Exhibit 10.1

ASSET PURCHASE AGREEMENT

AMONG

CULP, INC.

AND

BODET & HORST USA, LP

BODET & HORST GMBH & CO. KG

DATED AS OF AUGUST 11, 2008

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

TABLE OF CONTENTS

§ 1 DEFINITIONS 1     § 2 BASIC TRANSACTION 7   (a)

Purchase and Sale of Assets

7 (b)

Assumption of Liabilities

8 (c)

Preliminary Purchase Price

8 (d)

Post-Closing Purchase Price Adjustment

8 (e)

The Closing

11 (f)

Deliveries at the Closing by Seller

11 (g)

Deliveries at the Closing by Buyer

11 (h)

Consents to Assignment

11 (i)

Allocation

12   § 3 SELLER’S REPRESENTATIONS AND WARRANTIES 12   (a)

Organization, Etc.

13 (b)

Authorization of Transaction

13 (c)

Non-contravention

13 (d)

Title to Tangible Assets

14 (e)

Inventories

14 (f)

Tangible Personal Property

14 (g)

Recent Changes

14 (h)

Legal Compliance

14 (i)

Intellectual Property

14 (j)

Contracts

15 (k)

Employees

15 (l)

Litigation

15 (m)

Financial Statements

15 (n)

Benefit Plans

16 (o)

Environmental Matters

16 (p)

Disclaimer of Other Representations and Warranties

16   § 4 BUYER’S REPRESENTATIONS AND WARRANTIES, COVENANTS 16   (a)

Organization of Buyer

16 (b)

Authorization of Transaction

16 (c)

Non-contravention

17 (d)

Independent Investigation

17 (e)

Accounting Expert

17

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

§ 5 [RESERVED] 18     § 6 POST-CLOSING COVENANTS 18   (a) General 18 (b)
Litigation Support 18 (c) Non-Competition Agreement 18 (d) Agency Agreement 18
(e) Employees 20 (f) Liquidation of Seller 21 (g) Access to Information 22 (h)
Financial Statements 22 (i) Trademarks 23 (j) Cost for Physical Inventory 23   §
7 [RESERVED] 23     § 8 REMEDIES FOR BREACHES OF THIS AGREEMENT 23   (a)
Survival of Representations and Warranties 23 (b) Indemnification Provisions for
Buyer’s Benefit 23 (c) Indemnification Provisions for Seller’s Benefit 24 (d)
Matters Involving Third Parties 24 (e) Insurance Claims 25 (f) Claims regarding
Non-Culp Suppliers Inventories 25 (g) Exclusive Remedy 25   § 9 TERMINATION 25  
(a) Termination of Agreement 25 (b) Effect of Termination 26   § 10
MISCELLANEOUS 26   (a) Press Releases and Public Announcements 26 (b) No
Third-Party Beneficiaries 27 (c) Entire Agreement 27 (d) Succession and
Assignment 27 (e) Counterparts 27 (f) Headings 27 (g) Notices 27 (h) Governing
Law 28 (i) Amendments and Waivers 29 (k) Expenses 29 (l) Construction 30

2

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

(m) Incorporation of Exhibits and Schedules 30 (n) Tax Matters 30 (o) Bulk
Transfer Laws 30 (p) Governing Language 31 (q) Tax Disclosure Authorization 31

3

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

Table of Exhibits

Exhibit Name Exhibit A Bill of Sale Exhibit B Assignment and Assumption
Agreement Exhibit C IP Assignment Agreement Exhibit D Consulting and Development
Agreement Exhibit E Agency Agreement Exhibit F Authorized Dealer Termination
Agreement Exhibit G Leasehold Assignment and Release Agreement Exhibit H
Delivery Notice

Table of Schedules

Schedule Name

Disclosure Schedule -

Exceptions to and Other

Information Supplementing

Representations and

Warranties

- § 3(a)(i) Jurisdictions

- § 3(d) Title to Assets

- § 3(i) IP Rights

- § 3(j) Contracts

- § 3(k) Seller’s Employees

- § 3(l) Litigation

- § 3 (n) Benefit Plans

Schedule 1 AA Schedule of Acquired Assets Schedule 1 AL Schedule of Assumed
Liabilities Schedule 1 AC Schedule of Assumed Contracts Schedule 1 EA Schedule
of Excluded Assets Schedule 1 IP Schedule of Intellectual Property Schedule 1 PE
Schedule of Prepaid Expenses Schedule 1 RL Schedule of Retained Liabilities
Schedule 2 NWC Schedule Setting Forth Estimated Closing Net Working Capital

