Exhibit 10.2

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CULP, INC.

$11,000,000

______________

$11,000,000 8.01% Senior Notes due August 11, 2015

______________

NOTE PURCHASE AGREEMENT

_____________

Dated as of August 11, 2008

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Table of Contents

SECTION

Heading Page    

SECTION 1.

Authorization of Notes 5    

SECTION 2.

Sale and Purchase of Notes 6    

SECTION 3.

Closing 6    

SECTION 4.

Conditions to Closing 6   Section 4.1. Representations and Warranties 6 Section
4.2. Performance; No Default 6 Section 4.3. Compliance Certificates 7 Section
4.4. Opinions of Counsel 7 Section 4.5. Purchase Permitted By Applicable Law,
Etc. 7 Section 4.6. Sale of Other Notes 7 Section 4.7. Payment of Special
Counsel Fees 7 Section 4.8. Private Placement Number 8 Section 4.9. Changes in
Corporate Structure 8 Section 4.10. B&H Acquisition 8 Section 4.11. Funding
Instructions 8 Section 4.12. Proceedings and Documents 8  

SECTION 5.

Representations and Warranties of the Company 8   Section 5.1. Organization;
Power and Authority 8 Section 5.2. Authorization, Etc. 8 Section 5.3. Disclosure
9 Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates
9 Section 5.5. Financial Statements; Material Liabilities 10 Section 5.6.
Compliance with Laws, Other Instruments, Etc. 10 Section 5.7. Governmental
Authorizations, Etc. 10 Section 5.8. Litigation; Observance of Agreements,
Statutes and Orders 10 Section 5.9. Taxes 11 Section 5.10. Title to Property;
Leases 11 Section 5.11. Licenses, Permits, Etc. 11 Section 5.12. Compliance with
ERISA 12 Section 5.13. Private Offering by the Company 12 Section 5.14. Use of
Proceeds; Margin Regulations 13 Section 5.15. Existing Indebtedness; Future
Liens 13 Section 5.16. Foreign Assets Control Regulations, Etc. 13 Section 5.17.
Status under Certain Statutes 14 Section 5.18. Environmental Matters 14  

SECTION 6.

Representations of the Purchasers 14   Section 6.1. Purchase for Investment 14
Section 6.2. Source of Funds 15  

SECTION 7.

Information as to Company 16   Section 7.1. Financial and Business Information
16 Section 7.2. Officer’s Certificate 19

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Section 7.3. Visitation 20  

SECTION 8.

Payment and Prepayment of the Notes 20  

Section 8.1.

Required Prepayments 21 Section 8.2. Change in Control 21 Section 8.3.
Allocation of Partial Prepayments 22 Section 8.4. Optional Prepayments with
Make-Whole Amount 23 Section 8.5. Maturity; Surrender, Etc. 23 Section 8.6.
Purchase of Notes 24 Section 8.7. Make-Whole Amount 24  

SECTION 9.

Affirmative Covenants 25   Section 9.1. Compliance with Law 25 Section 9.2.
Insurance 25 Section 9.3. Maintenance of Properties 26 Section 9.4. Payment of
Taxes and Claims 26 Section 9.5. Corporate Existence, Etc. 26 Section 9.6. Notes
to Rank Pari Passu 26 Section 9.7. Guaranty by Subsidiaries 26 Section 9.8.
Books and Records 27 Section 9.9. B&H Acquisition 27  

SECTION 10.

Negative Covenants 27   Section 10.1. Tangible Net Worth 27 Section 10.2.
Financial Ratios 27 Section 10.3. Liens 28 Section 10.4. Merger, Consolidation,
Etc. 30 Section 10.5. Sale of Assets, etc. 30 Section 10.6. Transactions with
Affiliates 31 Section 10.7. Sale and Lease-Back 31 Section 10.8. Sale or
Discount of Receivables 31 Section 10.9. Change in Business 31 Section 10.10.
Restrictive Agreements 31 Section 10.11. Terrorism Sanctions Regulations 32
Section 10.12. Liens and Reserves 32  

SECTION 11.

Events of Default 32    

SECTION 12.

Remedies on Default, Etc. 34   Section 12.1. Acceleration 34 Section 12.2. Other
Remedies 35 Section 12.3. Rescission 35 Section 12.4. No Waivers or Election of
Remedies, Expenses, Etc. 35

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SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES 32   Section 13.1.
Registration of Notes 32 Section 13.2. Transfer and Exchange of Notes 32

Section 13.3.

Replacement of Notes 33   SECTION 14. PAYMENTS ON NOTES 33   Section 14.1. Place
of Payment 33 Section 14.2. Home Office Payment 34   SECTION 15. EXPENSES, ETC
34   Section 15.1. Transaction Expenses 34 Section 15.2. Survival 34   SECTION
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT 35   SECTION
17. AMENDMENT AND WAIVER 35   Section 17.1. Requirements 35 Section 17.2.
Solicitation of Holders of Notes 35 Section 17.3. Binding Effect, etc 36 Section
17.4. Notes Held by Company, etc 36   SECTION 18. NOTICES 36   SECTION 19.
REPRODUCTION OF DOCUMENTS 37   SECTION 20. CONFIDENTIAL INFORMATION 37   SECTION
21. SUBSTITUTION OF PURCHASER 38   SECTION 22. MISCELLANEOUS 38   Section 22.1.
Successors and Assigns 38 Section 22.2. Payments Due on Non-Business Days 39
Section 22.3. Accounting Terms 39

Section 22.4.

Severability 39 Section 22.5. Construction, etc 39 Section 22.6. Counterparts 39
Section 22.7. Governing Law 39 Section 22.8. Jurisdiction and Process; Waiver of
Jury Trial 40   Signature 1

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SCHEDULE A — INFORMATION RELATING TO PURCHASERS   SCHEDULE B — DEFINED TERMS  
SCHEDULE 5.3 — Disclosure Materials   SCHEDULE 5.4 — Subsidiaries of the Company
and Ownership of Subsidiary Stock   SCHEDULE 5.5 — Financial Statements  
SCHEDULE 5.14 — Use of Proceeds   SCHEDULE 5.15 — Existing Indebtedness  
EXHIBIT 1 — Form of 8.01% Senior Note due August 11, 2015   EXHIBIT 4.4(a) —
Form of Opinion of Special Counsel for the Company   EXHIBIT 4.4(b) —

Form of Opinion of Special Counsel for the Purchasers

CULP, INC.
101 South Main Street
High Point, North Carolina  27261-2686

8.01% Senior Notes due August 11, 2015

August 11, 2008

TO EACH OF THE PURCHASERS LISTED IN
          SCHEDULE A HERETO:

Ladies and Gentlemen:

Culp, Inc., a North Carolina corporation (the “Company”), agrees with each of
the purchasers whose names appear at the end hereof (each, a “Purchaser” and,
collectively, the “Purchasers”) as follows:

SECTION 1.             AUTHORIZATION OF NOTES.

The Company will authorize the issue and sale of $11,000,000 aggregate principal
amount of its 8.01% Senior Notes due August 11, 2015 (the “Notes”, such term to
include any such notes issued in substitution therefor pursuant to
Section 13).  The Notes shall be substantially in the form set out in
Exhibit 1.  Certain capitalized and other terms used in this Agreement are
defined in Schedule B; and references to a “Schedule” or an “Exhibit” are,
unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.

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SECTION 2.             SALE AND PURCHASE OF NOTES.

Subject to the terms and conditions of this Agreement, the Company will issue
and sell to each Purchaser and each Purchaser will purchase from the Company, at
the Closing provided for in Section 3, Notes in the principal amount specified
opposite such Purchaser’s name in Schedule A at the purchase price of 100% of
the principal amount thereof.  The Purchasers’ obligations hereunder are several
and not joint obligations and no Purchaser shall have any liability to any
Person for the performance or non-performance of any obligation by any other
Purchaser hereunder.

SECTION 3.             CLOSING.

The sale and purchase of the Notes to be purchased by each Purchaser shall occur
at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago,
Illinois 60603, at 10:00 a.m., Chicago time, at a closing (the “Closing”) on
August 11, 2008 or on such other Business Day thereafter on or prior to
August 22, 2008 as may be agreed upon by the Company and the Purchasers.  At the
Closing the Company will deliver to each Purchaser the Notes to be purchased by
such Purchaser in the form of a single Note (or such greater number of Notes in
denominations of at least $100,000 as such Purchaser may request) dated the date
of the Closing and registered in such Purchaser’s name (or in the name of its
nominee), against delivery by such Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
account number 2040230014183 at Wachovia Bank, National Association, ABA Number
053000219, High Point, North Carolina.  If at the Closing the Company shall fail
to tender such Notes to any Purchaser as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been fulfilled to
such Purchaser’s satisfaction, such Purchaser shall, at its election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
nonfulfillment.

SECTION 4.             CONDITIONS TO CLOSING.

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such
Purchaser at the Closing is subject to the fulfillment to such Purchaser’s
satisfaction, prior to or at the Closing, of the following conditions:

Section 4.1. Representations and Warranties.  The representations and warranties
of the Company in this Agreement shall be correct when made and at the time of
the Closing.

Section 4.2. Performance; No Default.  The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at the Closing and after
giving effect to the issue and sale of the Notes (and the application of the
proceeds thereof as contemplated by Section 5.14) no Default or Event of Default
shall have occurred and be continuing.  Neither the Company nor any Subsidiary
shall have entered into any transaction since April 27, 2008 that would have
been prohibited by Section 10 hereof had such Section applied since such date.

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   Section 4.3. Compliance Certificates.

   (a)  Officer’s Certificate.  The Company shall have delivered to such
Purchaser an Officer’s Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2, 4.9 and 4.10 have been
fulfilled.

   (b) Secretary’s Certificate.  The Company shall have delivered to such
Purchaser a certificate of its Secretary or Assistant Secretary, dated the date
of Closing, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and this Agreement.

   Section 4.4. Opinions of Counsel.  Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the date of
the Closing (a) from Robinson, Bradshaw & Hinson, P.A., special counsel for the
Company, covering the matters set forth in Exhibit 4.4(a) and covering such
other matters incident to the transactions contemplated hereby as such Purchaser
or its counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to the Purchasers) and (b) from Chapman and
Cutler LLP, the Purchasers’ special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as such Purchaser may
reasonably request.

   Section 4.5. Purchase Permitted By Applicable Law, Etc.  On the date of the
Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject such
Purchaser to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date
hereof.  If requested by such Purchaser, such Purchaser shall have received an
Officer’s Certificate certifying as to such matters of fact as such Purchaser
may reasonably specify to enable such Purchaser to determine whether such
purchase is so permitted.

   Section 4.6. Sale of Other Notes.  Contemporaneously with the Closing the
Company shall sell to each other Purchaser and each other Purchaser shall
purchase the Notes to be purchased by it at the Closing as specified in
Schedule A.

  Section 4.7. Payment of Special Counsel Fees. Without limiting the provisions
of Section 15.1, the Company shall have paid on or before the Closing the fees,
charges and disbursements of the Purchasers’ special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel rendered to
the Company at least one Business Day prior to the Closing.

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  Section 4.8. Private Placement Number.  A Private Placement Number issued by
Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have
been obtained for the Notes.

                Section 4.9. Changes in Corporate Structure.  The Company shall
not have changed its jurisdiction of incorporation or been a party to any merger
or consolidation and shall not have succeeded to all or any substantial part of
the liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.  

                Section 4.10. B&H Acquisition.  The Company shall have delivered
to such Purchaser a true, complete and correct copy of the fully executed
Purchase Agreement and all conditions necessary to close the B&H Acquisition
(other than payment of the purchase price) shall have been satisfied in the
manner contemplated therein.

                Section 4.11. Funding Instructions.  At least three Business
Days prior to the date of the Closing, each Purchaser shall have received
written instructions signed by a Responsible Officer on letterhead of the
Company confirming the information specified in Section 3 including (i) the name
and address of the transferee bank, (ii) such transferee bank’s ABA number and
(iii) the account name and number into which the purchase price for the Notes is
to be deposited.

