Document:

Ex-10.2

 

CHANGE OF CONTROL AGREEMENT

     THIS CHANGE OF CONTROL AGREEMENT (“Agreement”) between UNIFI, INC., a New York
Corporation (the “Company”), and William L. Jasper (“Executive”) effective the 25th day of July,
2006 (the “Effective Date”).

WITNESSETH:

     WHEREAS, The Executive is the Vice President of Sales of the Company and is considered as an
integral part of the Company’s management; and

     WHEREAS, the Company’s Board of Directors (hereinafter sometimes referred to as the “Board”)
considers the establishment and maintenance of a sound and vital management to be essential in
protecting and enhancing the best interests of the Company and its Shareholders, recognizes that
the possibility of a Change in Control exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its Shareholders; and

     WHEREAS, the Executive desires that in the event of any Change in Control he will continue to
have the responsibility and status he has earned; and

     WHEREAS, the Board has determined that it is appropriate to reinforce and encourage the
continued attention and dedication of the Executive, as a member of the Company’s management, to
his assigned duties without distraction in potentially disturbing circumstances arising from the
possibility of a Change in Control of the Company.

     NOW, THEREFORE, in order to induce the Executive to remain in the employment of the Company
and in consideration of the Executive agreeing to remain in the employment of the Company, subject
to the terms and conditions set out below, the Company agrees it will pay such amount, as provided
in Section 4 of this Agreement, to the Executive, if the Executive’s employment with the Company
terminates under one of the circumstances described herein following a Change in Control of the
Company, as herein defined.

     Section 1. Term: This Agreement shall terminate, except to the extent that any
obligation of the Company hereunder remains unpaid as of such time, upon the earliest of (i)
November 1, 2008 if a Change in Control of the Company has not occurred within such period; (ii)
the termination of the Executive’s employment with the Company based on Death, Disability (as
defined in Section 3(b)), Retirement (as defined in Section 3(c)), Cause (as defined in Section
3(d)) or by the Executive other than for Good Reason (as defined in Section 3(e)); and (iii) two
years from the date of a Change in Control of the Company if the Executive has not voluntarily
terminated his employment for Good Reason as of such time.

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     Section 2. Change in Control: No compensation shall be payable under this Agreement
unless and until (a) there shall have been a Change in Control of the Company, while the Executive
is still an employee of the Company and (b) the Executive’s employment by the Company thereafter
shall have been terminated in accordance with Section 3. For purposes of this Agreement, a Change
in Control of the Company shall be deemed to have occurred if:(i) there shall be consummated (x)
any consolidation or merger of the Company in which the Company is not the continuing or surviving
legal entity or pursuant to which shares of the Company’s Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which the holders of the
Company’s Common Stock immediately prior to the merger have the same proportionate ownership of
Common Stock of the surviving company immediately after the merger, or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or (ii) the shareholders of the Company approved
any plan or proposal for the liquidation or dissolution of the Company; or (iii) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), shall become the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of twenty percent (20%) or more of the Company’s outstanding Common Stock; or
(iv) during any period of two consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors shall cease for any reason to constitute a majority
thereof unless the election, or the nomination for election by the Company’s Shareholders, of each
new Director was approved by a vote of at least two-thirds of the Directors then still in office
who were Directors at the beginning of the period.

     Section 3. Termination Following Change in Control: (a) If a Change in Control of
the Company shall have occurred while the Executive is still an employee of the Company, the
Executive shall be entitled to the compensation provided in Section 4 upon the subsequent
termination of the Executive’s employment with the Company by the Executive voluntarily for Good
Reason or by the Company unless such termination by the Company is as a result of (i) the
Executive’s Death, (ii) the Executive’s Disability (as defined in Section (3)(b) below); (iii) the
Executive’s Retirement (as defined in Section 3(c) below); (iv) the Executive’s termination by the
Company for Cause(as defined in Section 3(d) below); or (v) the Executive’s decision to terminate
employment other than for Good Reason (as defined in Section 3(e) below).

     (b) Disability: If, as a result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been absent from his duties with the Company on a
full-time basis for one hundred twenty (120) consecutive days or a period of one hundred eighty
(180) days within twelve (12) consecutive months (including days before and after the change of
control) and within 30 days after written notice of termination is thereafter given by the Company
the Executive shall not have returned to the full-time performance of the Executive’s duties, the
Company may terminate this Agreement for “Disability.”

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     (c) Retirement: The term “Retirement” as used in this Agreement shall mean
termination in accordance with the Company’s retirement policy or any arrangement established with
the consent of the Executive.