4

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

Schedule 2(a) Confirmation of RBC Bank Schedule 6(h) Schedule of Information
Required for Buyer’s SEC Filings Schedule 6(i) Schedule of Trademarks

5

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

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”) is entered into on August 11,
2008, by and among CULP, INC., a North Carolina corporation (“Buyer”), BODET &
HORST USA, LP, a North Carolina domestic limited partnership (“Seller”), and
with regard to § 3, § 6(c), § 6(d), § 6(e)(iii), § 6(f), § 6(g), § 6(h), 6(i),
§ 8 and § 10(k) (and the defined terms in § 1 associated with the foregoing)
only, BODET & HORST GMBH & CO. KG (“Shareholder”; Seller and Shareholder
collectively referred to as the “Selling Parties”; Buyer and Seller being
referred to herein, individually, as a “Party” and collectively as the
“Parties”).

WHEREAS, Seller is engaged in, among other things, the business of the sale of
running meters of circular knitted double jersey plain and jacquard, circular
knitted terry plain and jacquard and circular knitted velour plain and jacquard
in the United States, Canada and Mexico; and

WHEREAS, Seller desires to sell, and Buyer desires to purchase and acquire all
of the Purchased Assets (as hereinafter defined).

NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.

§ 1       Definitions

“Accounting Expert” has the meaning set forth in §2(e)(iv).

“Acquired Assets” means (1) all of the fixed assets of Seller described
conclusively in Schedule 1 AA, (2) all Inventories related to the Business as of
the Closing Date of which Schedule 1 AA includes an indicative list as of July
31, 2008, excluding for the avoidance of doubt any and all Inventories relating
to the production and sale of Products to Tempurpedic and any direct or indirect
supplier of Tempurpedic, and (3) all assets conclusively listed on Schedule 1
AC, Schedule 1 IP and Schedule 1 PE, but excluding for the avoidance of doubt
any Excluded Assets.

“Adverse Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, Taxes, Liens, losses,
expenses, and fees, including court costs and reasonable attorneys’ fees and
expenses.

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

“Agency Agreement” has the meaning as set forth in §6(d).

“Ancillary Agreements” has the meaning as set forth in §2(f)(iv).

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

“Assignment and Assumption Agreement” has the meaning as set forth in §2(f)(ii).

“Assumed Liabilities” means (a) any and all liabilities and obligations of the
Seller relating to the Business as of the Closing Date as listed indicatively in
Schedule 1 AL as of July 29, 2008 and July 31, 2008 respectively or arising
after the Closing Date, (b) the Boyteks Assumed Liabilities and (c) any and all
liabilities and obligations of the Seller arising from and after Closing under
the Assumed Contracts, however, for the avoidance of doubt, Buyer shall also
assume any and all liabilities and obligations under the Assumed Contracts that
arose prior to Closing, if and to the extent such liabilities and obligations
are included in (a) or (b) above, excluding for the avoidance of doubt (1) any
liabilities or obligations relating to the production and sale of any products,
including but not limited to Products to Tempurpedic and any direct or indirect
supplier of Tempurpedic, (2) any and all bank loans of the Seller, (3) any and
all liabilities and obligations of the Seller to any related party or affiliate
of the Seller, (4) any and all Boyteks Retained Liabilities and (5) any and all
Retained Liabilities, in particular Retained Liabilities with regard to the
employees of the Seller.

“Bill of Sale” has the meaning as set forth in § 2(f)(i).

“Boyteks” shall mean Boyteks A.S. or any Affiliate of Boyteks A.S. or any direct
or indirect supplier of Boyteks A.S.

“Boyteks Assumed Liabilities” shall mean any payables of either Selling Party to
Boyteks for any goods or supplies delivered from Boyteks to the Buyer, for which
the Buyer has not yet made full payment to either Selling Party on the relating
Boyteks Receivables.   

“Boyteks Receivables” shall mean any receivable of either Selling Party against
the Buyer for the delivery of goods and supplies from Boyteks to the Buyer,
including the commission to be paid by the Buyer to either Selling Party for
such delivery.  

“Boyteks Retained Liabilities” shall mean any payables of either Selling Party
to Boyteks not being a Boyteks Assumed Liability.

“Break Fee” shall mean a lump sum amount of $500,000.