                Section 4.12. Proceedings and Documents.  All corporate and
other proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions shall
be satisfactory to such Purchaser and its special counsel, and such Purchaser
and its special counsel shall have received all such counterpart originals or
certified or other copies of such documents as such Purchaser or such special
counsel may reasonably request.

SECTION 5.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each Purchaser that:

                Section 5.1. Organization; Power and Authority.  The Company is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  The
Company has the corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this Agreement and
the Notes and to perform the provisions hereof and thereof.

                Section 5.2. Authorization, Etc.  This Agreement and the Notes
have been duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

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                Section 5.3. Disclosure.  The Company has delivered to each
Purchaser a copy of each of the items listed on Schedule 5.3 hereto (the
“Offering Materials”) relating to the transactions contemplated hereby.  The
Offering Materials fairly describe, in all material respects, the general nature
of the business and principal properties of the Company and its
Subsidiaries.  This Agreement, the Offering Materials and the documents,
certificates or other writings delivered to the Purchasers by or on behalf of
the Company in connection with the transactions contemplated hereby and
identified in Schedule 5.3, and the financial statements listed in Schedule 5.5
(this Agreement, the Offering Materials and such documents, certificates or
other writings and such financial statements delivered to each Purchaser prior
to July 3, 2008 being referred to, collectively, as the “Disclosure Documents”),
taken as a whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made.  Except as
disclosed in the Disclosure Documents, since April 27, 2008, there has been no
change in the financial condition, operations, business, properties or prospects
of the Company or any Subsidiary except changes that individually or in the
aggregate could not reasonably be expected to have a Material Adverse
Effect.  There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect that has not been set forth herein or in the
Disclosure Documents.

                Section 5.4. Organization and Ownership of Shares of
Subsidiaries; Affiliates.  (a) Schedule 5.4 contains (except as noted therein)
complete and correct lists (i) of the Company’s Subsidiaries, showing, as to
each Subsidiary, the correct name thereof, the jurisdiction of its organization,
and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other Subsidiary,
(ii) of the Company’s Affiliates, other than Subsidiaries, and (iii) of the
Company’s directors and senior officers.

  (b) All of the outstanding shares of capital stock or similar equity interests
of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Company or another Subsidiary free and clear of any Lien (except as
otherwise disclosed in Schedule 5.4).

  (c)  Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

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    (d)    No Subsidiary is a party to, or otherwise subject to any legal,
regulatory, contractual or other restriction (other than this Agreement, the
agreements or other restrictions listed on Schedule 5.4 and customary
limitations imposed by corporate law or similar statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of such
Subsidiary.

                Section 5.5. Financial Statements; Material Liabilities.  The
Company has delivered to each Purchaser copies of the financial statements of
the Company and its Subsidiaries listed on Schedule 5.5.  All of said financial
statements (including in each case the related schedules and notes) fairly
present in all material respects the consolidated financial position of the
Company and its Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).   The Company and its Subsidiaries do not have any
Material liabilities that are not disclosed on such financial statements or
otherwise disclosed in the Disclosure Documents.

                Section 5.6. Compliance with Laws, Other Instruments, Etc.  The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any other
agreement or instrument to which the Company or any Subsidiary is bound or by
which the Company or any Subsidiary or any of their respective properties may be
bound or affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.

                Section 5.7. Governmental Authorizations, Etc.  No consent,
approval or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution, delivery or
performance by the Company of this Agreement or the Notes.

                Section 5.8. Litigation; Observance of Agreements, Statutes and
Orders.  (a) There are no actions, suits, investigations or proceedings pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any Subsidiary or any property of the Company or any Subsidiary in any court
or before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

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   (b) Neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws or the USA Patriot
Act) of any Governmental Authority, which default or violation, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

               Section 5.9. Taxes.  The Company and its Subsidiaries have filed
all material tax returns that are required to have been filed in any
jurisdiction, or have properly filed for extensions of time for the filing
thereof, and have paid all taxes shown to be due and payable on such returns and
all other taxes and assessments levied upon them or their properties, assets,
income or franchises, to the extent such taxes and assessments have become due
and payable and before they have become delinquent, except for any taxes and
assessments (i) the amount of which is not individually or in the aggregate
Material or (ii) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Company or a Subsidiary, as the case may be, has established adequate
reserves in accordance with GAAP.  The Company knows of no basis for any other
tax or assessment that could reasonably be expected to have a Material Adverse
Effect.  The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods
are adequate.  The Federal income tax liabilities of the Company and its
Subsidiaries have been finally determined (whether by reason of completed audits
or the statute of limitations having run) for all fiscal years up to and
including the fiscal year ended April 29, 2001.

                Section 5.10. Title to Property; Leases.  The Company and its
Subsidiaries have good and sufficient title to their respective properties that
individually or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company or any Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement.  All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.

                Section 5.11. Licenses, Permits, Etc.  (a) The Company and its
Subsidiaries own or possess all licenses, permits, franchises, authorizations,
patents, copyrights, proprietary software, service marks, trademarks and trade
names, or rights thereto, that individually or in the aggregate are Material,
without known conflict with the rights of others.

   (b)To the best knowledge of the Company, no product of the Company or any of
its Subsidiaries infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, proprietary software, service mark,
trademark, trade name or other right owned by any other Person.

    (c)To the best knowledge of the Company, there is no Material violation by
any Person of any right of the Company or any of its Subsidiaries with respect
to any patent, copyright, proprietary software, service mark, trademark, trade
name or other right owned or used by the Company or any of its Subsidiaries.

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               Section 5.12.Compliance with ERISA.  (a)  The Company and each
ERISA Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse
Effect.  Neither the Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans (as defined in section 3 of ERISA),
and no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by the
Company or any ERISA Affiliate, or in the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA Affiliate, in either
case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to section 401(a)(29) or 412 of the Code or section 4068 of ERISA,
other than such liabilities or Liens as would not be individually or in the
aggregate Material.

               (b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end of
such Plan’s most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan’s most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities.  The term “benefit liabilities”
has the meaning specified in section 4001 of ERISA and the terms “current value”
and “present value” have the meaning specified in section 3 of ERISA.

               (c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.

               (d) The expected postretirement benefit obligation (determined as
of the last day of the Company’s most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.

               (e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is subject
to the prohibitions of section 406 of ERISA or in connection with which a tax
could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.  The
representation by the Company to each Purchaser in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the accuracy of such
Purchaser’s representation in Section 6.2 as to the sources of the funds used to
pay the purchase price of the Notes to be purchased by such Purchaser.

               Section 5.13. Private Offering by the Company.  Neither the
Company nor anyone acting on its behalf has offered the Notes or any similar
securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any person other
than the Purchasers and not more than five (5) other Institutional Investors,
each of which has been offered the Notes at a private sale for
investment.  Neither the Company nor anyone acting on its behalf has taken, or
will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act or to the
registration requirements of any securities or blue sky laws of any applicable
jurisdiction.

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                Section 5.14. Use of Proceeds; Margin Regulations.  The Company
will apply the proceeds of the sale of the Notes as set forth in
Schedule 5.14.  No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220).  Neither
the Company nor any Subsidiary presently owns, legally or beneficially, or has
any present intention to, acquire any margin stock.  As used in this Section,
the terms “margin stock” and “purpose of buying or carrying” shall have the
meanings assigned to them in said Regulation U.

               Section 5.15. Existing Indebtedness; Future Liens .  (a) Except
as described therein, Schedule 5.15 sets forth a complete and correct list of
all outstanding Indebtedness of the Company and its Subsidiaries as of July 15,
2008 (including a description of the obligors and obligees, principal amount
outstanding and collateral therefor, if any, and Guaranty thereof, if any)
excluding Indebtedness having an unpaid aggregate principal amount of less than
$50,000 as of July 15, 2008, since which date there has been no Material change
in the amounts, interest rates, sinking funds, installment payments or
maturities of the Indebtedness of the Company or its Subsidiaries.  Neither the
Company nor any Subsidiary is in default and no waiver of default is currently
in effect, in the payment of any principal or interest on any Indebtedness of
the Company or such Subsidiary and no event or condition exists with respect to
any Indebtedness of the Company or any Subsidiary that would permit (or that
with notice or the lapse of time, or both, would permit) one or more Persons to
cause such Indebtedness to become due and payable before its stated maturity or
before its regularly scheduled dates of payment.

              (b) Except as disclosed in Schedule 5.15, neither the Company nor
any Subsidiary has agreed or consented to cause or permit in the future (upon
the happening of a contingency or otherwise) any of its property, whether now
owned or hereafter acquired, to be subject to a Lien not permitted by Section
10.3.

              (c) Neither the Company nor any Subsidiary is a party to, or
otherwise subject to any provision contained in, any instrument evidencing
Indebtedness of the Company or such Subsidiary, any agreement relating thereto
or any other agreement (including, but not limited to, its charter or other
organizational document) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Indebtedness of the Company, except as
specifically indicated in Schedule 5.15.

              Section 5.16. Foreign Assets Control Regulations,
Etc.  (a) Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.  

              (b) Neither the Company nor any Subsidiary (i) is a Person
described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section 1 of the
Anti-Terrorism Order or (ii) engages in any dealings or transactions with any
such Person.  The Company and its Subsidiaries are in compliance, in all
material respects, with the USA Patriot Act.

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(c) No part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming
in all cases that such Act applies to the Company.

             Section 5.17. Status under Certain Statutes.  Neither the Company
nor any Subsidiary is subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 2005, as amended,
the ICC Termination Act of 1995, as amended, or the Federal Power Act, as
amended.

             Section 5.18. Environmental Matters.  (a) Neither the Company nor
any Subsidiary has knowledge of any claim or has received any notice of any
claim, and no proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or, to the Company’s knowledge, any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect.

(b) Neither the Company nor any Subsidiary has knowledge of any facts which
would give rise to any claim, public or private, of violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any way
related to real properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.

(c) Neither the Company nor any Subsidiary has stored any Hazardous Materials on
real properties now or formerly owned, leased or operated by any of them and has
not disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect; and

(d) To the knowledge of the Company, all buildings on all real properties now
owned, leased or operated by the Company or any Subsidiary are in compliance
with applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.

SECTION 6.             REPRESENTATIONS OF THE PURCHASERS.

               Section 6.1. Purchase for Investment.  Each Purchaser severally
represents that it is purchasing the Notes for its own account or for one or
more separate accounts maintained by such Purchaser or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of such Purchaser’s or their property shall at all
times be within such Purchaser’s or their control.  Each Purchaser understands
that the Notes have not been registered under the Securities Act and may be
resold only if registered pursuant to the provisions of the Securities Act or if
an exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.