     (d) Cause: The Company may terminate the Executive’s employment for Cause.
For purposes of this Agreement only, the Company shall have “Cause” to terminate the Executive’s
employment hereunder only on the basis of fraud, misappropriation or embezzlement on the part of
the Executive or malfeasance or misfeasance by said Executive in performing the duties of his
office, as determined by the Board. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until there shall have been a meeting of the
Board (after at least ten (10) days written notice to the Executive and an opportunity for the
Executive to be heard before the Board), and the delivery to the Executive of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire membership of said
Board of Directors stating that in the good faith opinion of the Board the Executive was guilty of
conduct set forth in the second sentence of this Section 3(d) and specifying the particulars
thereof in detail.

     (e) Good Reason: The Executive may terminate the Executive’s employment for Good
Reason at any time during the term of this Agreement. For purposes of this Agreement “Good Reason”
shall mean any of the following (without the Executive’s express written consent):

     (i) the assignment to the Executive by the Company of duties inconsistent with the
Executive’s position, duties, responsibilities and status with the Company immediately prior
to a Change in Control of the Company; or a change in the Executive’s titles or offices as in
effect immediately prior to a Change in Control of the Company; or any removal of the
Executive from or any failure to reelect the Executive to any of the positions held prior to
the Change of Control, except in connection with the termination of his employment for
Disability, Retirement, or Cause, or as a result of the Executive’s Death; or by the
Executive other than for Good Reason;

     (ii) a reduction by the Company in the Executive’s base salary as in effect on the
date hereof or as the same may be increased from time to time during the term of this
Agreement or the Company’s failure to increase (within 12 months of the Executive’s last
increase in base salary) the Executive’s base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the average percentage
increase in base salary for all executive officers of the Company effected in the preceding
12 months;

     (iii) any failure by the Company to continue in effect any benefit plan or
arrangement (including, without limitation, the Company’s 401(k) Plan, group life insurance
plan and medical, dental, accident and disability plans) in which the Executive is
participating at the time of a Change in Control of the Company (or any

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other plans providing the Executive with substantially similar benefits)
(hereinafter referred to as “Benefit Plans”), or the taking of any action by the Company
which would adversely affect the Executive’s participation in or materially reduce the
Executive’s benefits under any such Benefit Plan or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of a Change in Control of the Company;

     (iv) any failure by the Company to continue in effect any plan or arrangement to
receive securities of the Company (including, without limitation, Stock Option Plans or any
other plan or arrangement to receive and exercise stock options, restricted stock or grants
thereof) in which the Executive is participating at the time of a Change in Control of the
Company (or plans or arrangements providing him with substantially similar benefits)
(hereinafter referred to as “Securities Plans”) and the taking of any action by the Company
which would adversely affect the Executive’s participation in or materially reduce the
Executive’s benefits under any such Securities Plan;

     (v) any failure by the Company to continue in effect any bonus plan, automobile
allowance plan, or other incentive payment plan in which the Executive is participating at
the time of a Change in Control of the Company, or said Executive had participated in during
the previous calendar year;

     (vi) a relocation of the Company’s principal executive offices to a location outside of
North Carolina, or the Executive’s relocation to any place other than the location at which
the Executive performed the Executive’s duties prior to a Change in Control of the Company,
except for required travel by the Executive on the Company’s business to an extent
substantially consistent with the Executive’s business travel obligations at the time of a
Change in Control of the Company;

     (vii) any failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled at the time of a Change in Control of the
Company;

     (viii) any breach by the Company of any provision of this Agreement;

     (ix) any failure by the Company to obtain the assumption of this Agreement by
any successor or assign of the Company; or

     (x) any purported termination of the Executive’s employment which is not made pursuant
to a Notice of Termination satisfying the requirements of Section 3(f).

     (f) Notice of Termination: Any termination by the Company pursuant to Section 3(b),
3(c) or 3(d) shall be communicated by a Notice of Termination. For purposes of this Agreement, a
“Notice of Termination” shall mean a written notice which shall
indicate those specific termination provisions in this Agreement relied upon and which sets
forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
of

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the Executive’s employment under the provision so indicated. For purposes of this Agreement, no
such purported termination by the Company shall be effective without such Notice of Termination.

     (g) Date of Termination: “Date of Termination” shall mean (a) if
Executive’s employment is terminated by the Company for Disability, 30 days after
Notice of Termination is given to the Executive (provided that the Executive shall not
have returned to the performance of the Executive’s duties on a full-time basis during
such 30 day period) or (b) if the Executive’s employment is terminated by the Company
for any other reason, the date on which a Notice of Termination is given; provided
that if within 30 days after any Notice of Termination is given to the Executive by
the Company the Executive notifies the Company that a dispute exists concerning the
termination, the Date of Termination shall be the date the dispute is finally
determined, whether by mutual agreement by the parties or otherwise or (c) the date
the Executive notifies the Company in writing that he is terminating his employment
and setting forth the Good Reason (as defined in Section 3(e)).

