the Option with a direct or
indirect reduction in the exercise price of the Option, regardless of whether
the holder in fact benefits from the change in terms; and (B) an “Extension”
means any of (1) the provision to the holder of an additional period of time
within which to exercise the Option beyond the time

 

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originally prescribed, (2) the conversion or exchange of the Option for a
legally binding right to compensation in a future taxable year, (3) the addition
of any feature for the deferral of compensation to the terms of the Option, or
(4) any renewal of the Option that has the effect of any of (1) through (3)
above. Notwithstanding the preceding sentence, it shall not be a Modification or
an Extension, respectively, to change the terms of an Option in accordance with
Section 18, or in any of the other ways or for any of the other purposes
provided in applicable Treasury Regulations or other generally applicable
guidance under Code section 409A as not resulting in a Modification or Extension
for purposes of that section. In particular, it shall not be an Extension to
extend the exercise period of an Option to a date no later than the earlier of
(x) the latest date upon which the Option could have expired by its original
terms under any circumstances or (y) the tenth (10th) anniversary of the
original Date of Grant.

10. Stock Appreciation Rights.

(a) The Committee may grant Stock Appreciation Rights to eligible Service
Providers. Whenever the Committee grants Stock Appreciation Rights, a Grant
Agreement shall be given to the Service Provider stating the number of shares
with respect to which Stock Appreciation Rights are granted, the extent, if any,
to which the Stock Appreciation Rights are granted in connection with all or any
part of a Nonstatutory Stock Option (“Tandem Rights”), and the conditions to
which the grant and exercise of the Stock Appreciation Rights are subject, and,
at that time, the Service Provider shall become a Participant.

(b) Stock Appreciation Rights (other than Tandem Rights) shall entitle the
Participant, upon exercise of all or any part of the Stock Appreciation Rights,
to receive in exchange from the Company an amount equal to the excess of (i) the
Fair Market Value on the date of exercise of the Company Stock covered by the
surrendered Stock Appreciation Right over (ii) the Fair Market Value of the
Company Stock on the Date of Grant of the Stock Appreciation Right.

(c) Tandem Rights shall entitle the Participant, upon exercise of all or any
part of the Tandem Rights, to surrender to the Company unexercised that portion
of the underlying Nonstatutory Stock Option relating to the same number of
shares of Company Stock as is covered by the Tandem Right (or the portion of the
Tandem Right so exercised) and to receive in exchange from the Company an amount
equal to the excess of (i) the Fair Market Value on the date of exercise of the
Company Stock covered by the surrendered portion of the underlying Nonstatutory
Stock Option over (ii) the exercise price of the Company Stock covered by the
surrendered portion of the underlying Nonstatutory Stock Option.

(d) Upon the exercise of a Tandem Right and surrender of the related portion of
the underlying Nonstatutory Stock Option, the Nonstatutory Stock Option, to the
extent surrendered, shall not thereafter be exercisable.

(e) Subject to any further conditions upon exercise imposed by the Committee, a
Tandem Right shall be granted on the same Date of Grant as the related
Nonstatutory Stock Option, be transferable only to the extent that the related
Nonstatutory Stock Option is transferable, be exercisable only to the extent
that the related Nonstatutory Stock Option is exercisable and shall expire no
later than the date on which the related Nonstatutory Stock Option expires.

(f) The Committee may limit the amount that the Participant will be entitled to
receive upon exercise of Stock Appreciation Rights.

(g) Stock Appreciation Rights shall not be transferable except to the extent
specifically provided in the Grant Agreement in accordance with applicable
securities laws, provided in no event shall Stock Appreciation Rights be
transferable to third-party financial institutions.

(h) Stock Appreciation Rights may be exercised in whole or in part at the times
as may be specified by the Committee in the Participant’s Grant Agreement;
provided that no Stock Appreciation Right may be exercised after the expiration
of ten (10) years from the Date of Grant.

 

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(i) A Stock Appreciation Right may only be exercised at a time when the Fair
Market Value of the Company Stock covered by the Stock Appreciation Right
exceeds the Fair Market Value of the Company Stock on the Date of Grant of the
Stock Appreciation Right (or, in the case of a Tandem Right, only to the extent
it exceeds the exercise price of the Company Stock covered by the underlying
Nonstatutory Stock Option).