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               Section 6.2. Source of Funds.  Each Purchaser severally
represents that at least one of the following statements is an accurate
representation as to each source of funds (a “Source”) to be used by such
Purchaser to pay the purchase price of the Notes to be purchased by such
Purchaser hereunder:

                     (a)    the Source is an “insurance company general account”
(as the term is defined in the United States Department of Labor’s Prohibited
Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and
liabilities (as defined by the annual statement for life insurance companies
approved by the National Association of Insurance Commissioners (the “NAIC
Annual Statement”)) for the general account contract(s) held by or on behalf of
any employee benefit plan together with the amount of the reserves and
liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the
general account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with such Purchaser’s state of
domicile; or

                     (b)  the Source is a separate account that is maintained
solely in connection with such Purchaser’s fixed contractual obligations under
which the amounts payable, or credited, to any employee benefit plan (or its
related trust) that has any interest in such separate account (or to any
participant or beneficiary of such plan (including any annuitant)) are not
affected in any manner by the investment performance of the separate account; or

                     (c)  the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 or (ii) a bank collective
investment fund, within the meaning of the PTE 91-38 and, except as disclosed by
such Purchaser to the Company in writing pursuant to this clause (c), no
employee benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or

                     (d)  the Source constitutes assets of an “investment fund”
(within the meaning of Part V of PTE 84-14 (the “QPAM Exemption”)) managed by a
“qualified professional asset manager” or “QPAM” (within the meaning of Part V
of the QPAM Exemption), no employee benefit plan’s assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c) and (g) of
the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or
controlled by the QPAM (applying the definition of “control” in Section V(e) of
the QPAM Exemption) owns a 5% or more interest in the Company and (i) the
identity of such QPAM and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the Company
in writing pursuant to this clause (d); or

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                     (e) the Source constitutes assets of a “plan(s)” (within
the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an
“in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM
Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are
satisfied, neither the INHAM nor a person controlling or controlled by the INHAM
(applying the definition of “control” in Section IV(d) of the INHAM Exemption)
owns a 5% or more interest in the Company and (i) the identity of such INHAM and
(ii) the name(s) of the employee benefit plan(s) whose assets constitute the
Source have been disclosed to the Company in writing pursuant to this clause
(e); or

                     (f)  the Source is a governmental plan; or

                     (g)  the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to this
clause (g); or

                     (h)  the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan,” “governmental
plan,” and “separate account” shall have the respective meanings assigned to
such terms in section 3 of ERISA.

SECTION 7.             INFORMATION AS TO COMPANY.

               Section 7.1. Financial and Business Information.  The Company
shall deliver to each holder of Notes that is an Institutional Investor:

                       (a) Quarterly Statements — within 60 days (or such
shorter period as is 15 days greater than the period applicable to the filing of
the Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC
regardless of whether the Company is subject to the filing requirements thereof)
after the end of each quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such fiscal year),
duplicate copies of,

                                 (i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such quarter, and

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                                 (ii) consolidated statements of income,
shareholders’ equity and cash flows of the Company and its Subsidiaries, for
such quarter and (in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Company’s Form 10-Q prepared in compliance with the requirements
therefor and filed with the SEC shall be deemed to satisfy the requirements of
this Section 7.1(a), provided, further, that the Company shall be deemed to have
made such delivery of such Form 10-Q if it shall have timely made such Form 10-Q
available on “EDGAR” and on its home page on the worldwide web (at the date of
this Agreement located at:  http//www.culpinc.com) and shall have given each
Purchaser prior notice of such availability on EDGAR and on its home page in
connection with each delivery (such availability and notice thereof being
referred to as “Electronic Delivery”);

                       (b)    Annual Statements — within 105 days (or such
shorter period as is 15 days greater than the period applicable to the filing of
the Company’s Annual Report on Form 10-K (the “Form 10-K”) with the SEC
regardless of whether the Company is subject to the filing requirements thereof)
after the end of each fiscal year of the Company, duplicate copies of

                               (i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such year, and

                               (ii) consolidated statements of income, changes
in shareholders’ equity and cash flows of the Company and its Subsidiaries for
such year,

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by

                               (A) an opinion thereon of independent public
accountants of recognized national standing, which opinion shall state that such
financial statements present fairly, in all material respects, the financial
position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in the circumstances,
and

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                               (B) a certificate of such accountants stating
that they have reviewed this Agreement and stating further whether, in making
their audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are aware that any
such condition or event then exists, specifying the nature and period of the
existence thereof (it being understood that such accountants shall not be
liable, directly or indirectly, for any failure to obtain knowledge of any
Default or Event of Default unless such accountants should have obtained
knowledge thereof in making an audit in accordance with generally accepted
auditing standards or did not make such an audit),

provided that the delivery within the time period specified above of the
Company’s Form 10-K for such fiscal year (together with the Company’s annual
report to shareholders, if any, prepared pursuant to Rule 14a-3 under the
Exchange Act) prepared in accordance with the requirements therefor and filed
with the SEC, together with the accountant’s certificate described in clause (B)
above (the “Accountants’ Certificate”), shall be deemed to satisfy the
requirements of this Section 7.1(b), provided, further, that the Company shall
be deemed to have made such delivery of such Form 10-K if it shall have timely
made Electronic Delivery thereof, in which event the Company shall separately
deliver, concurrently with such Electronic Delivery, the Accountants’
Certificate;

                       (c) SEC and Other Reports — promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or proxy
statement sent by the Company or any Subsidiary to its principal lending banks
as a whole (excluding information sent to such banks in the ordinary course of
administration of a bank facility, such as information relating to pricing and
borrowing availability) or to its public securities holders generally, and
(ii) each regular or periodic report, each registration statement other than
Registration Statements on Form S-8 (without exhibits except as expressly
requested by such holder), and each prospectus and all amendments thereto filed
by the Company or any Subsidiary with the SEC and of all press releases and
other statements made available generally by the Company or any Subsidiary to
the public concerning developments that are Material;

                       (d) Notice of Default or Event of Default — promptly, and
in any event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;

                       (e) ERISA Matters — promptly, and in any event within
five days after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that the
Company or an ERISA Affiliate proposes to take with respect thereto:

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                                 (i) with respect to any Plan, any reportable
event, as defined in section 4043(c) of ERISA and the regulations thereunder,
for which notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or

                                 (ii) the taking by the PBGC of steps to
institute, or the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multi-employer Plan that such action has been taken
by the PBGC with respect to such Multi-employer Plan; or

                                 (iii) any event, transaction or condition that
could result in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the imposition
of any Lien on any of the rights, properties or assets of the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably be expected to have a
Material Adverse Effect;

                     (f) Notices from Governmental Authority — promptly, and in
any event within 30 days of receipt thereof, copies of any notice to the Company
or any Subsidiary from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and

                     (g) Requested Information — with reasonable promptness,
such other data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries (including, but without limitation, actual copies of the Company’s
Form 10-Q and Form 10-K) or relating to the ability of the Company to perform
its obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.

               Section 7.2.    Officer’s Certificate.  Each set of financial
statements delivered to a holder of Notes pursuant to Section 7.1(a) or Section
7.1(b) shall be accompanied by a certificate of a Senior Financial Officer
setting forth (which, in the case of Electronic Delivery of any such financial
statements, shall be by separate concurrent delivery of such certificate to each
holder of Notes):

                       (a)  Covenant Compliance — the information (including
detailed calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 through Section 10.3, both
inclusive, and Section 10.5 hereof during the quarterly or annual period covered
by the statements then being furnished (including with respect to each such
Section, where applicable, (i) the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the terms of
such Sections, and the calculation of the amount, ratio or percentage then in
existence, and (ii) a detailed listing of the Restructuring Charges taken into
account in the preparation of such calculations); and

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                       (b)     Event of Default — a statement that such Senior
Financial Officer has reviewed the relevant terms hereof and has made, or caused
to be made, under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of the
quarterly or annual period covered by the statements then being furnished to the
date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event existed or
exists (including, without limitation, any such event or condition resulting
from the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof and
what action the Company shall have taken or proposes to take with respect
thereto.

               Section 7.3. Visitation.  The Company shall permit the
representatives of each holder of Notes that is an Institutional Investor:

                       (a)           No Default — if no Default or Event of
Default then exists, at the expense of such holder and upon reasonable prior
notice to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company’s officers, and (with the consent of the Company,
which consent will not be unreasonably withheld) its independent public
accountants, and (with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and

                       (b)              Default — if a Default or Event of
Default then exists, at the expense of the Company to visit and inspect any of
the offices or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public accountants (and
by this provision the Company authorizes said accountants to discuss the
affairs, finances and accounts of the Company and its Subsidiaries), all at such
times and as often as may be requested.

SECTION 8.             PAYMENT AND PREPAYMENT OF THE NOTES.

                Section 8.1. Required Prepayments.  On August 11, 2011, and on
the 11th day of each August thereafter to and including August 11, 2014, the
Company will prepay $2,200,000 principal amount (or such lesser principal amount
as shall then be outstanding) of the Notes at par and without payment of the
Make-Whole Amount or any premium, provided that upon any partial prepayment of
the Notes pursuant to Section 8.2 or Section 8.4 or purchase of the Notes
permitted by Section 8.6, the principal amount of each required prepayment of
the Notes becoming due under this Section 8.1 on and after the date of such
prepayment or purchase shall be reduced in the same proportion as the aggregate
unpaid principal amount of the Notes is reduced as a result of such prepayment
or purchase.  On August 11, 2015, the entire remaining principal amount of the
Notes, together with accrued and unpaid interest thereon, shall become due and
payable.

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                Section 8.2. Change in Control.  (a) Notice of Change in Control
or Control Event. The Company will, within five Business Days after any
Responsible Officer has knowledge of the occurrence of any Change in Control or
Control Event, give written notice of such Change in Control or Control Event to
each holder of Notes unless notice in respect of such Change in Control (or the
Change in Control contemplated by such Control Event) shall have been given
pursuant to subparagraph (b) of this Section.  If a Change in Control has
occurred, such notice shall contain and constitute an offer to prepay Notes as
described in subparagraph (c) of this Section and shall be accompanied by the
certificate described in subparagraph (g) of this Section.

         (b) Condition to Company Action.  The Company will not take any action
that consummates or finalizes a Change in Control unless (i) at least 30 days
prior to such action it shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as described in
subparagraph (c) of this Section, accompanied by the certificate described in
subparagraph (g) of this Section, and (ii) contemporaneously with such action,
it prepays all Notes required to be prepaid in accordance with this Section.

         (c) Offer to Prepay Notes.  The offer to prepay Notes contemplated by
subparagraphs (a) and (b) of this Section shall be an offer to prepay, in
accordance with and subject to this Section, all, but not less than all, the
Notes held by each holder (in this case only, “holder” in respect of any Note
registered in the name of a nominee for a disclosed beneficial owner shall mean
such beneficial owner) on a date specified in such offer (the “Proposed
Prepayment Date”).  If such Proposed Prepayment Date is in connection with an
offer contemplated by subparagraph (a) of this Section, such date shall be not
less than 15 days and not more than 30 days after the date of such offer (if the
Proposed Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the first Business Day after the 30th day after the
date of such offer).

         (d) Acceptance.  A holder of Notes may accept the offer to prepay made
pursuant to this Section by causing a notice of such acceptance to be delivered
to the Company at least five days prior to the Proposed Prepayment Date.  If the
offer is so accepted by any holder of Notes, the Company at least four days
prior to the Proposed Prepayment Date shall give written notice to each holder
of Notes that has not so accepted the offer, in which notice the Company shall
(i) state the aggregate outstanding principal amount of Notes in respect of
which the offer has been accepted and (ii) renew the offer and extend the time
for acceptance by stating that any holder of Notes may yet accept the offer,
whether theretofore rejected or not, by causing a notice of such acceptance to
be delivered to the Company at least two days prior to the Proposed Prepayment
Date. A failure by a holder of Notes to respond to an offer to prepay made
pursuant to this Section shall be deemed to constitute a rejection of such offer
by such holder.

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         (e) Prepayment.  Prepayment of the Notes to be prepaid pursuant to this
Section shall be at 100% of the principal amount of such Notes, together with
interest on such Notes accrued to the date of prepayment, but without Make-Whole
Amount or other premium.  The prepayment shall be made on the Proposed
Prepayment Date except as provided in subparagraph (f) of this Section.

         (f) Deferral Pending Change in Control.  The obligation of the Company
to prepay Notes pursuant to the offers required by subparagraph (b) and accepted
in accordance with subparagraph (d) of this Section is subject to the occurrence
of the Change in Control in respect of which such offers and acceptances shall
have been made.  In the event that such Change in Control has not occurred on
the Proposed Prepayment Date in respect thereof, the prepayment shall be
deferred until and shall be made on the date on which such Change in Control
occurs.  The Company shall keep each holder of Notes reasonably and timely
informed of (i) any such deferral of the date of prepayment, (ii) the date on
which such Change in Control and the prepayment are expected to occur, and
(iii) any determination by the Company that efforts to effect such Change in
Control have ceased or been abandoned (in which case the offers and acceptances
made pursuant to this Section in respect of such Change in Control shall be
deemed rescinded).