     Section 4. Severance Compensation upon Termination of Employment. If the Company
shall terminate the Executive’s employment other than pursuant to Section 3(b), 3(c) or 3(d) or if
the Executive shall voluntarily terminate his employment for Good Reason, then the Company shall
pay to the Executive as severance pay an amount equal to 2.99 times the annualized aggregate annual
compensation paid to the Executive by the Company or any of its subsidiaries during the five (5)
calendar years (or the period of the Executive’s employment with the Company if the Executive has
been employed with the Company for less than five calendar years) preceding the Change in Control
of the Company in twenty-four equal monthly installments beginning on the regular payroll date for
salaried employees of the Company in the month of the Executive’s Date of Termination; provided,
however, that if the severance payment under this Section 4, either alone or together with other
payments which the Executive has the right to receive from the Company, would constitute a
“parachute payment” (as defined in Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”)), such severance payment shall be reduced to the largest amount as will result in no
portion of the severance payment under this Section 4 being subject to the excise tax imposed by
Section 4999 of the Code. The determination of any reduction in the lump sum severance payment
under this Section 4 pursuant to the foregoing proviso shall be made by the Company’s Independent
Certified Public Accountants, and their decision shall be conclusive and binding on the Company and
the Executive.

     Section 5. No Obligation to Mitigate Damages; No Effect on Other Contractual Rights:
(a) The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another employer after the Date
of Termination, or otherwise.

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     (b) The provisions of this Agreement, and any payment provided for hereunder, shall not
reduce any amounts otherwise payable, or in any way diminish the Executive’s rights under any
employment agreement or other contract, plan or employment arrangement with the Company.

     (c) The Company shall, upon the termination of the Executive’s employment other than by
Death, Disability (as defined in Section 3(b)), Retirement (as defined in Section 3(c)) or Cause
(as defined in Section 3(d)), or the termination of the Executive’s employment by the Executive
without Good Reason, maintain in full force and effect, for the Executive’s continued benefit until
the earlier of (a) two years after the Date of Termination or (b) Executive’s commencement of full
time employment with a new employer, all life insurance, medical, health and accident, and
disability plans, programs or arrangements in which he was entitled to participate immediately
prior to the Date of Termination, provided that his continued participation is possible under the
general terms and provisions of such plans and programs. In the event the Executive is ineligible
under the terms of such plans or programs to continue to be so covered, the Company shall provide
substantially equivalent coverage through other sources.

     (d) The Executive’s account and rights in and under any retirement benefit or incentive
plans, shall remain subject to the terms and conditions of the respective plans as they existed at
the time of the termination of the Executive’s employment.

     Section 6. Successor to the Company: (a) The Company will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement expressly, absolutely
and unconditionally to assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such succession or assignment
had taken place. Any failure of the Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of this Agreement and shall entitle
the Executive to terminate the Executive’s employment for Good Reason. As used in this Agreement,
“Company” shall mean the Company as hereinbefore defined and any successor or assign to its
business and/or assets as aforesaid which executes and delivers the agreement provided for in this
Section 6 or which otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. If at any time during the term of this Agreement the Executive is employed by
any corporation a majority of the voting securities of which is then owned by the Company,
“Company” as used in Sections 3, 4 and 10 hereof shall in addition include such employer. In such
event, the Company agrees that it shall pay or shall cause such employer to pay any amounts owed to
the Executive pursuant to Section 4 hereof.

     (b) If the Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive’s legatee, or other designee or, if there be no

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such designee, to the
Executive’s estate. This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives or attorney-in-fact, executors or administrators, heirs,
distributees and legatees.

     Section 7. Notice: For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be deemed to have been
duly given when delivered or mailed by United States registered mail, return receipt requested,
postage prepaid, as follows:

If to the Company:

Unifi, Inc.

P. O. Box 19109

Greensboro, NC 27419-9109

ATTENTION: General Counsel

          (currently Charles F. McCoy)

If to the Executive:

Mr. William L. Jasper

404-B Fisher Park Circle

Greensboro, NC 27401

or such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

     Section 8. Miscellaneous: (a) The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other provision of
this Agreement, which shall remain in full force and effect.

     (b) Any payment or delivery required under this Agreement
shall be subject to all requirements of the law with regard to withholding (including FICA tax),
filing, making of reports and the like, and Company shall use its best efforts to satisfy promptly
all such requirements.

     (c) Prior to the Change in Control of the Company, as herein defined, this Agreement shall
terminate if Executive shall resign, retire, become permanently and totally disabled, or die. This
Agreement shall also terminate if Executive’s employment as an executive officer of the Company
shall have been terminated for any reason by the Board as constituted more than three (3) months
prior to any Change in Control of the Company, as defined in Section 2 of this Agreement.

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     Section 9. Legal Fees and Expenses: The Company shall pay all legal fees and
expenses which the Executive may incur as a result of the Company’s contesting the validity,
enforceability or the executive’s interpretation of, or determinations under, this Agreement.

