Document:

Ex-10.4

 

UNIFI, INC. SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN

as established effective July 26, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I NAME AND PURPOSE
	 	 	2	 
	 
	 	 	 	 
	Section 1.1. Name
	 	 	2	 
	Section 1.2. Purpose
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW
	 	 	2	 
	 
	 	 	 	 
	Section 2.1. Construction and Definitions
	 	 	2	 
	Section 2.2. Applicable Law
	 	 	5	 
	 
	 	 	 	 
	ARTICLE III PARTICIPATION
	 	 	5	 
	 
	 	 	 	 
	Section 3.1. General
	 	 	5	 
	Section 3.2. Eligibility
	 	 	5	 
	 
	 	 	 	 
	ARTICLE IV BENEFITS
	 	 	5	 
	 
	 	 	 	 
	Section 4.1. SERP Accounts
	 	 	5	 
	Section 4.2. SERP Account Credits and Adjustments
	 	 	6	 
	Section 4.3. Benefits Upon Separation from Service
	 	 	6	 
	Section 4.4. Benefits Upon Disability
	 	 	6	 
	Section 4.5. Benefits Upon Death of Participant
	 	 	6	 
	 
	 	 	 	 
	ARTICLE V AMENDMENT AND TERMINATION
	 	 	7	 
	 
	 	 	 	 
	Section 5.1. Amendment of Plan
	 	 	7	 
	Section 5.2. Termination of Plan
	 	 	7	 
	Section 5.3. Effective Date and Procedure for Amendment or Termination
	 	 	7	 
	Section 5.4. Effect of Amendment or Termination on Certain Benefits
	 	 	8	 
	 
	 	 	 	 
	ARTICLE VI MISCELLANEOUS
	 	 	8	 
	 
	 	 	 	 
	Section 6.1. Adoption by a Subsidiary Corporation
	 	 	8	 
	Section 6.2. Authorization and Delegation to the Committee
	 	 	8	 
	Section 6.3. Spendthrift Clause
	 	 	8	 
	Section 6.4. Benefits Payable From General Assets of the Participating Employers
	 	 	8	 
	Section 6.5. Tax Withholding
	 	 	9	 
	Section 6.6. Allocation of Benefits Among the Participating Employers
	 	 	9	 
	Section 6.7. Benefits Limited to the Plan
	 	 	9	 
	 
	 	 	 	 
	ARTICLE VII CLAIMS PROCEDURE
	 	 	10	 
	 
	 	 	 	 
	Section 7.1. Claims Procedure
	 	 	10	 
	Section 7.2. Agent for Service of Process
	 	 	11	 

 

 

UNIFI, INC. SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN

(established effective July 26, 2006)

     WHEREAS, Unifi, Inc. desires to establish an unfunded supplemental retirement plan for a
select group of management employees for the purpose of providing supplemental retirement benefits
effective as of July 26, 2006;

     NOW, THEREFORE, Unifi, Inc. does hereby establish effective as of July 26, 2006, the “Unifi,
Inc. Supplemental Key Employee Retirement Plan” to consist of the terms and provisions set forth in
Article I through Article VII, inclusive, as follows:

ARTICLE I

NAME AND PURPOSE

     Section 1.1. Name. The Plan shall be known as the “Unifi, Inc. Supplemental Key
Employee Retirement Plan.”

     Section 1.2. Purpose. The purpose of the Plan is to provide select management
employees of the Participating Employers who are designated as Participants in this Plan with
certain benefits in accordance with the provisions of the Plan. The Plan is intended and should be
construed so as to comply with the provisions of Code Section 409A.

ARTICLE II

CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW

     Section 2.1. Construction and Definitions.

     (a) Construction. Article, section and paragraph headings have been inserted for
convenience of reference only and are to be ignored in any construction of the provisions hereof.
If any provision of the Plan shall for any reason be invalid or unenforceable, the remaining
provisions shall nevertheless be valid, enforceable and fully effective.

     (b) Definitions. Whenever used in the Plan, unless the context clearly indicates
otherwise, the following terms shall have the following meanings:

     (1) Account means the aggregate amount to the credit of a Participant
in the Participant’s SERP Account.

     (2) Base Compensation of a Participant means the annual base cash
remuneration payable to the Participant for employment with the Participating
Employers, prior to any reduction in said cash remuneration under Section 125 or

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401(k) of the Code or under any non-qualified plan of deferred compensation
sponsored by a Participating Employer. Compensation shall not include any annual
cash bonuses or cash bonuses paid under any long-term incentive compensation plan
sponsored by a Participating Employer, any expense allowances or reimbursements, any
car allowances, any amounts realized from the grant or exercise of any stock option,
phantom stock, stock appreciation right or similar award or any benefit payments
from any non-qualified plan of deferred compensation sponsored by a Participating
Employer.