         (g)  Officer’s Certificate. Each offer to prepay the Notes pursuant to
this Section shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this
Section 8.2; (iii) the principal amount of each Note offered to be prepaid;
(iv) the interest that would be due on each Note offered to be prepaid, accrued
to the Proposed Prepayment Date; (v) that the conditions of this Section have
been fulfilled; and (vi) in reasonable detail, the nature and date or proposed
date of the Change in Control.

         (h)        “Change in Control” Defined.  A “Change in Control” shall be
deemed to have occurred if any Person or Persons acting in concert (other than
the Culp Family), together with Affiliates thereof, shall in the aggregate,
directly or indirectly, control or own (beneficially or otherwise) more than 50%
(by number of shares) of the issued and outstanding Voting Stock of the
Company.  “Culp Family” means Robert G. Culp III, his spouse, his mother, his
siblings, his lineal descendants and any trusts for the exclusive benefit of any
such individual, so long as such individual has the exclusive right to control
each such trust.

         (i)        “Control Event” Defined.  “Control Event” means:

                     (i)  the execution by the Company or any of its
Subsidiaries or Affiliates of any agreement or letter of intent with respect to
any proposed transaction or event or series of transactions or events which,
individually or in the aggregate, may reasonably be expected to result in a
Change in Control,

                    (ii) the execution of any written agreement which, when
fully performed by the parties thereto, would result in a Change in Control, or

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                   (iii) the making of any written offer by any person (as such
term is used in section 13(d) and section 14(d)(2) of the Exchange Act as in
effect on the date of the Closing) or related persons constituting a group (as
such term is used in Rule 13d-5 under the Exchange Act as in effect on the date
of the Closing) to the holders of the common stock of the Company, which offer,
if accepted by the requisite number of holders, would result in a Change in
Control.

               Section 8.3. Allocation of Partial Prepayments.  In the case of
partial prepayment of the Notes (other than a prepayment pursuant to Section
8.2), the principal amount of the Notes to be prepaid shall be allocated among
all of the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment.  All prepayments made pursuant to Section 8.2 shall be
applied only to the Notes of the holders who have elected to participate in such
prepayment.

                Section 8.4. Optional Prepayments with Make-Whole Amount.  The
Company may, at its option, upon notice as provided below, prepay at any time
all, or from time to time any part of, the Notes, in an amount not less than 10%
of the aggregate principal amount of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, plus the
Make-Whole Amount and accrued interest determined for the prepayment date with
respect to such principal amount.  The Company will give each holder of Notes
written notice of each optional prepayment under this Section 8.4 not less than
30 days and not more than 60 days prior to the date fixed for such
prepayment.  Each such notice shall specify such date, the aggregate principal
amount of the Notes to be prepaid on such date, the principal amount of each
Note held by such holder to be prepaid (determined in accordance with
Section 8.3), and the interest to be paid on the prepayment date with respect to
such principal amount being prepaid, and shall be accompanied by a certificate
of a Senior Financial Officer as to the estimated Make-Whole Amount due in
connection with such prepayment (calculated as if the date of such notice were
the date of the prepayment), setting forth the details of such computation.  Two
Business Days prior to such prepayment, the Company shall deliver to each holder
of Notes a certificate of a Senior Financial Officer specifying the calculation
of such Make-Whole Amount as of the specified prepayment date.  The calculations
with respect to the Make-Whole Amount shall in any event be subject to the
review and approval of the holders of the Notes and, in the case of any
disagreement among such holders and the Company with respect to such
calculations or method of computation thereof, the conclusion of such holders
shall, in the absence of manifest error, be deemed, binding and conclusive.   

                Section 8.5. Maturity; Surrender, Etc.  In the case of each
prepayment of Notes pursuant to this Section 8, the principal amount of each
Note to be prepaid shall mature and become due and payable on the date fixed for
such prepayment (which shall be a Business Day), together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any.  From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue.  Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.

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               Section 8.6. Purchase of Notes.  The Company will not and will
not permit any Affiliate to purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes.  The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment or prepayment of Notes pursuant to any
provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.

                Section 8.7. Make-Whole Amount.

“Make-Whole Amount” means, with respect to any Note, an amount equal to the
excess, if any, of the Discounted Value of the Remaining Scheduled Payments with
respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero.  For the purposes of determining the Make-Whole Amount, the following
terms have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.4 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of any Note,
0.50% over the yield to maturity implied by (i) the yields reported as of 10:00
a.m. (New York City time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the display designated as “Page
PX1” (or such other display as may replace Page PX1) on Bloomberg Financial
Markets for the most recently issued actively traded on the run U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (ii) if such yields are not reported as
of such time or the yields reported as of such time are not ascertainable
(including by way of interpolation), the Treasury Constant Maturity Series
Yields reported, for the latest day for which such yields have been so reported
as of the second Business Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable
successor publication) for U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date.  

In the case of each determination under clause (i) or clause (ii), as the case
may be, of the preceding paragraph, such implied yield will be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between (1) the applicable U.S. Treasury security with the maturity
closest to and greater than such Remaining Average Life and (2) the applicable
U.S. Treasury security with the maturity closest to and less than such Remaining
Average Life.  The Reinvestment Yield shall be rounded to the number of decimal
places as appears in the interest rate of the applicable Note.

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“Remaining Average Life” means, with respect to any Called Principal, the number
of years (calculated to the nearest one-twelfth year) obtained by dividing
(i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.4 or Section 12.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.4 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.

SECTION 9.             AFFIRMATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

               Section 9.1. Compliance with Law.  Without limiting
Section 10.11, the Company will, and will cause each of its Subsidiaries to,
comply with all laws, ordinances or governmental rules or regulations to which
each of them is subject, including, without limitation, ERISA, the USA Patriot
Act and Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

                Section 9.2.  Insurance.  The Company will, and will cause each
of its Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.

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               Section 9.3. Maintenance of Properties.  The Company will, and
will cause each of its Subsidiaries to, maintain and keep, or cause to be
maintained and kept, their respective properties in reasonably good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

               Section 9.4. Payment of Taxes and Claims.  The Company will, and
will cause each of its Subsidiaries to, file all material tax returns required
to be filed in any jurisdiction and to pay and discharge all taxes shown to be
due and payable on such returns and all other taxes, assessments, governmental
charges, or levies imposed on them or any of their properties, assets, income or
franchises, to the extent the same have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary need pay any
such tax, assessment, charge, levy or claim if (i) the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (ii) the nonpayment of all such
taxes, assessments, charges, levies and claims in the aggregate could not
reasonably be expected to have a Material Adverse Effect.

                Section 9.5. Corporate Existence, Etc.  Subject to Section 10.4,
the Company will at all times preserve and keep in full force and effect its
corporate existence.  Subject to Sections 10.4 and 10.5 the Company will at all
times preserve and keep in full force and effect the corporate existence of each
of its Subsidiaries (unless merged into the Company or a Wholly-Owned
Subsidiary) and all rights and franchises of the Company and its Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence, right or
franchise could not, individually or in the aggregate, have a Material Adverse
Effect.

                Section 9.6. Notes to Rank Pari Passu.  The Notes and all other
obligations under this Agreement of the Company are and at all times shall rank
at least pari passu in right of payment with all other present and future Senior
Funded Debt (actual or contingent) of the Company which is not expressed to be
subordinate or junior in rank to any other unsecured Indebtedness of the
Company.

                Section 9.7. Guaranty by Subsidiaries.  The Company will cause
each Subsidiary which becomes a borrower or a guarantor in respect of
Indebtedness of the Company outstanding under any facility or agreement in
respect of which senior Indebtedness of the Company may be outstanding
(including, without limitation, the Credit Agreement and the 1998 Note Agreement
and any replacement of either thereof) to concurrently enter into a Subsidiary
Guaranty, and within three Business Days thereafter will deliver to each of the
holders of the Notes the following items:

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                     (a) an executed counterpart of such Subsidiary Guaranty or
joinder agreement in respect of an existing Subsidiary Guaranty, as appropriate;
and

                     (b) such other documents, certificates, legal opinions and
information as the Required Holders reasonably may require regarding such
Subsidiary, the authorization of the transactions contemplated by such
Subsidiary Guaranty and the enforceability of such Subsidiary Guaranty,
including without limitation an Intercreditor Agreement.

               Section 9.8. Books and Records.  The Company will, and will cause
each of its Subsidiaries to, maintain proper books of record and account in
conformity with GAAP and all applicable requirements of any Governmental
Authority having legal or regulatory jurisdiction over the Company or such
Subsidiary, as the case may be.

               Section 9.9. B&H Acquisition.  On the date of Closing, the
proceeds from the sale of the Notes shall be applied to fund a portion of the
purchase price for the B&H Acquisition, and the B&H Acquisition shall be
consummated according to the terms of the Purchase Agreement.

SECTION 10.            NEGATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

                Section 10.1. Tangible Net Worth.  The Company shall not at any
time permit Tangible Net Worth to be less than the sum of (a) $65,164,800, plus
(b) an aggregate amount equal to 50% of its Consolidated Net Income (but, in
each case, only if a positive number) for each completed fiscal quarter,
beginning with the fiscal quarter ending August 3, 2008.

                Section 10.2. Financial Ratios.

                     (a) The Company shall not at any time permit the ratio of
(i) Consolidated Total Debt to (ii) Consolidated EBITDA for the period of four
consecutive fiscal quarters then most recently ended, to exceed 2.5 to 1.0.

                     (b) The Company will keep and maintain the ratio of
Consolidated EBITDAR to Consolidated Fixed Charges for each period of four
consecutive fiscal quarters at not less than 2.25 to 1.0.

                     (c) The Company shall not at any time permit Priority Debt
to exceed 15% of Consolidated Net Worth.

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                Section 10.3.     Liens.  The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly create, incur, assume
or permit to exist (upon the happening of a contingency or otherwise) any Lien
on or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
Company or any such Subsidiary, whether now owned or held or hereafter acquired,
or any income or profits therefrom, or assign or otherwise convey any right to
receive income or profits, except:

                     (a) Liens for taxes, assessments or other governmental
charges which are not yet due and payable or the payment of which is not at the
time required by Section 9.4;

                     (b) any attachment or judgment Lien, unless the judgment it
secures shall not, within 30 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal and with respect to which judgment
adequate reserves have been established by the Company and its Subsidiaries in
accordance with GAAP;

                     (c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each case,
incurred in the ordinary course of business for sums not yet due and payable or
the payment of which is not at the time required by Section 9.4;

                     (d) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances, in each
case incidental to, and not interfering with, the ordinary conduct of the
business of the Company or any of its Subsidiaries, provided that such Liens do
not, in the aggregate, materially detract from the value of such property;

                     (e) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business (i) in connection with
workers’ compensation, unemployment insurance and other types of social security
or retirement benefits, or (ii) to secure (or to obtain letters of credit that
secure) the performance of tenders, statutory obligations, surety bonds, appeal
bonds, bids, leases (other than Capital Leases), performance bonds, purchase,
construction or sales contracts and other similar obligations, in each case not
incurred or made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of property;

                     (f) Liens existing on the date of this Agreement and
securing the Indebtedness of the Company and its Subsidiaries referred to in
Schedule 5.15 as secured Indebtedness;

                     (g) Liens on property or assets of the Company or any of
its Subsidiaries securing Indebtedness owing to the Company or to any of its
Wholly-Owned Subsidiaries;

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                     (h) any Lien (other than Vendor Finance Liens) created to
secure all or any part of the purchase price, or to secure Indebtedness incurred
or assumed to pay all or any part of the purchase price or cost of construction,
of tangible property (or any improvement thereon) acquired or constructed by the
Company or a Subsidiary after the date of the Closing, provided that