Section 10. Disclosure of Confidential Information. Executive agrees that:

	 	(A)	 	During the term of this Agreement and for a period of five (5) years after his
Date of Termination, he will not disclose or make available to any person or other
entity any trade secrets, Confidential Information, or “know-how” relating to the
Company’s, its affiliates’ and subsidiaries’, businesses without written authority
from the Board, unless he is compelled to disclose it by judicial process.
	 
	 	 	 	Confidential Information - shall mean all information about the Company, its
affiliates or subsidiaries, or relating to any of their products, services or any
phase of their operations, not generally known to their Competitors or which is not
public information, which Executive knows or acquired knowledge of during the term
of his employment with the Company.
	 
	 	(B)	 	Documents — under no circumstances shall Executive remove from the Company’
offices any of the Company’s books, records, documents, files, computer discs or
information, reports, presentations, customer lists, or any copies of such documents
for use outside of his employment with the Company, except as specifically authorized
in writing by the Board.

Section 11. Non-Compete. Executive agrees that during the period of employment and
for a period of two (2) years after his Date of Termination he will not, directly or
indirectly:

	 	(A)	 	Seek employment or consulting arrangements with or offer advice,
suggestions, or input to any Competitor of the Company; or
	 
	 	(B)	 	Own any interest in, other than ownership of less than two percent (2%) of any
class of stock of a publicly held corporation, manage, operate, control, be employed
by, render advisory services to, act as a consultant to, participate in, assess or
be connected with any Competitor of the Company, unless approved by the Board; or

(C) Solicit, induce, or attempt to induce any past or current customer of the
Company (a) to cease doing business in whole or in part with or through the Company;
or (b) to do business with any other person, firm, partnership, corporation, or
other entity which sales products or performs services materially similar to or
competitive with those provided by the Company; or

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(D) Initiate, encourage or solicit for employment any person who is now employed or
during the term of this Agreement becomes employed by the Company (or whose
activities or services are dedicated to the Company).

Competitor - shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, business trust, association, trust or other
enterprise (whether or not incorporated) engaged in the business of developing,
producing, manufacturing, selling and/or distributing a product or providing
services similar to any product produced or service provided by the Company, its
affiliates or subsidiaries.

     Section 12. Remedy for violation of Sections 10 and 11. The Executive
acknowledges that the Company has no adequate remedy at law and will be irreparably harmed if the
Executive breaches or threatens to breach the provisions of Sections 10 or 11 of this Agreement,
and therefore, agrees that the Company shall be entitled to injunctive relief to prevent any breach
or threatened breach of such Sections and that the Company shall be entitled to specific
performance of the terms of such Sections in addition to any other legal or equitable remedy it may
have. Nothing in this Agreement shall be construed as prohibiting the Company from pursuing any
other remedies at law or in equity that it may have or any other rights that it may have under any
other agreement.

     13. Arbitration. Any dispute or controversy between the Company and the
Executive, whether arising out of or relating to this Agreement, the breach of this
Agreement, or otherwise, shall be settled by arbitration administered by the American
Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules then in effect,
and judgment on the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Any arbitration shall be held before a single arbitrator who shall be
selected by the mutual agreement of the Company and the Executive, unless the parties are unable to
agree to an arbitrator, in which case, the arbitrator will be selected under the procedures of the
AAA. The arbitrator shall have the authority to award any remedy or relief that a court of
competent jurisdiction could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this arbitration provision,
apply to any court having jurisdiction over such dispute relief until the arbitration award is
rendered or the controversy is otherwise resolved. Except as necessary in court proceedings to
enforce this arbitration provision or an award rendered hereunder, or to obtain interim relief,
neither a party nor an arbitrator may disclose the existence, content or results of any arbitration
hereunder without the prior written consent of the Company and the Executive. The Company and the
Executive acknowledge that this Agreement evidences a transaction involving interstate commerce.
Notwithstanding any choice of law provision included in this Agreement, the United States Federal
Arbitration Act shall govern the interpretation and enforcement of this arbitration provision. The
arbitration proceeding shall be conducted in Greensboro, North Carolina or such other location to
which the parties may agree. The Company shall pay the costs of any arbitrator appointed
hereunder.

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     IN WITNESS WHEREOF, Unifi, Inc. has caused this Agreement to be signed by an officer of the
Company and a member of the Company’s Compensation Committee pursuant to resolutions duly adopted
by the Board of Directors and its seal affixed hereto and the Executive has hereunto affixed his
hand and seal effective as of the date first above written.

