Exhibit 10.2
 

                     
UNIFI, INC.
 
DIRECTOR DEFERRED
COMPENSATION PLAN
                                             

 
 
 

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TABLE OF CONTENTS

ARTICLE I--
INTRODUCTION 
1

 
ARTICLE II--
DEFINITIONS 
1

 
 
2.01
Account: 
1

 
 
2.02
Act: 
1

 
 
2.03
Affiliate: 
1

 
 
2.04
Beneficial Owner: 
1

 
 
2.05
Beneficiary: 
2

 
 
2.06
Board: 
2

 
 
2.07
Calendar Year: 
2

 
 
2.08
Change in Control: 
2

 
 
2.09
Code: 
3

 
 
2.10
Common Stock: 
3

 
 
2.11
Company: 
3

 
 
2.12
Deferral Subaccount: 
3

 
 
2.13
Director: 
4

 
 
2.14
Director Compensation: 
4

 
 
2.15
Disability: 
4

 
 
2.16
Distribution Valuation Date: 
4

 
 
2.17
Election Form: 
4

 
 
2.18
Eligible Director: 
5

 
 
2.19
ERISA: 
5

 
 
2.20
Fair Market Value: 
5

 
 
2.21
Key Employee: 
5

 
 
2.22
Participant: 
6

 
 
2.23
Person: 
6

 
 
2.24
Plan: 
6

 
 
2.25
Plan Administrator: 
6

 
 
2.26
Plan Year: 
7

 
 
2.27
Retainer: 
7

 
 
2.28
Second Look Election: 
7

 
 
2.29
Section 409A: 
7

 
 
 

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2.30
Separation from Service: 
7

 
 
2.31
Specific Payment Date: 
7

 
 
2.32
Treasury Regulations: 
8

 
 
2.33
Unforeseeable Emergency: 
8

 
 
2.34
Unifi, Inc. Organization: 
8

 
 
2.35
Valuation Date: 
8

 
ARTICLE III--
ELIGIBILITY AND PARTICIPATION 
9

 
 
3.01
Eligibility to Participate: 
9

 
 
3.02
Termination of Eligibility to Defer: 
9

 
 
3.03
Termination of Participation: 
9

 
ARTICLE IV--
DEFERRAL OF COMPENSATION 
9

 
 
4.01
Deferral Election: 
9

 
 
4.02
Time and Manner of Deferral Election: 
10

 
 
4.03
Period of Deferral; Form of Payment: 
11

 
 
4.04
Second Look Election: 
11

 
ARTICLE V--
INTERESTS OF PARTICIPANTS 
13

 
 
5.01
Accounting for Participants’ Interests: 
13

 
 
5.02
Phantom Investment of Account: 
14

 
 
5.03
Vesting of a Participant’s Account: 
15

 
ARTICLE VI--
DISTRIBUTIONS 
15

 
 
6.01
General: 
15

 
 
6.02
Distributions Based on a Specific Payment Date: 
16

 
 
6.03
Distributions on Account of a Separation from Service: 
17

 
 
6.04
Distributions on Account of Death: 
18

 
 
6.05
Distributions on Account of Unforeseeable Emergency: 
19

 
 
6.06
Distributions on Account of a Change in Control: 
19

 
 
6.07
Valuation: 
20

 
 
6.08
Actual Payment Date: 
20

 
ARTICLE VII--
PLAN ADMINISTRATION
20

 
 
7.01
Plan Administrator: 
20

 
 
7.02
Action: 
21

 
 
7.03
Powers of the Plan Administrator: 
21

 
 
7.04
Compensation, Indemnity and Liability: 
22

 
 
 

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7.05
Withholding: 
22

 
 
7.06
Conformance with Section 409A: 
23

 
ARTICLE VIII--
CLAIMES PROCEDURE
23

 
 
8.01
Claims for Benefits: 
23

 
 
8.02
Appeals of Denied Claims: 
23

 
 
8.03
Special Claims Procedures for Disability Determinations: 
23

 
ARTICLE IX--
AMENDMENT AND TERMINATION 
24

 
 
9.01
Amendment of Plan: 
24

 
 
9.02
Termination of Plan: 
24

 
ARTICLE X--
MISCELLANEOUS 
24

 
 
10.01
Limitation on Participant’s Rights: 
24

 
 
10.02
Unfunded Obligation of the Company: 
25

 
 
10.03
Other Plans: 
25

 
 
10.04
Receipt or Release: 
25

 
 
10.05
Governing Law: 
25

 
 
10.06
Gender, Tense and Examples: 
25

 
 
10.07
Successors and Assigns; Nonalienation of Benefits: 
26

 
 
10.08
Facility of Payment: 
26

 
ARTICLE XI--
AUTHENTICATION 
27

 
 
 

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ARTICLE I--INTRODUCTION
 
Unifi, Inc. (the “Company”) established the Unifi, Inc. Director Deferred
Compensation Plan (the “Plan”) to permit Eligible Directors to defer certain
compensation paid to them as Directors.  The Plan is effective as of December
14, 2010 (the “Effective Date”).

For federal income tax purposes, the Plan is intended to be a nonqualified
unfunded deferred compensation plan that is unfunded and unsecured.  For
purposes of ERISA, the Plan is intended to be exempt from ERISA coverage as a
plan that solely benefits non-employees (or alternatively, a plan described in
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA providing benefits to a select
group of management or highly compensated employees).

ARTICLE II--DEFINITIONS
 
When used in this Plan, the following underlined terms shall have the meanings
set forth below unless a different meaning is plainly required by the context:

2.01         Account:
 
The account maintained for a Participant on the books of the Company to
determine, from time to time, the Participant’s interest under this Plan.  The
balance in such Account shall be determined by the Plan Administrator.  Each
Participant’s Account shall consist of at least one Deferral Subaccount for each
separate deferral under Section 4.01.  The Plan Administrator may also establish
such additional Deferral Subaccounts as it deems necessary for the proper
administration of the Plan.  The Plan Administrator may also combine Deferral
Subaccounts to the extent it deems separate accounts are not needed for sound
recordkeeping.  Where appropriate, a reference to a Participant’s Account shall
include a reference to each applicable Deferral Subaccount that has been
established thereunder.

2.02         Act:
 
The Securities Exchange Act of 1934, as amended from time to time.

2.03         Affiliate:
 
Affiliate of any Person shall mean 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.  The term “Control” shall have the
meaning specified in Rule 12b-2 under the Securities Exchange Act of 1934 (the
“Exchange Act”).
 
2.04         Beneficial Owner:
 
Beneficial Owner (and variants thereof) shall have the meaning given in Rule
13d-3 promulgated under the Exchange 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 Section 318(a) of the Code.
 
 
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2.05         Beneficiary:
 
The person or persons (including a trust or trusts) properly designated by a
Participant, as determined by the Plan Administrator, to receive the amounts in
one or more of the Participant’s Deferral Subaccounts in the event of the
Participant’s death in accordance with Section 4.02(c).

2.06         Board:
 
The Board of Directors of the Company.

2.07         Calendar Year:
 
The 12-month period beginning January 1st and ending December 31st.

2.08         Change in Control:
 
The occurrence of any of the following events:
 
(a)           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 (the “Total Voting
Power”); excluding, however, the following: (i) any acquisition by the Company
or any of its Controlled Affiliates, (ii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any of
its Controlled Affiliates, (iii) any Person who becomes such a Beneficial Owner
in connection with a transaction described in the exclusion within paragraph (d)
below and (iv) 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
 
(b)           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 (i)
through (iv) of subsection (a) above; or
 
(c)           a change in the composition of the Board such that the individuals
who, as of the effective date of this Agreement, 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 such effective date, whose election, or nomination for
election by the Company’s stockholders, 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 of Regulation
14A promulgated under the Exchange 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 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
 
 
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(d)           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 Common Stock of the Company and Total Voting
Power immediately prior to such Corporate Transaction will Beneficially Own,
directly or indirectly, more than 50%, respectively, of the outstanding Common
Stock and the combined voting power of the then outstanding Common 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 which as a
result of such transaction owns the Corporation 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 Stock and Total Voting Power, as the
case may be.
 