                               (i)  any such Lien shall extend solely to the
item or items of such property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument originally creating
such Lien, other property (or improvement thereon) which is an improvement to or
is acquired for specific use in connection with such acquired or constructed
property (or improvement thereon) or which is real property being improved by
such acquired or constructed property (or improvement thereon),

                              (ii) the principal amount of the Indebtedness
secured by any such Lien shall at no time exceed an amount equal to the lesser
of (A) the cost to the Company or such Subsidiary of the property (or
improvement thereon) so acquired or constructed and (B) the Fair Market Value
(as determined in good faith by the board of directors of the Company) of such
property (or improvement thereon) at the time of such acquisition or
construction, and

                             (iii) any such Lien shall be created
contemporaneously with, or within 18 months after, the acquisition or
construction of such property;

                     (i) Liens securing Indebtedness and other obligations
(including trade accounts payable) of the Company and its Subsidiaries incurred
to finance the acquisition of equipment, which financing is obtained from or
through the suppliers of such equipment (“Vendor Finance Liens”); provided that
(i) such Liens shall extend solely to the equipment so acquired and (ii) the
aggregate amount of Indebtedness and other obligations secured by such Liens
shall at no time exceed $5,000,000;

                     (j) any Lien existing on property of a Person immediately
prior to its being consolidated with or merged into the Company or a Subsidiary
or its becoming a Subsidiary, or any Lien existing on any property acquired by
the Company or any Subsidiary at the time such property is so acquired (whether
or not the Indebtedness secured thereby shall have been assumed), provided that
(i) no such Lien shall have been created or assumed in contemplation of such
consolidation or merger or such Person’s becoming a Subsidiary or such
acquisition of property, and (ii) each such Lien shall extend solely to the item
or items of property so acquired and, if required by the terms of the instrument
originally creating such Lien, other property which is an improvement to or is
acquired for specific use in connection with such acquired property;

                     (k) any Lien renewing, extending or refunding any Lien
permitted by paragraphs (f), (h), (i) or (j) of this Section, provided that
(i) the principal amount of Indebtedness secured by such Lien immediately prior
to such extension, renewal or refunding is not increased or the maturity thereof
reduced, (ii) such Lien is not extended to any other property, and
(iii) immediately after such extension, renewal or refunding no Default or Event
of Default would exist;

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                     (l) other Liens not otherwise permitted by paragraphs (a)
through (k) securing Indebtedness other than the principal credit facilities of
the Company and its Subsidiaries from time to time; provided that after giving
effect to the imposition of such Lien and the incurrence of the obligation
secured thereby, Priority Debt shall not exceed 15% of Consolidated Net Worth.

                Section 10.4. Merger, Consolidation, Etc.  The Company will not
consolidate with or merge with any other Person or convey, transfer or lease all
or substantially all of its assets in a single transaction or series of
transactions to any Person unless:

                       (a) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by conveyance, transfer or
lease all or substantially all of the assets of the Company as an entirety, as
the case may be, shall be a solvent corporation or limited liability company
organized and existing under the laws of the United States or any State thereof
(including the District of Columbia), and, if the Company is not such
corporation or limited liability company, (i) such corporation or limited
liability company shall have executed and delivered to each holder of any Notes
its assumption of the due and punctual performance and observance of each
covenant and condition of this Agreement and the Notes and (ii) such corporation
or limited liability company shall have caused to be delivered to each holder of
any Notes an opinion of nationally recognized independent counsel, or other
independent counsel reasonably satisfactory to the Required Holders, to the
effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms hereof; and

                       (b) immediately before and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing.

No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation or limited liability company that shall theretofore have become such
in the manner prescribed in this Section 10.4 from its liability under this
Agreement or the Notes.

                Section 10.5. Sale of Assets, etc.  Except as permitted under
Section 10.4, the Company will not, and will not permit any of its Subsidiaries
to, make any Asset Disposition unless:

                     (a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market Value at least
equal to that of the property exchanged and is in the best interest of the
Company or such Subsidiary; and

                     (b) immediately prior to and after giving effect to the
Asset Disposition, no Default or Event of Default would exist; and

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                     (c) immediately after giving effect to the Asset
Disposition, the Disposition Value of such property, together with all other
property of the Company and its Subsidiaries that was the subject of any Asset
Disposition occurring during the immediately preceding 365 days, would not
exceed 15% of Consolidated Assets as of the end of the then most recently ended
fiscal quarter of the Company.

                Section 10.6. Transactions with Affiliates.  The Company will
not and will not permit any Subsidiary to enter into directly or indirectly any
transaction or group of related transactions (including without limitation the
purchase, lease, sale or exchange of properties of any kind or the rendering of
any service) with any Affiliate (other than the Company or another Subsidiary),
except in the ordinary course and pursuant to the reasonable requirements of the
Company’s or such Subsidiary’s business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm’s-length transaction with a Person not an Affiliate.

          Section 10.7. Sale and Lease-Back.  The Company will not, and will not
permit any Subsidiary to, enter into or permit to remain in effect any Sale and
Leaseback Transaction with any Person.  Notwithstanding the foregoing, the
Company may enter into a Sale and Leaseback Transaction relating to its
corporate headquarters located in High Point, North Carolina; provided that (i)
the sales price received by the Company in connection with such transaction is
not less than $5,500,000, (ii) the proceeds of such sale (less reasonable
expenses and taxes paid in connection therewith) are applied to the repayment of
the Indebtedness secured by such corporate headquarters, and (iii) to the extent
such transaction involves a Capital Lease, the Indebtedness incurred by the
Company and attributable to such transaction (consisting of the aggregate
Rentals to become due under the related lease, discounted from the respective
due dates at the interest rate implicit in such Rentals and otherwise in
accordance with GAAP) shall constitute Priority Debt and shall, at the time of
such transaction and after giving effect thereto, be permitted within the
limitations of Section 10.2(c) hereof; and provided, further, that the Company
may seek in good faith the prior written consent of the Required Holders for a
Sale and Leaseback Transaction relating to its corporate headquarters with a
sales price of less than $5,500,000, it being understood that the manner in
which the Company proposes to payoff all existing Indebtedness secured by such
corporate headquarters must be acceptable to the Required Holders.

          Section 10.8. Sale or Discount of Receivables.  The Company will not,
and will not permit any Subsidiary to, sell with recourse, or discount or
otherwise sell for less than the face value thereof, any of its notes or
accounts receivable.

                Section 10.9. Change in Business.  The Company will not, and
will not permit any Subsidiary to, enter into any business other than the
business presently conducted by the Company and its Subsidiaries and businesses
reasonably related thereto.  

         Section 10.10. Restrictive Agreements.  The Company will not permit any
Subsidiary to enter into or otherwise be bound by or subject to any contract or
agreement (including, without limitation, any provision of its certificate or
articles of incorporation or bylaws) that restricts its ability (i) to pay
dividends or other distributions on account of its stock, (ii) to create, grant
or permit to exist any Liens securing the Notes or guarantees thereof or (iii)
to guaranty the obligations of the Company under the Notes and this Agreement;
provided, however, that Subsidiaries of the Company incorporated under the laws
of China may agree to the foregoing restrictions in credit facilities with
Chinese financial institutions so long as the aggregate amount committed and
lent under such credit facilities does not exceed $5,000,000.

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                Section 10.11. Terrorism Sanctions Regulations.  The Company
will not and will not permit any Subsidiary to (a) become a Person described or
designated in the Specially Designated Nationals and Blocked Persons List of the
Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or
(b) engage in any dealings or transactions with any such Person.

                Section 10.12. Liens and Reserves.  The Company will not and
will not permit any Subsidiary to (a) allow any Liens to exist on any of their
respective properties securing the obligations of the Company or any Subsidiary
under the Credit Agreement or (b) establish any liquidity reserves in connection
with the Credit Agreement or otherwise.

SECTION 11.            EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

                     (a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or

                     (b) the Company defaults in the payment of any interest on
any Note for more than five Business Days after the same becomes due and
payable; or

                     (c) the Company defaults in the performance of or
compliance with any term contained in Section 7.1(d) or Section 10; or

                     (d) the Company defaults in the performance of or
compliance with any term contained herein (other than those referred to in
Sections 11(a), (b) and (c)) and such default is not remedied within 30 days
after the earlier of (i) a Responsible Officer obtaining actual knowledge of
such default and (ii) the Company receiving written notice of such default from
any holder of a Note (any such written notice to be identified as a “notice of
default” and to refer specifically to this Section 11(d)); or

                     (e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this Agreement or in
any writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date as of
which made; or

                     (f) (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Indebtedness that is outstanding
in an aggregate principal amount of at least $1,000,000 beyond any period of
grace provided with respect thereto, or (ii) the Company or any Subsidiary is in
default in the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least $1,000,000
or of any mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such
Indebtedness has become, or has been declared (or one or more Persons are
entitled to declare such Indebtedness to be), due and payable before its stated
maturity or before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of Indebtedness to convert
such Indebtedness into equity interests), (x) the Company or any Subsidiary has
become obligated to purchase or repay Indebtedness before its regular maturity
or before its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $1,000,000, or (y) one or more Persons have the
right to require the Company or any Subsidiary so to purchase or repay such
Indebtedness; or

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                     (g) the Company or any Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or

                     (h) a court or Governmental Authority of competent
jurisdiction enters an order appointing, without consent by the Company or any
of its Subsidiaries, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or any of its
Subsidiaries, or any such petition shall be filed against the Company or any of
its Subsidiaries and such petition shall not be dismissed within 60 days; or

                     (i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 are rendered against one or more of the
Company and its Subsidiaries and which judgments are not, within 60 days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay; or

                     (j)  if (i) any Plan shall fail to satisfy the minimum
funding standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought or
granted under section 412 of the Code, (ii) a notice of intent to terminate any
Plan shall have been or is reasonably expected to be filed with the PBGC or the
PBGC shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate “amount of unfunded benefit liabilities”
(within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed $5,000,000, (iv) the Company
or any ERISA Affiliate shall have incurred or is reasonably expected to incur
any liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company
or any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such event or
events described in clauses (i) through (vi) above, either individually or
together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect.

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As used in Section 11(j), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in section 3 of ERISA.

SECTION 12.            REMEDIES ON DEFAULT, ETC.

                Section 12.1. Acceleration.  (a) If an Event of Default with
respect to the Company described in paragraph (g) or (h) of Section 11 has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.

         (b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 35% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.

         (c) If any Event of Default described in Section 11(a) or (b) has
occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it or
them to be immediately due and payable.

  Upon any Note’s becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon (including, but not limited to, interest accrued thereon at the Default
Rate) and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived.  The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

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                Section 12.2. Other Remedies.  If any Default or Event of
Default has occurred and is continuing, and irrespective of whether any Notes
have become or have been declared immediately due and payable under Section
12.1, the holder of any Note at the time outstanding may proceed to protect and
enforce the rights of such holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein or in any Note, or for an injunction against a violation of any
of the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.

                Section 12.3. Rescission.  At any time after any Notes have been
declared due and payable pursuant to Section 12.1(b) or (c), the holders of not
less than 66-2/3% in principal amount of the Notes then outstanding, by written
notice to the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and
(c) no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes.  No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.

               Section 12.4. No Waivers or Election of Remedies, Expenses,
Etc.  No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder’s rights, powers or remedies.  No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise.  Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys’ fees, expenses and disbursements.

SECTION 13.            REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

          Section 13.1. Registration of Notes.  The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes.  The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register.  Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary.  The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.

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          Section 13.2. Transfer and Exchange of Notes.  Upon surrender of any
Note to the Company at the address and to the attention of the designated
officer (all as specified in Section 18(iii)), for registration of transfer or
exchange (and in the case of a surrender for registration of transfer
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or such holder’s attorney duly authorized in writing and
accompanied by the relevant name, address and other information for notices of
each transferee of such Note or part thereof), within 30 days thereafter, the
Company shall execute and deliver, at the Company’s expense (except as provided
below), one or more new Notes (as requested by the holder thereof) in exchange
therefor, in an aggregate principal amount equal to the unpaid principal amount
of the surrendered Note.  Each such new Note shall be payable to such Person as
such holder may request and shall be substantially in the form of Exhibit
1.  Each such new Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon.  The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes.  Notes shall not be
transferred in denominations of less than $100,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000.  Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.