(j) The manner in which the Company’s obligation arising upon the exercise of a
Stock Appreciation Right shall be paid shall be determined by the Committee and
shall be set forth in the Grant Agreement. The Grant Agreement may provide for
payment in Company Stock or cash, or a fixed combination of Company Stock or
cash, or the Committee may reserve the right to determine the manner of payment
at the time the Stock Appreciation Right is exercised. Shares of Company Stock
issued upon the exercise of a Stock Appreciation Right shall be valued at their
Fair Market Value on the date of exercise.

(k) A Participant who acquires shares of Company Stock upon exercise of a Stock
Appreciation Right shall have no rights as a shareholder until the Company Stock
is issued pursuant to the terms of the Grant Agreement and all requirements with
respect to the issuance of such shares have been satisfied.

(l) Stock Appreciation Rights may be exercised by the Participant giving written
notice of the exercise to the Company, stating the number of Stock Appreciation
Rights the Participant has elected to exercise.

(m) Whenever payments upon exercise of Stock Appreciation Rights are to be made
in cash to a Participant who is an Employee, the Employer will withhold
therefrom an amount sufficient to satisfy any Applicable Withholding Taxes. Each
Participant who is an Employee shall agree as a condition of receiving Stock
Appreciation Rights payable in the form of Company Stock to pay to his or her
Employer, or make arrangements satisfactory to his or her Employer regarding the
payment to the Employer of, Applicable Withholding Taxes. Until the amount has
been paid or arrangements satisfactory to the Employer have been made, no stock
certificate shall be issued to the Participant. Payment to the Employer in
satisfaction of Applicable Withholding Taxes may be in cash. In addition,
(i) payment to the Employer in satisfaction of Applicable Withholding Taxes may
be made in shares of Company Stock (valued at their Fair Market Value as of the
date of payment) to which the Participant has good title, free and clear of all
liens and encumbrances; (ii) the Participant may elect to have his or her
Employer retain that number of shares of Company Stock (valued at their Fair
Market Value as of the date of such retention) that would satisfy all or a
specified portion of the Applicable Withholding Taxes; or (iii) unless
prohibited by law, the Participant may deliver irrevocable instructions to a
broker to deliver promptly to the Employer, from the sale or loan proceeds with
respect to the sale of Company Stock or a loan secured by Company Stock, the
amount necessary to pay the Applicable Withholding Taxes.

(n) Unless specifically provided in the discretion of the Committee in a writing
that references and supersedes this Section 10(n), (i) no Modification shall be
made in respect to any Stock Appreciation Right if such Modification would
result in the Stock Appreciation Right constituting a deferral of compensation,
and (ii) no Extension shall be made in respect to any Stock Appreciation Right
if such Extension would result in the Stock Appreciation Right having an
additional deferral feature from the Date of Grant, in each case within the
meaning of applicable Treasury Regulations under Code section 409A. Subject to
the remaining part of this subsection (n), (A) a “Modification” means any change
in the terms of the Stock Appreciation Right (or change in the terms of the Plan
or applicable Grant Agreement) that may provide the holder of the Stock
Appreciation Right with a direct or indirect reduction in the exercise price of
the Stock Appreciation Right, regardless of whether the holder in fact benefits
from the change in terms; and (B) an “Extension” means any of (1) the provision
to the holder of an additional period of time within which to exercise the Stock
Appreciation Right beyond the time originally prescribed, (2) the

 

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conversion or exchange of the Stock Appreciation Right for a legally binding
right to compensation in a future taxable year, (3) the addition of any feature
for the deferral of compensation to the terms of the Stock Appreciation Right,
or (4) any renewal of the Stock Appreciation Right that has the effect of any of
(1) through (3) above. Notwithstanding the preceding sentence, it shall not be a
Modification or an Extension, respectively, to change the terms of a Stock
Appreciation Right in accordance with Section 18, or in any of the other ways or
for any of the other purposes provided in applicable Treasury Regulations or
other generally applicable guidance under Code section 409A as not resulting in
a Modification or Extension for purposes of that section. In particular, it
shall not be an Extension to extend the exercise period of a Stock Appreciation
Right to a date no later than the earlier of (x) the latest date upon which the
Stock Appreciation Right could have expired by its original terms under any
circumstances or (y) the tenth (10th) anniversary of the original Date of Grant.