	 	 	 	 	 	 	 
	 	 	UNIFI, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ CHARLES F. MCCOY
 

Charles F. McCoy
	 	 
	 

	 	 	 	Vice President, Secretary &	 	 
	 

	 	 	 	     General Counsel	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ WILLIAM J. ARMFIELD, IV
 

William J. Armfield, IV
	 	 
	 

	 	 	 	Chairman of the Compensation Committee	 	 
	 

	 	 	 	of the Board of Directors	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ WILLIAM L. JASPER	(Seal)	 
	 	 	 	 	 
	 	 	William L. Jasper	 	 
	 

	 	 	 	 	 	 

10Ex-10.3

 

EMPLOYMENT AGREEMENT

BY AND BETWEEN

WILLIAM M. LOWE, JR.

AND

UNIFI, INC.

Effective July 25, 2006

 

 

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is effective July 25, 2006 (the “Effective Date”) by
and between UNIFI, INC., a New York Corporation (the “Company”), and WILLIAM M. LOWE, JR. (the
“Executive”);

WITNESSETH:

     WHEREAS, Executive is presently serving as Vice President, Chief Financial Officer and Chief
Operating Officer of the Company and is an integral part of the Company’s management; and

     WHEREAS, Executive, through his knowledge and experience in business and with the Company is
exceptionally well qualified, fitted and equipped to continue to serve the Company as its Vice
President, Chief Financial Officer and Chief Operating Officer; and

     WHEREAS, the Company deems it to be in its best interest to retain the unique experience,
ability and leadership of the Executive as its Vice President, Chief Financial Officer and Chief
Operating Officer in accordance with the terms of this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the
Company and the Executive hereby agree as follows:

     1. EMPLOYMENT. The Company hereby agrees to continue to employ the Executive, and the
Executive agrees to continue to serve the Company, in the capacities described herein during the
Period of Employment (as defined in Section 2 of this Agreement), in accordance with the terms and
conditions of this Agreement.

     2. PERIOD OF EMPLOYMENT. The term “Period of Employment” shall mean the period which commences
on the Effective Date and, unless earlier terminated pursuant to Section 6, ends on July 31, 2009;
provided, however, that the Period of Employment shall automatically be extended on a day by day
basis so that the remaining term of the Period of Employment shall always be three (3) years until
such date as either the Company or the Executive shall have terminated such automatic extension
provision by giving written notice to the other.

     3. DUTIES DURING THE PERIOD OF EMPLOYMENT.

          3.1 DUTIES. During the Period of Employment, the Executive shall be employed as the Vice
President, Chief Financial Officer and Chief Operating Officer of the Company. The Executive shall
report to the Company’s Chief Executive Offer (the “CEO”) and shall perform such duties as the
Executive shall reasonably be directed to perform by the CEO.

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          3.2 SCOPE. During the Period of Employment, the Executive shall devote substantially all of
his business time and attention to the business and affairs of the Company. It shall not be a
violation of this Agreement for the Executive to (I) serve on corporate, civic or charitable boards
or committees, (ii) deliver lectures, fulfill speaking engagements or teach occasional courses or
seminars at educational institutions, or (iii) manage personal investments, so long as such
activities under clauses (I), (ii) and (iii) do not interfere, in any substantial respect, with the
Executive’s responsibilities hereunder.

     4. COMPENSATION AND OTHER PAYMENTS.

          4.1 SALARY. During the Period of Employment, the Company shall pay the Executive an annualized
base salary of not less than five hundred fifty thousand dollars ($550,000.00) per year (the “Base
Salary”). The Executive’s Base Salary shall be paid in accordance with the Company’s payroll
policy. The Compensation Committee of the Board (“Committee”) shall review the Base Salary on an
annual basis during the Period of Employment. Based upon such reviews, the Committee may increase,
but shall not decrease, the Base Salary. Any increase in Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement.

          4.2 OTHER COMPENSATION. The Committee may at its discretion award the Executive other
additional compensation and bonuses during the Period of Employment.

     5. OTHER EXECUTIVE BENEFITS.

          5.1 REGULAR REIMBURSED BUSINESS EXPENSES. The Company shall promptly reimburse the Executive
for all expenses and disbursements reasonably incurred by the Executive in the performance of his
duties hereunder during the Period of Employment.

          5.2 BENEFIT PLANS. The Executive and his eligible family members shall be entitled to
participate on terms no less favorable to the Executive than the terms offered to other senior
executives of the Company in any group and/or executive life, hospitalization or disability
insurance plan, health program, vacation policy, 401(k) plan and similar benefit plans (qualified,
non-qualified and supplemental) or other fringe benefits (it being understood that items such as
stock options are not fringe benefits) of the Company (collectively referred to as the “Benefits).
Anything contained herein to the contrary notwithstanding, the Benefits described herein shall not
duplicate benefits made available to the Executive pursuant to any other provision of this
Agreement.

