UNIFI INC
MASTER AGREEMENT POY MANUFACTURING ALLIANCE
<DOCUMENT>
<TYPE>EX-10.(O)
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>MASTER AGREEMENT POY MANUFACTURING ALLIANCE
<TEXT>

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                                                                   Exhibit 10(O)

Execution Copy


                                MASTER AGREEMENT

                           POY MANUFACTURING ALLIANCE


                                    Between


                                  Unifi, Inc.

                                      and

                      E. I. du Pont de Nemours and Company



                                  June 1, 2000
<PAGE>

                 MASTER AGREEMENT - POY MANUFACTURING ALLIANCE
                 ---------------------------------------------

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<S>                                                                          <C>
Background.................................................................   1
Article 1:  Definitions....................................................   1
Article 2:  Independent Marketing and Sales................................   7
Article 3:  Supply of Product - Shortfall Of Capacity......................   8
Article 4:  Sharing of Manufacturing Costs.................................   9
Article 5:  Sharing of Revenues............................................  11
Article 6:  Reconciliations................................................  12
Article 7:  Management / Governance........................................  12
Article 8:  Fairness Review................................................  15
Article 9:  Personnel and Plant Operations.................................  15
Article 10: Technology and Trademarks......................................  16
Article 11: Impact of Acquisitions.........................................  18
Article 12: Reporting, Tax and Auditing....................................  18
Article 13: Term; Termination..............................................  19
Article 14: Purchase / Sale Options........................................  21
Article 15: Conduct of Manufacturing Operations Until Termination..........  25
Article 16: Dispute Resolution.............................................  26
</TABLE>

Master Agreement - POY Manufacturing Alliance                                 i
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                 MASTER AGREEMENT - POY MANUFACTURING ALLIANCE
                 ---------------------------------------------

                         TABLE OF CONTENTS  (continued)
                         -----------------

<TABLE>
<S>                                                                          <C>
Article 17: Assignment.....................................................  28
Article 18: Representations and Warranties.................................  28
Article 19: Operation Until Sale...........................................  29
Article 20: Confidentiality................................................  29
Article 21: Compliance.....................................................  30
Article 22: Further Assurances.............................................  30
Article 23: Amendment and Modification.....................................  31
Article 24: Entire Agreement...............................................  31
Article 25: Costs and Expenses.............................................  31
Article 26: Governing Law..................................................  31
Article 27: Counterparts...................................................  31
Article 28: Exhibits, Headings and Captions................................  32
Article 29: Notices........................................................  32
Article 30: Public Announcements...........................................  33
Article 31: Force Majeure..................................................  33
Article 32: Severability...................................................  33
Article 33: Survival.......................................................  33
Article 34: Specific Performance...........................................  33
Article 35: Limitation of Liability; Indemnification.......................  34
Article 36: Miscellaneous..................................................  35
</TABLE>

Master Agreement - POY Manufacturing Alliance                                ii
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                 MASTER AGREEMENT - POY MANUFACTURING ALLIANCE
                 ---------------------------------------------

                                   SCHEDULES
                                   ---------

Schedule 1  - Amoco Formula
Schedule 2  - Asset Transfer Agreement - Agreed Form
Schedule 3  - [reserved]
Schedule 4  - Unifi Base Cash Fixed Costs; Unifi Base Variable Costs
Schedule 5  - DuPont Base Cash Fixed Costs; DuPont Base Variable Costs
Schedule 6  - Definition of Greater Europe
Schedule 7  - Kinston Ground Lease - Agreed Form
Schedule 8  - Kinston Site Services Agreement - Agreed Form
Schedule 9  - POY Technology, Patent and Trademark Agreement - Agreed Form
Schedule 10 - Transition Services Agreement - Agreed Form
Schedule 11 - Treatment of Certain Capital Expenditures
Schedule 12 - Conditions Precedent
Schedule 13 - Material Supply Agreement - TPA - Agreed Form
Schedule 14 - Material Supply Agreement - MEG - Agreed Form

Master Agreement - POY Manufacturing Alliance                               iii
<PAGE>

                 MASTER AGREEMENT - POY MANUFACTURING ALLIANCE
                 ---------------------------------------------

     THIS MASTER AGREEMENT, (hereinafter "Agreement") effective as of June 1,
2000 by and between E. I. du Pont de Nemours and Company, a corporation
organized and existing under the laws of the State of Delaware, USA (hereinafter
"DuPont"); and Unifi, Inc., a corporation organized and existing under the laws
of the State of New York, USA (hereinafter "Unifi).

                                   BACKGROUND

A. DuPont produces, among other products, polyester textile filament products at
   its Cape Fear site near Wilmington, North Carolina, USA. and at its Kinston
   site near Kinston, North Carolina, USA;

B. Unifi produces, among other products, polyester textile filament and textured
   filament products at its Yadkinville site near Yadkinville, North Carolina,
   USA;

C. This Agreement sets forth the mutual agreements of DuPont and Unifi to form
   an alliance to manufacture partially oriented polyester yarn at the Cape Fear
   facility, the Kinston facility and the Yadkinville facility.

  NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the Parties agree as follows:

ARTICLE 1:  DEFINITIONS
-----------------------

"Affiliate" means with respect to any Party any entity of which fifty percent
(50%) or more of the total voting securities or other ownership interest giving
the right to vote in that entity is directly or indirectly owned or controlled
by such Party, or which entity, directly or indirectly owns or controls, or is
under common ownership or control with such Party.  For the purpose of this
definition "control" shall mean the power to direct or cause the direction of
the management and policies of an entity whether through the ownership of voting
securities, by contract or otherwise and "controlled" shall be construed
accordingly.

"Agreed Form" means, in relation to any document, the form of that document
(unless otherwise stated in this Agreement) which has been initialed for the
purpose of identifying such document as an Agreed Form by or on behalf of the
Parties to this Agreement.  Documents which are in Agreed Form contain
substantially all of the substantive provisions relating to the subject matter
of the document and such provisions have been agreed to, in principle, by the
Parties.  Documents in Agreed Form may be modified as a result of (i) agreement
of the Parties, (ii) issues arising during due diligence, or (iii) compliance
with requirements of all applicable law; and the schedules

Master Agreement - POY Manufacturing Alliance                                  1
<PAGE>

and exhibits of such documents must be finalized and agreed to by the Parties by
the Closing Date.

"Americas" means North America, Caribbean countries, Central America and South
America.

"Amoco Formula" means the price formula for contract sales of TPA attached as
part of Schedule 1, or in the event the Amoco Formula is no longer used as the
        --------
industry-wide standard for TPA price, then such other comparable price formula.

"Ancillary Agreements" means the Technology Cross-License Agreement, the
Financial Models Agreement and the Supplemental Alliance Agreement, each of
which are effective on the Effective Date.

"Asset Transfer Agreement" means the contract for the sale and transfer of the
assets of the partially oriented polyester yarn business in Agreed Form between
DuPont and Unifi, attached hereto as Schedule 2.
                                     --------

"Business" means the manufacture, marketing, distribution and sale of the
Products, as more fully described in the Asset Transfer Agreement.

"Business Assets" of a Party means the Unifi Business Assets or the DuPont
Business Assets, as the context may require.

"Business Premises" means, in the case of DuPont, the Kinston Facility, the Cape
Fear Facility and, in the case of Unifi, the Yadkinville Facility.

"Cape Fear Facility" means DuPont's POY manufacturing facility located at the
DuPont Cape Fear site near Wilmington, NC.

"Cash Fixed Manufacturing Costs" means those direct plant period costs listed in
Schedules 4 and 5attached hereto.
---------

"Closing" means the closing for the sale of DuPont's Business and DuPont's
Business Assets from DuPont to Unifi.

"Closing Date" means completion of signing of the Asset Transfer Agreement and
other relevant Implementation Agreements and completion of the relevant
transactions with regard to the sale of the DuPont Business from DuPont to
Unifi.

"DTY" means draw textured yarn.

"DuPont Base Cash Fixed Costs" means the Cash Fixed Manufacturing Costs at the
Kinston Facility and the Cape Fear Facility (based on the annualized cash
manufacturing fixed costs at the Kinston Facility and the Cape Fear Facility
during the first quarter of

Master Agreement - POY Manufacturing Alliance                                  2
<PAGE>

2000) indexed quarterly based on actual changes in local labor costs. A summary
of the DuPont Base Cash Fixed Costs and an example of the method for indexing
such costs are attached hereto as Schedule 5. The Parties acknowledge that the
                                  --------
DuPont Base Cash Fixed Costs have been adjusted to reflect the full impact of
the costs incurred for implementation of the Autopack system and cost savings
that will be derived from the Autopack systems that have been installed at the
Cape Fear Facility and the Kinston Facility.

"DuPont Base Variable Costs" means the average unit Variable Cash Cost by
product to manufacture POY at DuPont's Cape Fear Facility and Kinston Facility
during 1stQ 2000 indexed quarterly to (a) current TPA price (based on the Amoco
Formula), and (b) MEG price (based on DuPont's acquisition cost), times the sum
of the actual Unifi DuPont-Sourced Volume and the actual DuPont Merchant Market
Sales.  For purposes of this Agreement, the revenue derived from the sale of
Fiberstock to third parties shall be treated as a credit against variable cost.
A summary of the DuPont Base Variable Costs by product and an example of the
method for indexing such costs are attached hereto as Schedule 5.
                                                      --------

"DuPont Business" means the Business conducted by DuPont and its Affiliates at
the Kinston Facility.

"DuPont Business Assets" means DuPont's assets related to the Business set forth
in the Agreed Form of Asset Transfer Agreement attached hereto.

"DuPont Merchant Market Sales" means the first 250 million pounds per year (or
any portion thereof as the context requires) of first grade POY which DuPont's
POY Business sells to parties (including internal sales to other DuPont
businesses) other than Unifi, reduced by fifty percent (50%) of the Shortfall of
Capacity.

"DuPont Polyester Technologies" means the global polyester research and
development organization of DuPont currently known by such name.

"Effective Date" means June 1, 2000.

"Extraordinary Costs" means out-of-pocket costs incurred by the Parties in
connection with operating the Facilities and related to: (i) costs to repair
damage to the Facilities arising from fire, flood, hurricane, tornado or other
natural disasters; (ii) non-recurring payments to third parties for liability,
claims (including product defect claims), damages, settlements or judgments
(irrespective of whether caused by negligence, willful misconduct or gross
negligence); (iii) fines or penalties paid to government authorities; (iv) costs
for clean-up, investigation, remediation of any past, present or future
environmental spills, discharges, releases or leaks; and (v) any other costs
decided by the Parties or the Policy Board.