11. Director Awards.

(a) General. The Board may grant Director Awards to Independent Directors in the
form of shares of Restricted Stock, Restricted Stock Units, Performance Share
Units, Nonstatutory Options or Stock Appreciation Rights as provided in Sections
7 through 10 above, or in the form of Vested Shares or Vested Shares Units as
provided in paragraph (b) below. The Board may also grant to Consultants awards
in the same forms as Director Awards. Whenever the Board grants shares of
Restricted Stock, Restricted Stock Units, Performance Share Units, Nonstatutory
Options or Stock Appreciation Rights to an Independent Director, notice shall be
given to the Independent Director stating the type of award being made, the
number of shares with respect to which the award is granted and the terms and
conditions to which the award and (where applicable) the exercise of the award
is subject. This notice shall become the Grant Agreement between the Company and
the Independent Director and, at that time, the Independent Director shall
become a Participant. Restricted Stock, Restricted Stock Units, Performance
Share Units, Nonstatutory Options or Stock Appreciation Rights granted to
Independent Directors shall otherwise be subject to the terms of the Plan
applicable to each type of award as set forth in Sections 7 through 10 above;
provided, however, that, notwithstanding anything in Section 7(b) or 8(b) to the
contrary, any service or performance period with respect to Restricted Stock,
Restricted Stock Units or Performance Share Units granted to Independent
Directors or Consultants shall not be less than six (6) consecutive months in
length; and provided further, that where context reasonably requires, references
throughout Sections 7 through 10 above to the “Committee” shall be read instead
as references to the Board wherever the award is to be granted to an Independent
Director. The Board shall have all the same rights and powers with respect to
the administration of Director Awards as the Committee has with respect to
Incentive Awards as provided in Section 18 below (provided that the Board may
not delegate its authority with respect to the granting of Director Awards
pursuant to Section 18(a)(viii)), and the Board shall be subject to the same
limitations with respect to the modification and Repricing of outstanding
Director Awards as provided therein.

(b) Vested Shares and Vested Share Units. The Board may grant Vested Shares and
Vested Shared Units to Independent Directors or Consultants. Vested Shares shall
be immediately transferable (subject to compliance with any applicable
securities laws), and the Participant receiving an award of Vested Shares shall
have all the rights of a shareholder with respect to such shares as of the Date
of Grant. Vested Share Units shall represent the vested right to receive shares
of Company Stock at the time specified in the Grant Agreement for the Vested
Share Units, and the Participant holding Vested Share Units shall be entitled to
receive dividend equivalents on the outstanding Vested Share Units.

12. Recoupment of Awards. The Committee may require in any Grant Agreement that
any current or former Participant reimburse the Company for all or any portion
of any Award, terminate any

 

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outstanding, unexercised, unexpired or unpaid Award, rescind any exercise,
payment or delivery pursuant to an Award or recapture any Company Stock (whether
restricted or unrestricted) or proceeds from the Participant’s sale of Company
Stock issued pursuant to an Award to the extent required by any recoupment or
clawback policy adopted by the Committee in its discretion or to comply with the
requirements of any applicable laws.

13. Continuing Securities Law Compliance. If at any time on or after the
Effective Date, the requirements of any applicable federal or state securities
laws should fail to be met, no shares of Company Stock issuable under Non-Option
Awards shall be issued and no Options or Stock Appreciation Rights shall be
exercisable until the Committee (or, with respect to a Director Award, the
Board) has determined that these requirements have again been met. The Committee
(or, with respect to a Director Award, the Board) may suspend the right to
exercise an Option or Stock Appreciation Right at any time when it determines
that allowing the exercise and issuance of Company Stock would violate any
federal or state securities or other laws, and may provide that any time periods
to exercise the Option or Stock Appreciation Right are extended during a period
of suspension.

14. Termination, Modification, Change. If not sooner terminated by the Board,
this Plan shall terminate at the close of business on the date that immediately
follows the tenth (10th) anniversary of the Effective Date. No new Awards shall
be granted under the Plan after its termination. The Board may terminate the
Plan at any time and may amend the Plan at any time in any respect as it shall
deem advisable; provided that no change shall be made that increases the total
number of shares of Company Stock reserved for issuance under the Plan (except
pursuant to Section 15), materially modifies the requirements as to eligibility
for participation in the Plan, or would otherwise be considered a material
revision or amendment under Code section 422 or the listing standards of the
principal exchange on which the Company Stock is traded, unless the change is
approved by the shareholders of the Company. Notwithstanding the foregoing, the
Board may unilaterally amend the Plan and outstanding Awards with respect to
Participants as it deems appropriate to ensure compliance with Rule 16b-3 and
other applicable federal or state securities laws and to meet the requirements
of the Code and applicable regulations or other generally applicable guidance
thereunder. Except as provided in the preceding sentence, a termination or
amendment of the Plan shall not, without the consent of the Participant,
adversely affect a Participant’s rights under an Award previously granted to him
or her.