     6. TERMINATION.

          6.1 DEATH OR DISABILITY. This Agreement and the Period of Employment shall terminate
automatically upon the Executive’s death. If the Company

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determines in good faith that the Disability of the Executive has occurred (pursuant to the
definition of “Disability” set forth below), it may give to the Executive written notice of its
intention to terminate the Executive’s employment. In such event, the Executive’s employment with
the Company shall terminate effective on the thirtieth (30th) day after receipt by the
Executive of such notice given at any time after a period of one hundred twenty (120) consecutive
days of Disability or a period of one hundred eighty (180) days of Disability within any twelve
(12) consecutive months, and, in either case, while such Disability is continuing (“Disability
Effective Date”); provided that, within the thirty (30) days after such receipt, the Executive
shall not have returned to full-time performance of the Executive’s duties. For purposes of this
Agreement, “Disability” means the Executive’s inability to substantially perform his duties
hereunder, with reasonable accommodation as reasonably determined by the CEO or the Board. Until
the Disability Effective Date, the Executive shall be entitled to all compensation provided for
under Section 4 hereof. It is understood that nothing in this Section 6.1 shall serve to limit the
Company’s obligations under Section 7.2 hereof.

          6.2 BY THE COMPANY FOR CAUSE. During the Period of Employment, the Company may terminate the
Executive’s employment immediately for “Cause.” For purposes of this Agreement, “Cause” shall mean
that (i) the Executive has been convicted of a felony involving theft or moral turpitude, or (ii)
engaged in conduct that constitutes willful gross neglect or willful gross misconduct with respect
to employment duties which results in material economic harm to the Company; provided, however,
that for the purposes of determining whether conduct constitutes willful gross misconduct, no act
on Executive’s part shall be considered “willful” unless it is done by the Executive in bad faith
and without reasonable belief that the Executive’s action was in the best interests of the Company.
Notwithstanding the foregoing, the Company may not terminate the Executive’s employment for Cause
unless (i) a determination that Cause exists is made and approved by a majority of the Company’s
Board of Directors, (ii) the Executive is given at least ten (10) days written notice of the Board
meeting called to make such determination, and (iii) the Executive is given the opportunity to
address such meeting.

          6.3 BY EXECUTIVE FOR GOOD REASON. During the Period of Employment, the Executive’s employment
hereunder may be terminated by the Executive for Good Reason upon fifteen (15) business days’
written notice. For purposes of this Agreement, “Good Reason” shall mean, without the Executive’s
consent:

               6.3.1. Assignment to the Executive of any duties inconsistent in any material respect with the
Executive’s position (including status, offices, titles and reporting relationships), authority,
duties or responsibilities as contemplated by Section 3 of this Agreement, or any other action by
the Company which results in a significant diminution in such position, authority, duties or
responsibilities, excluding any isolated and inadvertent action not taken in bad faith and which is
remedied by the Company within ten business (10) days after receipt of notice thereof given by the
Executive;

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               6.3.2. Any failure by the Company to comply with any of the provisions of Section 4 or 5 of
this Agreement other than an isolated and inadvertent failure not committed in bad faith and which
is remedied by the Company within ten business (10) days after receipt of notice thereof given by
the Executive;

               6.3.3. Delivery by the Company of a notice discontinuing the automatic extension provision of
Section 2 of this Agreement; or

               6.3.4. Any purported termination by the Company of the Executive’s employment otherwise than
as expressly permitted by this Agreement.

          6.4 OTHER THAN FOR CAUSE OR GOOD REASON. The Executive or the Company may terminate this
Agreement for any reason other than for Good Reason or Cause, respectively, upon the Executive
providing the Company with ninety (90) days written notice and upon the Company providing the
Executive thirty (30) days written notice. If the Executive terminates the Agreement for any
reason, he shall have no liability to the Company or its subsidiaries or affiliates as a result
thereof. If the Company terminates the Agreement, or if the Agreement terminates because of the
death of the Executive, the obligations of the Company shall be as set forth in Section 7 hereof.

          6.5 NOTICE OF TERMINATION. A Notice of Termination shall communicate any termination by the
Company or by the Executive to the other party hereto given in accordance with Section 13.b. of
this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice
which (I) indicates the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail, if necessary, the facts and circumstances claimed to provide a basis
for termination of the Executive’s employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such notice, specifies
the termination date. The failure by the Executive or Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of the basis for termination
shall not waive any right of such party hereunder or preclude such party from asserting such fact
or circumstance in enforcing his or its rights hereunder.

          6.6 DATE OF TERMINATION. “Date of Termination” means the date specified in the Notice of
Termination; provided, however, that if the Executive’s employment is terminated by reason of death
or Disability, the Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.

     7. OBLIGATIONS OF THE COMPANY UPON TERMINATION. The following provisions describe the
obligations of the Company to the Executive under this Agreement upon termination of his
employment. However, except as explicitly provided in this Agreement, nothing in this Agreement
shall limit or otherwise adversely affect any rights which the Executive may have under applicable
law, under any other agreement

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with the Company, or under any compensation or benefit plan, program, policy or practice of
the Company.