2.09         Code:
 
The Internal Revenue Code of 1986, as amended from time to time.

2.10         Common Stock:
 
The shares of common stock of the Company.
 
2.11         Company:
 
Unifi, Inc., a corporation organized and existing under the laws of the State of
New York, or its successor or successors.

2.12         Deferral Subaccount:
 
A subaccount of a Participant’s Account maintained to reflect his or her
interest in the Plan attributable to each deferral (or separately tracked
portion of a deferral) of Director Compensation, and earnings or losses credited
to such subaccount in accordance with Section 5.01(b).

2.13         Director:
 
A person who is a member of the Board of Directors of the Company and who is not
currently an employee of the Unifi, Inc. Organization.
 
 
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2.14         Director Compensation:
 
The Director’s Retainer.

2.15           Disability:
 
A Participant shall be considered to suffer from a Disability, if, in the
judgment of the Plan Administrator (based on the provisions of Section 409A and
any guidelines established by the Plan Administrator for this purpose), the
Participant –

(a)           Is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, or
 
(b)           By reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, is receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan of the Company.
 
Solely for those Participants who are otherwise eligible for Social Security, a
Participant who is determined to be totally disabled by the Social Security
Administration will be deemed to satisfy the requirements of Subsection (a), and
a Participant who has not been determined to be totally disabled by the Social
Security Administration will be deemed to not meet the requirements of
Subsection (a).

2.16         Distribution Valuation Date:
 
Each date as specified by the Plan Administrator from time to time as of which
Participant Accounts are valued for purposes of a distribution from a
Participant’s Account.  The current Distribution Valuation Dates are March 31,
June 30, September 30 and December 31.  Any current Distribution Valuation Date
may be changed by the Plan Administrator, provided that such change does not
result in a change in when deferrals are paid out that is impermissible under
Section 409A.  Values are determined as of the close of a Distribution Valuation
Date or, if such date is not a business day, as of the close of the preceding
business day.

2.17         Election Form:
 
The form prescribed by the Plan Administrator on which a Participant specifies
the amount of his or her Retainer to be deferred and the timing and form of his
or her deferral payout, pursuant to the provisions of Article IV.  An Election
Form need not exist in a paper format, and it is expressly authorized that the
Plan Administrator may make available for use such technologies, including voice
response systems, Internet-based forms and any other electronic forms, as it
deems appropriate from time to time.
 
 
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2.18         Eligible Director:
 
The term “Eligible Director” shall have the meaning given to it in Section
3.01(b).

2.19         ERISA:
 
Public Law 93-406, the Employee Retirement Income Security Act of 1974, as
amended from time to time.

2.20         Fair Market Value:
 
For purposes of converting a Participant’s deferrals to phantom Unifi, Inc.
Common Stock as of any date, the Fair Market Value of such stock is the average
of the high and low price on such date (or if such date is not a trading date,
the first date immediately following such date that is a trading date) for
Unifi, Inc. Common Stock as reported on the composite tape for securities listed
on the New York Stock Exchange, Inc., rounded to four decimal places.  For
purposes of determining the value of a Plan distribution, the Fair Market Value
of phantom Unifi, Inc. Common Stock is determined as the closing price on the
applicable Distribution Valuation Date for Unifi, Inc. Common Stock as reported
on the composite tape for securities listed on the New York Stock Exchange,
Inc., rounded to four decimal places.

2.21         Key Employee:
 
The individuals identified in accordance with the principles set forth below.

(a)           General.  Any Participant who at any time during the applicable
year is –
 
(1)           An officer of any member of the Unifi, Inc. Organization having
annual compensation greater than $130,000 (as adjusted for the applicable year
under Code Section 416(i)(1));

(2)           A 5-percent owner of any member of the Unifi, Inc. Organization;
or

(3)           A 1-percent owner of any member of the Unifi, Inc. Organization
having annual compensation of more than $150,000.

For purposes of (1) above, no more than 50 employees identified in the order of
their annual compensation shall be treated as officers.  For purposes of this
Section, annual compensation means compensation as defined in Treas. Reg.
§1.415(c)-2(a), without regard to Treas. Reg. §§1.415(c)-2(d), 1.415(c)-2(e),
and 1.415(c)-2(g).  The Plan Administrator shall determine who is a Key Employee
in accordance with Code Section 416(i) and the applicable regulations and other
guidance of general applicability issued thereunder or in connection therewith
(provided, that Code Section 416(i)(5) shall not apply in making such
determination), and provided further that the applicable year shall be
determined in accordance with Section 409A and that any modification of the
foregoing definition that applies under Section 409A shall be taken into
account.
 
 
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(b)           Applicable Year.  The Plan Administrator shall determine Key
Employees as of the last day of each calendar year (the “determination date”),
based on compensation for such year, and the designation for a particular
determination date shall be effective for purposes of this Plan for the twelve
month period commending on April 1 of the next following calendar year (e.g.,
the Key Employees determined by the Plan Administrator as of December 31, 2010,
shall apply to the period from April 1, 2011, to March 31, 2012).
 
2.22         Participant:
 
Any Director who is qualified to participate in this Plan in accordance with
Section 3.01 and who has an Account.  An active Participant is one who is
currently deferring under Section 4.01.

2.23         Person:
 
Person shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) of the Exchange Act and, only to
the extent such meaning is more restrictive than the meaning given in Section
3(a)(9) of the Exchange Act (as modified as 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.
 
2.24         Plan:
 
The Unifi, Inc. Director Deferred Compensation Plan.

2.25         Plan Administrator:
 
The Board of Directors of the Company or its delegate or delegates, which shall
have the authority to administer the Plan as provided in Article VII.  As of the
Effective Date, the Company’s Compensation Committee is delegated the
responsibility for the operational administration of the Plan.  In turn, the
Compensation Committee has the authority to re-delegate operational
responsibilities to other persons or parties.  As of the Effective Date, the
Compensation Committee has re-delegated operational responsibilities to the
Company’s Employee Benefits Committee.  However, references in this document to
the Plan Administrator shall be understood as referring to the Board of
Directors, the Compensation Committee and those delegated by the Compensation
Committee, including the Company’s Employee Benefits Committee.

2.26         Plan Year:
 
The 12-consecutive month period beginning on January 1 and ending on
December 31.

2.27         Retainer:
 
An Eligible Director’s “Stock Award” (as such term is defined under the 2008
Unifi, Inc. Long-Term Incentive Plan) received as compensation for service on
the Company’s Board of Directors.  Subject to the next sentence, the Retainer
shall be limited to the amount due an Eligible Director for the discharge of his
or her duties as a member of the Board of Directors of the Company, and shall be
reduced for any applicable tax levies, garnishments and other legally required
deductions.  Notwithstanding the preceding sentence, an Eligible Director’s
Retainer may be reduced by an item described in the preceding sentence only to
the extent such reduction does not violate Section 409A.
 
 
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2.28         Second Look Election:
 
The term “Second Look Election” shall have the meaning given to it in Section
4.04.

2.29         Section 409A:
 
Code Section 409A and the applicable regulations and other guidance of general
applicability that are issued thereunder.

2.30         Separation from Service:
 
A Participant’s separation from service as defined in Section 409A, including
the rule that a Participant who is Disabled incurs a Separation from Service 29
months after the Participant is no longer actively rendering services to the
Company.  In the event the Participant also provides services to the Unifi, Inc.
Organization other than as a Director for the Company, such other services shall
not be taken into account in determining when a Separation from Service occurs
to the extent permitted under Treas. Reg. § 1.409A-1(h)(5).  The term may also
be used as a verb (i.e., “Separates from Service”) with no change in meaning.