15. Change in Capital Structure.

(a) The Committee (or, with respect to a Director Award, the Board) shall
proportionately adjust the number and kind of shares of stock or securities of
the Company to be subject to the Plan and to Awards then outstanding or to be
granted thereunder, the maximum number of shares or securities that may be
delivered under the Plan (including the maximum limit on Non-Option Awards or
Incentive Stock Options under Section 4), the maximum number of shares or
securities that can be granted to an individual Participant under Section 4, the
exercise price of Options, the initial Fair Market Value of Company Stock under
Stock Appreciation Rights, and other relevant terms of the Plan and any Awards
whenever, in the event of a stock dividend, stock split or combination of
shares, recapitalization or merger in which the Company is the surviving
corporation, or other change in the Company’s corporate structure or capital
stock (including, but not limited to, the creation or issuance to shareholders
generally of rights, options or warrants for the purchase of common stock or
preferred stock of the Company), it deems any such adjustment necessary or
desirable to preserve the intended benefits of the Plan and any outstanding
Awards for the Company and the Participants. The Committee’s (or, with respect
to a Director Award, the Board’s) determination in this regard shall be binding
on all persons. If the adjustment would produce fractional shares with respect
to any unexercised Option or Stock Appreciation Right or fractional cents with
respect to the exercise price thereof, the Committee (or, with respect to a
Director Award, the Board) shall round down the number of shares covered by the
Option or Stock

 

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Appreciation Right to the nearest whole share and round up the exercise price to
the nearest whole cent.

(b) Notwithstanding anything in the Plan to the contrary, the Committee (or,
with respect to a Director Award, the Board) may take the foregoing actions
without the consent of any Participant, and its determination shall be
conclusive and binding on all persons and for all purposes.

16. Corporate Events. In the event of a Change of Control as described in
Sections 2(h)(i), (ii) or (iv), or if the Company is otherwise a party to a
consolidation or a merger in which the Company is not the surviving corporation,
a transaction that results in the acquisition of substantially all of the
Company’s outstanding stock by a single person or entity, or a sale or a
transfer of substantially all of the Company’s assets occurs (in any such case,
a “Corporate Event”), notwithstanding anything contained in the Plan to the
contrary, the provisions of this Section 16 shall apply.

(a) Replacement Awards; No Immediate Vesting.

(i) An Award shall not vest upon the occurrence of a Change of Control and shall
continue to the extent qualifying as a Replacement Award.

(ii) A “Replacement Award” includes an outstanding Award that continues upon and
after the occurrence of a Change of Control and an Award provided to a
Participant in replacement of an outstanding Award (such replaced Award, a
“Replaced Award”) in connection with a Change of Control that satisfies the
following conditions:

(A) It has a value at least equal to the value of the Replaced Award;

(B) It relates to publicly traded equity securities of the Company or its
successor in the Change of Control or another entity that is affiliated with the
Company or its successor following the Change of Control;

(C) Its other terms and conditions are not less favorable to the Participant
than the terms and conditions of the Replaced Award (including the provisions
that would apply in the event of a subsequent Change of Control); and

(D) Upon an involuntary termination of employment or separation from service of
a Participant by the Company other than for Cause (and not due to Disability),
or a voluntary termination of employment or separation from service by the
Participant for Good Reason (if applicable), occurring on or during the period
of twenty-four (24) months after the Change of Control, the Replacement Award,
to the extent not vested and unrestricted as of such termination of employment
or separation from service, shall become fully vested and (if applicable)
exercisable and free of restrictions.

The Committee, as constituted immediately before the Change of Control, shall
have the discretion to determine whether the conditions of this
Section 16(a)(ii) are satisfied.