Master Agreement - POY Manufacturing Alliance                                  3
<PAGE>

"Facilities" means the Cape Fear Facility, the Kinston Facility and the
Yadkinville Facility.

"Fiberstock" means POY sold by the Parties as non-first grade POY.

"Financial Models Agreement" means the financial models agreement - POY
manufacturing alliance between the Parties and effective on the Effective Date.

"Greater Europe" has the meaning set forth in Schedule 6.
                                              ----------

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, including any regulations promulgated pursuant thereto.

"Implementation Agreements" means such agreements, leases, assignments, bills of
sale, endorsements, notices, consents, assurances and such other instruments of
conveyance and transfer as counsel for each Party shall reasonably request in
order to vest the DuPont Business in Unifi.  Such instruments shall be in a form
to be agreed by the Parties.

"Inventory" means all finished goods held for sale in the Business of such
Party.

"Kinston Facility" means DuPont's POY manufacturing facility located at the
DuPont Kinston site in Kinston, NC.

"Kinston Ground Lease" means the lease or leases of land at the Kinston Facility
in Agreed Form, attached hereto as Schedule 7.
                                   ----------

"Kinston Site Services Agreement" means the site services agreement at the
Kinston Site between Unifi and DuPont in Agreed Form, attached hereto as
Schedule 8.
----------

"Material" or "Material Adverse Affect" means having a potential economic impact
on the pre-tax earnings of the Business of more than $1 million per annum.

"MEG" means mono-ethylene glycol.

"Ordinary Course of Business" or "Ordinary Course" means the ordinary course of
the Business and consistent with the Party's past practice.

"Parties" shall mean DuPont and Unifi.

"Person" means any individual, partnership (whether general or limited), limited
liability company, corporation, trust, estate, association, nominee or other
entity.

"Policy Board" means the governance board of the Alliance comprising two (2)
senior members of each Party, as more fully set forth in Article 7.2.

Master Agreement - POY Manufacturing Alliance                                  4
<PAGE>

"POY Patent, Technology and Trademark License Agreement" means the POY Patent,
Technology and Trademark License Agreement between DuPont and Unifi in Agreed
Form attached hereto as Schedule 9.
                        --------

"Pre-Closing" means any preparatory execution of the Closing which will be done
by agreement of the Parties before the Closing Date.

"Product" or "POY" means partially oriented polyester yarn, including highly
oriented yarn (HOY), Softec partially oriented yarn and the specialty feed yarn
for the Coolmax family of products.  The term "Products" does not include, by
way of example and not limitation: the polyester filament textile family of
products that are used and sold under the Coolmax trademark or the Thermolite
trademark, 3GT polyester products, polyester textured textile fiber, and
polyester chip for the manufacture of textile fibers, polyester intermediates,
polyester films, polyester staple fiber, polyester or nylon industrial fibers,
polyester engineering polymers, polyester packaging or specialty resins
(including specialty resins manufactured by DuPont).

"Shared Revenue" means the revenue derived from the sale collectively of the
Unifi Other-Sourced Volume (based on the price set forth in Article 4.2(b)) and
any sales to the merchant market in excess of the DuPont Merchant Market Sales
(based on the lowest realized price of the DuPont Merchant Market Sales).

"Shortfall of Capacity" means 630 Million pounds per year minus the actual
amount of the Parties' combined U.S. capacity for POY production (but only after
shutdown of the Cape Fear Facility).

"Supervisory Board" means the governance board comprising two (2) senior members
of each Party, as more fully described in Article 7.1.

"Supplemental Alliance Agreement" means the supplemental alliance agreement
between the Parties and effective on the Effective Date.

"Supply Agreement for POY" means the supply agreement for partially oriented
polyester yarn between DuPont, as supplier, and Unifi, as purchaser.

"Technology Cross-License Agreement" means the technical information and patent
cross-license between Unifi and DuPont.

"TPA" means terephthallic acid and may also include or be referred to from time
to time as TPA or PGTPA.

"Transition Period" means the period from the Effective Date of the Alliance to
DuPont's shut down of the Cape Fear Facility.

Master Agreement - POY Manufacturing Alliance                                  5
<PAGE>

"Transition Services Agreement" means the transition services agreement between
DuPont and Unifi in Agreed Form, attached hereto as Schedule 10.
                                                    -----------

"Uncontrollable Event" means an event or condition beyond the control of any of
the Parties, including, but not limited to an act of God, fire, storm, flood,
earthquake, hurricane, governmental regulation or direction, acts of the public
enemy, war, rebellion, insurrection, riot, invasion, strike or lockout.

"Unifi Business" means the Business conducted by Unifi and its Affiliates at the
Yadkinville Facility.

"Unifi Business Assets" means Unifi's assets related to the Business.

"Unifi Base Cash Fixed Costs" means the Cash Fixed Manufacturing Costs at the
Yadkinville Facility (based on the annualized cash manufacturing fixed costs at
the Yadkinville Facility during the first quarter of 2000) indexed quarterly
based on actual changes in local labor costs. A summary of the Unifi Base Cash
Fixed Costs and an example of the method for indexing such costs are attached
hereto as Schedule 4.
          --------

"Unifi's Base Variable Costs" means the average unit Variable Cash Cost, based
on a representative product mix in the 1/st/ quarter 2000 to manufacture POY at
Unifi's Yadkinville Facility during 1stQ 2000 indexed quarterly to (a) Unifi's
polyester chip price escalator times the actual Unifi Yadkinville Volume.  For
purposes of this Agreement, (a) the revenue derived from the sale of Fiberstock
to third parties shall be treated as a credit against variable cost.  A summary
of the Unifi Base Variable Costs, the representative product mix and an example
of the method for indexing such costs are attached hereto as Schedule 4.
                                                             --------

"Unifi DuPont-Sourced Volume" means the volume and mix of first grade POY
purchased by Unifi from DuPont in 1999 in the approximate amount of 200 million
pounds, or any portion thereof as the context requires.

"Unifi Other-Sourced Volume" means new volume of POY purchased by Unifi from
DuPont to replace amounts which Unifi currently purchases from other producers
or any portion thereof as the context requires.

"Unifi Yadkinville Volume" means the volume (approximately 180MM pounds per year
of POY) and mix of products which Unifi presently manufactures at its
Yadkinville Facility or any portion thereof as the context requires, reduced by
fifty percent (50%) of the Shortfall of Capacity.

"Variable Cash Cost" means the variable costs listed in Schedule 4 and 5attached
                                                        --------
hereto.

"Western Europe" means the European Economic Area.

Master Agreement - POY Manufacturing Alliance                                  6
<PAGE>

"Yadkinville Facility" means Unifi's POY manufacturing facility located at
Unifi's Yadkinville site in Yadkinville, NC.

ARTICLE 2:  INDEPENDENT MARKETING AND SALES
-------------------------------------------

2.1  DuPont's Independent Marketing and Sales.  Subject to the provisions of
     ----------------------------------------
     this Agreement, DuPont shall continue to independently use, market, sell
     and distribute and shall have sole control over all use and sales of DuPont
     Product (including Unifi DuPont-Sourced Volume, Unifi Other-Sourced Volume,
     DuPont Merchant Market Sales and any sales to the merchant market in excess
     thereof, as well as overall sales of Fiberstock to third parties).  The
     Parties shall not integrate any of their marketing, sales and technical
     service functions.

2.2  Unifi's Independent Use of POY.  Unifi shall continue to independently use
     ------------------------------
     the Unifi Yadkinville Volume.   For avoidance of doubt, all profits on
     Unifi's sales of DTY manufactured by Unifi shall be for the account of
     Unifi (except for value added from the sale of upgraded Fiberstock which
     shall be shared as provided in Article 5 herein).

2.3  No Agency.  It is expressly understood and agreed that the Parties are
     ---------
     acting independently and that this Agreement does not constitute either
     Party as an employee, agent or other representative of the other Party for
     any purpose whatsoever.  Neither Party has the right or authority to enter
     into any contract, warranty, guarantee or other undertaking in the name or
     for the account of the other Party, or to assume or create any obligation
     or liability of any kind, express or implied, on behalf of the other Party,
     or to bind the other Party in any manner whatsoever, or to hold itself out
     as having any right, power or authority to create any such obligation or
     liability on behalf of the other or to bind the other Party in any manner
     whatsoever (except as to any actions taken by either Party at the express
     written request and direction of the other Party).

2.4  Integration of Other POY Manufacturing.
     --------------------------------------

     2.4.1  Principle.  During the term of this Agreement, the Parties and their
            ---------
     Affiliates will carry out their activities in the Americas related to the
     manufacture of POY exclusively through the Alliance, subject to the
     following.

     2.4.2  Unifi Acquisitions.  During the term of this Agreement if  Unifi
            ------------------
     desires to:

          (a) acquire or build a facility for the manufacture or sale of POY, or
          (b)  acquire, directly or indirectly, an interest in a business which
          manufactures or sells  POY within the Americas,
          (together referred to as the "Acquired Business")

Master Agreement - POY Manufacturing Alliance                                  7
<PAGE>

     then Unifi shall obtain DuPont's prior written consent, which consent shall
     not be unreasonably withheld, and further provided that such transaction
     shall not adversely impact the value created by the Alliance.  In the event
     that Unifi builds or acquires an Acquired Business, then the Policy Board
     shall determine whether or not the Acquired Business shall be included in
     this Alliance, in which case this Agreement and the Ancillary Agreements
     shall be amended to integrate the Acquired Business.  If the Policy Board
     decides that the Acquired Business shall not be included in this Alliance,
     then Unifi shall operate the Acquired Business so as to not adversely
     impact the value created by the Alliance.

     2.4.3  DuPont Acquisitions.  Unless otherwise agreed by Unifi, during the
            ----------------------
     term of this Agreement DuPont shall not build or acquire, directly or
     indirectly, a controlling interest in a business which is engaged in the
     manufacture or sale of POY in the Americas, unless such manufacture or sale
     of POY is incidental to the main purpose of the business (i.e. constituting
     less than twenty-five percent (25%) of the total revenue of such business).
     If DuPont does acquire a controlling interest in a business with incidental
     manufacturing or sale of POY, the Parties shall confer in order to
     determine whether such business shall (a) be included in this Alliance, in
     which case this Agreement and the Ancillary Agreements shall be amended to
     integrate such incidental business, (b) sold to Unifi (and the Parties
     shall decide whether it shall be included in this Alliance, in which case
     this Agreement and the Ancillary Agreements shall be amended to integrate
     such incidental business), or (c) sold to a third party.


ARTICLE 3:  SUPPLY OF PRODUCT - SHORTFALL OF CAPACITY
-----------------------------------------------------

3.1  Shortfall of Capacity. If for any reason there is a Shortfall of Capacity,
     ---------------------
     then the Parties shall equally reduce the volume of POY that they draw from
     the Facilities.  The Parties intend that the reduced production arising
     from such lost capacity shall be from lower value Products.


