CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT ("Agreement") between
UNIFI, INC. , a New York Corporation (the "Company"), and
Ronald L. Smith ("Executive") effective the 21 st day of
February, 2008 (the "Effective Date").
WITNESSETH:
WHEREAS, The Executive is the Vice President and Chief
Financial Officer of the Company and is considered as an integral
part of the Company's management; and
WHEREAS, the Company's Board of Directors (hereinafter
sometimes referred to as the "Board") considers the establishment
and maintenance of a sound and vital management to be essential in
protecting and enhancing the best interests of the Company and its
Shareholders, recognizes that the possibility of a Change in
Control exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment
of the Company and its Shareholders; and
WHEREAS, the Executive desires that in the event of any
Change in Control he will continue to have the responsibility and
status he has earned; and
WHEREAS, the Board has determined that it is appropriate to
reinforce and encourage the continued attention and dedication of
the Executive, as a member of the Company's management, to his
assigned duties without distraction in potentially disturbing
circumstances arising from the possibility of a Change in Control
of the Company.
NOW, THEREFORE, in order to induce the Executive to remain
in the employment of the Company and in consideration of the
Executive agreeing to remain in the employment of the Company,
subject to the terms and conditions set out below, the Company
agrees it will pay such amount, as provided in Section 4 of this
Agreement, to the Executive, if the Executive's employment with the
Company terminates under one of the circumstances described herein
following a Change in Control of the Company, as herein
defined.
Section 1. Term: This Agreement shall
terminate, except to the extent that any obligation of the Company
hereunder remains unpaid as of such time, upon the earliest of (i)
November 1, 2008 if a Change in Control of the Company has not
occurred within such period; (ii) the termination of the
Executive's employment with the Company based on Death, Disability
(as defined in Section 3(b)), Retirement (as defined in Section
3(c)), Cause (as defined in Section 3(d)) or by the Executive other
than for Good Reason (as defined in Section 3(e)); and (iii) two
years from the date of a Change in Control of the Company if the
Executive has not voluntarily terminated his employment for Good
Reason as of such time.
Section 2. Change in Control: No
compensation shall be payable under this Agreement unless and until
(a) there shall have been a Change in Control of the Company, while
the Executive is still an employee of the Company and (b) the
Executive's employment by the Company thereafter shall have been
terminated in accordance with Section 3. For purposes of this
Agreement, a Change in Control of the Company shall be deemed to
have occurred if:(i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not
the continuing or surviving legal entity or pursuant to which
shares of the Company's Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in
which the holders of the Company's Common Stock immediately prior
to the merger have the same proportionate ownership of Common Stock
of the surviving company immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of
the assets of the Company; or (ii) the shareholders of the Company
approved any plan or proposal for the liquidation or dissolution of
the Company; or (iii) any person (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), shall become the beneficial owner
(within the meaning of Rule 13d‑3 under the Exchange Act) of
twenty percent (20%) or more of the Company's outstanding Common
Stock; or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute
a majority thereof unless the election, or the nomination for
election by the Company's Shareholders, of each new Director was
approved by a vote of at least two‑thirds of the Directors
then still in office who were Directors at the beginning of the
period.
Section 3. Termination Following Change in
Control: (a) If a Change in Control of the Company
shall have occurred while the Executive is still an employee of the
Company, the Executive shall be entitled to the compensation
provided in Section 4 upon the subsequent termination of the
Executive's employment with the Company by the Executive
voluntarily for Good Reason or by the Company unless such
termination by the Company is as a result of (i) the Executive's
Death, (ii) the Executive's Disability (as defined in Section
(3)(b) below); (iii) the Executive's Retirement (as defined in
Section 3(c) below); (iv) the Executive's termination by the
Company for Cause(as defined in Section 3(d) below); or (v) the
Executive's decision to terminate employment other than for Good
Reason (as defined in Section 3(e) below).
(b)
Disability: If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall
have been absent from his duties with the Company on a
full‑time basis for one hundred twenty (120) consecutive days
or a period of one hundred eighty (180) days within twelve (12)
consecutive months (including days before and after the change of
control) and within 30 days after written notice of termination is
thereafter given by the Company the Executive shall not have
returned to the full‑time performance of the Executive's
duties, the Company may terminate this Agreement for
"Disability."
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(c) Retirement: The term "Retirement" as
used in this Agreement shall mean termination in accordance with
the Company's retirement policy or any arrangement established with
the consent of the Executive.
(d) Cause: The Company may
terminate the Executive's employment for Cause. For purposes
of this Agreement only, the Company shall have "Cause" to terminate
the Executive's employment hereunder only on the basis of fraud,
misappropriation or embezzlement on the part of the Executive or
malfeasance or misfeasance by said Executive in performing the
duties of his office, as determined by the Board.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have
been a meeting of the Board (after at least ten (10) days written
notice to the Executive and an opportunity for the Executive to be
heard before the Board), and the delivery to the Executive of a
resolution duly adopted by the affirmative vote of not less than
three‑quarters of the entire membership of said Board of
Directors stating that in the good faith opinion of the Board the
Executive was guilty of conduct set forth in the second sentence of
this Section 3(d) and specifying the particulars thereof in
detail.
(e) Good Reason: The Executive may
terminate the Executive's employment for Good Reason at any time
during the term of this Agreement. For purposes of this
Agreement "Good Reason" shall mean any of the following (without
the Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties,
responsibilities and status with the Company immediately prior to a
Change in Control of the Company; or a change in the Executive's
titles or offices as in effect immediately prior to a Change in
Control of the Company; or any removal of the Executive from or any
failure to reelect the Executive to any of the positions held prior
to the Change of Control, except in connection with the termination
of his employment for Disability, Retirement, or Cause, or as a
result of the Executive's Death; or by the Executive other than for
Good Reason;
(ii) a reduction by the Company in the Executive's base
salary as in effect on the date hereof or as the same may be
increased from time to time during the term of this Agreement or
the Company's failure to increase (within 12 months of the
Executive's last increase in base salary) the Executive's base
salary after a Change in Control of the Company in an amount which
at least equals, on a percentage basis, the average percentage
increase in base salary for all executive officers of the Company
effected in the preceding 12 months;
(iii) any
failure by the Company to continue in effect any benefit plan or
arrangement (including, without limitation, the Company's 401(k)
Plan, group life insurance plan and medical, dental, accident and
disability plans) in which the Executive is participating at the
time of a Change in Control of the Company (or any
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other plans providing the Executive with substantially
similar benefits) (hereinafter referred to as "Benefit Plans"), or
the taking of any action by the Company which would adversely
affect the Executive's participation in or materially reduce the
Executive's benefits under any such Benefit Plan or deprive the
Executive of any material fringe benefit enjoyed by the Executive
at the time of a Change in Control of the Company;
(iv) any
failure by the Company to continue in effect any plan or
arrangement to receive securities of the Company (including,
without limitation, Stock Option Plans or any other plan or
arrangement to receive and exercise stock options, restricted stock
or grants thereof) in which the Executive is participating at the
time of a Change in Control of the Company (or plans or
arrangements providing him with substantially similar benefits)
(hereinafter referred to as "Securities Plans") and the taking of
any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Securities Plan;
(v) any
failure by the Company to continue in effect any bonus plan,
automobile allowance plan, or other incentive payment plan in which
the Executive is participating at the time of a Change in Control
of the Company, or said Executive had participated in during the
previous calendar year;
(vi) a
relocation of the Company's principal executive offices to a
location outside of North Carolina, or the Executive's relocation
to any place other than the location at which the Executive
performed the Executive's d