2.31         Specific Payment Date:
 
A specific date selected by an Eligible Director that triggers a lump sum
payment of a deferral or the start of installment payments for a deferral, as
specified in Section 4.03 or 4.04.  The Specific Payment Dates that are
available to be selected by Eligible Directors shall be a specified anniversary
following an Eligible Director’s Separation from Service, as reflected on the
Election Form or the Second Look Election form that is made available by the
Plan Administrator for the deferral.

2.32         Treasury Regulations:
 
Treasury Regulations means the final, temporary or proposed regulations issued
by the Treasury Department and/or Internal Revenue Service as modified in Title
26 of The United States Code of Federal Regulations.  Any references made in
this Agreement to specific Treasury Regulations shall also refer to any
successor or replacement regulations thereto.
 
2.33         Unforeseeable Emergency:
 
A severe financial hardship to the Participant resulting from –

(a)           An illness or accident of the Participant, the Participant’s
spouse, the Participant’s Beneficiary or the Participant’s dependent (as defined
in Code Section 152(a) without regard to Code Sections 152(b)(1), 152(b)(2) and
152(d)(1)(B));
 
 
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(b)           Loss of the Participant’s property due to casualty (including, the
need to rebuild a home following damage to the home not otherwise covered by
insurance); or
 
(c)           Any other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant.
 
The Plan Administrator shall determine the occurrence of an Unforeseeable
Emergency in accordance with Treas. Reg. §1.409A-3(i)(iii) and any guidelines
that may be established by the Plan Administrator.

2.34         Unifi, Inc. Organization:
 
The controlled group of organizations of which the Company is a part, as defined
by Code section 414(b) and (c) and the regulations issued thereunder.  An entity
shall be considered a member of the Unifi, Inc. Organization only during the
period it is one of the group of organizations described in the preceding
sentence.
 
2.35         Valuation Date:
 
Each business day, as determined by the Plan Administrator, as of which
Participant Accounts are valued in accordance with Plan procedures that are
currently in effect. The Plan Administrator may change the Valuation Dates for
future deferrals at any time before the election to make such deferrals becomes
irrevocable under the Plan.  The Plan Administrator may change the Valuation
Dates for existing deferrals only to the extent that such change in permissible
under Section 409A.

ARTICLE III--ELIGIBILITY AND PARTICIPATION
 
3.01         Eligibility to Participate:
 
(a)           An individual shall be eligible to defer compensation under the
Plan during the period that he or she is a Director hereunder.
 
(b)           During the period an individual satisfies the eligibility
requirements of this Section, he or she shall be referred to as an Eligible
Director.
 
(c)           Each Eligible Director shall become an active Participant on the
earlier of the date an amount is first withheld from his or her compensation
pursuant to an Election Form submitted by the Director to the Plan Administrator
under Section 4.01 or, the date on which a Retainer is first deferred and
credited to the Plan on his or her behalf under Section 4.05.
 
3.02         Termination of Eligibility to Defer:
 
An individual’s eligibility to participate actively by making deferrals under
Section 4.01 shall cease as soon as administratively practicable following the
date he or she ceases to be a Director.
 
 
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3.03         Termination of Participation:
 
An individual, who has been an active Participant under the Plan, ceases to be a
Participant on the date his or her Account is fully paid out.

ARTICLE IV--DEFERRAL OF COMPENSATION
 
4.01         Deferral Election:
 
(a)           Each Eligible Director may make an election to defer under the
Plan in 10% increments up to 100% of his or her Retainer for a Calendar Year in
the manner described in Section 4.02.  Such election to defer shall apply to the
Retainer that is earned for services performed in the corresponding Calendar
Year.  A newly Eligible Director may only defer the portion of his or her
eligible Retainer for the Calendar Year in which he or she becomes an Eligible
Director that is earned for services performed after the date of his or her
election.  For this purpose, if a valid Election Form is received prior to the
date on which the Eligible Director becomes a Director and the Election Form is
effective under Section 4.02(a) as of the date on which the Eligible Director
becomes a Director, then the Director shall be deemed to receive all of his or
her Retainer for the Calendar Year in which he or she becomes an Eligible
Director after the date of the election.  Any Retainer deferred by an Eligible
Director for a Calendar Year will be deducted for each payment period during the
Calendar Year for which he or she would otherwise be paid the Retainer and is an
Eligible Director.  
 
(b)           To be effective, an Eligible Director’s Election Form must set
forth the percentage of the Retainer to be deferred and any other information
that may be requested by the Plan Administrator from time to time.  In addition,
the Election Form must meet the requirements of Section 4.02.
 
4.02           Time and Manner of Deferral Election:
 
(a)           Deferral Election Deadlines.  An Eligible Director must make a
deferral election for an Retainer earned for services performed in a Calendar
Year no later than December 31 of the Calendar Year immediately prior to the
beginning of the Calendar Year (although the Plan Administrator may adopt
policies that encourage or require earlier submission of Election Forms).  If
December 31 of such year is not a business day, then the deadline for deferral
elections will be the first business day preceding December 31 of such year.  In
addition, an individual, who has been nominated for Director status, must submit
an Election Form prior to becoming an Eligible Director or otherwise prior to
rendering services as an Eligible Director, and such Election Form will be
effective immediately upon commencement of the individual’s status as an
Eligible Director or otherwise upon commencement of his or her services as an
Eligible Director.
 
(b)           General Provisions.  A separate deferral election under subsection
(a) above must be made by an Eligible Director for each Calendar Year’s
compensation that is eligible for deferral.  If a properly completed and
executed Election Form is not actually received by the Plan Administrator by the
prescribed time in subsection (a) above, the Eligible Director will be deemed to
have elected not to defer any portion of the Retainer for the applicable
Calendar Year.  Except as provided in the next sentence, an election is
irrevocable once received and determined by the Plan Administrator to be
properly completed (and such determination shall be made not later than the last
date for making the election in question). Increases or decreases in the amount
or percentage a Participant elects to defer shall not be permitted after the
beginning of the applicable Calendar Year; provided that if a Participant
receives a distribution on account of an Unforeseeable Emergency pursuant to
Section 6.06, the Plan Administrator may cancel the Participant’s deferral
election for the Calendar Year in which such distribution occurs.  If an
election is cancelled because of a distribution on account of an Unforeseeable
Emergency, such cancellation shall permanently apply to the deferral election
for such Calendar Year, and the Participant will only be eligible to make a new
deferral election for the next Calendar Year pursuant to the rules in Sections
4.01 and 4.02.
 
 
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(c)           Beneficiaries.  A Participant may designate on the Election Form
(or in some other manner authorized by the Plan Administrator) one or more
Beneficiaries to receive payment, in the event of his or her death, of the
amounts credited to his or her Account; provided that, to be effective, any
Beneficiary designation must be in writing, signed by the Participant, and must
meet such other standards (including any requirement for spousal consent) as the
Plan Administrator shall require from time to time.  The Beneficiary designation
must also be filed with the Plan Administrator prior to the Participant’s
death.  An incomplete Beneficiary designation, as determined by the Plan
Administrator, shall be void and of no effect.  A Beneficiary designation of an
individual by name remains in effect regardless of any change in the designated
individual’s relationship to the Participant.  Any Beneficiary designation
submitted to the Plan Administrator that only specifies a Beneficiary by
relationship shall not be considered an effective Beneficiary designation and
shall be void and of no effect.  If more than one Beneficiary is specified and
the Participant fails to indicate the respective percentage applicable to two or
more Beneficiaries, then each Beneficiary for whom a percentage is not
designated will be entitled to an equal share of the portion of the Account (if
any) for which percentages have not been designated. At any time, a Participant
may change a Beneficiary designation for his or her Account in a writing that is
signed by the Participant and filed with the Plan Administrator prior to the
Participant’s death, and that meets such other standards as the Plan
Administrator shall require from time to time.  An individual who is otherwise a
Beneficiary with respect to a Participant’s Account ceases to be a Beneficiary
when all payments have been made from the Account.
 