ARTICLE 4:  SHARING OF MANUFACTURING COSTS
------------------------------------------

Each Party will pay the cost of operation for its own Facilities.  Each month
during the term of the Alliance, the Parties shall reconcile certain costs of
manufacture, as follows:

4.1  Cash Fixed Manufacturing Costs.
     ------------------------------

     (a)  DuPont Manufacturing Costs.  DuPont will bear the DuPont Base Cash
          --------------------------
          Fixed Costs.

Master Agreement - POY Manufacturing Alliance                                  8
<PAGE>

     (b)  Unifi Manufacturing Costs.  Unifi will bear the Unifi Base Cash Fixed
          -------------------------
          Costs.

     (c)  Calculation of Cash Fixed Manufacturing Costs.  Cash fixed
          ---------------------------------------------
          manufacturing costs shall be calculated as per Schedules 4 and 5 and
          consistently applied, provided, however:
               (i)  at the Kinston Facility and the Yadkinville Facility, the
                    Parties shall not benefit from the addition of new non-POY
                    business operations and shall not be penalized by the
                    departure of non-POY business operations from such
                    Facilities.
               (ii) at the Cape Fear Facility, the Parties shall not benefit
                    from the addition of new non-POY business operations and
                    shall not be penalized by the departure of non-POY business
                    operations; provided, however, that after the shutdown of
                    the Cape Fear Facility (where the dismantlement and
                    rearrangement costs for the POY Facility are shared by the
                    Parties) the Parties shall benefit from the reallocation in
                    non-reducible cash fixed manufacturing costs previously
                    allocated to the POY cash fixed manufacturing costs arising
                    from the addition of new non-POY business operations.

     (d)  Sharing of Cash Fixed Manufacturing Costs.  Any difference between:
          -----------------------------------------
               (i)  the sum of DuPont's actual cash fixed manufacturing costs
                    and Unifi's actual cash fixed manufacturing costs, and
               (ii) the sum of the DuPont Base Cash Fixed Costs and the Unifi
                    Base Cash Fixed Costs
          shall be shared equally by the Parties (subject to the proviso in
               paragraph (c) above).

4.2  Variable Costs.
     --------------

     (a)  DuPont Variable Costs. DuPont will bear the DuPont Base Variable
          ---------------------
          Costs.

     (b)  Unifi Variable Costs. Unifi will bear the Unifi Base Variable Costs.
          --------------------

     (c)  Calculation of Variable Costs. Variable cash costs shall be calculated
          -----------------------------
          as per Schedules 4 and 5 consistently applied.

     (d)  Sharing of Variable Costs. Any difference between:
          -------------------------
          (i)  the sum of DuPont's actual variable cash costs and Unifi's actual
               variable cash costs, and
          (ii) the sum of the DuPont Base Variable Costs and the Unifi Base
               Variable Costs,

Master Agreement - POY Manufacturing Alliance                                  9
<PAGE>

               shall be shared equally by the Parties.

4.3  Sharing of Costs and Expenditures to Optimize Assets.
     ----------------------------------------------------

     4.3.1  Equal Sharing of Certain Cash Costs.  The Parties shall share
            -----------------------------------
            equally all costs and expenditures related to the ongoing
            implementation of this Agreement including but not limited to all
            costs and expenditures necessary to achieve the asset optimization
            plan, including costs and expenditures incurred to reduce the total
            manufacturing costs to both Parties. Such costs and expenditures, by
            way of example, shall include all cash costs for DuPont's shutting
            down or scaling back production at the Cape Fear Facility (including
            employee severance costs and dismantlement and rearrangement of the
            POY Facility), one-time costs for transferring production from one
            Facility to another Facility to achieve manufacturing cost savings,
            capital expenditures at any of the Facilities if the primary purpose
            of such capital expenditures would be to expand production,
            manufacture the Unifi Other-Sourced Volume, enrich the Product mix,
            or reduce manufacturing costs, etc. However, such expenditures shall
            not include capital expenditures for maintenance or creep investment
            even if such expenditures produced ancillary manufacturing cost
            savings. Such maintenance or creep investment is solely for the
            account of the Party owning the Facility in question.

     4.3.2  Treatment of Certain Capital Expenditures.  Capital expenditures
            -----------------------------------------
            (estimated to total $5 - 10 million) for new assets for shared cost
            savings or expansion will be shared equally by both Parties, and the
            Parties will jointly own such assets and share equally in the
            depreciation thereon, but only if such assets are separable from the
            existing equipment of the Parties. If the new equipment is such an
            integral part of one Party's existing equipment that it could not be
            later separated from the existing equipment, then the Party owning
            the existing equipment shall make all of the new capital expenditure
            and the other Party shall compensate the investing Party over time
            in a way that puts both Parties in the same cash flow position as
            though they had made the investment jointly, including compensation
            to the investing Party for lost time value of money, as shown by way
            of example in Schedule 11 attached hereto. Any amounts owing by one
                          --------
            Party to the other with respect to such inseparable expenditures at
            the time of the exercise of the put or call options (described in
            Article 14 below) shall be taken into consideration in determining
            the purchase price for the Business.

4.4  Extraordinary Costs. The Parties agree that Extraordinary Costs shall be
     -------------------
     paid solely by the Party incurring those costs and such Extraordinary Costs
     shall not be considered in connection with determining sharing of costs or
     revenues.

Master Agreement - POY Manufacturing Alliance                                 10
<PAGE>

4.5  Depreciation. Each Party shall bear all depreciation on its own equipment
     -------------
     and assets in operation on the Effective Date and on all maintenance or
     creep investment for which it is solely responsible pursuant to Section
     4.3.1 above. All depreciation on capital expenditures which are to be split
     between the Parties shall be shared equally pursuant to Section 4.3.

4.6  Mix Impact on Variable Cost. To the extent that the mix of Products
     ---------------------------
     comprising the DuPont Merchant Market Sales and the Unifi DuPont-Sourced
     Volume changes materially from the base period (with respect to the DuPont
     Base Variable Costs), the Parties shall equitably adjust the DuPont Base
     Variable Costs arising from such changes.

4.7  Warehousing Costs. After the Transition Period, the Parties shall
     -----------------
     establish a baseline for their respective warehousing costs for Products
     during the first full calendar quarter after such Transition Period.
     Thereafter, any changes in the Parties' total warehousing costs shall be
     equally shared by the Parties.

4.8   Working Capital, Freight, Etc. Consistent with the overall intent of this
      -----------------------------
      Agreement, neither Party shall be advantaged or disadvantaged by changes
      in working capital (inventory, accounts receivable, and accounts payable),
      freight, or other cash or expense items that may change solely as a result
      of the formation or operation of the Alliance. Further, the Parties will
      share equally in changes (increases or decreases) in these items.
      Procedures for sharing such changes will be determined at a later date.

ARTICLE 5:  SHARING OF REVENUES
-------------------------------

5.1  Sharing of Certain Revenues.  The Parties shall share certain revenues
     ---------------------------
     arising from the Businesses, as follows:

     5.1.1  All sales and revenues with respect to the Unifi DuPont-Sourced
            Volume and DuPont Merchant Market Sales shall be solely for the
            account of DuPont.

     5.1.2  The Shared Revenues shall be shared equally by the Parties.

     5.2    Treatment of Fiberstock. The Parties shall explore opportunities to
            -----------------------
     add value to the Fiberstock produced by DuPont.  The value added by the
     Parties from further processing (excluding "Clover" processing) of
     Fiberstock shall be shared equally.

Master Agreement - POY Manufacturing Alliance                                 11
<PAGE>

ARTICLE 6: RECONCILIATIONS
--------------------------

6.1  The Parties will reconcile monthly in arrears on the sharing of costs and
     revenues as set forth herein. Cash imbalances will be settled quarterly on
     a year-to-date basis.  A final settlement of all elements will made
     annually.  For this purpose (a) quarterly is each three (3) months
     beginning June 1, 2000; and (b) annually is the twelve (12) month period
     from June 1 to May 31.  Cash imbalances will be paid as soon as possible,
     but not later than the 25/th/ of the month after the actual month covered
     by the reconciliation. For example, quarterly cash imbalances will be paid
     not later than the 25/th/ of September (for 1/st/ quarter actual), December
     (for 6 months actual), March (9 month actual), and June (for the actual
     contract year).

6.2  Any reconciliation shall specifically exclude access to any information
     regarding the Parties' marketing, sales and distribution of Products.


ARTICLE 7:  MANAGEMENT/GOVERNANCE
---------------------------------

7.1  Supervisory Board - General. A Supervisory Board consisting of two (2)
     ---------------------------
     member chosen by DuPont and two (2) member chosen by Unifi shall be formed.
     The Supervisory Board shall be responsible for the strategic direction of
     the Alliance and resolution of disputes not resolved by the Policy Board.
     Supervisory Board decisions shall be made only by unanimous vote (except
     where expressly agreed otherwise by the Parties in writing).  The members
     of the Supervisory Board shall not receive remuneration for their services.

     The Supervisory Board shall meet upon the request of either Party, with
     written notice to each of the members.  The meeting will be held in such
     locations as the Parties may mutually agree.  Decisions can also be made in
     writing by the Supervisory Board, without a meeting being held, provided
     that both members shall confirm their approval of such decisions in
     writing.  Either Party may invite any employee of the Parties to attend a
     meeting of the Supervisory Board, provided, however, that it notifies the
     other Party of the identity of the guest and the purpose for the
     invitation.

7.2  Policy Board - General.
     ----------------------

     7.2.1  The Parties shall cause the Alliance to function in a coordinated
            manner, under the overall direction of a Policy Board made up as
            provided in this Article 7.

     7.2.2  The Parties and the Policy Board shall to the extent practicable,
            make decisions which maximize the creation of economic value for the
            Parties

Master Agreement - POY Manufacturing Alliance                                 12
<PAGE>

            as a whole, rather than deciding in favor of any one Party over the
            other Party.

7.3  Policy Board Members. On the Effective Date hereof a Policy Board,
     --------------------
     consisting of two (2) members chosen by DuPont and two (2) members chosen
     by Unifi shall be formed. Policy Board decisions shall be made only by
     unanimous vote (except where expressly agreed otherwise by the Parties in
     advance in writing).  The members of the Policy Board shall not receive
     remuneration for their services.