(b) Vesting if No Replacement Award. To the extent that a Replacement Award is
not provided to the Participant, upon the occurrence of a Change of Control:

(i) Any and all Options and Stock Appreciation Rights granted hereunder shall
become immediately exercisable;

(ii) Any restrictions imposed on Restricted Stock shall lapse and become freely
transferable, and all other Awards shall become fully vested; and

(iii) Except as otherwise provided in a Grant Agreement, the payout
opportunities attainable at target or, if greater, in the amount determined by
the Committee to have been earned thereunder based on performance through the
date of the Change of Control, under all outstanding Awards of performance-based
Awards shall be deemed to have been earned

 

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for the entire performance period(s) as of the effective date of the Change of
Control. The vesting of all such earned Awards shall be accelerated as of the
effective date of the Change of Control, and in full settlement of such Awards,
there shall be paid out in cash, or in the discretion of the Committee, in
shares of Company Stock with a Fair Market Value equal to the amount of such
cash.

Except as otherwise determined by the Committee, the foregoing provisions of
this Section 16(b) shall apply, and a Participant’s outstanding Awards shall not
become Replacement Awards, upon the occurrence of a Change of Control following
an involuntary termination of employment or separation from service of the
Participant by the Company other than for Cause (and not due to Disability), or
a voluntary termination of employment or separation from service for Good Reason
by the Participant (if applicable), occurring (A) at the request of a third
party who was taking steps reasonably calculated to effect such Change of
Control or (B) otherwise in contemplation of and within one hundred eighty
(180) days before such Change of Control.

17. Dividend Equivalents. An Award may provide the Participant with dividends or
dividend equivalents, payable in cash, shares of Company Stock, other securities
or other property. In the event the Committee provides for dividends or dividend
equivalents to be payable with respect to any Awards denominated in shares of
Company Stock, any shares of Company Stock, cash or other property distributable
as a dividend or otherwise with respect to such Awards as to which the
restrictions have not yet lapsed (and/or performance goals have not been
satisfied) shall be accumulated or credited, and shall be subject to the same
restrictions and risk of forfeiture as such Awards with respect to which they
relate and shall not be paid unless and only to the extent the underlying Awards
vest or are earned. The total number of shares of Company Stock available for
grant under Section 4(a) shall not be reduced to reflect any dividends or
dividend equivalents that are reinvested into additional shares of Company Stock
or credited as Performance Shares or Performance Share Units. Notwithstanding
the foregoing (but subject to Section 15), neither dividends nor dividend
equivalents may be payable with respect to Options or Stock Appreciation Rights.

18. Administration of the Plan.

(a) The Plan shall be administered by the Committee. Subject to the express
provisions and limitations set forth in this Plan or the Committee’s charter or
as otherwise established by the Board, the Committee shall be authorized and
empowered to do all things necessary or desirable, in its sole discretion, in
connection with the administration of this Plan, including, without limitation,
the following:

(i) to prescribe, amend and rescind policies relating to this Plan, and to
interpret the Plan, including defining terms not otherwise defined;

(ii) to determine which persons are eligible Service Providers, to which of the
Service Providers, if any, Incentive Awards shall be granted hereunder and the
timing of any Incentive Awards;

(iii) to grant Incentive Awards to Service Providers and determine the terms and
conditions thereof, including the number of shares of Company Stock subject to
Incentive Awards and the exercise or purchase price of the shares of Company
Stock and the circumstances under which Incentive Awards become exercisable or
vested or are forfeited or expire, which terms may but need not be conditioned
upon the passage of time, continued employment, the satisfaction of performance
conditions (including Performance Goals), the occurrence of certain events, or
other factors;

(iv) to establish or verify the extent of satisfaction of any Performance Goals
or other conditions applicable to the grant, issuance, exercisability, vesting
and/or ability to retain any Incentive Award;

 

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(v) to prescribe and amend the terms of the Grant Agreements or other documents
evidencing Incentive Awards made under this Plan (which need not be identical);

(vi) to determine whether, and the extent to which, adjustments are required
pursuant to Section 15;

(vii) to interpret and construe this Plan, any policies under this Plan and the
terms and conditions of any Incentive Award granted hereunder, and to make
exceptions to any provisions for the benefit of the Company;

(viii) to delegate, to the extent permitted by the New York Business Corporation
Law and the Company’s Certificate of Incorporation and Bylaws, any portion of
its authority under the Plan to make Incentive Awards to an executive officer of
the Company, subject to any conditions that the Committee may establish
(including but not limited to conditions on such officer’s ability to make
awards to “executive officers” within the meaning of Section 16 of the Act); and

(ix) to make all other determinations deemed necessary or advisable for the
administration of this Plan.