     (3) Beneficiary means the person(s) or entity(ies) designated by a
Participant or the provisions of the Plan to receive such benefits as may become
payable to such person(s) or entity(ies) in accordance with the provisions of the
Plan.

     (4) Board of Directors means the Board of Directors of the Company.

     (5) Code means the Internal Revenue Code of 1986, as amended from time
to time, and references thereto shall include the valid Treasury regulations issued
thereunder.

     (6) Committee means the Compensation Committee of the Board of
Directors.

     (7) Company means Unifi, Inc., a New York corporation.

     (8) Disability means a 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 twelve (12) months or (B) is, by
reason of a 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 that twelve (12) months, receiving income replacement benefits for a period
of not less than three (3) months under an accident and health plan sponsored by a
Participating Employer.

     (9) Effective Date means July 26, 2006, the date the Plan is approved
by the Board of Directors.

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     (10) Employee means a common law employee of a Participating Employer.

     (11) Participant means an Employee who has been designated as a Participant in
the Plan as provided in Section 3.2.

     (12) Participating Employers means:

     (A) the Company; and

     (B) those Subsidiary Corporations which adopt the Plan pursuant to the
provisions of Section 6.1 hereof.

     (13) Plan means the Unifi, Inc. Supplemental Key Employee Retirement
Plan, as set forth herein and as amended from time to time.

     (14) Plan Year means the calendar year.

     (15) SERP Account means the bookkeeping account established and maintained on
the books and records of the Plan pursuant to Sections 4.1 for a Participant to
record that portion of the Participant’s benefit accrued under the Plan from and after the
Effective Date and adjustments thereto pursuant to Section 4.2.

     (16) SERP Credit means the amount credited to a Participant’s SERP
Account as of the end of each calendar quarter pursuant to Section 4.1(a).

     (17) SERP Credit Percentage means five and one-half percent (51/2%) for
Participants who are not officers of a Participating Company and eight and one-half
percent (81/2%) for Participants who are officers of a Participating Company. The
Committee shall determine whether a Participant is an officer of a Participating
Company for purposes of the Plan.

     (18) Subsidiary Corporation or Subsidiaries means:

     (A) any corporation at least fifty percent (50%) of whose outstanding
voting capital stock is owned by the Company;

     (B) any corporation at least eighty percent (80%) of whose outstanding
voting capital stock and at least eighty percent (80%) of each class of
whose outstanding non-voting capital stock is owned by a corporation at
least fifty percent (50%) of whose outstanding voting capital stock is owned
by the Company; or

     (C) any corporation at least eighty percent (80%) of whose outstanding
voting capital stock and at least eighty percent (80%) of each class of
whose outstanding non-voting capital stock is owned by a corporation
described in subparagraph (B) above.

4

 

     (19) Valuation Period means each day on which the United States
financial markets are open for the normal transaction of business or such other
period as established from time to time by the Committee for the purpose of
adjusting SERP Account balances pursuant to Section 4.2(b).

     Section 2.2. Applicable Law. The Plan shall be construed, administered, regulated and
governed in all respects under and by the laws of the United States to the extent applicable, and
to the extent such laws are not applicable, by the laws of the State of North Carolina.

ARTICLE III

PARTICIPATION

     Section 3.1. General. No person shall become a Participant unless or until such
person is or becomes an Employee. In addition, in no event shall any Employee be eligible to
participate in the Plan prior to the Effective Date.

     Section 3.2. Eligibility. The Committee, in its sole and exclusive discretion, shall
determine which Employees shall become Participants. Designation of Employees as Participants
shall be made in such manner as the Committee shall determine from time to time. The Committee
may in its discretion determine that an Employee designated as a Participant is no longer a
Participant or such Employee may terminate his or her employment with the Participating Employers,
and in either such event, such Participant shall cease active participation in the Plan. No
further SERP Credits shall be made to a Participant’s SERP Account from and after the date the
Participant ceases active participation in the Plan. However, such Participant’s SERP Account
shall continue to be adjusted in accordance with Section 4.2(b) until the Participant
separates from employment with the Participating Employers.

ARTICLE IV

BENEFITS

     Section 4.1. SERP Accounts.

     (a) General. A SERP Account shall be established and maintained on the books and records
of the Plan in the name of each Participant in accordance with the provisions of this Section
4.1.