7.4  Policy Board Matters. The Policy Board's responsibility is to resolve
     --------------------
     disputes and insure fairness between the Parties consistent with the intent
     of the Alliance.  The Policy Board will approve all shared costs and
     capital expenditures and the asset optimization plans.  The Policy Board
     shall monitor the progress of such asset optimization plans.  Additionally,
     for personnel who are severed in connection with implementation of the
     asset optimization plans, the Policy Board will proactively seek to find
     employment with the Parties.  The Policy Board shall monitor quarterly the
     placement of personnel who are severed in connection with implementation of
     the asset optimization plans.  The Policy Board shall decide matters which
     (i) are material to the economic value of the Parties, or (ii) would
     materially affect the financial results of the Parties as such financial
     result relates to the Alliance.  Such issues comprise primarily, but are
     not limited to:

       (a) Annual operating and shared capital investment plans;

       (b) Contractual arrangements relating to the Alliance between the Parties
           or their Affiliates entered into after the Effective Date; and

       (c) Acquisitions or dispositions of assets (including permanent shutdown
           of capacity) relating to the Alliance.

     In addition, the Policy Board shall periodically review:

          (a) The operation of the Facilities versus historical operating
              parameters;

          (b) Manufacturing cost performance;

          (c) Future operations plans, forecasts of production and shipments,
              scheduling and delivery concerns; and

          (d) Capital projects (the expenditure of which is to be shared
              pursuant to Section 4.3), including the status of current
              projects, review of upcoming and new projects and allocations of
              capital projects.

Master Agreement - POY Manufacturing Alliance                                 13
<PAGE>

7.5  Meetings. The Policy Board shall meet upon the request of either Party,
     --------
     with written notice to each of the members, but in no event less frequently
     than four (4) times per calendar year.  The meeting will be held in such
     locations as the Parties may mutually agree.  Valid meetings of the Policy
     Board require that at least more than half of the members are present in
     person.  Decisions can also be made in writing by the Policy Board, without
     a meeting being held, provided that all of the members shall confirm their
     approval of such decisions in writing.  Either Party may invite an employee
     of the Parties to attend a meeting of the Policy Board, provided, however,
     that it notifies the other Party of the identity of the guest and the
     purpose for the invitation.

7.6  Management Committees. The Parties shall form the following management
     ---------------------
     teams to support the objectives of the Alliance:

     7.6.1  Asset Optimization. An asset optimization team shall develop the
            ------------------
     overall strategy for optimizing the operation and reducing the cost of the
     Facilities.  The asset optimization team shall include business
     representatives of both Parties.

     7.6.2  Supply Chain Management. The Parties shall cooperatively develop
            -----------------------
     overall production scheduling and a supply chain plan for the Alliance.
     The supply chain team shall include business representatives of both
     Parties and representatives from all Facilities.  DuPont shall have lead
     responsibility for the overall production scheduling and supply chain
     planning of the Alliance.  DuPont, following consultation with Unifi, shall
     resolve all conflicts with respect to production scheduling and supply
     chain planning, taking into account Unifi's requirements for POY.

     7.6.3  Management Process. The Parties or the Policy Board may establish
            -------------------
     other management committee(s) to oversee the Alliance and make
     recommendations to the Policy Board and shall:

       (a) Provide long-term direction to the Alliance in making operational
           decisions and determining policies to ensure manufacturing
           optimization.

       (b) Facilitate performance through setting targets for the manufacturing
           operation and monitoring performance.

       (c) Lead the integration effort to bring both Parties' manufacturing
           operations that relate to the Businesses together by monitoring
           transition/integration progress and resolving conflicts.

       (d) Develop principles for operations planning and scheduling processes
           and coordinate scheduling of Products on production lines with strong
           focus on lowest cost production, highest quality products and
           greatest customer satisfaction.

Master Agreement - POY Manufacturing Alliance                                 14
<PAGE>

       (e) Develop asset plans (e.g., upgrades, best practice transfer
           initiatives, new investments, moves or shutdowns) consistent with the
           purpose of the Alliance.

       (f) Develop critical operating tasks for various elements in the
           manufacturing organization.

  7.7  Further Relationships.  During the term of this Alliance, the members of
       ---------------------
       the Policy Board and the Parties may explore alternate structures for the
       Alliance.


ARTICLE 8:  FAIRNESS REVIEW
---------------------------

     The Policy Board will review continually the fairness of the cost and
benefit sharing, and the Policy Board may consider any changes necessary to
reflect changes in the Product market or the needs of the Parties.


ARTICLE 9:  PERSONNEL AND PLANT OPERATIONS
------------------------------------------

9.1  All personnel of the Businesses shall remain on the rolls of their
     respective employers. DuPont and Unifi, as the case may be, shall have full
     function and management of their respective employees.

9.2  To the extent that the asset optimization plan results in severance of any
     personnel (including the personnel at the Cape Fear Facility), both Parties
     shall use diligent and conscientious efforts in good faith to find
     opportunities for such severed employees.

9.3  The Parties shall be responsible for operation of their respective
     Facilities, and shall do so in accordance with their respective corporate
     policies concerning matters such as health, safety, environmental
     protection and employee relations.

     9.3.1  Recognizing that operating decisions and practices relating to the
            Facilities affect cost, quality, and availability of POY for both
            Parties, the Parties, consistent with their responsibility for
            operation of the Facilities, shall treat the other Party's interests
            with respect thereto equally with their interests. It is the intent
            of both Parties to drive toward continuous improvement in and
            reduction of the cost of manufacture of POY.

9.4  The Parties shall comply with all laws that govern the employment
     relationship with their respective employees, including but not limited to
     laws regarding discrimination in employment, workers' compensation, and
     wage and salary administration.  During the term of this Agreement, the
     Parties shall also fulfill

Master Agreement - POY Manufacturing Alliance                                 15
<PAGE>

     their obligations under collective bargaining agreements, if any,
     applicable to the personnel. The Parties shall independently have the
     ultimate right and responsibility:

     (i)   to direct the hiring terminating and transferring of their personnel;

     (ii)  to direct, control, supervise and evaluate the manner and means of
           the personnel's performance of services; and

     (iii) to determine the amount of compensation and bonus payable to their
           respective personnel.


ARTICLE 10: TECHNOLOGY AND TRADEMARKS
-------------------------------------

10.1  License of Existing Technology. On the Effective Date, Unifi shall grant
      ------------------------------
      DuPont a non-exclusive, non-transferable (with no right to sublicense)
      license with no royalty or other payment for the right to use only at the
      Cape Fear Facility and the Kinston Facility Unifi's patents and technical
      know-how in commercial use only at the Yadkinville Facility as more fully
      described in the Technology Cross-License Agreement. Unifi shall seek to
      obtain approval for the sub-license of "MOD-4" technology (from Zimmer);
      if such approval is not obtained then such technology shall be excluded.
      On the Effective Date, DuPont shall grant Unifi a non-exclusive, non-
      transferable (with no right to sublicense) license with no royalty or
      other payment for the right to use only at the Yadkinville Facility
      DuPont's patents and technical know how in commercial use only at the Cape
      Fear Facility and the Kinston Facility as more fully described in the
      Technology Cross-License Agreement. DuPont's 3GT technology and know-how
      is excluded.

10.2  License of Other Technology. The Parties can license future technical
      ----------------------------
      developments from the other on a royalty basis, in which case to the
      extent that the benefit of such license shall be shared equally by the
      Parties the cost of such royalties shall be shared equally by the Parties.
      To the extent that the Kinston Facility or the Cape Fear Facility obtain
      research or development services from DuPont related to asset
      optimization, cost savings or productivity improvement, the cost for such
      services shall be shared equally by the Parties. To the extent that the
      Yadkinville Facility obtains research or development services from Unifi
      related to asset optimization, cost savings or productivity improvement,
      the cost for such services shall be shared equally by the Parties. Any
      shared license fees or costs for research and development services shall
      be negotiated between the Parties.

10.3  Jointly Developed Process Technology.  The Parties shall jointly own any
      ------------------------------------
      patents, technical knowledge or other intangible rights of any kind or
      nature related to the POY manufacturing processes at the Facilities that
      are developed

Master Agreement - POY Manufacturing Alliance                                 16
<PAGE>

     during the term of the Alliance by the Parties pursuant to a specific joint
     development program approved by the Parties. The Parties shall share the
     costs associated with obtaining and maintaining any patents, trademarks
     and/or copyrights on such jointly developed technology.

10.4 Rights of the Parties.  The Parties acknowledge that, unless otherwise
     ---------------------
     agreed, no Party shall obtain ownership rights or the right to use
     intellectual property rights or technical information of the other Party by
     virtue of its status as a participant in the Alliance.  DuPont and Unifi
     shall license to each other technology in commercial use as of the
     Effective Date at their respective Facilities for the manufacture of
     Products at the Facilities, pursuant to the terms of the Technology Cross-
     License Agreement.

10.5 Product Scale-Up of Newly Developed Products.  Unifi grants to DuPont the
     ---------------------------------------------
     right to conduct scale-up of newly developed Products at the Yadkinville
     Facility.  Such scale-up shall be conducted in essentially the same manner
     as DuPont presently conducts the scale-up of Products at the Kinston
     Facility or the Cape Fear Facility.

     DuPont grants to Unifi the right to conduct scale-up of newly developed
     Products at the Kinston Facility and the Cape Fear Facility.  Such scale-up
     shall be conducted in essentially the same manner as Unifi presently
     conducts the scale-up of Products at the Yadkinville Facility.

     Costs for any such Product scale-up shall be included in the Parties' Cash
     Fixed Manufacturing Costs and the Variable Cash Costs. Such costs are
     currently included in the base period manufacturing costs.

10.6 DACRON(R) Trademark. In order to create and preserve value for the Parties:
     -------------------
     (a) Unifi shall be permitted to continue to sell DTY using the DACRON(R)
     trademark under existing marketing programs approved by DuPont; (b) DuPont
     shall consider any additional or new uses of the DACRON(R) trademark by
     Unifi, which additional or new uses shall be approved in writing in advance
     by DuPont.

10.7 No Other Rights.  Except as expressly provided herein or in the Technology
     ---------------
     Cross-License Agreement, the Parties grant no right or license, either
     express or implied, under any patent or trademark or to any know-how.


ARTICLE 11: IMPACT OF ACQUISITIONS
----------------------------------

11.1 In the event Unifi acquires another DuPont POY customer located in the
Americas, then DuPont shall continue to supply at least the same quantity of POY
(or lower quantities if such customer's demand for POY is reduced due to changes
in market demand) to such acquired company (or directly to Unifi if such
acquired company shall

Master Agreement - POY Manufacturing Alliance                                 17
<PAGE>

be merged into Unifi), and such quantity shall continue to be considered as
DuPont Merchant Market Sales (assuming that such quantity is within the first
250 million pounds base of DuPont Merchant Market Sales); provided, however that
the price for such POY shall be the actual net product price (including freight
if paid by the other supplier and excluding freight if paid by Unifi) to such
POY customer in effect on the date of acquisition by Unifi, adjusted quarterly
for relative changes in Unifi's DTY prices for the corresponding Product
segment/application.