“Business” means the sale of running meters of circular knitted double jersey
plain and jacquard, circular knitted terry plain and jacquard and circular
knitted velour plain and jacquard in the United States, Canada and Mexico as
currently conducted by Seller but shall exclude any sales to Tempurpedic and
IKEA (such exclusion to cover any indirect sales to Tempurpedic and any indirect
sales to IKEA so long as such sales to IKEA are made pursuant to the Agency
Agreement).

“Business Day” means a day other than a Saturday, Sunday, or national holiday.

“Buyer” has the meaning set forth in the preface above.

“Cash” means cash and cash equivalents (including marketable securities and
short-term investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements.

2

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

“Closing” has the meaning set forth in §2(f) below.

“Closing Balance Sheet” has the meaning as set forth in §2(e).

“Closing Date” has the meaning set forth in §2(f) below.

“Closing Net Working Capital” has the meaning as set forth in §2(d).

“Culp Supplier Inventory” shall mean any and all Inventory directly or
indirectly delivered to Seller by American Fibers & Yarns Company, O’Mara
Incorporated or Unifi, Inc.

“Current Assets” means Inventories held for sale in the Business and which would
be of a nature to be included in the Acquired Assets if they were held by the
Seller as of the Closing Date.

“Current Liabilities” means current liabilities of the Seller which would be of
a nature to be included in the Assumed Liabilities if they were liabilities of
the Seller as of the Closing Date.

“Disclosure Schedule” has the meaning set forth in §3 below.

“Environmental Laws” means any statute, law, regulation, order, writ or judicial
or administrative determination that relates to the generation, storage,
handling, discharge, emission, transportation, treatment or disposal of
Hazardous Substances or wastes or to the protection of human health and the
environment, including CERCLA, the Superfund Amendments and Reauthorization Act
of 1986, the Resource Conservation and Recovery Act, the Clean Water Act, the
Federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Occupational Safety and Health Act, and the
Hazardous Material Transportation Act, in each case as amended, and the
regulations implementing such acts and the state and local equivalent of such
acts and regulations, and common law.

“Excess Net Working Capital” has the meaning as set forth in §2(d)(iii).

“Excess Net Working Capital Payment Amount” has the meaning as set forth in
§2(d)(iii).

“Excluded Assets” means any and all assets not constituting Acquired Assets,
including Cash and the assets as listed indicatively as of July 28, 2008 in
Schedule 1 EA.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
including all regulations and other authoritative governmental authority
guidance issued with respect thereto.

“ERISA Affiliate” means any trade or business, whether or not incorporated, that
is a member of a group of corporations or of trades or businesses (whether or
not incorporated) that along with the Seller are treated as a single employer
under and for any of the purposes specified in Section 414(b), (c), (m) or (o)
of the Code or that is a member of a controlled group within the meaning of
Section 4001(a)(14) of ERISA that includes the Seller.

3

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

“Financial Statements” means, collectively, the Interim Balance Sheet and the
audited balance sheet, income statement and statement of cash flows for the
Seller dated as of June 30, 2006 and June 30, 2007 (including the notes thereto.

“GAAP” means United States generally accepted accounting principles as in effect
from time to time, consistently applied.

“General Partner” means Bodet & Horst Corporation, with registered offices at
100 North Tryon Street, Suite 4700, Charlotte, NC, 28202-4003.

“Hazardous Substance” includes each substance identified or designated as such
under CERCLA, as well as any other substance or material meeting any one or more
of the following criteria:  (i) it is or contains a substance designated as a
hazardous waste, hazardous substance, hazardous material, pollutant, contaminant
or toxic substance under any Environmental Law, (ii) it is toxic, reactive,
corrosive, ignitable, infectious, radioactive or otherwise hazardous or (iii) it
is or contains, without limiting the foregoing, petroleum hydrocarbons.

“Hired Employees” has the meaning as set forth in §2(g)(iii).

“IKEA” means any entity belonging to the IKEA group companies as further
identified under http://www.ikea.com/us/en/.

“Indemnified Party” has the meaning set forth in §8(d) below.

“Indemnifying Party” has the meaning set forth in §8(d) below.

“Intellectual Property” means the designs and related copyrights used in the
operation of the Business, including all rights related thereto and all the
other intellectual property set forth on Schedule 1 IP.

 “Interim Balance Sheet” means the unaudited balance sheet of the Seller dated
as of January 31, 2008.

“Inventories” means all inventories owned by Seller on the Closing Date relating
to the Business, wherever located, including all finished goods, work in
progress, raw materials and all other materials and supplies to be used and
consumed by Seller in the production of finished goods sold by the Seller in the
Business (but specifically excluding inventories for sale to Tempurpedic).