4.03         Period of Deferral; Form of Payment:
 
(a)           Period of Deferral.  An Eligible Director making a deferral
election shall specify a deferral period on his or her Election Form by
designating a Specific Payment Date or the date he or she incurs a Separation
from Service.  In no event shall an Eligible Director’s Specific Payment Date be
later than his or her 85th birthday (and the specification of such a later date
shall be deemed instead to specify the Director’s 85th birthday as the Specific
Payment Date).  If an Eligible Director fails to affirmatively designate a
period of deferral on his or her Election Form, he or she shall be deemed to
have specified the date on which he or she incurs a Separation from Service.
 
(b)           Form of Payment.  An Eligible Director making a deferral election
shall specify a form of payment on his or her Election Form by designating
either a lump sum payment or annual installment payments to be paid over a
period of not more than 5 years but not later than the Eligible Director’s 85th
birthday.  If the Eligible Director elects installment payments and the
installments would otherwise extend beyond the Eligible Director’s 85th
birthday, such election shall be treated as an election for installments over a
period of whole and partial years that ends on the Eligible Director’s 85th
birthday.  If an Eligible Director fails to make a form of payment election for
a deferral as provided above, he or she shall be deemed to have elected a lump
sum payment.
 
 
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4.04         Second Look Election:
 
(a)           General.  Subject to Subsection (b) below, a Participant who has
made a valid initial deferral in accordance with the foregoing provisions of
this Article may subsequently make another one-time election regarding the time
and/or form of payment of his or her deferral.  This opportunity to modify the
Participant’s initial election is referred to as a “Second Look Election.”
 
(b)           Requirements for Second Look Elections.  A Second Look Election
must comply with all of the following requirements:
 
(1)           If a Participant’s initial election specified payment based on a
Specific Payment Date, the Participant may only make a Second Look Election if
the election is made at least 12 months before the Participant’s original
Specific Payment Date.  In addition, in this case the Participant’s Second Look
Election must provide for a new Specific Payment Date that is at least 5 years
after the original Specific Payment Date.  The Specific Payment Date applicable
pursuant to a Second Look Election may not be after the Participant’s 85th
birthday, and if this would be necessary to comply with 5-year rule stated
above, then a Second Look Election may not be made.

(2)           Subject to subsection (d), if a Participant’s initial election
specified payment based on the Participant’s Separation from Service, the
Participant may only make a Second Look Election if the election is made at
least 12 months before the Participant’s Separation from Service.  In addition,
in this case the Participant’s Second Look Election must delay the payment of
the Participant’s deferral to a new Specific Payment Date that turns out to be
at least 5 years after the Participant’s Separation from Service.  If the
Specific Payment Date selected in a Second Look Election turns out to be less
than 5 years after the Participant’s Separation from Service, the Second Look
Election is void.
 
(3)           A Participant may make only one Second Look Election for each
individual deferral, and each Second Look Election must comply with all of the
relevant requirements of this Section.

(4)           A Participant who uses a Second Look Election to change the form
of the Participant’s payment from a lump sum to installments shall be subject to
the provisions of Subsection (c) below regarding installment payment elections,
and such installment payments must begin no earlier than 5 years after when the
lump sum payment would have been paid based upon the Participant’s initial
election.
 
 
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(5)           If a Participant’s initial election specified payment in the form
of installments and the Participant wants to elect instead payment in a lump
sum, the earliest payment date of the lump sum must be no earlier than 5 years
after the first payment date that applied under the Participant’s initial
installment election.

(6)           For purposes of this Section, all of a Participant’s installment
payments related to a specific deferral election shall be treated as a single
payment.

A Second Look Election will be void and payment will be made based on the
Participant’s original election under Section 4.03 (or the mandatory provisions
of Section 4.05) if all of the relevant provisions of this subsection (b) are
not satisfied in full.  However, if a Participant’s Second Look Election becomes
effective in accordance with the provisions of subsection (b), the Participant’s
original election shall be superseded (including any Specific Payment Date
specified therein), and the original election shall not be taken into account
with respect to the deferral that is subject to the Second Look Election.
 
(c)           Installment Payments.  A Participant making a Second Look Election
may make an election to change the payment of the deferral subject to the Second
Look Election from a lump sum payment to installment payments.  Participants are
allowed to choose installment payments by designating that payments shall be
paid annually over five years, but not later than the Participant’s 85th
birthday.  If the Participant elects installment payments and the installments
would otherwise begin before and extend beyond the Participant’s 85th birthday,
such election shall be treated as an election for installments over a period of
whole and partial years that ends on the Participant’s 85th birthday.
 
(d)           Special Rules for Certain Second Look Elections.  Notwithstanding
the provisions in subsection (b)(2), if a Participant’s initial deferral
election specified payment based on the Participant’s Separation from Service,
then –
 
(1)           If such Participant is determined to be Disabled, such Participant
shall not be eligible to make a Second Look Election on or after the date the
Participant is determined to be Disabled; and

(2)           If such Participant submits a Second Look Election, such
Participant’s Second Look Election shall not take effect until the later of (i)
the date the Participant has rendered 10 years of service on the Board of
Directors or (ii) the date that is 12 months after the date on which the Second
Look Election is made.

For purposes of paragraph (2) above, if a Participant Separates from Service
prior to the date that a Participant’s Second Look Election takes effect, then
the Participant’s Second Look Election shall be void and payment shall be made
based on the Participant’s original deferral election under Section 4.03.

(e)           Plan Administrator’s Role.  Each Participant has the sole
responsibility to elect a Second Look Election by contacting the Plan
Administrator and to comply with the requirements of this Section.  The Plan
Administrator may provide a notice of a Second Look Election opportunity to some
or all Participants, but the Plan Administrator is under no obligation to
provide such notice (or to provide it to all Participants, in the event a notice
is provided only to some Participants).  The Plan Administrator has no
discretion to waive or otherwise modify any requirement for a Second Look
Election set forth in this Section or in Section 409A.
 
 
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ARTICLE V--INTERESTS OF PARTICIPANTS
 
5.01         Accounting for Participants’ Interests:
 
(a)           Deferral Subaccounts.  Each Participant shall have at least one
separate Deferral Subaccount for each separate deferral of Director Compensation
made by the Participant under this Plan.  A Participant’s deferral shall be
credited as of the date of the deferral to his or her Account as soon as
administratively practicable following the date the compensation would be paid
in the absence of a deferral.  A Participant’s Account is a bookkeeping device
to track the value of the Participant’s deferrals and the Company’s liability
therefor.  No assets shall be reserved or segregated in connection with any
Account, and no Account shall be insured or otherwise secured.
 
(b)           Account Earnings or Losses.  As of each Valuation Date, a
Participant’s Account shall be credited with earnings and gains (and shall be
debited for expenses and losses) determined as if the amounts credited to the
Participant’s Account had actually been invested in accordance with this
Article.  The Plan provides only for “phantom investments,” and therefore such
earnings, gains, expenses and losses are hypothetical and not actual.  However,
they shall be applied to measure the value of a Participant’s Account and the
amount of the Company’s liability to make deferred payments to or on behalf of
the Participant.
 
5.02         Phantom Investment of Account:
 
(a)           General.  Each of a Participant’s Deferral Subaccounts shall be
invested on a phantom basis in phantom Unifi, Inc. Common Stock as provided in
Subsection (b) below.
 