11.2 The term "acquires" as used in Section 11.1 shall be construed broadly and
shall include without limitation, the acquisition of control of another entity
or an entity, directly or indirectly owns or controls, or is under common
ownership or control with Unifi.  For the purpose of this definition "control"
shall mean the power to direct or cause the direction of the management and
policies of an entity whether through the ownership of voting securities, by
contract or otherwise and "controlled" shall be construed accordingly.


ARTICLE 12:  REPORTING, TAX AND AUDITING
----------------------------------------


12.1 Books and Records.  The Parties shall keep full and adequate books and
     -----------------
     accounts and other records to allow proper monthly financial reconciliation
     to be provided to the Parties for the purpose of reconciling the financial
     results in accordance with the terms of this Agreement.  The Parties shall
     cooperate with each other to set up the necessary accounting and financial
     reporting procedures in order to minimize the burden and cost of their
     requirements, while achieving the necessary end result in a satisfactory
     way.  Books and records include books, files, reports, plans, drawings and
     operating records of every kind used in the POY manufacturing operation.
     The Parties shall retain such books and records and the Business Data (as
     defined in Section 12.3) for a period of at least seven (7) years following
     the date of creation of such information.


12.2 Periodic Reports.  The Parties shall furnish the Policy Board with monthly
     ----------------
     written reports of financial results and reconciliations in a form
     acceptable to the Policy Board.  Such reports shall include significant
     actions and events affecting the Alliance including manufacturing costs.
     The Parties shall prepare such additional reports as the Policy Board shall
     require from time to time.

12.3 Auditing.  The Parties will maintain and provide upon request by the other
     --------
     Party such accounting records and information required to meet the
     reporting obligations of each Party in relation to its participation in the
     Alliance.  Each of the Parties at its own expense shall have the right at
     any time to audit (a) the manufacturing costs of the other Party, (b)
     changes in Unifi's DTY prices, (c) Shared Revenues (including the costs and
     benefits mix of such Products), (d) the price of POY previously supplied by
     third parties to Unifi (and now supplied by

Master Agreement - POY Manufacturing Alliance                                 18
<PAGE>

     DuPont as the DuPont Other Sourced Volume), (e) information required to be
     submitted to government authorities, and (f) such other costs as the
     Parties shall mutually agree ("collectively, the "Business Data"). The
     timing of any audit shall be reasonably acceptable to the Parties, and the
     audit shall be conducted in a manner that does not interfere with the
     normal operations of the Parties. The audit shall be conducted by a
     mutually acceptable independent accounting firm. Unless otherwise agreed,
     details of the review and all work papers and related supporting data
     pertaining to the review shall be held in strict confidence by the
     accounting firm and will not be shown, divulged or delivered to the other
     Party or any third party. The Parties agree that, under normal
     circumstances, an audit on a particular activity should not take place more
     often than once a year.

12.4 Internal Controls.  The Parties shall maintain adequate internal controls.
     -----------------


ARTICLE 13:  TERM; TERMINATION
------------------------------

13.1 Effective Date.  This Agreement shall become effective on the Effective
     --------------
     Date and shall continue in full force and effect until terminated in
     accordance with this Article 13.

13.2 Termination.  This Agreement and the Ancillary Agreements may, subject to
     -----------
     the other provisions of this Article 13, be terminated as follows:

     13.2.1  by mutual agreement of the Parties;

     13.2.2  by any Non-Bankrupt or Non-Breaching Party (both as defined below)
             on written notice following entry of final judgment, that is not
             subject to appeal, by a court of competent jurisdiction ordering
             the dissolution of a Party pursuant to applicable law;

     13.2.3  by a Party (a "Non-Bankrupt Party") on written notice after the
             filing of bankruptcy proceedings or insolvency proceedings with
             respect to the other Party (such other Party, the "Bankrupt
             Party"), which proceedings are not dismissed or discharged within
             thirty (30) days of such filing; provided, however, that the Non-
             Bankrupt Party shall have, in addition to the right so to terminate
             this Agreement, all such other rights and remedies to which it is
             entitled at law or in equity;

     13.2.4  by a Party (the "Non-Breaching Party"), where the other Party or
             its Affiliate (the "Breaching Party") has committed a substantial
             breach of any of its obligations under this Agreement or any of the
             Ancillary Agreements and shall have failed to cure such breach
             within sixty (60) days after receipt of written notice thereof from
             the Non-Breaching Party specifying such breach; provided, however,
             that the Non-Breaching Party

Master Agreement - POY Manufacturing Alliance                                 19
<PAGE>

             shall, in addition to the right so to terminate this Agreement,
             have all such other rights and remedies to which it is entitled at
             law or in equity; and

     13.2.5  by a Party where the other Party is unable to perform its
             obligations hereunder due to an Uncontrollable Event for a period
             of more than sixty (60) days beyond the date or period otherwise
             specified for such performance, provided, however, that the
             termination of this Agreement and the Ancillary Agreements shall be
             extended for up to ninety (90) days in the event that the non-
             performing Party is diligently seeking to remedy the non-
             performance.

13.3 Termination of Ancillary Agreements.  If (a) this Agreement is terminated
     -----------------------------------
     under the provisions of this Article 13 or (b) DuPont's Business is sold to
     Unifi pursuant to the provisions of Article 14 or (c) Unifi's Business is
     sold to DuPont pursuant to the provisions of Article 14, then the
     Technology Cross-License Agreement shall terminate.  This Agreement and the
     Ancillary Agreements shall, notwithstanding the service of written notice
     and commencement of termination procedures under this Article 13, continue
     in full force and effect; and the Parties shall continue their performance
     hereunder and thereunder, until the sale of one Party's Business to the
     other pursuant to Article 14.


ARTICLE 14:  PURCHASE / SALE OPTIONS
------------------------------------

14.1 Options to Sell/ Purchase DuPont's Business.  Unless otherwise agreed, at
     -------------------------------------------
     the time of termination of this Agreement for any reason or at any time
     after the end of the fifth (5th) year of the term of this Agreement:

     (a)  DuPont shall have the irrevocable right but not the obligation to put
          to Unifi all (but not less than all) of DuPont's Business and the
          DuPont Business Assets in accordance with the Asset Transfer
          Agreement.  Unifi shall be obliged to purchase DuPont's Business and
          Business Assets, subject to the provisions of this Article.

     (b)  Unifi shall have the irrevocable right but not the obligation to call
          all (but not less than all) of DuPont's Business and the DuPont
          Business Assets in accordance with the Asset Transfer Agreement.
          DuPont shall be obliged to sell DuPont's Business and Business Assets,
          subject to the provisions of this Article.

14.2 Manner of Exercise.  Such put/call options shall be exercised by written
     ------------------
     notice ("Notice of Exercise") by one Party to the other, in which case the
     Parties shall use all reasonable efforts to proceed to Closing as quickly
     as possible.  The Parties shall not be required to make any option payments
     or pay any other consideration for the right to exercise the put/call.

Master Agreement - POY Manufacturing Alliance                                 20
<PAGE>

14.3 Price for DuPont's Business.
     ----------------------------

     (a)  The purchase price for DuPont's Business and Business Assets shall be
          determined by mutual agreement of the Parties.  In the event the
          Parties cannot mutually agree on the price within thirty (30) days
          following receipt of the Notice of Exercise or such other time as the
          Parties may agree, then the Parties shall appoint a single appraiser
          to determine the value of the business.  In the event the Parties
          cannot decide on a single appraiser within forty-five (45) days
          following receipt of the Notice of Exercise, then each Party will
          nominate an appraiser.  Such appraisers shall promptly, but in no
          event more than ninety (90) days following receipt of the Notice of
          Exercise, determine the fair market value of DuPont's Business,
          including the Business Assets.  If the lower of the two appraisals is
          within ten (10%) percent of the higher of the two appraisals, then the
          price will be the average of the two appraisals.  If the two
          appraisals are not within ten percent (10%), then the two appraisers
          will nominate a third appraiser who shall promptly determine such fair
          market value, in which case the price will be the average of the two
          closest appraisals.

     (b)  The appraisals shall value the Business as an on-going concern and
          shall take into consideration all technical and market factors
          relating to the Business, the benefit of any shared savings arising
          from the Alliance, the strategic value of the Business and any
          technology rights conveyed by DuPont to Unifi, the potential future
          cash flow and earnings of the Business; and an identified risk of
          specific business that may reasonably be expected to be lost as a
          result of the change in control.

     (c)  The cost of the appraisal experts selected by the Parties shall be
          paid by the selecting party and the cost of an appraisal expert
          jointly selected by the Parties' or by the Parties' appraisal experts
          shall be borne by the Parties on an equal basis. Each appraiser
          selected pursuant to the provisions of this Section shall be an
          independent, qualified firm with prior experience in appraising
          businesses comparable to POY manufacturing and sale and that is not an
          interested person with respect to any Party.  The determination of
          fair market value of the Business shall be final and conclusive.

14.4 Maximum/Minimum Price for DuPont's Business.  Notwithstanding anything to
     --------------------------------------------
     the contrary contained herein, in the event DuPont exercises the put or
     Unifi exercises the call prior to the end of the 6th year of this Alliance,
     then the maximum price for the DuPont Business and the DuPont Business
     Assets shall be Six Hundred Million U.S. Dollars ($600,000,000) and the
     minimum price for the DuPont Business and the DuPont Business Assets shall
     be Three Hundred Million

Master Agreement - POY Manufacturing Alliance                                 21
<PAGE>

     U.S. Dollars ($300,000,000). For clarity, the Parties agree that the DuPont
     Business Assets to be valued and acquired by Unifi shall include the
     inventory of raw materials, work in process, finished goods, stores,
     supplies and packaging materials as more fully set forth in the Asset
     Transfer Agreement, but the valuation shall specifically exclude the
     inventories of finished product which DuPont may acquire from Unifi on or
     after the Effective Date.

14.5 Remedy - DuPont's Right to Purchase Unifi's Business.  If for any reason
     ----------------------------------------------------
     (including without limitation breach of this Agreement or any
     Implementation Agreement, insolvency or bankruptcy or Unifi's inability to
     obtain financing), Unifi cannot or does not purchase DuPont's Business and
     the DuPont Business Assets within two hundred seventy (270) days following
     receipt of the Notice of Exercise, then DuPont shall have the option but
     not the obligation to purchase Unifi's Business and the Unifi Business
     Assets by giving written notice of exercise to Unifi.  The price for the
     Unifi's Business and the Unifi Business Assets shall be determined by the
     same mechanism set forth in Section 14.3 above, and the sale shall be on
     substantially the same terms as those contained in the Asset Transfer
     Agreement and the Implementation Agreements. Notwithstanding anything to
     the contrary contained herein, in the event DuPont purchases Unifi's
     Business and the Unifi Business Assets as provided in this Section 14.5,
     then for a period of twelve (12) months following receipt of the Notice of
     Exercise (defined in Section 14.2), the maximum price shall be One Hundred
     Seventy-Five Million U.S. Dollars ($175,000,000) and the minimum price
     shall be One Hundred Twenty-Five Million U.S. Dollars ($125,000,000).