          7.1 TERMINATION BY THE COMPANY FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON. In the event this
Agreement terminates by reason of the termination of the Executive’s Employment by the Company for
Cause or by reason of the resignation of the Executive other than for Good Reason, the Company
shall pay to the Executive all Accrued Obligations (as defined below) in a lump sum in cash within
thirty (30) days after the Date of Termination. “Accrued Obligations” shall mean, as of the Date
of Termination, the sum of (A) the Executive’s Base Salary through the Date of Termination to the
extent not theretofore paid, (B) the amount of any bonus, incentive compensation, and other cash
compensation accrued by the Executive as of the Date of Termination to the extent not theretofore
paid and (C) any vacation pay, expense reimbursements and other cash entitlements accrued by the
Executive as of the Date of Termination to the extent not theretofore paid.

          7.2 RESIGNATION WITH GOOD REASON; TERMINATION WITHOUT CASE; DISABILITY. If (I) the Company
shall terminate the Executive’s employment other than for Cause, (ii) the Executive shall terminate
his employment at any time for Good Reason or (iii) the Executive’s employment shall terminate due
to Disability, the Executive shall receive in addition to the Accrued Obligations, the following:

               7.2.1 For the remainder of the Period of Employment (determined without regard to the
termination thereof pursuant to Section 6) or for three (3) years (which ever is longer), the
Company shall continue to pay the Executive the Base Salary in accordance with Section 4.1 of this
Agreement as if the Executive’s employment had not been terminated.

               7.2.2 Immediate full vesting in (i.e. full exercisability for) any stock options previously
granted to the Executive by the Company and not yet vested as of the Date of Termination;

               7.2.3 Continued exercisability, through the end of their respective full original terms, for
all vested options, whether previously vested or vesting under this subsection 7.2;

               7.2.4 Immediate full vesting in all other otherwise unvested shares of restricted stock of the
Company or other equity-based awards (if any) previously awarded to the Executive, with immediate
termination of all restrictions on such awards;

               7.2.5 Receipt of any other compensation and Benefits accrued or earned and vested (if
applicable) by the Executive as of the Date of Termination (but not duplicative of the Accrued
Obligations);

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               7.2.6 For the remainder of the Period of Employment (determined without regard to the
termination thereof pursuant to Section 6) or for three (3) years (which ever is longer), the
Company shall continue health, prescription drug, dental, disability and life insurance benefits to
the Executive and/or the Executive’s eligible family members at least equal to those which would
have been provided to them in accordance with Section 5.2 of this Agreement if the Executive’s
employment had not been terminated.

          7.3 COBRA RIGHTS. It is understood that the Executive’s rights under this Section 7 are in
lieu of all other rights which the Executive may otherwise have had upon termination of employment
under this Agreement; provided, however, that no provision of this Agreement is intended to
adversely affect the Executive’s rights under the Consolidate Omnibus Budget Reconciliation Act of
1985.

     8. DISCLOSURE OF CONFIDENTIAL INFORMATION. Executive agrees that:

(A) During the term of this Agreement and for a period of five (5) years after his
Date of Termination, he will not disclose or make available to any person or other
entity any trade secrets, Confidential Information, or “know-how” relating to the
Company’s, its affiliates’ and subsidiaries’, businesses without written authority
from the Board, unless he is compelled to disclose it by judicial process.

     Confidential Information - shall mean all information about the Company, its
affiliates or subsidiaries, or relating to any of their products, services or any
phase of their operations, not generally known to their Competitors or which is not
public information, which Executive knows or acquired knowledge of during the term
of his employment with the Company.

(B) Documents — under no circumstances shall Executive remove from the Company’
offices any of the Company’s books, records, documents, files, computer discs or
information, reports, presentations, customer lists, or any copies of such documents
for use outside of his employment with the Company, except as specifically
authorized in writing by the Board.

9. NON-COMPETE. Executive agrees that during the Period of Employment and after his Date of
Termination for as long as he is receiving the Base Salary payments provided for in Section
7 of this Agreement that he will not, directly or indirectly:

(A) Seek employment or consulting arrangements with or offer advice,
suggestions, or input to any Competitor of the Company; or

6

 

(B) Own any interest in, other than ownership of less than two percent (2%) of any
class of stock of a publicly held corporation, manage, operate, control, be employed
by, render advisory services to, act as a consultant to, participate in, assess or
be connected with any Competitor of the Company, unless approved by the Board; or

(C) Solicit, induce, or attempt to induce any past or current customer of the
Company (a) to cease doing business in whole or in part with or through the Company;
or (b) to do business with any other person, firm, partnership, corporation, or
other entity which sales products or performs services materially similar to or
competitive with those provided by the Company; or

(D) Initiate, encourage or solicit for employment any person who is now employed or
during the term of this Agreement becomes employed by the Company (or whose
activities or services are dedicated to the Company).

     Competitor - shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, business trust, association, trust or other
enterprise (whether or not incorporated) engaged in the business of developing,
producing, manufacturing, selling and/or distributing a product or providing
services similar to any product produced or service provided by the Company, its
affiliates or subsidiaries.

     10. REMEDY FOR VIOLATION OF SECTIONS 8 and 9. The Executive acknowledges that he has been
given adequate consideration and benefits to support the enforcement of the provisions provided for
in Sections 8 and 9 of this Agreement and that the Company has no adequate remedy at law and will
be irreparably harmed if the Executive breaches or threatens to breach the provisions of Sections 8
or 9 of this Agreement, and therefore, agrees that the Company shall be entitled to injunctive
relief to prevent any breach or threatened breach of such Sections and that the Company shall be
entitled to specific performance of the terms of such Sections in addition to any other legal or
equitable remedy it may have. Nothing in this Agreement shall be construed as prohibiting the
Company from pursuing any other remedies at law or in equity that it may have or any other rights
that it may have under any other agreement.

     11. ARBITRATION. Any dispute or controversy between the Company and the Executive, whether
arising out of or relating to this Agreement, the breach of this Agreement, or otherwise, shall be
settled by arbitration administered by the American Arbitration Association (“AAA”) in accordance
with its Commercial Arbitration Rules then in effect, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any arbitration shall be held
before a single arbitrator who shall be selected by the mutual agreement of the Company and the
Executive, unless the parties are unable to agree to an arbitrator, in which case, the arbitrator
will be selected under the procedures of the AAA. The arbitrator shall have the authority to award
any remedy or relief that a court of competent jurisdiction could order or grant, including,
without limitation, the issuance of an injunction. However, either party may,

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without inconsistency with this arbitration provision, apply to any court having jurisdiction
over such dispute relief until the arbitration award is rendered or the controversy is otherwise
resolved. Except as necessary in court proceedings to enforce this arbitration provision or an
award rendered hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without the prior written
consent of the Company and the Executive. The Company and the Executive acknowledge that this
Agreement evidences a transaction involving interstate commerce. Notwithstanding any choice of law
provision included in this Agreement, the United States Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision. The arbitration proceeding shall be
conducted in Greensboro, North Carolina or such other location to which the parties may agree. The
Company shall pay the costs of any arbitrator appointed hereunder.

     12. SUCCESSORS.

          a. This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
heirs and legal representatives.

          b. This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

          c. As used in this Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation
of law, or otherwise.

     13. MISCELLANEOUS.

          a. This Agreement shall be governed by and construed in accordance with the laws of the State
of North Carolina, without reference to principles of conflicts of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.

          b. All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party, by overnight courier, or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:

William M. Lowe, Jr.

7505 Forest Creek Ridge Court

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Summerfield, NC 27358

If to the Company:

Unifi, Inc.

7201 W. Friendly Avenue

Greensboro, NC 27410

Attn: General Counsel (currently Charles F. McCoy)

or to such other address as either of the parties shall have furnished to the other in writing in
accordance herewith. Notice and communications shall be effective when actually received by the
addressee.

          c. None of the provisions of this Agreement shall be deemed to impose a penalty.

          d. The obligations contained in this Agreement (specifically including Sections 8 and 9) shall
survive the termination of this Agreement. Additionally, the Executive acknowledges that the
restrictions and covenants contained in Section 9 are reasonable and necessary to protect the
legitimate business interests of the Company and will not impose an economic hardship on the
Executive. If any provision of this Agreement is held to be in any respect illegal, invalid or
unenforceable under present or future law, such provisions shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provisions
had never comprised a part hereof, and the remaining provisions hereof shall remain in full force
and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, the
same shall be reformed and modified automatically by the Compensation Committee as a part hereof to
be as similar in terms to such illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable.

          e. Any party’s failure to insist upon strict compliance with any provision hereof shall not be
deemed to be a waiver of such provision or any other provision hereof.

          f. This Agreement supersedes any prior employment agreement or understandings, written or oral
between the Company and the Executive and contains the entire understanding of the Company and the
Executive with respect to the subject matter hereof.

          g. This Agreement may be executed simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates written below.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	UNIFI, INC.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ CHARLES F. MCCOY                     
	 	7/26/06	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Charles F. McCoy	 	 	 	 
	 

	 	 	 	Vice President, Secretary & General Counsel	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ WILLIAM J. ARMFIELD, IV	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	William J. Armfield, IV.	 	 	 	 
	 

	 	 	 	Chairman of the Compensation Committee
of the Board of Directors	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	WILLIAM M. LOWE, JR.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ WILLIAM M. LOWE, JR.	 	 	 	 
	 	 	                                                                 (Seal)	 	 	 	 

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