(b)           Phantom Unifi, Inc. Common Stock.  Participant Accounts invested
in this phantom option are adjusted to reflect an investment in Unifi, Inc.
Common Stock.  An amount deferred into this option is converted to phantom
shares of Unifi, Inc. Common Stock of equivalent value by dividing such amount
by the Fair Market Value of a share of Unifi, Inc. Common Stock on the Valuation
Date as of which the amount is treated as invested in this option by the Plan
Administrator.  Only whole shares are determined.  Any partial share (and all
amounts that would be received by the Account as dividends, if dividends were
paid on phantom shares of Unifi, Inc. Common Stock as they are on actual shares)
are credited to a dividend subaccount that is invested on a phantom basis as
described in paragraph (4) below.  The Plan Administrator shall adopt a fair
valuation methodology for valuing a phantom investment in this option, such that
the value shall reflect the complete value of an investment in Unifi, Inc.
Common Stock in accordance with the following Paragraphs below.
 
(1)           A Participant’s interest in the phantom Unifi, Inc. Common Stock
is valued as of a Valuation Date by multiplying the number of phantom shares
credited to his or her Account on such date by the Fair Market Value of a share
of Unifi, Inc. Common Stock on such date.
 
 
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(2)           If shares of Unifi, Inc. Common Stock change by reason of any
stock split, stock dividend, recapitalization, merger, consolidation, spin-off,
combination or exchange of shares or any other corporate change treated as
subject to this provision by the Plan Administrator, such equitable adjustment
shall be made in the number and kind of phantom shares credited to an Account or
Deferral Subaccount as the Plan Administrator may determine to be necessary or
appropriate.

(3)           In no event will shares of Unifi, Inc. Common Stock actually be
purchased or held under this Plan, and no Participant shall have any rights as a
shareholder of Unifi, Inc. Common Stock on account of an interest in this
phantom option.

(4)           All amounts that would be received by the Account as dividends, if
dividends were paid on phantom shares of Unifi, Inc. Common Stock as they are on
actual shares are credited to a dividend subaccount that is invested on a
phantom basis (the “Dividend Subaccount”).  Amounts credited to a Participant’s
Dividend Subaccount shall accrue a return based upon the prime rate of interest
announced from time to time by Bank of America, NA (or another bank designated
by the Plan Administrator from time to time).  Returns accrue during the period
since the last Valuation Date based on the prime rate in effect on the first
business day after such Valuation Date and are compounded annually.  An amount
is credited with the applicable rate of return beginning with the date as of
which the amount is treated as invested in this option by the Plan
Administrator.

(c)           Phantom Unifi, Inc. Common Stock Fund Restrictions.
Notwithstanding the preceding provisions of this Section, the Plan Administrator
may at any time alter the effective date of any investment or allocation
involving phantom Unifi, Inc. Common Stock pursuant to Section 7.03(j) (relating
to safeguards against insider trading).  The Plan Administrator may also, to the
extent necessary to ensure compliance with Rule 16b-3(f) of the Act, arrange for
tracking of any such transaction defined in Rule 16b-3(b)(1) of the Act and bar
any such transaction to the extent it would not be exempt under Rule
16b-3(f).  The Company may also impose blackout periods pursuant to the
requirements of the Sarbanes-Oxley Act of 2002 whenever the Company determines
that circumstances warrant.  Further, the Company may impose quarterly blackout
periods on insider trading in phantom Unifi, Inc. Common Stock as needed (as
determined by the Company), timed to coincide with the release of the Company’s
quarterly earnings reports.  The commencement and termination of these blackout
periods in each quarter, the parties to which they apply and the activities they
restrict shall be as set forth in the official insider trading policy
promulgated by the Company from time to time.  These provisions shall apply
notwithstanding any provision of the Plan to the contrary except Section 7.06
(relating to compliance with Section 409A).
 
5.03         Vesting of a Participant’s Account:
 
A Participant’s interest in the value of his or her Account shall at all times
be 100% vested, which means that it will not forfeit as a result of his or her
Separation from Service.
 
 
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ARTICLE VI--DISTRIBUTIONS
 
6.01         General:
 
A Participant’s Deferral Subaccount(s) shall be distributed as provided in this
Article, subject in all cases to Section 7.03(j) (relating to safeguards against
insider trading)  All Deferral Subaccount balances shall be paid in whole shares
of Unifi, Inc. Common Stock, other than the amounts that are credited to the
phantom Dividend Subaccount which shall be paid in cash.  In no event shall any
portion of a Participant’s Account be distributed earlier or later than is
allowed under Section 409A.  The following general rules shall apply for
purposes of interpreting the provisions of this Article VI.

(a)           Section 6.02 (Distributions Based on a Specific Payment Date)
applies when a Participant has elected to defer until a Specific Payment Date
and the Specific Payment Date is reached before the Participant’s death.  If
such a Participant dies prior to the Specific Payment Date, Section 6.04 shall
apply to the extent it would result in an earlier distribution of all or part of
a Participant’s Account.
 
(b)           Section 6.03 (Distributions on Account of a Separation from
Service) applies when a Participant has elected to defer until a Separation from
Service and then the Participant Separates from Service (other than as a result
of death).
 
(c)           Section 6.04 (Distributions on Account of Death) applies when the
Participant dies.  If a Participant is entitled to receive or is receiving a
distribution under Section 6.02 or 6.03 at the time of his or her death, Section
6.04 shall take precedence over those sections to the extent Section 6.04 would
result in an earlier distribution of all or part of a Participant’s Account.
 
(d)           Section 6.05 (Distributions on Account of Unforeseeable Emergency)
applies when the Participant incurs an Unforeseeable Emergency prior to when a
Participant’s Account is distributed under Sections 6.02 through 6.04.  In this
case, the provisions of Section 6.05 shall take precedence over Sections 6.02
through 6.04 to the extent Section 6.05 would result in an earlier distribution
of all or part of the Participant’s Account.
 
(e)           Section 6.06 (Distributions on Account of a Change in Control)
applies when the Company experiences a Change in Control prior to when a
Participant’s Account is distributed under Sections 6.02 through 6.05.  In this
case, the provisions of Section 6.06 shall take precedence over Sections 6.02
through 6.05 to the extent Section 6.06 would result in an earlier distribution
of all or part of the Participant’s Account.
 
6.02         Distributions Based on a Specific Payment Date:
 
This Section shall apply to distributions that are to be made upon the
occurrence of a Specific Payment Date.  In the event a Participant’s Specific
Payment Date for a Deferral Subaccount is reached before the Participant’s
death, such Deferral Subaccount shall be distributed based on the occurrence of
such Specific Payment Date in accordance with the following terms and
conditions:
 
 
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(a)           If a Participant’s Deferral Subaccount is to be paid in the form
of a lump sum pursuant to Sections 4.03 or 4.04, whichever is applicable, the
Deferral Subaccount shall be valued as of the last Distribution Valuation Date
that immediately precedes the Specific Payment Date, and the resulting amount
shall be paid in a single lump sum on the Specific Payment Date.
 
(b)           If a Participant’s Deferral Subaccount is to be paid in the form
of installments pursuant to Section 4.03 or 4.04, whichever is applicable, the
Deferral Subaccount shall be valued as of the last Distribution Valuation Date
that immediately precedes the Specific Payment Date and the first installment
payment shall be paid on the Specific Payment Date.  Thereafter, installment
payments shall continue in accordance with the schedule elected by the
Participant on the Election Form or the Second Look Election (whichever is
applicable, and subject in each case to the provisions of this Plan that
constrain such elections), except as provided in Sections 6.04 through 6.06
(relating to distributions on account of death, Unforeseeable Emergency and
Change in Control).  The amount of each installment shall be determined under
Section 6.07.  Notwithstanding the preceding provisions of this Subsection, if
before the date the last installment distribution is processed for payment the
Participant would be entitled to a distribution in accordance with Section 6.04
(relating to a distribution on account of death), the remaining balance of the
Participant’s Deferral Subaccounts that would otherwise be distributed based on
such Specific Payment Date shall instead be distributed in accordance with
Section 6.04 (relating to distributions on account of death), whichever applies,
but only to the extent it would result in an earlier distribution of the
Participant’s Subaccounts in the case of Section 6.04.
 