14.6 Conditions Precedent to Closing.  The obligations of the Parties to
     -------------------------------
     complete the proposed transactions under this Article are subject to the
     Conditions Precedent; provided, however, that the Parties may conduct the
     Pre-Closing necessary for the complete performance of the Closing as
     quickly as possible without waiting for the fulfillment of the Conditions
     Precedent.  The Pre-Closing shall also be agreed by the Parties.

     The Parties shall use reasonable efforts to satisfy the Conditions
     Precedent as soon as possible after the Notice of Exercise. The Conditions
     Precedent shall be deemed to have been fulfilled when they have been
     satisfied in accordance with the terms described in Schedule 12. Each
                                                         -----------
     Party shall advise the other as soon as the Conditions Precedent which
     relate to that Party have been fulfilled and the Closing Date shall be
     confirmed or newly determined as the case may be.

     Subject to agreement between the Parties on the timing and approach to the
     antitrust and regulatory authorities, the Parties jointly will be
     responsible for obtaining all antitrust or regulatory approvals of all the
     governmental authorities of relevant countries necessary to complete the
     proposed transactions. The Parties will use all reasonable efforts to
     obtain such approvals as promptly as possible and, in this regard, provide
     all information requested, shall assist and cooperate


Master Agreement - POY Manufacturing Alliance                                 22
<PAGE>

     with one another to make the necessary filings and take other steps to
     secure the non-objection of the antitrust and regulatory authorities.

14.7 Non-Competition.  It is agreed by the Parties and shall be incorporated
     ----------------
     into the Asset Transfer Agreement (as more fully provided therein) that
     following Closing for the sale of DuPont's Business to Unifi, Unifi and its
     Affiliates will not, directly or indirectly, engage in the sale in or
     transfer to Greater Europe of Products manufactured at the Facilities;
     provided, however, that Unifi shall have the right to transfer specialty
     POY manufactured at the Yadkinville Facility to Unifi's Affiliates located
     in Greater Europe for subsequent processing by such Affiliates (and not for
     resale) if such Affiliates cannot acquire specialty POY of like quality at
     competitive prices from DuPont SA or other European POY suppliers.

     In the unlikely event that Unifi is unable to purchase commodity POY for
     consumption by its Affiliates in Western Europe from DuPontSA or other
     suppliers at prices that are competitive for POY in Western Europe, then
     Unifi shall have the right only for so long as this condition exists to
     transfer commodity POY manufactured at the Yadkinville Plant to its
     Affiliates in Western Europe for subsequent processing by such Affiliates
     (and not for resale).

     It is agreed by the Parties and shall be incorporated into the Asset
     Transfer Agreement (as more fully provided therein) that for a period of
     seven (7) years following Closing of the sale of DuPont's Business to
     Unifi, DuPont will not, directly or indirectly, engage in the sale of
     Products in the Americas.

14.8 Efforts.  Each Party shall use its diligent efforts to obtain all
     -------
     authorizations, consents, orders and approvals of, and to give all notices
     to and make all filings with, all governmental authorities and other third
     parties that may be or become necessary for such party's execution and
     delivery of, and the performance of its obligations pursuant to this
     Agreement and the Implementation Agreements.  Each Party will cooperate
     fully with the other Party in promptly seeking to obtain all such
     authorizations, consents, orders and approvals, giving such notices, and
     making such filings. The Parties acknowledge that time shall be of the
     essence in this Agreement and agree not to take any action that will have
     the effect of unreasonably delaying, impairing or impeding the receipt of
     any required authorizations, consents, orders or approvals.

14.9 Implementation Agreements.  As soon as reasonably possible, but in no
     --------------------------
     event later than the Closing Date, the Parties shall discuss and finalize
     material and service agreements between DuPont and Unifi, which shall be
     substantially in the form of the following attached Implementation
     Agreements:

Master Agreement - POY Manufacturing Alliance                                 23
<PAGE>

     (a)  Attached hereto as Schedule 10 is an Agreed Form Transition Services
                             -----------
          Agreement relative to administrative services that may be provided by
          DuPont to Unifi after the Closing Date.

     (b)  Attached hereto as Schedule 8 is an Agreed Form Kinston Site Services
                             ----------
          Agreement relative to site services to be provided by Unifi to DuPont
          at the Kinston Site after the Closing Date.

     (c)  Attached hereto as Schedule 7 is an Agreed Form Kinston Ground Lease
                             ----------
          Agreement relative to the lease of land at the Kinston Site by DuPont
          to Unifi after the Closing Date.

     (d)  Attached hereto as Schedule 13 is an Agreed Form Material Supply
                             -----------
          Agreement relative to the sale of TPA by DuPont to Unifi after the
          Closing Date.

     (e)  Attached hereto as Schedule 14 is an Agreed Form Material Supply
                             -----------
          Agreement relative to the sale of MEG by DuPont to Unifi after the
          Closing Date.

     (f)  Attached hereto as Schedule 9 is an Agreed POY Trademark, Patent and
                             ----------
          Technology License Agreement.

     In the event that the Cape Fear Facility is still operating on the Closing
     Date, then the Parties shall enter into a services agreement, in a mutually
     agreeable form,  whereby DuPont shall contract manufacture POY for Unifi.

     In the event DuPont purchases Unifi's Business pursuant to Article 14.5,
     then the Asset Transfer Agreement and the Implementation Agreements shall
     be revised to the limited extent necessary to reflect such transaction.


ARTICLE 15:  CONDUCT OF MANUFACTURING OPERATIONS UNTIL TERMINATION
------------------------------------------------------------------

15.1 Cooperation.  Following the Effective Date, the Parties shall conduct
     -----------
     their POY manufacturing operation subject to the following provisions:

     a.   The Parties shall do all things as may be required to give effect to
          this Article, including, without limitation, executing all documents,
          convening all necessary meetings, giving all necessary waivers and
          consents, passing all resolutions and otherwise exercising all powers
          and rights available to it.

Master Agreement - POY Manufacturing Alliance                                 24
<PAGE>

     b.   The Parties shall cooperatively discuss and diligently plan for
          integration of their manufacturing operations so as to enable the
          Parties to maximize the synergies that may be derived from the
          formation of the Alliance.

15.2 Conduct of Business.  In the period from the Effective Date until
     --------------------
     termination of the Alliance, the Parties shall conduct their Businesses as
     follows:

     a.   the Business is carried on in the Ordinary Course, with the duty and
          care of a good manager (due care);

     b.   unless otherwise agreed by the Parties capital expenditures project
          which the Parties have commenced to implement within the Business
          shall not be discontinued or progressed other than pursuant to their
          respective capital expenditures project plan;

     c.   except as required by law or by any governmental, administrative, or
          judicial authority of competent jurisdiction or pursuant to any
          agreement, commitment and/or arrangement existing as of the date of
          this Agreement, the Parties shall not:

          (1)  make a substantial change in the terms of employment or benefits
               of any employees except in the Ordinary Course of Business; or

          (2)  sell land or buildings related to the Business Assets which are
               in commercial use; or

          (3)  fail to comply in any substantial respect with applicable laws;
               or

          (4)  fail to maintain in its substance the equipment in its current
               state of repair, excepting normal wear and tear or fail to
               replace consistent with the Parties' past practices.

15.3 Access to Facilities.  Representatives and customers of the Parties may
     ---------------------
     access the Facilities following reasonable advance notice, provided that
     such Persons comply with applicable site rules and regulations and such
     Persons shall execute confidentiality agreements as may be reasonably
     required by the Parties.


ARTICLE 16: DISPUTE RESOLUTION
------------------------------

16.1 Consultation to Resolve Disputes.  Subsequent to the Effective Date, the
     --------------------------------
Parties shall attempt in good faith to settle disputes between the Parties
relative to (a) the interpretation of this Agreement or any Ancillary Agreement
or (b) the accounting of costs or revenues as provided herein.  In the event
that the Parties cannot resolve a dispute, it may be submitted by either Party
to the Policy Board.  If, after such

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<PAGE>

consultation, the members of the Policy Board cannot solve the dispute, they
will wait for not less than sixty (60) days after the dispute arises and at the
end of such period meet for a second consultation. If the dispute still cannot
be resolved after this second consultation, the matter shall be referred to the
Supervisory Board. The Supervisory Board shall diligently attempt to resolve the
dispute, including, if they deem it necessary, meeting directly in order to
provide full consideration of the dispute. If the Supervisory Board is unable to
resolve the dispute or agree to submission to a non-binding alternate dispute
resolution process within sixty (60) additional days after the second
consultation, then (a) issues relative to the interpretation of this Agreement
or an Ancillary Agreement may be resolved by either Party's referring the matter
to arbitrators for binding arbitration in accordance with this Article 16 for
the purpose of deciding the issue and (b) issues relative to accounting may be
referred to accountants for binding resolution in accordance with this Article
16.

In the case the Parties cannot resolve a dispute relative to all or part of a
budget, the Parties will continue to operate to the extent possible in
accordance with the last approved budget.

16.2  Arbitration Notice.  If the Parties are unable to resolve a dispute
      ------------------
relative to the interpretation of this Agreement or an Ancillary Agreement
through negotiation as provided in Section 16.1 or to agree upon an alternate
method for doing so, the matter shall, at the written request of either Party,
be finally determined and settled pursuant to arbitration in Washington, D.C.,
by three (3) arbitrators, one (1) to be appointed by Unifi, one (1) to be
appointed by DuPont, and a neutral arbitrator to be appointed by such two (2)
Party-appointed arbitrators.  The neutral arbitrator shall be an attorney and
shall act as chairperson.  Any such arbitration may be initiated by a Party by
written notice ("Arbitration Notice") to the other Party specifying the subject
of the requested arbitration and appointing such Party's arbitrator for such
arbitration.

16.3  Appointment of Arbitrator.  Should (i) a Party receiving an Arbitration
      -------------------------
Notice fail to appoint an arbitrator as herein above contemplated by written
notice to the Party giving the Arbitration Notice within twenty (20) days after
the receipt of the Arbitration Notice, or (ii) the two (2) arbitrators appointed
by or on behalf of the Parties as contemplated in Paragraph 16.2 hereof fail to
appoint a neutral arbitrator as herein above contemplated within twenty (20)
days after the date of the appointment of the last arbitrator appointed by or on
behalf of the Parties, then the American Arbitration Association, upon
application of Unifi or of DuPont, shall appoint an arbitrator to fill any such
position with the same force and effect as though such arbitrator had been
appointed as herein above contemplated.