     (b) Initial SERP Account Balance. The SERP Account established for a Participant
shall be credited with an initial balance equal to zero; provided that, the Committee, in
its sole

5

 

discretion, may credit a Participant’s SERP Account with an initial balance greater than
zero as of the date the individual becomes a Participant in the Plan or may credit a Participant’s
SERP Account with an additional amount at any time thereafter.

     Section 4.2. SERP Account Credits and Adjustments.

     (a) SERP Credits. As soon as administratively practicable following the Effective
Date, the SERP Account of each Participant on the Effective Date shall be credited with a SERP
Credit equal to three times the product of the Participant’s Base Compensation for the 2005
calendar year multiplied by the Participant’s SERP Credit Percentage. As of the end of each
calendar year from and after the Effective Date, including the calendar year that contains the
Effective Date, the SERP Account of each Participant shall be credited with a SERP Credit equal to
the product of the Participant’s Base Compensation for the calendar year then ended multiplied by
the Participant’s SERP Credit Percentage.

     (b) Account Adjustments. Each Participant’s SERP Account shall be adjusted for each
Valuation Period as if such SERP Account had been invested in the stocks that make up the Standard
& Poor’s 500 Index in the same proportions as their weighting within such index.

     Section 4.3. Benefits Upon Separation from Service. In the event a Participant
terminates employment with the Participating Employers for any reason other than death or
Disability, such Participant shall be entitled to receive the Participant’s Account in a single
lump sum payable as soon as administratively practicable after the date that is six months after
the Participant’s termination of employment. A Participant’s Account shall continue to be adjusted
as provided in Section 4.2(b) for the period from the Participant’s termination date until the
payment date but no additional SERP Credits shall be made to a Participant’s Account after a
Participant’s termination from employment with the Participating Employers.

     Section 4.4. Benefits Upon Disability. In the event a Participant terminates
employment with the Participating Employers due to Disability, such Participant shall be entitled
to receive the Participant’s Account in a single lump sum payable as soon as administratively
practicable after the Participant’s termination of employment due to Disability.

     Section 4.5. Benefits Upon Death of Participant.

     (a) Death Benefit. In the event a Participant dies prior to receiving payment of the
Participant’s Account, such Participant’s Beneficiary shall be entitled to receive the
Participant’s

6

 

Account in a single lump sum payable as soon as administratively practicable after
the Participant’s death.

     (b) Designation or Change of Beneficiary by a Participant. Each Participant may from
time to time designate the person(s) or entity(ies) to whom any death benefits are to be paid under
the Plan. A Participant may from time to time change such designation and upon any such change,
any previously designated Beneficiary’s right to receive any benefits under the Plan shall
terminate. In order to be effective, any designation or change of designation of a Beneficiary
must be made on a form furnished by the Company and signed by the Participant and received by the
Company while the Participant is alive. If a Beneficiary of a deceased Participant shall survive
the deceased Participant but die prior to the receipt of all benefits payable to said Beneficiary
under the Plan, then such benefits as would have been payable to said deceased Beneficiary shall be
paid to such Beneficiary’s estate at the same time and in the same manner as such benefits would
have been payable to said deceased Beneficiary.

     (c) Beneficiary Designated by the Plan. In the event a Participant shall die without
having designated a Beneficiary, or in the event that a Participant shall die having revoked an
earlier Beneficiary designation without having effectively designated another Beneficiary, or in
the event that a Participant shall die but the Beneficiary designated by such Participant shall
fail to survive such Participant, then and in any such event, the deceased Participant’s estate
shall be the Participant’s Beneficiary.

ARTICLE V

AMENDMENT AND TERMINATION

     Section 5.1. Amendment of Plan. Subject to the provisions of Section 5.4, the
Participating Employers expressly reserve the right, at any time and from time to time, to amend in
whole or in part any of the terms and provisions of the Plan for whatever reason(s) the
Participating Employers may deem appropriate.

     Section 5.2. Termination of Plan. Subject to the provisions of Section 5.4,
the Participating Employers expressly reserve the right, at any time and for whatever reason they
may deem appropriate, to terminate the Plan.

     Section 5.3. Effective Date and Procedure for Amendment or Termination. Subject to
the provisions of Section 5.4, any amendment to the Plan or termination of the Plan may be

7

 

retroactive to the extent not prohibited by applicable law. Any amendment to the Plan or
termination of the Plan shall be made by the Participating Employers by a resolution of the
Committee and shall not require the approval or consent of any Participant or Beneficiary in order
to be effective.