                Section 13.3. Replacement of Notes.  Upon receipt by the Company
at the address and to the attention of the designated officer (all as specified
in Section 18(iii)) of evidence reasonably satisfactory to it of the ownership
of and the loss, theft, destruction or mutilation of any Note (which evidence
shall be, in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft, destruction or
mutilation), and

                     (a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is, or
is a nominee for, an original Purchaser or another holder of a Note with a
minimum net worth of at least $100,000,000 or a Qualified Institutional Buyer,
such Person’s own unsecured agreement of indemnity shall be deemed to be
satisfactory), or

                     (b) in the case of mutilation, upon surrender and
cancellation thereof,

within 30 days thereafter, the Company at its own expense shall execute and
deliver, in lieu thereof, a new Note, dated and bearing interest from the date
to which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.

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SECTION 14.            PAYMENTS ON NOTES.

          Section 14.1. Place of Payment.  Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in the Borough of Manhattan, City and State of New York,
at the principal office of JPMorgan Chase Bank, N.A. in such jurisdiction.  The
Company may at any time, by notice to each holder of a Note, change the place of
payment of the Notes so long as such place of payment shall be either the
principal office of the Company in such jurisdiction or the principal office of
a bank or trust company in such jurisdiction.

          Section 14.2. Home Office Payment.  So long as any Purchaser or its
nominee shall be the holder of any Note, and notwithstanding anything contained
in Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose below such
Purchaser’s name in Schedule A, or by such other method or at such other address
as such Purchaser shall have from time to time specified to the Company in
writing for such purpose, without the presentation or surrender of such Note or
the making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, such Purchaser shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1.  Prior to any sale or other disposition
of any Note held by a Purchaser or its nominee, such Purchaser will, at its
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2.  The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by a
Purchaser under this Agreement and that has made the same agreement relating to
such Note as the Purchasers have made in this Section 14.2.

SECTION 15.            EXPENSES, ETC.

          Section 15.1. Transaction Expenses.  Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys’ fees of a special counsel and, if reasonably
required by the Required Holders, local or other counsel) incurred by the
Purchasers and each other holder of a Note in connection with such transactions
and in connection with any amendments, waivers or consents under or in respect
of this Agreement or the Notes (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce or
defend) any rights under this Agreement or the Notes or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement or the Notes, or by reason of being a holder of
any Note, (b) the costs and expenses, including financial advisors’ fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes and (c) the costs and expenses
incurred in connection with the initial filing of this Agreement and all related
documents and financial information with the SVO provided, that such costs and
expenses under this clause (c) shall not exceed $3,000.  The Company will pay,
and will save each Purchaser and each other holder of a Note harmless from, all
claims in respect of any fees, costs or expenses, if any, of brokers and finders
(other than those, if any, retained by a Purchaser or other holder in connection
with its purchase of the Notes).

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          Section 15.2.  Survival.  The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.

SECTION 16.            SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.

All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any subsequent holder of a Note, regardless
of any investigation made at any time by or on behalf of such Purchaser or any
other holder of a Note.  All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this
Agreement  shall be deemed representations and warranties of the Company under
this Agreement.  Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between each Purchaser and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.

SECTION 17.            AMENDMENT AND WAIVER.  

                Section 17.1. Requirements.  This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to any Purchaser
unless consented to by such Purchaser in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the Make-Whole Amount on, the
Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.

                Section 17.2. Solicitation of Holders of Notes.

         (a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes.  The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.

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         (b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security or provide other credit
support, to any holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of any of the
terms and provisions hereof unless such remuneration is concurrently paid, or
security is concurrently granted or other credit support concurrently provided,
on the same terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.

          Section 17.3. Binding Effect, etc.  Any amendment or waiver consented
to as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver.  No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon.  No course of dealing between the
Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note.  As used herein, the term “this Agreement” and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.

                Section 17.4. Notes Held by Company, etc. Solely for the purpose
of determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.

SECTION 18.            NOTICES.

All notices and communications provided for hereunder shall be in writing and
sent (a) by telecopy if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service (charges prepaid), or (b)
by registered or certified mail with return receipt requested (postage prepaid),
or (c) by a recognized overnight delivery service (with charges prepaid).  Any
such notice must be sent:

                     (i) if to any Purchaser or its nominee, to such Purchaser
or nominee at the address specified for such communications in Schedule A, or at
such other address as such Purchaser or nominee shall have specified to the
Company in writing,

                    (ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company in
writing, or

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                   (iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of its Chief Financial Officer,
or at such other address as the Company shall have specified to the holder of
each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

SECTION 19.            REPRODUCTION OF DOCUMENTS.

This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, electronic,
digital, or other similar process and such Purchaser may destroy any original
document so reproduced.  The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Purchaser in the regular course of business) and
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.  This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.

SECTION 20.            CONFIDENTIAL INFORMATION.

For the purposes of this Section 20, “Confidential Information” means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such Purchaser
or any person acting on such Purchaser’s behalf, (c) otherwise becomes known to
such Purchaser other than through disclosure by the Company or any Subsidiary or
(d) constitutes financial statements delivered to such Purchaser under Section
7.1 that are otherwise publicly available.  Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser, provided that such Purchaser may
deliver or disclose Confidential Information to (i) its directors, officers,
employees, agents, attorneys, trustees and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by its Notes), (ii) its financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which it sells or offers
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (v) any Person
from which it offers to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or
the SVO or, in each case, any similar organization, or any nationally recognized
rating agency that requires access to information about such Purchaser’s
investment portfolio, or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to such Purchaser, (x) in response to
any subpoena or other legal process, (y) in connection with any litigation to
which such Purchaser is a party or (z) if an Event of Default has occurred and
is continuing, to the extent such Purchaser may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or for
the protection of the rights and remedies under such Purchaser’s Notes and this
Agreement.  Each holder of a Note, by its acceptance of a Note, will be deemed
to have agreed to be bound by and to be entitled to the benefits of this Section
20 as though it were a party to this Agreement.  On reasonable request by the
Company in connection with the delivery to any holder of a Note of information
required to be delivered to such holder under this Agreement or requested by
such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company embodying
the provisions of this Section 20.

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SECTION 21.            SUBSTITUTION OF PURCHASER.

Each Purchaser shall have the right to substitute any one of its Affiliates as
the purchaser of the Notes that it has agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both such Purchaser and
such Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6.  Upon receipt
of such notice, any reference to such Purchaser in this Agreement (other than in
this Section 21), shall be deemed to refer to such Affiliate in lieu of such
original Purchaser.  In the event that such Affiliate is so substituted as a
Purchaser hereunder and such Affiliate thereafter transfers to such original
Purchaser all of the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, any reference to such Affiliate as a
“Purchaser” in this Agreement (other than in this Section 21), shall no longer
be deemed to refer to such Affiliate, but shall refer to such original
Purchaser, and such original Purchaser shall again have all the rights of an
original holder of the Notes under this Agreement.

SECTION 22.            MISCELLANEOUS.

                Section 22.1. Successors and Assigns.  All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.

          Section 22.2. Payments Due on Non-Business Days.  Anything in this
Agreement or the Notes to the contrary notwithstanding (but without limiting the
requirement in Section 8.4 that the notice of any optional prepayment specify a
Business Day as the date fixed for such prepayment), any payment of principal of
or Make-Whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day; provided that if the maturity date of any Note is
a date other than a Business Day, the payment otherwise due on such maturity
date shall be made on the next succeeding Business Day and shall include the
additional days elapsed in the computation of interest payable on such next
succeeding Business Day.

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                Section 22.3. Accounting Terms.  All accounting terms used
herein which are not expressly defined in this Agreement have the meanings
respectively given to them in accordance with GAAP.  Except as otherwise
specifically provided herein, (i) all computations made pursuant to this
Agreement shall be made in accordance with GAAP, and (ii) all financial
statements shall be prepared in accordance with GAAP.

   Section 22.4. Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

                Section 22.5. Construction, etc.  Each covenant contained herein
shall be construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, so that compliance with any
one covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant.  Where any provision herein refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.

For the avoidance of doubt, all Schedules and Exhibits attached to this
Agreement shall be deemed to be a part hereof.

                Section 22.6. Counterparts.  This Agreement may be executed in
any number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument.  Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.

                Section 22.7. Governing Law.  This Agreement shall be construed
and enforced in accordance with, and the rights of the parties shall be governed
by, the law of the State of New York excluding choice-of-law principles of the
law of such State that would permit the application of the laws of a
jurisdiction other than such State.

                Section 22.8. Jurisdiction and Process; Waiver of Jury
Trial.  (a) The Company irrevocably submits to the non-exclusive jurisdiction of
any New York State or federal court sitting in the Borough of Manhattan, The
City of New York, over any suit, action or proceeding arising out of or relating
to this Agreement or the Notes.  To the fullest extent permitted by applicable
law, the Company irrevocably waives and agrees not to assert, by way of motion,
as a defense or otherwise, any claim that it is not subject to the jurisdiction
of any such court, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.

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         (b) The Company consents to process being served by or on behalf of any
holder of Notes in any suit, action or proceeding of the nature referred to in
Section 22.8(a) by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other address
of which such holder shall then have been notified pursuant to said
Section.  The Company agrees that such service upon receipt (i) shall be deemed
in every respect effective service of process upon it in any such suit, action
or proceeding and (ii) shall, to the fullest extent permitted by applicable law,
be taken and held to be valid personal service upon and personal delivery to
it.  Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.

         (c) Nothing in this Section 22.8 shall affect the right of any holder
of a Note to serve process in any manner permitted by law, or limit any right
that the holders of any of the Notes may have to bring proceedings against the
Company in the courts of any appropriate jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

         (d) THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT
ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED
IN CONNECTION HEREWITH OR THEREWITH.

*    *    *    *    *

43

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If you are in agreement with the foregoing, please sign the form of agreement on
a counterpart of this Agreement and return it to the Company, whereupon this
Agreement shall become a binding agreement between you and the Company.

  Very truly yours,   CULP, INC.   By

/s/ Kenneth R. Bowling

Name: Kenneth R. Bowling Title: Vice President and Chief Financial Officer

This Agreement is hereby
accepted and agreed to as
of the date thereof.

MUTUAL OF OMAHA INSURANCE COMPANY

By

/s/ Curtis R. Caldwell

Name: Curtis R. Caldwell Title: Senior Vice President     UNITED OF OMAHA LIFE
INSURANCE COMPANY   By

/s/ Curtis R. Caldwell

Name: Curtis R. Caldwell Title: Senior Vice President

[Signature page to Note Purchase Agreement]

--------------------------------------------------------------------------------

CULP, INC.