6.03         Distributions on Account of a Separation from Service:
 
This Section shall apply to distributions that are to be made upon Separation
from Service.  When used in this Section, the phrase “Separation from Service”
shall only refer to a Separation from Service that is not for death.

(a)           The Participant’s Deferral Subaccount shall be distributed as of
the first day of the first calendar quarter that immediately follows the
Participant’s Separation from Service except as may be delayed pursuant to
subsection (d).
 
(b)           For deferrals of Director Compensation, the Deferral Subaccount
shall be distributed as of the first day of the first calendar quarter that
immediately follows the Participant’s Separation from Service except as may be
delayed pursuant to subsection (d); and
 
(c)           The distribution provided in subsections (a) or (b) shall be made
in either a single lump sum payment or in installment payments depending upon
the Participant’s deferral election under Sections 4.03 or 4.04.  If the
Deferral Subaccount is to be paid in the form of a lump sum, the Deferral
Subaccount shall be distributed in a lump sum on the first day of the first
calendar quarter that is after the Separation from Service.  If a Participant’s
Deferral Subaccount is to be paid in the form of installments pursuant to
Section 4.03 or 4.04, whichever is applicable, the first installment payment
shall be paid on the first day of the first calendar quarter that is after the
Separation from Service.  Thereafter, installment payments shall continue in
accordance with the schedule elected by the Participant on his/her deferral
election form or Second Look Election (and subject in each case to the
provisions of this Plan that constrain such elections), except as provided in
Sections 6.04 through 6.06 (relating to distributions on account of death,
Unforeseeable Emergency and Change in Control).  The amount of each installment
shall be determined under Section 6.07.  Notwithstanding the preceding
provisions of this Subsection, if before the date the last installment
distribution is processed for payment the Participant would be entitled to a
distribution in accordance with Section 6.04 (relating to a distribution on
account of death), the remaining balance of the Participant’s Deferral
Subaccounts that would otherwise be distributed based on such Separation from
Service shall instead be distributed in accordance with Section 6.04 (relating
to distributions on account of death), whichever applies, but only to the extent
it would result in an earlier distribution of the Participant’s Account in the
case of Section 6.04.  Unless otherwise provided in this Section, a distribution
shall be valued as of the Distribution Valuation Date that immediately precedes
the date the payment is to be made.
 
 
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(d)           Notwithstanding the subsections above, if the Participant is
classified as a Key Employee at the time of the Participant’s Separation from
Service (or at such other time for determining Key Employee status as may apply
under Section 409A), then such Participant’s Account shall not be paid, as a
result of the Participant’s Separation from Service, earlier than the date that
is at least 6 months after the Participant’s Separation from Service.  In such
event:
 
(1)           any applicable lump sum payment shall be valued as of the first
Distribution Valuation Date that is on or after the date that is 6 months after
the date of the Participant’s Separation from Service and the resulting amount
shall be distributed on such date; and

(2)           any installment payments that would otherwise have been paid
during such 6 month period shall be valued as of the first Distribution
Valuation Date that is on or after the date that is 6 months after the date of
the Participant’s Separation from Service pursuant to Section 6.07 and the
resulting amount(s) shall be distributed in a lump sum on such date and the
installment stream shall continue from that point in accordance with the
applicable schedule.

6.04         Distributions on Account of Death:
 
(a)           Upon a Participant’s death, the Participant’s Account under the
Plan shall be distributed in a single lump sum as of the first day of the first
calendar quarter immediately following the Participant’s death.  This payment
shall be valued as of the Distribution Valuation Date that immediately precedes
the payment date.  If the Participant is receiving installment payments at the
time of the Participant’s death, such installment payments shall continue in
accordance with the terms of the Participant’s deferral election that governs
such payments until the time that the lump sum payment is due to be paid under
the provisions of the preceding sentence of this Subsection.  Immediately prior
to the time that such lump sum payment is to be paid all installment payments
shall cease and the remaining balance of the Participant’s Account shall be
distributed at such scheduled payment time in a single lump sum.  Amounts paid
following a Participant’s death, whether a lump sum or continued installments,
shall be paid to the Participant’s Beneficiary.  If some but not all of the
persons designated as Beneficiaries by a Participant to receive his or her
Account at death predecease the Participant, the Participant’s surviving
Beneficiaries shall be entitled to the portion of the Participant’s Account
intended for such pre-deceased persons in proportion to the surviving
Beneficiaries’ respective shares.
 
 
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(b)           If no designation is in effect at the time of a Participant’s
death (as determined by the Plan Administrator) or if all persons designated as
Beneficiaries have predeceased the Participant, then the payments to be made
pursuant to this Section shall be distributed as follows:
 
(1)           If the Participant is married at the time of his/her death, all
payments made pursuant to this Section shall be paid to the Participant’s
spouse; and

(2)           If the Participant is not married at the time of his/her death,
all payments made pursuant to this Section shall be paid to the Participant’s
estate.

The Plan Administrator shall determine whether a Participant is “married” and
shall determine a Participant’s “spouse” based on the state or local law where
the Participant has his/her primary residence at the time of death.  The Plan
Administrator is authorized to make any applicable inquires and to request any
documents, certificates or other information that it deems necessary or
appropriate in order to make the above determinations.

(c)           Prior to the time the value of the Participant’s Account is
distributed under this Section, the Participant’s Beneficiary may apply for a
distribution under Section 6.05 (relating to a distribution on account of an
Unforeseeable Emergency).
 
(d)           Any claim to be paid any amounts standing to the credit of a
Participant in connection with the Participant’s death must be received by the
Plan Administrator or the Plan Administrator at least 14 days before any such
amount is paid out by the Plan Administrator.  Any claim received thereafter is
untimely, and it shall be unenforceable against the Plan, the Company, the Plan
Administrator, the Plan Administrator or any other party acting for one or more
of them.
 
6.05         Distributions on Account of Unforeseeable Emergency:
 
Prior to the time that an amount would become distributable under Sections 6.02
through 6.04 or Section 6.06, a Participant or Beneficiary may file a written
request with the Plan Administrator for accelerated payment of all or a portion
of the amount credited to the Participant’s Account based upon an Unforeseeable
Emergency.  After an individual has filed a written request pursuant to this
Section, along with all supporting material that may be required by the Plan
Administrator from time to time, the Plan Administrator shall determine within
60 days (or such other number of days that is necessary if special circumstances
warrant additional time) whether the individual meets the criteria for an
Unforeseeable Emergency.  If the Plan Administrator determines that an
Unforeseeable Emergency has occurred, the Participant or Beneficiary shall
receive a distribution from his or her Account on the date that such
determination is finalized by the Plan Administrator. However, such distribution
shall not exceed the dollar amount necessary to satisfy the Unforeseeable
Emergency (plus amounts necessary to pay taxes reasonably anticipated as a
result of the distribution) after taking into account the extent to which the
Unforeseeable Emergency is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant’s
assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship).
 
 
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6.06         Distributions on Account of a Change in Control:
 
(a)           Upon a Change in Control, the Participant's Account under the Plan
shall be distributed in a single lump sum as of the first day of the calendar
quarter immediately following the date of such Change in Control.  This payment
shall be valued as of the Distribution Valuation Date that immediately precedes
the payment date.  If the Participant is receiving installment payments at the
time of the Change in Control, such installment payments shall continue in
accordance with the terms of the Participant's deferral election that governs
such payments until the time that the lump sum payment is due to be paid under
the provisions of the preceding sentence of this Subsection.  Immediately prior
to the time that such lump sum payment is to be paid all installment payments
shall cease and the remaining balance of the Participant's Account shall be
distributed at such scheduled payment time in a single lump sum.
 