     Section 5.4. Effect of Amendment or Termination on Certain Benefits. No amendment or
termination of the Plan may reduce or eliminate the benefits (if any) payable under the Plan
(without regard to such amendment or termination) to:

     (a) any Participant who commenced receiving benefits under the Plan prior to
the amendment or termination date and is alive on the amendment or termination date
and the Beneficiary of such Participant; or

     (b) any Beneficiary who commenced receiving benefits under the Plan prior to
the amendment and termination date.

In addition, no amendment or termination of the Plan shall reduce the amount of any Participant’s
benefits under the Plan below the amount of such benefits determined immediately prior to such
amendment or termination as if the Participant had then separated from service and was to receive
such benefits in a single cash payment of the entire amount of such benefits.

ARTICLE VI

MISCELLANEOUS

     Section 6.1. Adoption by a Subsidiary Corporation. A Subsidiary Corporation may, with
the approval of the Committee and the board of directors of such Subsidiary Corporation, elect to
adopt the Plan as of the date mutually agreeable to the Committee and the board of directors of
such Subsidiary Corporation. Any such adoption of the Plan by a Subsidiary Corporation shall be
evidenced by an appropriate instrument of adoption executed by such Subsidiary Corporation.

     Section 6.2. Authorization and Delegation to the Committee. Each Subsidiary
Corporation which is or hereafter becomes a Participating Employer authorizes and empowers the
Committee (i) to amend or terminate the Plan without further action by said Subsidiary Corporation
as provided in Article V and (ii) to perform such other acts and do such other things as
the Committee is expressly directed, authorized or permitted to perform or do as provided herein.

     Section 6.3. Spendthrift Clause. To the extent permitted by law, no benefits payable
under the Plan shall be subject to the claim of any creditor of any Participant or to any legal
process

8

 

by any creditor of any Participant and no Participant entitled to benefits hereunder shall
have any right whatsoever to alienate, commute, anticipate or assign any benefits under the Plan.

     Section 6.4. Benefits Payable From General Assets of the Participating Employers. All
benefits payable hereunder shall be paid from the general assets of the Participating Employers.
No assets of the Participating Employers shall be segregated or placed in trust pursuant to the
Plan in a manner which would put such asset beyond the reach of the general creditors of any of the
Participating Employers, and the rights of any Participant (or Beneficiary) to receive any benefits
hereunder shall be no greater than the right of any general, unsecured creditor of the
Participating Employers. Nothing contained in the Plan shall create or be construed as creating a
trust of any kind or any other fiduciary relationship between the Participating Employers and a
Participant. In the event the Participating Employers purchase any insurance policies insuring the
life of any Participant hereunder, no Participant shall have any rights whatsoever therein and the
Participating Employers shall be the sole owner and beneficiary thereof and shall possess and
exercise all incidents of ownership therein. The Company may establish a trust for the purpose of
accumulating assets which may be used by the Company to satisfy some or all of its obligations to
provide benefits to Participants under this Plan; provided that the assets of such trust shall
remain the exclusive property of the Company and shall be available to pay creditor claims of the
Company in the event of bankruptcy. Any such trust shall be administered in accordance with the
terms of a separate trust agreement between the Company and a trustee.

     Section 6.5. Tax Withholding. The Participating Employers shall withhold from any
payment of Plan benefits to a Participant (or Beneficiary, if applicable) any federal, state or
local income taxes required by law to be withheld from such payment and shall remit such taxes to
the proper taxing authority(ies). The Participating Employers may elect to reduce a Participant’s
SERP Account or the amount of a SERP Credit to be credited to a Participant’s SERP Account as
necessary to pay any FICA taxes required by law to be paid due to a SERP Credit being made to such
Participant’s SERP Account prior to payment of the Account to the Participant.

     Section 6.6. Allocation of Benefits Among the Participating Employers. The benefits
payable under the Plan to a particular Participant (or Beneficiary, if applicable) shall be
allocated among the Participating Employers in such proportion as shall reasonably reflect the
proportion of

9

 

such Participant’s benefits under the Plan that are attributable to such
Participant’s employment by, and compensation from, the respective Participating Employers (or
their predecessors in interest).

     Section 6.7. Benefits Limited to the Plan. Participation in the Plan shall not give a
Participant any right to be retained in the employ of any one or more of the Participating
Employers nor, upon dismissal, any right or interest in the Plan except as expressly provided
herein.

ARTICLE VII

CLAIMS PROCEDURE

     Section 7.1. Claims Procedure.