The Committee may amend the terms of previously granted Incentive Awards so long
as the terms as amended are consistent with the terms of the Plan and provided
that the consent of the Participant is obtained with respect to any amendment
that would be detrimental to him or her, except that such consent will not be
required if the amendment is for the purpose of complying with applicable
provisions of the Code or any federal or state securities laws.

The Committee is prohibited from Repricing any Option or Stock Appreciation
Right without the prior approval of the shareholders of the Company with respect
to the proposed Repricing.

(b) The interpretation and construction of any provision of the Plan by the
Committee shall be final and conclusive as to any Participant. The Committee may
consult with counsel, who may be counsel to the Company, and shall not incur any
liability for any action taken in good faith in reliance upon the advice of
counsel.

(c) A majority of the members of the Committee shall constitute a quorum, and
all actions of the Committee shall be taken by a majority of the members
present. Any action may be taken by the Committee in writing or by electronic
transmission or transmissions as permitted by the Bylaws of the Company, and any
action so taken shall be fully effective as if it had been taken at a meeting.

(d) The Committee may delegate the administration of the Plan to an officer or
officers of the Company, and such officer(s) may have the authority to execute
and distribute agreements or other documents evidencing or relating to Incentive
Awards granted by the Committee under this Plan, to maintain records relating to
the grant, vesting, exercise, forfeiture or expiration of Incentive Awards, to
process or oversee the issuance of shares of Company Stock upon the exercise,
vesting and/or settlement of an Incentive Award, to interpret the terms of
Incentive Awards and to take any other actions as the Committee may specify,
provided that in no case shall any such officer(s) be authorized to grant
Incentive Awards under the Plan, except in accordance with Section 18(a)(viii)
above. Any action by an administrator within the scope of its delegation
consistent with this paragraph (d) shall be deemed for all purposes to have been
taken by the Committee, and references in this Plan to the Committee shall
include any such officer(s), provided that the actions and interpretations of
any such officer(s) shall be subject to review and approval, disapproval or
modification by the Committee.

19. Notice. All notices and other communications required or permitted to be
given under the Plan shall be in writing and shall be deemed to have been duly
given if delivered personally or mailed first

 

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class, postage prepaid, as follows (a) if to the Company—at the principal
business address of the Company to the attention of the Corporate Secretary of
the Company; and (b) if to any Participant—at the last address of the
Participant on file with (or in the business records of) the Company or as
otherwise known to the sender at the time the notice or other communication is
sent.

20. No Effect on Other Plans. Nothing contained in the Plan will be deemed in
any way to limit or restrict the Company or any Related Company from making any
award or payment to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.

21. Interpretation. The Plan is intended to operate in compliance with the
provisions of Rule 16b-3. The terms of the Plan are subject to all present and
future regulations and rulings of the Secretary of the Treasury of the United
States or his or her delegate relating to the qualification of Incentive Stock
Options under the Code. The Plan and the individual Awards under the Plan are
intended to comply with any applicable requirements of Code section 409A and
shall be interpreted in accordance with such requirements. If any provision of
the Plan conflicts with any such regulation or ruling, then that provision of
the Plan shall be void and of no effect. The terms of the Plan shall be governed
by the laws of the State of North Carolina.

22. Effective Date of the Plan; Limited Effect of Restatement. The Plan shall
become effective as of October 29, 2020 subject to approval by the shareholders
of the Company. Until (a) the Plan has been approved by the Company’s
shareholders, and (b) the requirements of any applicable federal or state
securities laws have been met, no shares of Company Stock issuable under
Non-Option Awards shall be issued and no Options or Stock Appreciation Rights
shall be exercisable that, in either case, are not contingent on the occurrence
of both such events. This instrument amends and restates the Plan effective as
of the Effective Date. Nothing in this instrument shall in any way change, alter
or affect the terms of any award made under the Plan prior to the Effective Date
of this amendment and restatement or the amount of any Plan benefit or payment
due with respect to awards made under the Plan prior to such date.

 

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IN WITNESS WHEREOF, the Company hereby adopts the Plan as of the Effective Date.

 

UNIFI, INC.

By:

 

/s/ EDMUND M. INGLE

Name:

 

Edmund M. Ingle

Title:

 

Chief Executive Officer

 

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