(b)           Prior to the time the value of the Participant's Account is
distributed under this Section, the Participant may apply for a distribution
under Section 6.05 (relating to a distribution on account of an Unforeseeable
Emergency).
 
6.07         Valuation:
 
In determining the amount of any individual distribution pursuant to this
Article, the Participant’s Deferral Subaccount shall continue to be credited
with earnings and gains (and debited for expenses and losses) as specified in
Article V until the Distribution Valuation Date that is used in determining the
amount of the distribution under this Article.  If a particular Section in this
Article does not specify a Distribution Valuation Date to be used in calculating
the distribution, the Participant’s Deferral Subaccount shall continue to be
credited with earnings and gains (and debited for expenses and losses) as
specified in Article V until the Distribution Valuation Date most recently
preceding the date of such distribution.  In determining the value of a
Participant’s remaining Deferral Subaccount following an installment
distribution from the Deferral Subaccount (or a partial distribution under
Section 6.05 relating to a distribution on account of an Unforeseeable
Emergency), such distribution shall reduce the value of the Participant’s
Deferral Subaccount as of the close of the Distribution Valuation Date most
recently preceding the payment date for such installment (or partial
distribution).  The amount to be distributed in connection with any installment
payment shall be determined by dividing the value of a Participant’s Deferral
Subaccount as of such Distribution Valuation Date (determined before reduction
of the Deferral Subaccount as of such Distribution Valuation Date in accordance
with the preceding sentence) by the remaining number of installments to be paid
with respect to the Deferral Subaccount.

6.08         Actual Payment Date:
 
An amount payable on a date specified in this Article VI shall be paid no later
than the later of (a) the end of the calendar year in which the specified date
occurs, or (b) the 15th day of the third calendar month following such specified
date.  In addition, the Participant (or Beneficiary) is not permitted to
designate the taxable year of the payment.
 
 
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ARTICLE VII--PLAN ADMINISTRATION
 
7.01         Plan Administrator:
 
The Plan Administrator is responsible for the administration of the Plan.  The
Plan Administrator has the authority to name one or more delegates to carry out
certain responsibilities hereunder, as specified in the definition of Plan
Administrator.  To the extent not already set forth in the Plan, any such
delegation shall state the scope of responsibilities being delegated.

7.02         Action:
 
Action by the Plan Administrator may be taken in accordance with procedures that
the Plan Administrator adopts from time to time or that the Company’s Legal
Department determines are legally permissible.

7.03         Powers of the Plan Administrator:
 
The Plan Administrator shall administer and manage the Plan and shall have (and
shall be permitted to delegate) all powers necessary to accomplish that purpose,
including the following:

(a)           To exercise its discretionary authority to construe, interpret,
and administer this Plan;
 
(b)           To exercise its discretionary authority to make all decisions
regarding eligibility, participation and deferrals, to make allocations and
determinations required by this Plan, and to maintain records regarding
Participants’ Accounts;
 
(c)           To compute and certify to the Company the amount and kinds of
payments to Participants or their Beneficiaries, and to determine the time and
manner in which such payments are to be paid;
 
(d)           To authorize all disbursements by the Company pursuant to this
Plan;
 
(e)           To maintain (or cause to be maintained) all the necessary records
for administration of this Plan;
 
(f)           To make and publish such rules for the regulation of this Plan as
are not inconsistent with the terms hereof;
 
(g)           To delegate to other individuals or entities from time to time the
performance of any of its duties or responsibilities hereunder;
 
(h)           To change the phantom investment under Article V;
 
(i)           To hire agents, accountants, actuaries, consultants and legal
counsel to assist in operating and administering the Plan; and
 
 
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(j)           Notwithstanding any other provision of this Plan except Section
7.07 (relating to compliance with Section 409A), the Plan Administrator may take
any action the Plan Administrator determines is necessary to assure compliance
with any policy of the Company respecting insider trading as may be in effect
from time to time.  Such actions may include altering the distribution date of
Deferral Subaccounts.  Any such actions shall alter the normal operation of the
Plan to the minimum extent necessary.
 
The Plan Administrator has the exclusive and discretionary authority to construe
and to interpret the Plan, to decide all questions of eligibility for benefits,
to determine the amount and manner of payment of such benefits and to make any
determinations that are contemplated by (or permissible under) the terms of this
Plan, and its decisions on such matters will be final and conclusive on all
parties.  Any such decision or determination shall be made in the absolute and
unrestricted discretion of the Plan Administrator, even if (1) such discretion
is not expressly granted by the Plan provisions in question, or (2) a
determination is not expressly called for by the Plan provisions in question,
and even though other Plan provisions expressly grant discretion or call for a
determination.  As a result, benefits under this Plan will be paid only if the
Plan Administrator decides in its discretion that the applicant is entitled to
them.  In the event of a review by a court, arbitrator or any other tribunal,
any exercise of the Plan Administrator’s discretionary authority shall not be
disturbed unless it is clearly shown to be arbitrary and capricious.

7.04         Compensation, Indemnity and Liability:
 
The Plan Administrator will serve without bond and without compensation for
services hereunder.  All expenses of the Plan and the Plan Administrator will be
paid by the Company.  To the extent deemed appropriate by the Plan
Administrator, any such expense may be charged against specific Participant
Accounts, thereby reducing the obligation of the Company.  No member of the
Board of Directors (who serves as the Plan Administrator), and no individual
acting as the delegate of the Board of Directors, shall be liable for any act or
omission of any other member or individual, nor for any act or omission on his
or her own part, excepting his or her own willful misconduct.  The Company will
indemnify and hold harmless each member of the Board of Directors and any
employee of the Company (or a Company affiliate, if recognized as an affiliate
for this purpose by the Plan Administrator) acting as the delegate of the Board
of Directors against any and all expenses and liabilities, including reasonable
legal fees and expenses, arising in connection with this Plan out of his or her
membership on the Board of Directors (or his or her serving as the delegate of
the Board of Directors), excepting only expenses and liabilities arising out of
his or her own willful misconduct or bad faith.

7.05         Withholding:
 
The Company shall withhold from amounts due under this Plan, any amount
necessary to enable the Company to remit to the appropriate government entity or
entities on behalf of the Participant as may be required by the federal income
tax provisions of the Code, by an applicable state’s income tax provisions, and
by an applicable city, county or municipality’s earnings or income tax
provisions.  Further, the Company shall withhold from the payroll of, or collect
from, a Participant the amount necessary to remit on behalf of the Participant
any Social Security and/or Medicare taxes which may be required with respect to
amounts deferred or accrued by a Participant hereunder, as determined by the
Company.  In addition, to the extent required by Section 409A, amounts deferred
under this Plan shall be reported to the Internal Revenue Service as provided by
Section 409A, and any amounts that become taxable hereunder pursuant to Section
409A shall be reported as taxable compensation to the Participant as provided by
Section 409A.
 
 
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7.06         Conformance with Section 409A:
 
At all times during each Plan Year, this Plan shall be operated in accordance
with the requirements of Section 409A.  In all cases, the provisions of this
Section shall apply notwithstanding any contrary provision of the Plan that is
not contained in this Section.

ARTICLE VIII--CLAIMS PROCEDURE
 
8.01         Claims for Benefits:
 
If a Participant, Beneficiary or other person (hereafter, “Claimant”) does not
receive timely payment of any benefits which he or she believes are due and
payable under the Plan, he or she may make a claim for benefits to the Plan
Administrator.  The claim for benefits must be in writing and addressed to the
Plan Administrator.  If the claim for benefits is denied, the Plan Administrator
will notify the Claimant within 90 days after the Plan Administrator initially
received the benefit claim.  However, if special circumstances require an
extension of time for processing the claim, the Plan Administrator will furnish
notice of the extension to the Claimant prior to the termination of the initial
90-day period and such extension may not exceed one additional, consecutive
90-day period.  Any notice of a denial of benefits shall advise the Claimant of
the basis for the denial, any additional material or information necessary for
the Claimant to perfect his or her claim, and the steps which the Claimant must
take to appeal his or her claim for benefits.