     (a) General. In the event that any person (a “Claimant”) makes a claim for benefits
under the Plan (a “Claim”), such Claim shall be made by the Claimant’s filing a notice thereof with
the Committee, within ninety (90) days after such Claimant first has knowledge of such Claim. Each
Claimant who has submitted a Claim to the Committee shall be afforded a reasonable opportunity to
state such Claimant’s position and to present evidence and other material relevant to the Claim to
the Committee for its consideration in rendering its decision with respect thereto. The Committee
shall render its decision in writing within sixty (60) days after the Claim is referred to it, and
a copy of such written decision shall be furnished to the Claimant.

     (b) Notice of Decision of Committee. Each Claimant whose Claim has been denied by the
Committee shall be provided written notice thereof, which notice shall set forth:

     (1) the specific reason(s) for the denial;

     (2) specific reference to pertinent provision(s) of the Plan upon which such
denial is based;

     (3) a description of any additional material or information necessary for the
Claimant to perfect such Claim and an explanation of why such material or
information is necessary; and

     (4) an explanation of the procedure hereunder for review of such Claim;

all in a manner calculated to be understood by such Claimant.

     (c) Review of Decision of Committee. Each such Claimant shall be afforded a
reasonable opportunity for a full and fair review of the decision of the Committee denying the
Claim. Such review shall be by the Committee. Such appeal shall be made within ninety (90) days

10

 

after the Claimant received the written decision of the Committee and shall be made by the written
request of the Claimant or such Claimant’s duly authorized representative to the Committee. In the
event of appeal, the Claimant or such Claimant’s duly authorized representative may review
pertinent documents and submit issues and comments in writing to the Committee. The Committee
shall review the following:

     (1) the initial proceedings of the Committee with respect to such Claim;

     (2) such issues and comments as were submitted in writing by the Claimant or
the Claimant’s duly authorized representative; and

     (3) such other material and information as the Committee, in its sole
discretion, deems advisable for a full and fair review of the decision of the
Committee.

The Committee may approve, disapprove or modify the decision of the Committee, in whole or in part,
or may take such other action with respect to such appeal as it deems appropriate. The decision of
the Committee with respect to such appeal shall be made promptly, and in no event later than sixty
(60) days after receipt of such appeal, unless special circumstances require an extension of such
time within which to render such decision, in which event such decision shall be rendered as soon
as possible and in no event later than one hundred twenty (120) days following receipt of such
appeal. The decision of the Committee shall be in writing and in a manner calculated to be
understood by the Claimant and shall include specific reasons for such decision and set forth
specific references to the pertinent provisions of the Plan upon which such decision is based. The
Claimant shall be furnished a copy of the written decision of the Committee. Such decision shall
be final and conclusive upon all persons interested therein, except to the extent otherwise
provided by applicable law. Not in limitation of the foregoing, the Committee shall have the
discretion to decide any factual or interpretative issues in its determination of Claims, and the
Committee’s exercise of such discretion shall be conclusive and binding as long as it is not
arbitrary or capricious.

     Section 7.2. Agent for Service of Process. The Company shall be the agent for
service of legal process upon this Plan, and its address for such purpose shall be the address of
its principal place of business in Greensboro, North Carolina.

11

 

     IN WITNESS WHEREOF, the undersigned authorized officer of the Company has executed this
instrument on behalf of the Participating Employers as of the 26th day of July, 2006.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	UNIFI, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ CHARLES F. MCCOY	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Name: CHARLES F. MCCOY	 	 
	 
	 	 	 	 	 	 
	 	 	Title: VICE PRESIDENT	 	 

12Ex-10.5

 

UNIFI, INC.’S

STOCK OPTION GRANTS

UNDER THE 1999 UNIFI, INC. LONG TERM INCENTIVE PLAN

     THIS
OPTION GRANT (“Agreement”) effective the
                     day of                     , by and between
UNIFI, INC., a New York corporation, (hereinafter called the
“Corporation”), and                     , a key employee
(hereinafter called the “Optionee”) of the Corporation.