INFORMATION RELATING TO PURCHASERS

NAME AND ADDRESS OF PURCHASER

PRINCIPAL AMOUNT OF
NOTES TO BE PURCHASED  

MUTUAL OF OMAHA INSURANCE COMPANY

Mutual of Omaha Plaza

Omaha, Nebraska 68175-1011

Attention: 4-Investment Accounting

$3,000,000

Payments

All principal and interest payments on the Notes shall be made by wire transfer
of immediately available funds to:

JPMorgan Chase Bank
ABA #021000021
Private Income Processing

For credit to:  Mutual of Omaha Insurance Company
Account # 900-9000200
a/c:  G07096
Cusip/PPN:  230215 B#1
Interest Amount:  __________________________
Principal Amount:  _________________________

Notices

Address for all notices in respect of payment of principal and interest,
corporate actions, and reorganization notifications:

JPMorgan Chase Bank
14201 Dallas Parkway, 13th Floor
Dallas, Texas  75254-2917
Attention: Income Processing - G. Ruiz
a/c:  G07096

All other notices and communications (i.e.:  quarterly/annual reports, tax
filings, modifications, waivers regarding the Note Purchase Agreement or Notes)
to be addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  47-0246511

SCHEDULE A
(to Note Purchase Agreement)

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NAME AND ADDRESS OF PURCHASER

PRINCIPAL AMOUNT OF
NOTES TO BE PURCHASED   UNITED OF OMAHA LIFE INSURANCE COMPANY

Mutual of Omaha Plaza

Omaha, Nebraska 68175-1011

Attention: 4-Investment Accounting

$8,000,000

Payments

All principal and interest payments on the Notes shall be made by wire transfer
of immediately available funds to:

JPMorgan Chase Bank
ABA #021000021
Private Income Processing
For credit to:  United of Omaha Life Insurance Company
Account # 900-9000200
a/c:  G07097
Cusip/PPN:  230215 B#1
Interest Amount:  __________________________
Principal Amount:  _________________________

Notices

Address for all notices in respect of payment of principal and interest,
corporate actions, and reorganization notifications:

JPMorgan Chase Bank
14201 Dallas Parkway, 13th Floor
Dallas, Texas  75254-2917
Attention: Income Processing - G. Ruiz
a/c:  G07097

All other notices and communications (i.e.:  quarterly/annual reports, tax
filings, modifications, waivers regarding the Note Purchase Agreement or Notes)
to be addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  47-0322111

A-2-

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DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

“1998 Noteholders” means the holders of the 1998 Notes.

“1998 Notes” means the “Notes” as such term is defined in the 1998 Note
Agreement.

“1998 Note Agreement” means those certain Note Purchase Agreements, dated as of
March 4, 1998, by and between the Company and the purchasers party thereto, as
the same have been and may be amended from time to time.

“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person, and, with respect to the Company, shall include any Person beneficially
owning or holding, directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or any Subsidiary or any corporation of which
the Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity
interests.  As used in this definition, “Control” means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an “Affiliate” is a reference to an Affiliate of the Company.

“Anti-Terrorism Order” means Executive Order No. 13,224 of September 24, 2001,
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.

“Asset Disposition” means any Transfer except:

                     (a) any Transfer from a Subsidiary to the Company or a
Wholly-Owned Subsidiary so long as immediately before and immediately after the
consummation of any such Transfer and after giving effect thereto, no Default or
Event of Default exists;

                     (b) any sale of real estate, machinery and equipment in
connection with the closure of the Company’s upholstery fabric plant located in
Anderson, South Carolina; (ii) the sale of the Company’s corporate headquarters
located in High Point, North Carolina; and (iii) the disposition of assets
described (as of December 6, 2006) on the Company’s balance sheet as “Assets
Held For Sale”; and

                     (c) any Transfer made in the ordinary course of business
and involving only property that is either (i) inventory held for sale or
(ii) equipment, fixtures, supplies or materials no longer required in the
operation of the business of the Company or any of its Subsidiaries or that is
obsolete.

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“B&H Acquisition” means the Company’s purchase of certain assets and the
assumption of certain liabilities of Bodet & Horst USA, L.P., a New York limited
partnership, which assets and liabilities relate to the seller’s business of the
manufacture and sale of running meters of certain textiles, in the United
States, Canada and Mexico pursuant to the terms of the Purchase Agreement.

“Business Day” means (a) for the purposes of Section 8.7 only, any day other
than a Saturday, a Sunday or a day on which commercial banks in New York City
are required or authorized to be closed, and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York or Charlotte, North Carolina are
required or authorized to be closed.

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

“Change in Control” has the meaning set forth in Section 8.2.

“Closing” is defined in Section 3.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

“Company” means Culp, Inc., a North Carolina corporation or any successor that
becomes such in the manner prescribed in Section 10.4.

“Confidential Information” is defined in Section 20.

“Consolidated Assets” means, at any time, the total assets of the Company and
its Subsidiaries which would be shown as assets on a consolidated balance sheet
of the Company and its Subsidiaries as of such time prepared in accordance with
GAAP, after eliminating all amounts properly attributable to minority interests,
if any, in the stock and surplus of Subsidiaries.

“Consolidated EBITDA” means, with reference to any period, the sum of (i) all
Consolidated Net Income, (ii) Interest Expense, income tax expense, depreciation
and amortization expense of the Company and its Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, after
eliminating all offsetting debits and credits between the Company and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP, in each case for such period, and (iii)
Restructuring Charges for such period, to the extent such charges were deducted
when calculating Consolidated Net Income.  In addition, in order to give effect
to the B&H Acquisition on a pro forma basis, the following amounts shall be
added to Consolidated EBITDA for the quarterly periods set forth below:

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Quarterly Period Ending

Amount to be added to

Consolidated EBITDA

October 28, 2007 $875,000 January 27, 2008 $520,000 April 27, 2008 $885,000
August 3, 2008 $720,000

“Consolidated EBITDAR” means, with reference to any period, the sum of
(i) Consolidated EBITDA, plus (ii) Operating Lease Rentals (excluding Expensed
Lease Rentals), in each case, for such period.

“Consolidated Fixed Charges” means, with reference to any period, the sum of
(i) the Interest Expense of the Company and its Subsidiaries for such period
(taken as a cumulative whole), in each case as determined in accordance with
GAAP, after eliminating all offsetting debits and credits between the Company
and its Subsidiaries and all other items required to be eliminated in the course
of the preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP plus (ii) Operating Lease Rentals
(excluding Expensed Lease Rentals) in each case for such period.

“Consolidated Net Income” means, with reference to any period, the net income
(or loss) of the Company and its Subsidiaries for such period (taken as a
cumulative whole), as determined in accordance with GAAP, after eliminating all
offsetting debits and credits between the Company and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP, provided that there shall be excluded:

                     (a )the income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary or is merged into or consolidated with the Company
or a Subsidiary, and the income (or loss) of any Person, substantially all of
the assets of which have been acquired in any manner, realized by such other
Person prior to the date of acquisition,

                     (b) the income (or loss) of any Person (other than a
Subsidiary) in which the Company or any Subsidiary has an ownership interest,
except to the extent that any such income has been actually received by the
Company or such Subsidiary in the form of cash dividends or similar cash
distributions,

                     (c) the undistributed earnings of any Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time permitted by the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Subsidiary,

                     (d) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income
accrued during such period,

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                     (e) any aggregate net gain (but not any aggregate net loss)
during such period arising from the sale, conversion, exchange or other
disposition of capital assets (such term to include, without limitation, (i) all
non-current assets and, without duplication, (ii) the following, whether or not
current:  all fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets, and all Securities),

                     (f) any gains resulting from any write-up of any assets
(but not any loss resulting from any write-down of any assets),

                     (g) any net gain from the collection of the proceeds of
life insurance policies,

                     (h) any gain arising from the acquisition of any Security,
or the extinguishment, under GAAP, of any Indebtedness, of the Company or any
Subsidiary,

                     (i) any net income or gain (but not any net loss) during
such period from (i) any change in accounting principles in accordance with
GAAP, (ii) any prior period adjustments resulting from any change in accounting
principles in accordance with GAAP, (iii) any extraordinary items, or (iv) any
discontinued operations or the disposition thereof,

                     (j) any deferred credit representing the excess of equity
in any Subsidiary at the date of acquisition over the cost of the investment in
such Subsidiary,

                     (k) in the case of a successor to the Company by
consolidation or merger or as a transferee of its assets, any earnings of the
successor corporation prior to such consolidation, merger or transfer of assets,
and

                     (l) any portion of such net income that cannot be freely
converted into United States Dollars.

“Consolidated Net Worth” means, at any time,

                     (a) the sum of (i) the par value (or value stated on the
books of the corporation) of the capital stock (but excluding Redeemable
Preferred Stock, treasury stock and capital stock subscribed but unissued) of
the Company and its Subsidiaries, plus (ii) the amount of paid-in capital and
retained earnings of the Company and its Subsidiaries, plus (iii) the amount
equal to all Restructuring Charges for all completed fiscal quarters, commencing
with the fiscal quarter ended August 3, 2008, in each case as such amounts would
be shown on consolidated financial statements of the Company and its
Subsidiaries as prepared in accordance with GAAP, minus

                     (b) to the extent included in clause (a), all amounts
properly attributable to minority interests, if any, in the stock and surplus of
Subsidiaries.

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“Consolidated Total Debt” means, as of any date of determination, all
Indebtedness of the Company and its Subsidiaries outstanding on such date, after
eliminating all offsetting debits and credits between the Company and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP, provided, that solely for purposes of
Section 10.2(a), Consolidated Total Debt shall exclude up to $5,000,000 in
Indebtedness of the Company and its Subsidiaries outstanding on the date of such
determination incurred to finance the acquisition of equipment, which financing
is obtained from or through the suppliers of such inventory and secured by
Vendor Finance Liens permitted by Section 10.3(i).

“Control Event” has the meaning set forth in Section 8.2

“Credit Agreement” means that certain Amended and Restated Credit Agreement
dated as of August 23, 2002, by and among Company, the lenders party thereto and
Wachovia Bank, National Association, as Agent, as the same has been and may be
amended, restated, replaced or otherwise modified from time to time.

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

“Default Rate” means that rate of interest that is the greater of (i) 10.01% per
annum or (ii) 2% over the rate of interest publicly announced from time to time
by JPMorgan Chase Bank, N.A. in New York, New York, as its “base” or “prime”
rate.

“Disposition Value” means, at any time, with respect to any property

                     (a) in the case of property that does not constitute
Subsidiary Stock, the book value thereof, valued at the time of such disposition
in accordance with GAAP, and

                     (b) in the case of property that constitutes Subsidiary
Stock, an amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that the book
value of such Subsidiary Stock represents of the book value of all of the
outstanding capital stock of such Subsidiary (assuming, in making such
calculations, that all Securities convertible into such capital stock are so
converted and giving full effect to all transactions that would occur or be
required in connection with such conversion) determined at the time of the
disposition thereof, in accordance with GAAP.

“Electronic Delivery” is defined in Section 7.1(a).

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to Hazardous Materials.

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

“ERISA Affiliate” means any trade or business  (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.

“Event of Default” is defined in Section 11.

“Expensed Lease Rentals” means Operating Lease Rentals associated with leased
properties vacated by the Company which have been expensed as a part of the
Company’s restructuring accounting (and which appear on the Company’s balance
sheet as a part of its accrued restructuring expenses), provided that, for
purposes of covenant calculations hereunder, Expensed Lease Rentals shall not
exceed (a) $790,000 in the aggregate for all fiscal measurement periods on or
prior to April 27, 2008 and (b) $325,000 in the aggregate for all fiscal
measurement periods thereafter.

“Fair Market Value” means, at any time and with respect to any property, the
sale value of such property that would be realized in an arm’s-length sale at
such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).

“Form 10-K” is defined in Section 7.1(b).

“Form 10-Q” is defined in Section 7.1(a).

“Funded Debt” means, with respect to any Person, all Debt of such Person which
by its terms or by the terms of any instrument or agreement relating thereto
matures, or which is otherwise payable or unpaid, one year or more from, or is
directly or indirectly renewable or extendible at the option of the obligor in
respect thereof to a date one year or more (including, without limitation, an
option of such obligor under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of one year or more) from,
the date of the creation thereof.

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America; provided that calculations made in
connection with determining the covenants contained in Section 10 hereof, GAAP
shall mean generally accepted accounting principals in effect in the United
States as of the date of Closing.

“Governmental Authority” means

                     (a)    the government of

                               (i) the United States of America or any State or
other political subdivision thereof, or

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                              (ii) any other jurisdiction in which the Company
or any Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or

                     (b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.

“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect
guaranteeing  (whether by reason of being a general partner of a partnership or
otherwise) any indebtedness, dividend or other obligation of any other Person in
any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:

                     (a) to purchase such indebtedness or obligation or any
property constituting security therefor;

                     (b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement condition of
any other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;

                     (c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or

                     (d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
other substances that might pose a hazard to health and safety, the removal of
which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law including,
but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.