16.4  Arbitration Proceedings.  The arbitration proceeding shall be conducted in
      -----------------------
the English language in Washington, D.C., in accordance with the Commercial
Rules of the American Arbitration Association. A determination, award or other
action shall be considered the valid action of the arbitrators if supported by
the affirmative vote of two (2) or three (3) of the three (3) arbitrators. The
costs of arbitration (exclusive of the

Master Agreement - POY Manufacturing Alliance                                 26
<PAGE>

expense of a Party in obtaining and presenting evidence and attending the
arbitration, and of the fees and expenses of legal counsel to such Party, all of
which shall be borne by such Party) shall be shared equally by Unifi and DuPont.
The arbitration award shall be final and conclusive and shall receive
recognition, and judgment upon such award may be entered and enforced in any
court of competent jurisdiction.

16.5 Resolution of Accounting Disputes. (a)  If the Parties are unable to
     ---------------------------------
     resolve a dispute relative to accounting matters through negotiation as
     provided in Section 16.1 or to agree upon an alternate method for doing so,
     the matter shall, at the written request of either Party, be finally
     determined by an independent accountant (the "Independent Accountant")
     selected by the Parties.  Any such accounting may be initiated by a Party
     by written notice ("Accounting Notice") to the other Party specifying the
     subject of the requested accounting.

     (b) If the Parties are unable to agree upon the Independent Accountant
     within fourteen (14) days of such Accounting Notice, then the Independent
     Accountant shall be appointed by the President of the American Institute of
     Certified Public Accountants on the application of either Party.

     (c) The Independent Accountant shall act as an expert and not as an
     arbitrator and his/her decision shall (in the absence of manifest error) be
     final and binding on the Parties.  The Independent Accountant shall afford
     the Parties the opportunity of making written representations to him or
     her.


     (d) The fees and expenses of the Independent Accountant shall be borne by
     the Parties in equal shares unless the Independent Accountant otherwise
     determines.

16.6 Disputed Payments.  If a payment made or to be made hereunder is disputed,
     ------------------
     then the undisputed portion of the payment shall be made and the disputed
     portion of the payment shall thereafter be resolved pursuant to the terms
     of this Article 16.  If the resolution of the disputed payment requires
     payment from one Party to another upon final determination of the
     Independent Accountant, then such payment shall bear interest at a
     reasonable rate from the date of the original disputed payment.


ARTICLE 17:  ASSIGNMENT
-----------------------

17.1 This Agreement may not be transferred or assigned to a third party without
     the prior written consent of the other Party, which consent shall not be
     unreasonably withheld; provided, however, that this Agreement may be freely
     assigned by either Party to an Affiliate in which case the Affiliate shall
     assume the transferring Party's rights and obligations under this Agreement
     and the transferring Party shall guarantee its Affiliate's performance
     thereunder.

Master Agreement - POY Manufacturing Alliance                                 27
<PAGE>

ARTICLE 18:  REPRESENTATIONS AND WARRANTIES
-------------------------------------------

18.1 Each Party represents and warrants to the other Party as follows:

     (a)  The Party is a corporation duly organized, validly existing and in
          good standing under the laws of the jurisdiction of its organization
          and has full corporate power to own, lease or operate its assets,
          properties and businesses and to enter into this Agreement.

     (b)  The execution, delivery and performance by the Party of this Agreement
          and the consummation of the transactions contemplated hereby:  (1)
          have been duly authorized and approved by the governing board of the
          Party; (2) do not conflict with any provision of the Certificate of
          Incorporation, Bylaws or other organizational documents of the Party;
          (3) do not violate any law, regulation, order of judgment or decree by
          which the Party is bound; or (4) do not conflict with or result in a
          breach of any agreement, contract or commitment to which the Party is
          obligated.

     (c)  Other than any action contemplated by the relevant antitrust
          authorities, there are no material actions or proceedings pending, or
          to the knowledge of the Party, threatened, at law or in equity, before
          any court or before or by any governmental agency, or by any private
          person or entity which would challenge the validity or enforceability
          of this Agreement, interfere with the performance by the Party of its
          obligations hereunder or result in the imposition of any encumbrance
          of any kind on or result in any diminution in value of the Parties'
          respective Business Assets.


ARTICLE 19.  OPERATION UNTIL SALE
----------------------------------

19.1 The Parties covenant and agree that between the Effective Date and the
     Closing Date the Parties shall not, without having received the prior
     written consent of the other Party, do any of the following with respect to
     its Business:

     (a)  sell, demolish, remove, alter, enlarge or dispose (or permit same) of
          any of the Business Assets to any material extent, other than in the
          Ordinary Course of Business (including sales of Inventory in the
          ordinary course);

     (b)  make any material change in the operation of its Business Assets other
          than in the Ordinary Course of Business;

     (c)  alter or revise in any material respect the accounting principles,
          procedures, methods or practices being used in connection with the
          Alliance.

Master Agreement - POY Manufacturing Alliance                                 28
<PAGE>

ARTICLE 20:  CONFIDENTIALITY
----------------------------

20.1 The Parties shall provide that their employees, officers, directors,
     advisors, affiliates shall treat as confidential and not use for purposes
     other than as contemplated by the Agreement for the term of this Agreement
     and a period of ten (10) years following termination hereof, the Letter of
     Intent dated March 12, 2000 (the "LOI"), or any of their provisions, as
     well as all business, technical and intellectual property information
     disclosed or which otherwise becomes known pursuant to this Agreement
     ("Confidential Information").  This obligation of confidentiality shall not
     apply to:

     (a)  information which is or becomes known publicly through no fault of the
          receiving Party;

     (b)  information learned by the receiving Party from a third party entitled
          to disclose it;

     (c)  information already known to the receiving Party before receipt from
          the other Party as shown by the receiving Party's written records.

     (d)  information which a Party is legally obliged by a court or
          governmental entity to furnish but only to the extent such Party is so
          obligated, and only after such Party has notified the other Party of
          such obligation.

     (e)  the furnishing of the documents in connection with (i) the Parties'
          HSR Act filings, (ii) documents required to be submitted to the
          Securities and Exchange Commission or (iii) compliance with other
          governmental laws or regulations.

20.2 Confidential Information disclosed with regard to this Agreement shall not
     be disclosed to any person or entity which is not either an employee,
     officer, director of a Party or its Affiliates or its advisors who requires
     to see the Confidential Information for the purposes of this Agreement or
     who has not agreed in writing to treat such Confidential Information as
     confidential in accordance with the terms of this Agreement.  Upon
     termination or expiration of this Agreement, all materials containing
     Confidential Information disclosed hereunder shall promptly be returned to
     the disclosing Party upon its request.

ARTICLE 21:  COMPLIANCE
-----------------------

21.1 The covenants and agreements set out in this Agreement shall bind the
     Parties, and their permitted successors and assigns.  Each of the Parties
     shall cause compliance with this Agreement by its Affiliates.

Master Agreement - POY Manufacturing Alliance                                 29
<PAGE>

ARTICLE 22:  FURTHER ASSURANCES
-------------------------------

22.1 Each of the Parties agrees to take all reasonably necessary steps to do
     all such further acts and things as may be necessary to cause the purposes
     and intentions of this Agreement to be carried out.


ARTICLE 23:  AMENDMENT AND MODIFICATION
---------------------------------------

23.1 This Agreement may be amended, modified, and supplemented only by written
     agreement of the Parties.  Whenever this Agreement requires or permits
     waivers or consents by or on behalf of any Party, any such waiver or
     consent shall be given in writing.

ARTICLE 24: ENTIRE AGREEMENT
----------------------------

24.1 This Agreement (including the Appendices, Exhibits, Schedules and other
     agreements referred to herein) embodies the entire agreement and
     understanding of the Parties with respect to the matters contemplated
     thereby.  There are no restrictions, promises, representations, warranties,
     covenants, or undertakings with respect thereto, other than those set forth
     or referred to in this Agreement, the Appendices, and the Schedules and
     Exhibits appended hereto.  This Agreement supersedes all prior agreements
     and understandings between the Parties with respect to the subject matter
     hereof, including but not limited to the Letter of Intent between the
     Parties dated March 12, 2000.  Except as provided for herein, no rights in
     favor of third parties are hereby created.  In the event and to the extent
     that the provisions of the Ancillary Agreements conflict with the terms of
     this Agreement, the terms of the Ancillary Agreements shall control unless
     otherwise specifically provided herein.


ARTICLE 25:  COSTS AND EXPENSES
-------------------------------

25.1 Each Party hereto shall pay its own legal, accounting and other expenses
     incident to this Agreement and the agreements appended hereto and the
     consummation of the transactions contemplated hereby.


ARTICLE 26:  GOVERNING LAW
--------------------------

26.1 This Agreement shall be interpreted and construed in accordance with the
     laws of the State of North Carolina, USA.  To the extent that any Ancillary
     Agreement contains its own choice of law provision, the terms of that
     choice of law provision

Master Agreement - POY Manufacturing Alliance                                 30
<PAGE>

     shall prevail over this provision with respect to any dispute under that
     Ancillary Agreement.


ARTICLE 27:  COUNTERPARTS
-------------------------

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


ARTICLE 28:  EXHIBITS, HEADINGS, AND CAPTIONS
---------------------------------------------

29.1 The Appendices, Schedules and Exhibits to this Agreement are an integral
     part of this Agreement.  The headings and captions contained in this
     Agreement are for reference purposes only and shall not affect in any way
     the meaning or interpretation of this Agreement.


ARTICLE 29:  NOTICES
--------------------

29.1 All notices, consents, requests, demands and other communications
     authorized or required to be given pursuant to this Agreement shall be
     given in writing to the following addresses or to such other addresses as
     the Parties shall provide in a written notice delivered to all other
     parties:

          If to DuPont:
          ------------

          E. I. du Pont de Nemours and Company
          1007 Market Street
          Wilmington, DE  19898, USA
          Attention: Group Vice President - Polyester Enterprise (presently
          George F. MacCormack)

          If to Unifi:
          ------------

          Unifi, Inc.
          P. O. Box 19109
          7201 W. Friendly Avenue
          Greensboro, NC 27419-9109, USA
          Attention: Chief Financial Officer (presently Willis C. Moore III)

29.2 Notices under this Agreement shall be deemed effective on the earlier of:
     actual receipt; one (1) working day after dispatch when sent by telex,
     cable or by facsimile to the recipient's proper telex or facsimile number,
     or when delivered by hand; or five (5) working days after being sent by
     express or overnight delivery

Master Agreement - POY Manufacturing Alliance                                 31
<PAGE>

     service addressed as set out above (or as otherwise designated by any party
     in writing by notice given in accordance with this Article 29).