WITNESSETH:

     WHEREAS, the Board of Directors of Unifi, Inc. adopted, effective July 1, 1999, subject to the
approval of the shareholders of the Corporation, the 1999 Unifi, Inc. Long Term Incentive Plan
(“Plan”) which was approved by the shareholders of the Corporation at their Annual Meeting held on
October 21, 1999; and

     WHEREAS, the Plan is incorporated into and forms a part of this Agreement and the Optionee has
been selected by the Compensation Committee of the Board of Directors (“Committee”), consisting of
three directors who satisfy the requirements of an outside director, as set forth in the Plan, to
receive a stock option (“Option”) under the Plan;

     NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, and for other
good and valuable consideration, it is agreed by and between the parties as follows:

     Section 1. Grant of Option. The Corporation granted effective                      (“Date of
Grant”) to Optionee the right, privilege, and option to purchase
                     shares of Unifi,
Inc. Common Stock, $.10 par value (“Option Shares”) in the manner and subject to the conditions
hereinafter set forth. The Option is intended to constitute an incentive stock option as that term
is used in Code §422. If, as a result of the Option granted hereunder, the aggregate fair market
value (“FMV”) (determined as of the time the Option is granted) of the stock, with respect to which
the incentive stock options are exercisable for the first time by the Optionee during
any calendar year under this and all other incentive stock option plans (as defined by §422 of
the Code, as amended) of the Corporation, would exceed $100,000.00 any excess amount will be
treated as non-qualified stock options.

     Section 2. Exercise Price. The exercise price for the Option granted under Section 1
of this Agreement shall be                      per share, the FMV of said stock on the Date of Grant, as defined
in Section 12 of this Agreement.

     Section 3. Time of Exercise. The Option Shares granted under Section 1 of this
Agreement shall vest and become exercisable according to the following schedule:

 

 

	 	 	 
	As of the Following Anniversary
of the Date of this Agreement:

	 	The Option Shall Become Exercisable with
Respect to the Following Percentage of the Option Shares:

[Insert Information]

     There shall be no fractional shares vested under this vesting schedule. If the vesting
schedule would entitle the participant to an option in a fractional share, such option shall be
rounded up to the next whole number. 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 12 (D), occurs before such anniversary. 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 exercisable with respect to all of the Option
Shares as follows:

	 	(A)	 	The Option shall become fully vested and exercisable upon the date of the
Optionee’s Date of Termination by reason of the Optionee’s death, disability or
retirement with the approval of the Committee.
	 
	 	(B)	 	The Option shall become fully vested and exercisable upon the date of a Change
of Control, if the Change in Control occurs prior to an exercise date determined in
accordance with the vesting schedule set forth above, and the Optionee’s Date of
Termination does not occur before the Change in Control.

     Section 4. Method of Exercise. This Option shall be exercised by written
notice directed to Mr. William M. Lowe, Jr., Vice President, Chief Operating Officer and Chief
Financial Officer of the Corporation, or Charles F. McCoy, Vice President, Secretary & General
Counsel of the Corporation or other Officer as hereafter designated by the Committee (“Designated
Officer”) at the Corporation’s principal office in Greensboro, North Carolina, or at such other
office as the Corporation may designate. Such notice shall (a) set forth the number of full shares
which are being exercised, (b) be signed by the person exercising the Option, (c) be accompanied by
a certified or other check acceptable to the Corporation made payable to the order of the
Corporation for the full purchase price of such shares or by a certificate or certificates of
Unifi, Inc. common stock acceptable to the Designated Officer, the fair market value of which on
the New York Stock Exchange at the close of business on the date said notice is received by the
Corporation, shall equal or exceed the Option price, said certificate or certificates being duly
endorsed, and (d) be accompanied by a signed investment representation letter as provided in
Section 9 hereof. 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. The certificate or certificates for the shares issued upon the exercise of

2

 

an Option or
part thereof and any shares delivered to the Corporation under subparagraph (c) of
this Section 4, 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. All shares issued as provided
herein, will be fully paid and non-assessable.

     Section 5. Withholding. Optionee, upon the exercise of an Option granted to him under
this Agreement, shall pay to the Corporation in cash the amount of any tax or other amount required
by any governmental authority to be withheld and paid over by the Corporation to such authority for
the account of such Optionee. 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 an Option, by electing to deliver to the
Corporation shares owned by the Optionee at the time of the exercise or surrender, or to have the
Corporation withhold shares from the shares to which the Optionee is entitled. The number of
shares to be delivered or withheld shall have a fair market value as of the date the amount of tax
to be withheld is determined, those being withheld being as nearly equal to (but not exceeding) the
amount of such obligation being satisfied as possible.