“holder” means, with respect to any Note the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1.

“Indebtedness” with respect to any Person means, at any time, without
duplication,

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                     (a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;

                     (b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
any such property);

                     (c) (i) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases and (ii) all liabilities which
would appear on its balance sheet in accordance with GAAP in respect of
Synthetic Leases assuming such Synthetic Leases were accounted for as Capital
Leases;

                     (d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);

                     (e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial institutions (whether or not representing obligations
for borrowed money);

                     (f) the aggregate Swap Termination Value of all Swap
Contracts of such Person; and

                     (g) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (f) hereof.  

Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a
Note holding (together with one or more of its affiliates) more than 5% of the
aggregate principal amount of the Notes then outstanding, (c) any bank, trust
company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form, and (d) any Related Fund of any holder of any Note.

“Intercreditor Agreement” means an agreement, in form and substance reasonably
satisfactory to the Required Holders, among the holders of the Notes and each
creditor of the Company to which a Subsidiary is then becoming obligated as a
co-borrower or guarantor giving rise the requirements of Section 9.7, providing
that payments received from any such Subsidiary following agreed upon
enforcement events shall be shared on an equal and ratable basis.

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“Interest Expense” of the Company and its Subsidiaries for any period shall mean
all interest (including the imputed interest component on Rentals on Capital
Leases) and all amortization of debt discount and expense on any particular
Indebtedness (including, without limitation, payment-in-kind, zero coupon and
other like Securities) for which such calculations are being made.  Computations
of Interest Expense on a pro forma basis for Indebtedness having a variable
interest rate shall be calculated at the rate in effect on the date of any
determination.

“Investment” shall have the meaning set forth in Section 10.10.

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).

“Make-Whole Amount” is defined in Section 8.7.

“Material” means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of the Company to
perform its obligations under this Agreement and the Notes, or (c) the validity
or enforceability of this Agreement or the Notes.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in section 4001(a)(3) of ERISA).

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto.

“Net Proceeds Amount” means, with respect to any Transfer of any Property by any
Person, an amount equal to the difference of

                     (a) the aggregate amount of the consideration (valued at
the Fair Market Value of such consideration at the time of the consummation of
such Transfer) received by such Person in respect of such Transfer, minus

                     (b) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by such Person in connection with such Transfer.

“Notes” is defined in Section 1.

“Offering Materials” is defined in Section 5.3.

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“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.

“Operating Lease Rentals” means, with reference to any period, all fixed rents
or charges (including as such all payments which the lessee is obligated to make
on termination of the lease or surrender of the property) payable by the Company
and its Subsidiaries (as lessee, sublessee, license, franchisee or the like)
under all leases, licenses, or other agreements for the use or possession of
real or personal property, tangible or intangible (except Capital Leases) having
a term of more than one year (whether as an initial term or any extension or
renewal thereof and including options to renew or extend any term, whether or
not exercised), during such period, of the Company and its Subsidiaries for such
period (taken as a cumulative whole), as determined in accordance with GAAP,
after eliminating all offsetting debits and credits between the Company and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or
Governmental Authority.

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA)
subject to Title I of ERISA that is or, within the preceding five years, has
been established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by the Company or
any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate
may have any liability.

“Preferred Stock” means any class of capital stock of a Person that is preferred
over any other class of capital stock (or similar equity interests) of such
Person as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such Person.

“Priority Debt” means, without duplication, the sum of (i) all Indebtedness of
the Company secured by any Lien with respect to any property owned by the
Company or any of its Subsidiaries other than Liens permitted by paragraphs (a)
through (k), both inclusive, of Section 10.3, (ii) all Indebtedness of
Subsidiaries (except (x) Indebtedness held by the Company or a Wholly-Owned
Subsidiary and (y) Guaranties and joint obligations of a Subsidiary with respect
to Indebtedness of the Company, provided that such Subsidiary has delivered to
the holders of the Notes a Subsidiary Guaranty and the other documents required
by Section 9.7(b)), and (iii) Indebtedness described in clause (iii) of
Section 10.7 attributable to a Sale and Leaseback Transaction involving the
Company’s corporate headquarters.

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

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“PTE” is defined in Section 6.2(a).

“Purchase Agreement” means that certain Asset Purchase Agreement dated as of
August 11, 2008, by and between Company, Bodet & Horst USA, L.P. and Bodet &
Horst GmbH & Co. KE.

“Purchaser” is defined in the first paragraph of this Agreement.

“Qualified Institutional Buyer” means any Person who is a “qualified
institutional buyer” within the meaning of such term as set forth in Rule
144A(a)(1) under the Securities Act.

“Redeemable” means, with respect to the capital stock of any Person, each share
of such Person’s capital stock that is:

                     (a) redeemable, payable or required to be purchased or
otherwise retired or extinguished, or convertible into Indebtedness of such
Person (i) at a fixed or determinable date, whether by operation of sinking fund
or otherwise, (ii) at the option of any Person other than such Person, or
(iii) upon the occurrence of a condition not solely within the control of such
Person; or

                     (b) convertible into other Redeemable capital stock.

“Related Fund” means, with respect to any holder of any Note, any fund or entity
that (i) invests in Securities or bank loans, and (ii) is advised or managed by
such holder, the same investment advisor as such holder or by an affiliate of
such holder or such investment advisor.

“Rentals” shall mean and include as of the date of any determination thereof all
fixed payments (including as such all payments which the lessee is obligated to
make to the lessor on termination of the lease or surrender of the property)
payable by the Company or a Subsidiary, as lessee or sublessee under a lease of
real or personal property, but shall be exclusive of any amounts required to be
paid by the Company or a Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges.

“Required Holders” means, at any time, the holders of at least 66-2/3% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).

“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this Agreement.

“Restructuring Charges” means, collectively, (a) from and after the date of
Closing through the term of this Agreement, (i) up to $1,000,000 in the
aggregate in cash restructuring expenses and restructuring-related costs, and
(ii) all non-cash restructuring expenses and restructuring-related costs, and
(b) non-cash write-downs of deferred tax assets of the Company accounted for as
“valuation allowances”, in each case, as such amounts would be shown on
consolidated financial statements of the Company and its Subsidiaries as
prepared in accordance with GAAP.  In addition, solely for the purpose of
calculating EBITDA for determining the Company’s compliance with the financial
covenants in Section 10.2, “Restructuring Charges” shall include, for the
12-month trailing period ended April 27, 2008, $2,900,000 in the aggregate in
cash and non-cash restructuring expenses and restructuring-related costs.  For
purposes of clarity, it is understood and agreed that restructuring expenses and
restructuring-related costs, as such terms are used in this definition, are
expenses and costs related solely to the disposal of plants and other tangible
assets of the Company and its Subsidiaries or the reduction in the work force or
layoffs and not to the write-off or write-down of assets, impaired or otherwise.

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“Sale and Leaseback Transaction” shall mean any arrangement with any Person or
to which such Person is a party providing for the leasing by the Company or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Company or any Subsidiary to any Person to which funds have
been or are to be advanced on the security of such property or rental
obligations of the Company or any Subsidiary.

“SEC” shall mean the Securities and Exchange Commission of the United States, or
any successor thereto.

“Securities” or “Security” shall have the meaning specified in Section 2(1) of
the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

“Senior Funded Debt” means (a) any Funded Debt of the Company (other than
Subordinated Debt) and (b) any Funded Debt of any Subsidiary.

“Subordinated Debt” means any Indebtedness that is in any manner subordinated in
right of payment or security in any respect to Indebtedness evidenced by the
Notes.

“Subsidiary” means, as to any Person, any other Person in which such first
Person or one or more of its Subsidiaries or such first Person and one or more
of its Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
second Person, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such first Person or one or more
of its Subsidiaries or such first Person and one or more of its Subsidiaries
(unless such partnership or joint venture can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries).  Unless the context otherwise clearly requires, any reference to
a “Subsidiary” is a reference to a Subsidiary of the Company.

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“Subsidiary Guaranty” means any Guaranty of the obligations of the Company under
this Agreement executed by a Subsidiary of the Company in connection with the
requirements of Section 9.7 or otherwise, in form and substance reasonably
satisfactory to the Required Holders, as the same has been and may be amended,
restated, replaced or otherwise modified from time to time.

“Subsidiary Stock” means, with respect to any Person, the stock (or any options
or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.

“SVO” means the Securities Valuation Office of the NAIC or any successor to such
Office.

“Swap Contract” means (a) any and all interest rate swap transactions, basis
swap transactions, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps
or options or forward foreign exchange transactions, cap transactions, floor
transactions, currency options, spot contracts or any other similar transactions
or any of the foregoing (including, but without limitation, any options to enter
into any of the foregoing), and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amounts(s) determined as the
mark-to-market values(s) for such Swap Contracts, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts.

“Synthetic Lease” means, at any time, any lease (including leases that may be
terminated by the lessee at any time) of any property (a) that is accounted for
as an operating lease under GAAP and (b) in respect of which the lessee retains
or obtains ownership of the property so leased for U.S. federal income tax
purposes, other than any such lease under which such Person is the lessor.

“Tangible Net Worth” means, at any time, Consolidated Net Worth, less the amount
of any intangible items as determined in accordance with GAAP, at such time.

“Transfer” means, with respect to any Person, any transaction in which such
Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Stock. For purposes of determining the
application of the Net Proceeds Amount in respect of any Transfer, the Company
may designate any Transfer as one or more separate Transfers each yielding a
separate Net Proceeds Amount.  In any such case, the Disposition Value of any
property subject to each such separate Transfer shall be determined by ratably
allocating the aggregate Disposition Value of all property subject to all such
separate Transfers to each such separate Transfer on a proportionate basis.

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“USA Patriot Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

“Vendor Finance Liens” is defined in Section 10.3(i).

“Voting Stock” shall mean Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).

“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent
of all of the equity interests (except directors’ qualifying shares) and voting
interests of which are owned by any one or more of the Company and the Company’s
other Wholly-Owned Subsidiaries at such time.

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[FORM OF NOTE]

CULP, INC.

8.01% SENIOR NOTE DUE AUGUST 11, 2015

No. [_____]

[Date]

$[_______]

PPN 230215 B#1

FOR VALUE RECEIVED, the undersigned, Culp, Inc. (herein called the “Company”), a
corporation organized and existing under the laws of the State of North
Carolina, hereby promises to pay to [____________], or registered assigns, the
principal sum of [_____________________] DOLLARS (or so much thereof as shall
not have been prepaid) on August 11, 2015, with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at
the rate of 8.01% per annum from the date hereof, payable semiannually, on the
15th day of August and February in each year, commencing with the August or
February next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law, on any overdue
payment of interest and, during the continuance of an Event of Default, on such
unpaid balance and on any overdue payment of any Make-Whole Amount, at a rate
per annum from time to time equal to the greater of (i) 10.01% or (ii) 2.0% over
the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from time
to time in New York, New York as its “base” or “prime” rate, payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal place of JPMorgan Chase Bank, N.A. in the Borough of Manhattan, City
and State of New York, or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the Note
Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement, dated as of August 11, 2008 (as from
time to time amended, the “Note Purchase Agreement”), between the Company and
the respective Purchasers named therein and is entitled to the benefits
thereof.  Each holder of this Note will be deemed, by its acceptance hereof, to
have (i) agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) made the representation set forth in
Section 6.2 of the Note Purchase Agreement.  Unless otherwise indicated,
capitalized terms used in this Note shall have the respective meanings ascribed
to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer accompanied by a
written instrument of transfer duly executed, by the registered holder hereof or
such holder’s attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee.  Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.

EXHIBIT 4.4(a)
(To Note Purchase Agreement)

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The Company will make required prepayments of principal on the dates and in the
amounts specified in the Note Purchase Agreement.  This Note is also subject to
optional prepayment, in whole or from time to time in part, at the times and on
the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

  CULP, INC. By   Name: Title: