Document:

ufi-ex103_151.htm

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.  

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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, 

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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.

 

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(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.

 

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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 

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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]

 

 

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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
	
 
	
Dateufi-ex104_150.htm

Exhibit 10.4

 

INCENTIVE STOCK OPTION AGREEMENT

 

 

 

This Incentive Stock Option Agreement (this “Agreement”) is made by and between UNIFI, INC., a New York corporation (the “Company”), and [_________], a key employee (the “Optionee”) 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 Optionee a stock option as an incentive for the Optionee 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 Option; Exercise Price; Expiration Date.  The Company has granted, effective as of [_______] (the “Date of Grant”), to Optionee the right, privilege and option (the or this “Option”) to purchase [______] shares of Company Stock (“Option Shares”) in the manner and subject to the conditions hereinafter set forth.  The Option is intended to constitute an Incentive Stock Option.  If the aggregate Fair Market Value (determined as of the time of the applicable grant date) of the Company Stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year under this Option and all other stock options granted to Optionee pursuant to incentive stock option plans (as defined by Code Section 422) of the Company would exceed $100,000, then subject to the ordering provisions of Code Section 422, all or a portion of this Option attributable to such excess amount will be treated as a Nonstatutory Stock Option.

The exercise price for the Option shall be $[____] per share, which is the Fair Market Value of the Company Stock on the Date of Grant.  The Option shall expire, if not previously exercised or terminated as provided herein, on the date that is ten (10) years from the Date of Grant (the “Expiration Date”).

 

Section 3.Time of Exercise.  The Option shall vest and become exercisable with respect to the Option Shares according to the following schedule (each such date being a “Vesting Date”):

 

			
	
As of the Following Anniversary of the Date of Grant:
	
 
	
The Option Shall Become Exercisable with Respect to the Following Percentage of the Option Shares:

	
One-Year Anniversary
	
   
	
25%

	
Two-Year Anniversary
	
 
	
25%

	
Three-Year Anniversary
	
 
	
50%

 

There shall be no vesting of the Option to result in fractional shares under this vesting schedule.  If the vesting schedule would otherwise result in a fractional share, the number of shares 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 Option Shares with respect to which the Optionee becomes vested is rounded up on any Vesting Date prior to the final Vesting Date, the number of Option Shares with respect to which the Optionee becomes vested on the final Vesting Date shall be adjusted so that the total number of vested Option Shares does not exceed the number of Option Shares set forth above.  For example, if the Optionee was awarded an Option to purchase 99 Option Shares under this Agreement, the Optionee would become vested with respect to 25, 25 and 49 Option Shares on the respective Vesting Dates listed above.

 

The Option shall not become exercisable in accordance with the foregoing vesting schedule as of any anniversary if the Optionee’s Date of Termination (as defined in Section 10(b)) occurs before such Vesting Date.  Exercisability under this vesting schedule is cumulative, and after the Option becomes exercisable under the above schedule with respect to any portion of the Option Shares, it shall continue to be exercisable with respect to that portion of the Option Shares until the Option expires.  Notwithstanding the foregoing provisions of this Section 3, the Option shall become vested and exercisable with respect to all of the Option Shares upon either of: (a) the date of the Optionee’s Date of Termination by reason of the Optionee’s death, Disability or Retirement (as defined in Section 10(c)) or (b) the date of a Change of Control, if such Change of Control occurs prior to Optionee’s Date of Termination.

 

Section 4.Method of Exercise.  The Option shall be exercised by written notice directed to the Chief Financial Officer or General Counsel of the Company or other Officer as may hereafter be designated by the Committee (“Designated Officer”) at the Company’s principal office in Greensboro, North Carolina, or at such other office as the Company may designate.  Such notice shall (a) set forth the number of full shares of Company Stock for which the Option is being exercised, (b) be signed by the person exercising the Option, and (c) be accompanied by payment of the full purchase price of such shares (the “Option Price”) in the form of (i) a certified or other check acceptable to the Company made payable to the order of the Company, (ii) a certificate or certificates (or an instrument confirming the ownership of shares of Company Stock in book-entry or other uncertificated form) representing shares of Company Stock (duly endorsed or otherwise in a form acceptable to the Designated Officer), (iii) an irrevocable direction to the Company to pay all or a portion of the Option Price by withholding a portion of the Option Shares which the Optionee would otherwise be entitled to receive, or (iv) a combination of the foregoing, with the value of any shares of Company Stock being equal to their Fair Market Value on the date said notice is received by the Company.  Such exercise shall be effective only when said properly executed notice, accompanied by check or stock certificates as referred to above, are received by the Designated Officer.  Any certificate for shares of Company Stock issued upon the exercise of the Option or part thereof (and for any shares of Company Stock delivered to the Company under clause (c) above, in excess of the Option Price) shall be issued or reissued, as the case may be, with or without restrictive legend, as determined by the Designated Officer, in the name of the person exercising the Option, and shall be delivered to such person; provided, however, that shares may be issued or reissued in book-entry uncertificated form if acceptable to the Optionee or other person exercising the Option.  All shares of Company Stock issued as provided herein will be fully paid and nonassessable.

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Section 5.Withholding.  The Optionee, upon the exercise of the Option, shall pay to the Company in cash the amount of any Applicable Withholding Taxes. Notwithstanding the foregoing, the Optionee may satisfy this obligation in whole or in part, and any other local, state or federal income tax obligations resulting from the exercise or the surrender of the Option, by electing (a) to deliver to the Company shares of Company Stock owned by the Optionee at the time of the exercise, (b) to have the Company withhold a portion of the Option Shares to which the Optionee 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 Optionee shall have a value equal to their Fair Market Value on the day the Option exercise notice under Section 4 is received by the Company.

 

Section 6.Termination of Option.  Except as herein otherwise stated, the Option shall terminate upon the first to occur of the following dates or events, to the extent not theretofore exercised:

 

(a)the expiration of three months from the Optionee’s Date of Termination, but not beyond the Expiration Date, except if such termination be by reason of death or Disability or Cause (as defined below);

 

(b)in the event of the death of the Optionee, the Administrator of the deceased Optionee’s estate, the Executor under the Optionee’s Last Will and Testament, or the person or persons to whom the Option shall have been validly transferred by such Executor or Administrator pursuant to the Last Will and Testament or the applicable laws of intestate succession shall have the right within twelve (12) months of the date of the Optionee’s death, but not beyond the Expiration Date, to exercise such Option to the extent exercisable by the Optionee at the date of his or her death;

 

(c)if the termination of the Optionee’s employment is due to Retirement or Disability, the Optionee shall have the right within twelve (12) months from his or her Date of Termination, but not beyond the Expiration Date, to exercise such Option to the extent exercisable on such Date of Termination; and

 

(d)if the Optionee’s employment with the Company is terminated for Cause, the Optionee’s Date of Termination.

 

Section 7.Reclassification, Consolidation, or Merger.  If and to the extent that the number of issued shares of Company Stock shall be increased or reduced by change in par value, split or combination, reclassification, distribution of a dividend payable in stock, or the like, the number of Option Shares and the exercise price per share under the Option shall be proportionately adjusted.

 

If the Company is reorganized or consolidated or merged with another corporation, the Optionee shall be entitled to receive an option (a “new option”) covering shares of such reorganized, consolidated or merged company in the same proportion, at an equivalent price and subject to the same conditions, as the Option.  For purposes of the preceding sentence, the excess of the aggregate Fair Market Value of the shares of stock subject to the new option immediately after the reorganization, consolidation or merger over the aggregate exercise price of such shares of stock shall not be more than the excess of the aggregate Fair Market Value of all shares of Company Stock subject to the Option immediately before such reorganization, consolidation or merger over the aggregate Option Price of such shares of Company Stock, and the new option or the assumption of this Option in connection with such transaction shall not give Optionee additional benefits that he or she did not have under this Option, or deprive him or her of benefits that he or she had this Option, immediately before such transaction.

 

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Section 8.Restrictive Legend.   At the sole and absolute discretion of the Designated Officer, any certificate issued for Option Shares upon exercise of the Option, may carry such restrictive legend as the Designated Officer shall determine to be appropriate.  

 

Section 9.Rights Prior to Exercise of the Option.  This Option is non‐transferable by the Optionee, except in the event of his or her death as provided in Section 6 above, and is exercisable only by the Optionee during his or her lifetime.  The Optionee shall have no right as a shareholder with respect to the Option Shares until payment of the exercise price and delivery to the Optionee of such shares as herein provided.

 

Section 10.Definitions.  In addition to the defined terms contained in the Plan (which have been incorporated by reference herein as provided in Section 1), the following terms have the indicated meanings for purposes of this Agreement:

 

(a)“Cause” means any of the following, as determined in good faith by the Committee: (i) an act of embezzlement, theft or misappropriation by the Optionee of any property of the Company or any Related Company; (ii) any breach by the Optionee of any material provision of any material agreement to which the Optionee is a party with the Company or any Related Company that is not cured, to the extent the breach is susceptible to being cured, within fourteen (14) days after the Company gives express notice to the Optionee describing such breach; (iii) gross negligence by the Optionee 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); (iv) any act by the Optionee constituting a felony or a crime that otherwise involves dishonesty or misrepresentation; (v) the Optionee’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 (vi) any chemical or alcohol dependence by the Optionee that materially and adversely affects the performance of his or her duties or responsibilities to the Company or any Related Company.  

 

(b)“Date of Termination” means the first day occurring on or after the Date of Grant on which the Optionee’s employment with the Company and all Related Companies terminates for any reason; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Optionee between the Company and a Related Company or between two Related Companies; and further provided that the Optionee’s employment shall not be considered terminated while the Optionee is on a leave of absence from the Company or a Related Company approved by the Optionee’s employer.  If, as a result of a sale or other transaction, the Optionee’s employer ceases to be a Related Company (and the Optionee’s employer is or becomes an entity that is separate from the Company), the occurrence of such transaction shall be treated as the Optionee’s Date of Termination caused by the Optionee being discharged by the employer.

 

(c)“Retirement” means the occurrence of the Optionee’s Date of Termination after age 57 with the approval of the Committee.

 

Section 11.Rule 16b-3 Intention.  The Option granted to the Optionee is intended to meet the eligibility requirements of Rule 16b-3 promulgated by the Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such that the Option is exempt from Section 16(b) of the Exchange Act and the so-called “short swing profit” provisions, which provide for the disgorgement of any profits realized by the Optionee, as an insider, from the purchase and sale (or sale and purchase) of Company Stock within a six-month period.  The Company recommends that the Optionee consult with counsel prior to exercising the Option. 

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Section 12.Recoupment of Option/Shares of Stock.  Notwithstanding any provision in the Plan or this Agreement to the contrary, all Option Shares and any shares of Company Stock acquired pursuant to the exercise of this Option 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.

 

Section 13.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 Optionee under this Agreement that are not distributed at the time of the Optionee’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 Optionee in writing filed with the Company in such form and at such time as the Committee shall require.  If a deceased Optionee failed to designate a beneficiary, or if the designated beneficiary of the deceased Optionee dies before the Optionee 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 Optionee and any designated beneficiary.

 

(b)Amendments by the Committee.  The Committee may, at any time prior to the Expiration Date, amend this Agreement, provided that no amendment may, in the absence of written consent by the Optionee, adversely affect the rights of the Optionee under the Option 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 Optionee, including, without limitation, reasonable attorneys’ fees of the Optionee, shall be borne by the Company if the Optionee 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 Optionee for Federal tax purposes, then (i) the amount of any such costs reimbursed to the Optionee in one taxable year shall not affect the amount of such costs reimbursable to the Optionee in any other taxable year, 

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(ii) the Optionee’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 Optionee shall be made as soon as administratively practicable, but in any event within ten (10) days, after the date the Optionee is determined to be the prevailing party in the arbitration.  The Optionee 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) on the next business day after delivery to the courier service or U.S. Mail (in time for and specifying next day delivery) 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.  In each case (except for personal delivery), any such notice or other communication shall be sent, as appropriate, (x) to the Optionee at the last address or facsimile number specified in the Optionee’s records with the Company, or such other address or facsimile number as the Optionee may designate in writing to the Company, or (y) 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 Optionee.

 

(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.

 

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IN WITNESS WHEREOF, the parties have executed this Incentive Stock Option Agreement, effective as of the Date of Grant set forth above.

 

		
	
UNIFI, INC.

	
 
	
 

	
By:
	
 

	
Name:
	
 

	
Title:
	
 

	
 
	
 

	
OPTIONEE

	
 
	
 

	
 
	
 

	
 
	
(Signature)

 

 

 

 

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