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

	 	(A)	 	The expiration of three months from the Optionee’s date of termination with the
Corporation, except if such termination be by reason of death or permanent and total
disability, or cause;
	 
	 	(B)	 	In the event of the death of the Optionee, the Administrator of the deceased
Optionee’s estate, the Executor under his Last Will and Testament, or the person or
persons to whom the stock option shall have been validly transferred by such Executor
or Administrator pursuant to the Last Will and Testament or the Intestacy Succession
Laws shall have the right within twelve (12) months of the date of the Optionee’s
death, but not beyond the                      expiration date of the Option, to exercise such
Option to the extent exercisable by the Optionee at the date of his death;
	 
	 	(C)	 	In the event of the termination of the Optionee’s employment due to retirement
with the consent of the Board of Directors, or permanent and total disability, the
Optionee shall have the right within twelve (12) months from his date of termination,
but not beyond                     , the expiration date of such Option, to exercise such
Option to the extent exercisable on such date of termination;
	 
	 	(D)	 	In the event the Optionee’s employment with the Corporation is terminated for
cause, the Optionee’s date of termination.
	 
	 	(E)	 	                    , being the expiration of ten years from the grant of this Option.

3

 

     Section 7. Reclassification, Consolidation, or Merger. If and to the extent that the
number of issued shares of common stock of the Corporation shall be increased or reduced by
change in par value, split, reclassification, distribution of a dividend payable in stock, or the
like, the number of shares subject to Option and the Option Price per share shall be
proportionately adjusted.

     If the Corporation is reorganized or consolidated or merged with another corporation, Optionee
shall be entitled to receive Options covering shares of such reorganized, consolidated, or merged
company in the same proportion, at an equivalent price, and subject to the same conditions. For
purposes of the preceding sentence, the excess of the aggregate fair market value of the shares
subject to the Option immediately after the reorganization, consolidation, or merger over the
aggregate Option Price of such shares shall not be more than the excess of the aggregate fair
market value of all shares subject to the Option immediately before such reorganization,
consolidation, or merger over the aggregate Option Price of such shares, and the new Option or
assumption of the old Option shall not give Optionee additional benefits which he did not have
under the old Option, or deprive him of benefits which he had under the old option.

     Section 8. Restrictive Legend. At the sole and absolute discretion of the Designated
Officer, the certificates issued under this Option, upon exercise thereof by the Optionee, may
carry such restrictive legend as the Designated Officer shall determine to be appropriate.

     Section 9. Purchase For Investment. By accepting this Option, the Optionee
agrees that any shares of common stock purchased upon the exercise of this Option shall be
acquired for investment and not for distribution, and that each notice of exercise of any
portion of this Option shall be accompanied by the following representation in writing
signed by him or such other person as may be exercising this Option under the provisions of
Section 6 hereof:

I hereby warrant and represent that the shares being acquired by me pursuant
hereto are being acquired by me with my own funds for investment for my own
account and not with a view to offer for sale, or for sale in connection
with, the distribution or transfer thereof. I further warrant and represent
that I am not participating in or have a direct or indirect participation in
the distribution or transfer of such shares, nor am I participating in or
have a participation in the direct or indirect underwriting of any such
distribution or transfer of the shares.

     Section 10. Listing of Shares. The Optionee acknowledges and represents that
Optionee has been advised by the Corporation that the shares issued under this Option may be
restricted shares (not registered under the Securities and Exchange Act of 1933, as amended), and
the Optionee covenants, agrees, warrants and represents that prior to any proposed sale, pledge,
hypothecation, gift or transfer, for value or otherwise, of any or all of the shares or any
interest therein (Transfer), the Optionee shall:

4

 

	 	(A)	 	give written notice to the Corporation expressing his or her
desire to affect a Transfer and describe in detail such proposed
Transfer;
	 
	 	(B)	 	furnish the Corporation with written opinion of counsel
reasonably acceptable to the Designated Offer that the proposed
Transfer may be effected without registration under the Federal
Securities Act of 1933 as then in force or any similar statute then
in force (“the ‘33 Act”) and applicable State Security laws;
	 
	 	(C)	 	deliver to the Corporation such other information in
relation to the proposed Transfer as the Corporation may request.

The Corporation thereafter, if, in the opinion of its general counsel, such proposed
transfer can be made without registration under the ‘33 Act and applicable State law,
shall notify its transfer agent to reissue said stock in accordance with the requested
transfer without a restrictive legend.

     If, in the opinion of the Corporation’s general counsel, the transfer cannot be made
without registration under the Act and/or applicable State securities law, the Corporation
shall promptly notify Optionee in writing, and the transfer shall not be made unless such
registration is then in effect.

     Section 11. Rights Prior to Exercise of the Option. This Option is
non-transferable by the Optionee, except in the event of his death, as provided in Section
6 above, and during his or her lifetime is exercisable only by the Optionee. 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 12. Definitions. For purposes of this Agreement, the terms listed
below shall be defined as follows:

	 	(A)	 	Fair Market Value. The Fair Market Value (“FMV”) of Unifi,
Inc. Common Stock on                      is                      per share, being the average
of the high and low prices of such stock on the New York Stock Exchange on
that date.
	 