8.02         Appeals of Denied Claims:
 
Each Claimant whose claim for benefits has been denied may file a written appeal
for a review of his or her claim by the Plan Administrator.  The request for
review must be filed by the Claimant within 60 days after he or she received the
notice denying his or her claim.  The decision of the Plan Administrator will be
communicated to the Claimant within 60 days after receipt of a request for
appeal.  The notice shall set forth the basis for the Plan Administrator’s
decision.  If special circumstances require an extension of time for processing
the appeal, the Plan Administrator will furnish notice of the extension to the
Claimant prior to the termination of the initial 60-day period and such
extension may not exceed one additional, consecutive 60-day period.  In no event
shall the Plan Administrator’s decision be rendered later than 120 days after
receipt of a request for appeal.

8.03         Special Claims Procedures for Disability Determinations:
 
Notwithstanding Sections 8.01 and 8.02 to the contrary, if the claim or appeal
of the Claimant relates to Disability benefits, such claim or appeal shall be
processed pursuant to the applicable provisions of Department of Labor
Regulation Section 2560.503-1 relating to Disability benefits, including
Sections 2560.503-1(d), 2560.503-1(f)(3), 2560.503-1(h)(4) and 2560.503-1(i)(3).
 
 
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ARTICLE IX--AMENDMENT AND TERMINATION
 
9.01         Amendment of Plan:
 
The Board (or an applicable committee thereof) of the Company has the right in
its sole discretion to amend this Plan in whole or in part at any time and in
any manner, including the manner of making deferral elections, the terms on
which distributions are made, and the form and timing of
distributions.  However, except for mere clarifying amendments necessary to
avoid an inappropriate windfall, no Plan amendment shall reduce the amount
credited to the Account of any Participant as of the date such amendment is
adopted.  Any amendment shall be in writing and adopted by the Committee.  All
Participants and Beneficiaries shall be bound by such amendment.  Any amendments
made to the Plan shall be subject to any restrictions on amendment that are
applicable to ensure continued compliance under Section 409A.

9.02         Termination of Plan:
 
(a)           The Company expects to continue this Plan, but does not obligate
itself to do so.  The Company, acting by the Board (or an applicable committee
thereof), reserves the right to discontinue and terminate the Plan at any time,
in whole or in part, for any reason (including a change, or an impending change,
in the tax laws of the United States or any state).  Termination of the Plan
will be binding on all Participants (and a partial termination shall be binding
upon all affected Participants) and their Beneficiaries, but in no event may
such termination reduce the amounts credited at that time to any Participant’s
Account.  If this Plan is terminated (in whole or in part), the termination
resolution shall provide for how amounts theretofore credited to affected
Participants’ Accounts will be distributed.
 
(b)           This Section is subject to the same restrictions related to
compliance with Section 409A that apply to Section 9.01.  In accordance with
these restrictions, the Company intends to have the maximum discretionary
authority to terminate the Plan and make distributions in connection with a
Change in Control, and the maximum flexibility with respect to how and to what
extent to carry this out following a Change in Control as is permissible under
Section 409A.  The previous sentence contains the exclusive terms under which a
distribution may be made in connection with any change in control with respect
to deferrals made under this 409A Program.
 
ARTICLE X--MISCELLANEOUS
 
10.01       Limitation on Participant’s Rights:
 
Participation in this Plan does not give any Participant the right to be
retained in the service of the Company.  The Company reserves the right to
terminate the service of any Participant without any liability for any claim
against the Company under this Plan, except for a claim for payment of deferrals
as provided herein.
 
 
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10.02       Unfunded Obligation of the Company:
 
The benefits provided by this Plan are unfunded.  All amounts payable under this
Plan to Participants are paid from the general assets of the Company.  Nothing
contained in this Plan requires the Company to set aside or hold in trust any
amounts or assets for the purpose of paying benefits to Participants.  Neither a
Participant, Beneficiary, nor any other person shall have any property interest,
legal or equitable, in any specific Company asset.  This Plan creates only a
contractual obligation on the part of the Company, and the Participant has the
status of a general unsecured creditor of the Company with respect to amounts of
compensation deferred hereunder.  Such a Participant shall not have any
preference or priority over, the rights of any other unsecured general creditor
of the Company.  No other Company affiliate guarantees or shares such
obligation, and no other Company affiliate shall have any liability to the
Participant or his or her Beneficiary.

10.03       Other Plans:
 
This Plan shall not affect the right of any Eligible Director or Participant to
participate in and receive benefits under and in accordance with the provisions
of any other Director compensation plans which are now or hereafter maintained
by the Company, unless the terms of such other plan or plans specifically
provide otherwise or it would cause such other plan to violate a requirement for
tax favored treatment.

10.04       Receipt or Release:
 
Any payment to a Participant in accordance with the provisions of this Plan
shall, to the extent thereof, be in full satisfaction of all claims against the
Plan Administrator, the Plan Administrator and the Company, and the Plan
Administrator may require such Participant, as a condition precedent to such
payment, to execute a receipt and release to such effect.

10.05       Governing Law:
 
This Plan shall be construed, administered, and governed in all respects in
accordance with applicable federal law and, to the extent not preempted by
federal law, in accordance with the laws of the State of North Carolina.  If any
provisions of this instrument shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions hereof shall continue
to be fully effective.

10.06       Gender, Tense and Examples:
 
In this Plan, whenever the context so indicates, the singular or plural number
and the masculine, feminine, or neuter gender shall be deemed to include the
other.  Whenever an example is provided or the text uses the term “including”
followed by a specific item or items, or there is a passage having a similar
effect, such passage of the Plan shall be construed as if the phrase “without
limitation” followed such example or term (or otherwise applied to such passage
in a manner that avoids limitation on its breadth of application).
 
 
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10.07       Successors and Assigns; Nonalienation of Benefits:
 
This Plan inures to the benefit of and is binding upon the parties hereto and
their successors, heirs and assigns; provided, however, that the amounts
credited to the Account of a Participant are not (except as provided in Section
7.05) subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any
right to any benefits payable hereunder, including, without limitation, any
assignment or alienation in connection with a separation, divorce, child support
or similar arrangement, will be null and void and not binding on the Plan or the
Company.  Notwithstanding the foregoing, the Plan Administrator reserves the
right to make payments in accordance with a divorce decree, judgment or other
court order as and when cash payments are made in accordance with the terms of
this Plan from the Deferral Subaccount of a Participant.  Any such payment shall
be charged against and reduce the Participant’s Account.

10.08        Facility of Payment:
 
Whenever, in the Plan Administrator’s opinion, a Participant or Beneficiary
entitled to receive any payment hereunder is under a legal disability or is
incapacitated in any way so as to be unable to manage his or her financial
affairs, the Plan Administrator may direct the Company to make payments to such
person or to the legal representative of such person for his or her benefit, or
to apply the payment for the benefit of such person in such manner as the Plan
Administrator considers advisable.  Any payment in accordance with the
provisions of this Section shall be a complete discharge of any liability for
the making of such payment to the Participant or Beneficiary under the Plan.

ARTICLE XI--AUTHENTICATION
 
The Plan was adopted and approved by the Company’s Executive Committee of the
Board of Directors on December 14, 2010, to be effective as of December 14,
2010, except as provided herein.

 
UNIFI, INC.
         
By: /S/ CHARLES F. MCCOY                    
 
Name: Charles F. McCoy
 
Title: V.P., Secretary & General Counsel

 
 
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