ARTICLE 30:  PUBLIC ANNOUNCEMENTS
---------------------------------

30.1 The Parties hereto agree that no public release or announcement concerning
     this Agreement or the transactions contemplated hereby shall be issued by a
     Party without the prior written consent of DuPont and Unifi as to the
     nature and content of the disclosure (which consent shall not be
     unreasonably withheld), except as such release or announcement may be
     required by law or the rules or regulations of the United States.


ARTICLE 31:  FORCE MAJEURE
--------------------------

31.1 A Party or its Affiliate whose performance hereunder is prevented by an
     Uncontrollable Event shall, upon providing written notice to the other
     Party within ten (10) days after the occurrence of such Uncontrollable
     Event, be excused from such performance for an additional period of sixty
     (60) days beyond the date or period otherwise specified for such
     performance to the extent the Uncontrollable Event prevents its
     performance, provided that the Party so affected shall use reasonable
     efforts to avoid or remove the cause of non-performance and shall continue
     performance hereunder immediately upon the removal of such cause.


ARTICLE 32:  SEVERABILITY
-------------------------

32.1 If any provision of this Agreement is held to be invalid by a court of
     competent jurisdiction or by any regulatory agency, the remaining
     provisions of this Agreement shall remain in full force and effect and the
     Parties will renegotiate a suitable replacement for the term or terms held
     invalid.


ARTICLE 33:  SURVIVAL
---------------------

33.1 The covenants contained in this Agreement which contemplate their
     performance after the expiration or termination of this Agreement shall be
     enforceable notwithstanding the expiration or other termination of this
     Agreement.

Master Agreement - POY Manufacturing Alliance                                 32
<PAGE>

ARTICLE 34:  SPECIFIC PERFORMANCE
---------------------------------

34.1 Each party hereto agrees with the other Party that the other Party would
     be irreparably damaged if any of the provisions of this Agreement are not
     performed in accordance with their specific terms and that monetary damages
     would not provide an adequate remedy in such event.  Accordingly, it is
     agreed that in addition to any other remedy to which a Non-Breaching Party
     may be entitled, at law or in equity, the Non-Breaching Party shall be
     entitled to injunctive relief to prevent breaches of the provisions of this
     Agreement and specifically to enforce the terms and provisions hereof.


ARTICLE 35: LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------------------

35.1 Limitation of Liability.  Neither Party shall incur any liability to the
     -----------------------
     other in connection with the Alliance and the performance of obligations
     under this Agreement for any mistakes or errors in judgment made in good
     faith and in the exercise of due care in connection with the Businesses,
     and no Party shall be deemed to have violated any of the provisions of this
     Agreement for any such mistakes or errors in judgment.

35.2 Indemnity for Actions of Parties.  The Parties shall indemnify, defend and
     --------------------------------
     hold the other harmless from and against any and all claims, liabilities,
     damages, losses, costs, expenses (including, but not limited to,
     settlements, judgments, court costs and reasonable attorneys' fees), fines
     and penalties arising out of any injury, loss or damage of any nature
     whatsoever (including, without limitation, loss of or damage to property,
     or damage to the environment) due or relating to operation of its Business,
     including without limitation, (i) any environmental liabilities arising
     from events, acts, omissions, circumstances, or violations of environmental
     laws, (ii) any liability for claims for actions that relate to the benefit
     plans or employment practices of a Party, including without limit claims
     for accidents, injuries, sexual harassment, and labor relations from
     employees of a Party, (iii) any liability for taxes with respect to the
     Business, or (iv) liabilities arising from the actions the Party's
     respective personnel or any contract personnel who are managed and directed
     by the Parties.


35.3 Limitation - Consequential Damages.
     ----------------------------------

     NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR
     AT LAW OR IN EQUITY, IN NO EVENT SHALL EITHER PARTY BE LIABLE
     FOR PUNITIVE, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
     DAMAGES (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF
     BUSINESS PROFITS, BUSINESS INTERRUPTION OR ANY OTHER LOSS)

Master Agreement - POY Manufacturing Alliance                                 33
<PAGE>

     ARISING FROM OR RELATING TO ANY CLAIM MADE UNDER THIS
     AGREEMENT, EVEN IF EITHER OF THEM HAVE BEEN ADVISED OF THE
     POSSIBILITY OF SUCH DAMAGES.


ARTICLE 36:  MISCELLANEOUS
--------------------------

36.1 U.S. Currency.  All dollar amounts set forth herein are expressed in
     -------------
     United States currency.

36.2 Terminology.
     -----------

     36.2.1  A word or series of words comprising a defined term hereunder has
             its defined meaning only when used solely and precisely in the form
             defined and not when used as a component of another defined term.

     36.2.2  The use of the terms "including", "include", and "includes"
             followed by one or more examples is intended to be illustrative and
             shall not be deemed or construed to limit the scope of the
             classification or category to the examples listed.

     36.2.3  The singular shall include the plural and vice versa and words
             denoting persons shall include bodies incorporated and
             unincorporated associations of persons and, unless otherwise
             stated, shall include successors or assigns of such persons.

36.3 Brokers.  The Parties represent to each other that they have not engaged
     -------
     any broker or finder with respect to the transactions contemplated by this
     Agreement, the Ancillary Agreements or the Asset Transfer Agreement.

Master Agreement - POY Manufacturing Alliance                                 34
<PAGE>

     IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be
duly executed in their respective corporate names by their respective officers
each of whom is duly and validly authorized and empowered, all as of the day and
year first above written.


UNIFI, INC.

By: /s/ G. ALLEN MEBANE IV
   ----------------------------

Name: G. Allen Mebane IV
     --------------------------

Title: Chairman of the Board
      -------------------------

Date: June 1, 2000
     --------------------------



E. I. DU PONT DE NEMOURS AND COMPANY

By: /s/ GEORGE F. MACCORMICK
   ----------------------------

Name: George F. Maccormick
     --------------------------

Title: Group Vice-President--
        Chemicals and Polyester
      -------------------------

Date: June 2, 2000
     --------------------------

Master Agreement - POY Manufacturing Alliance                                 35
<PAGE>

                          Schedule 1 - Amoco Formula

Master Agreement - POY Manufacturing Alliance                                 36
<PAGE>

              Schedule 2 - Asset Transfer Agreement - Agreed Form

Master Agreement - POY Manufacturing Alliance                                 37
<PAGE>

                            Schedule 3 - [reserved]

Master Agreement - POY Manufacturing Alliance                                 38
<PAGE>

      Schedule 4 - Unifi Base Cash Fixed Costs; Unifi Base Variable Costs

Master Agreement - POY Manufacturing Alliance                                 39
<PAGE>

     Schedule 5 - DuPont Base Cash Fixed Costs; DuPont Base Variable Costs

Master Agreement - POY Manufacturing Alliance                                 40
<PAGE>

                   Schedule 6 - Definition of Greater Europe

 Greater Europe means all the countries of Europe, the Middle East, Africa and
                                   the CIS.

Master Agreement - POY Manufacturing Alliance                                 41
<PAGE>

                Schedule 7 - Kinston Ground Lease - Agreed Form

Master Agreement - POY Manufacturing Alliance                                 42
<PAGE>

          Schedule 8 - Kinston Site Services Agreement - Agreed Form

Master Agreement - POY Manufacturing Alliance                                 43
<PAGE>

   Schedule 9 - POY Patent, Technology and Trademark Agreement - Agreed Form

Master Agreement - POY Manufacturing Alliance                                 44
<PAGE>

           Schedule 10 - Transition Services Agreement - Agreed Form

Master Agreement - POY Manufacturing Alliance                                 45
<PAGE>

            Schedule 11 - Treatment of Certain Capital Expenditures

Master Agreement - POY Manufacturing Alliance                                 46
<PAGE>

                                  SCHEDULE 12
                                  -----------

                             Conditions Precedent
                             --------------------

     The obligations of the Parties to consummate the sale of the DuPont's
Business from DuPont to Unifi are subject to satisfaction of the following
conditions:

(1)  All waiting periods and any extensions thereof under the HSR Act applicable
     to the consummation of the Proposed Transactions have been satisfied,
     expired, or been terminated (the "HSR Condition")without imposing any
     conditions on either of the Parties which are deemed by DuPont or Unifi, as
     the case may be, in their reasonable opinion to be unacceptable.

(2)  All waiting periods and any extensions thereof under the applicable
     competition law in other countries have been satisfied, expired, or been
     terminated without imposing any conditions on either of the Parties which
     are deemed by DuPont or Unifi, as the case may be, in their reasonable
     opinion to be unacceptable.

(3)  Unifi shall have obtained the approval by its Shareholders, if necessary
     (following the strong recommendation of Unifi's officers and directors).

(4)  All other governmental consents and approvals, as are required by law, have
     been obtained or all waiting periods (in addition to the HSR Condition)
     (and any extensions thereof) have expired or terminated in any relevant
     jurisdiction for the purposes of implementing the proposed transactions in
     a form reasonably satisfactory to both Parties.

(5)  No order, writ, injunction, or decree has been issued which restrains,
     enjoins, or invalidates, or otherwise has a Material Adverse Effect on the
     proposed transactions and no action, suit, or other proceeding is pending
     or threatened that has a reasonable likelihood of resulting in any such
     order, writ, injunction, or decree being issued.

(6)  All obligations and undertakings of the other Party (the breach of which,
     singly or in the aggregate, would result in a Material Adverse Effect) to
     be performed by the other Party under this Agreement prior to or at the
     Closing Date shall have been performed.

(7)  All warranties and representations made by the other Party in this
     Agreement (the breach of which, singly or in the aggregate, would be
     material) shall be true and correct in all material respects.

(8)  Compliance with all federal, state and local government regulations
     relating to the consummation of the Proposed Transaction and completion of
     any other required government filings and approvals.

(9)  Absence of pending or threatened litigation or government investigation
     resulting, singly or in the aggregate, in a Material Adverse Effect to the
     Parties' Businesses.

(10) Unifi shall have obtained a reasonable amount of financing on commercially
     reasonable terms for the proposed transaction.

Master Agreement - POY Manufacturing Alliance                                 47
<PAGE>

          Schedule 13 - Material Supply Agreement - TPA - Agreed Form

Master Agreement - POY Manufacturing Alliance                                 48
<PAGE>

          Schedule 14 - Material Supply Agreement - MEG - Agreed Form

Master Agreement - POY Manufacturing Alliance                                 49
</TEXT>
</DOCUMENT>