	 	(B)	 	Cause. The term “Cause” means, except as provided in an individual
agreement or by the Committee, a vote of the Board resolving that the Optionee should
be dismissed as a result of (i) any material breach by the Optionee of any agreement
to which the Optionee and the Corporation are parties, (ii) any act (other than
Retirement) or omission to act by the

5

 

	 	 	 	Optionee which may have a material and adverse
effect on the business of the Corporation or any related company or on the Optionee’s
ability to perform services for the Corporation or any related company, including,
without limitation, the commission of any crime (other than ordinary
traffic violations), or (iii) any material misconduct or neglect of duties by the
Optionee in connection with the business or affairs of the Corporation or any
related company.
	 
	 	(C)	 	Change in Control. In the event of a change in control of the
Corporation while the Optionee is still an employee of the Corporation, prior to
                    , any non-vested increments of the option, as provided in Section 3
hereof, shall immediately vest and be exercisable. For purposes of this Agreement, a
change in control of the Corporation shall be deemed to have occurred if:(i) there
shall be consummated (x) any consolidation or merger of the Corporation in which the
Corporation is not the continuing or surviving corporation or pursuant to which shares
of the Corporation’s Common Stock would be converted into cash, securities or other
property, other than a merger of the Corporation in which the holders of the
Corporation’s Common Stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the merger,
or (y) any sale, lease, exchange or other transfer other than to a subsidiary (in one
transaction or a series of related transactions) of all, or substantially all, of the
assets of the Corporation; or (ii) the Shareholders of the Corporation approved any
plan or proposal for the liquidation or dissolution of the Corporation; 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 Corporation’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 Corporation’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.
	 
	 	(D)	 	Date of Termination. The Optionee’s “Date of Termination” shall be the
first day occurring on or after                      on which the Optionee’s employment with
the Corporation 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 Corporation 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

6

 

	 	 	 	Corporation 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 Corporation),
the occurrence of such transaction shall be treated as the Optionee’s Date of
Termination caused
by the Optionee being discharged by the employer.
	 
	 	(E)	 	Disability. Except as otherwise provided by the Committee, the
Optionee shall be considered to have a “Disability” during the period in which the
Optionee is unable, by reason of a medically determinable physical or mental
impairment, to engage in any substantial gainful activity, which condition, in the
opinion of a physician selected by the Committee, is expected to have a duration of
not less than 120 days.
	 
	 	(F)	 	Retirement. “Retirement” of the Optionee shall mean the occurrence
of the Optionee’s Date of Termination after age 57 with the approval of the Committee.
	 
	 	(G)	 	Plan Definitions. Except where the context clearly implies or
indicates the contrary, a word, term, or phrase used in the Plan is similarly used in
this Agreement.

     Section 13. SEC Rules and Regulations. The Option granted to the Optionee, by the
Board of Directors under this Agreement, is intended to meet the eligibility requirements of the
Securities and Exchange Commission’s (“SEC”) proposed new Rule 16b-3 issued October 1995, entitled
“Transactions Between an Issuer and its Directors or Officers”. Dependent upon future actions of
the SEC, the Option may not be exempt under Rule 16b-3 and, therefore, may be subject to
Rule 16b, the so-called “Short Swing Profit Rule”, which provides for the disgorgement of any
profits realized by the Optionee, as an insider, from the purchase and sale (or sale and purchase)
of any of the Corporation’s common stock within a six month period. The Corporation recommends
that the Optionee consult with counsel prior to exercising an Option.

     Section 14. Heirs and Successors. This Agreement shall be binding upon, and
inure to the benefit of, the Corporation 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 Corporation’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 Committee in such form and at such time as the Committee shall require. If a
deceased Optionee fails 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

7

 

representative or representatives of the estate of the last to die of the Optionee and
the beneficiary.

     Section 15. Amendments. The Board of Directors of the Corporation, or the Committee,
may at any time, prior to the termination date, amend this Agreement provided that no amendment
may, in the absence of written consent of change by the
Optionee, adversely affect the rights of the Optionee under any Option granted prior to the
date such amendment is adopted.

     Section 16. Administration. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Committee, and the Committee shall have all
powers with respect to this Agreement as 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.

     IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed by its
Officers, and the Optionee has hereunto set his hand and seal.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	UNIFI, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	BY:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Optionee	 	 
	 
	 	 	 	 	 	 
	 	 	                                                                 (Seal)	 	 

8

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