“IP Assignment Agreement” has the meaning has set forth in §2(g)(iii).

 “Knowledge” means actual knowledge without independent investigation.

“Liens” means any mortgages, claims, liens, security interests, pledges,
escrows, charges, options, easements, conditions, rights-of-way, covenants,
leases, subleases, licenses and other occupancy agreements or other restrictions
or encumbrances of any kind or character whatsoever.

4

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

“Material Adverse Effect” or “Material Adverse Change” means any effect or
change that would be materially adverse to the Business of the Seller taken as a
whole; provided that none of the following shall be deemed to constitute, and
none of the following shall be taken into account in determining whether there
has been, a Material Adverse Effect or Material Adverse Change:  (a) any adverse
change, event, development, or effect arising from or relating to (1) general
business or economic conditions, (2) national or international political or
social conditions, including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war, or
the occurrence of any military or terrorist attack upon the United States, or
any of its territories, possessions, or diplomatic or consular offices or upon
any military installation, equipment or personnel of the United States, (3)
financial, banking, or securities markets (including any disruption thereof and
any decline in the price of any security or any market index), (4) changes in
GAAP, (5) changes in laws, rules, regulations, orders, or other binding
directives issued by any governmental entity, (6) the taking of any action
contemplated by this Agreement and the other agreements contemplated
hereby,  (7) any change in the sales to, ability to fulfill orders from or
relationship with Tempurpedic or IKEA, (8) announcement or pendency of the
consummation of this Agreement and the transactions contemplated by this
Agreement either publicly or to the customers, suppliers, employees and advisors
of the Seller or the Business; and (b) any existing event, occurrence, or
circumstance with respect to which Buyer has Knowledge as of the date hereof,
and (c) any adverse change in or effect on the business of the Seller that is
cured before the earlier of (1) the Closing Date and (2) the date on which this
Agreement is terminated pursuant to §7 hereof.

“Net Working Capital” means, as of the date of determination, (a) the sum of (i)
Current Assets and (ii) Prepaid Expenses, less (b) Current Liabilities, all as
associated with the Business and determined as of such date. For the avoidance
of doubt, any and all liabilities to any employee of the Seller shall not be
part of the Net Working Capital.

“Net Working Capital Deficiency” has the meaning as set forth in §2(d)(iii).

“Net Working Capital Deficiency Payment Amount” has the meaning as set forth in
§2(e)(iii).

“Non-Culp Supplier Inventory” shall mean any and all Inventory not directly or
indirectly delivered to Seller by American Fibers&Yarn, Omara Inc. or Unifi
Manufacturing.

“NWC Determination Date” has the meaning as set forth in §2(d)(ii).

“Ordinary Course of Business” means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).

“Outside Date” has the meaning as set forth in §9(a)(ii).

“Party” has the meaning set forth in the preface above.

“Permitted Liens” means (i) the Liens for current Taxes not yet due and payable,
and (ii) the Liens imposed by law, such as the Liens of carriers, warehousemen,
mechanics, materialmen and landlords, and other similar Liens incurred in the
Ordinary Course of Business for sums not constituting borrowed money, that are
not overdue.

5

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

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, any other business entity, or a governmental entity
(or any department, agency, or political subdivision thereof).

“Plan” means any material employee pension, retirement, profit-sharing, stock
bonus, incentive, deferred compensation, stock option, employee stock ownership,
hospitalization, medical, dental, vacation, insurance, sick pay, disability,
severance or other plan, fund, program, policy, contract or arrangement, whether
arrived at through collective bargaining or otherwise, providing employee
benefits, including any “employee benefit plan” as that term is defined in
Section 3(3) of ERISA, currently maintained by, sponsored in whole or in part
by, or contributed to by the Seller, for the benefit of employees, retirees,
directors or independent contractors of the Business and their dependents,
spouses or other beneficiaries.

“Post Closing Adjustment Amount” has the meaning as set forth in §2(d)(iii).

“Preliminary Purchase Price” has the meaning as set forth in §2(c).

“Prepaid Expenses” shall include all expenses prepaid by the Seller prior to
Closing Date, which items are described in Schedule 1 PE.  

“Products” means circular knitted double jersey plain and jacquard, circular
knitted terry plain and jacquard, and circular knitted velour plain and jacquard
if and to the extent these products shall be used in any way for the mattress
industry and/or the mattress ticking industry.

“Purchase Price” has the meaning set forth in §2(c) below.

“Responsible Officer” means Gerd-Hermann Horst and Jerry Pratt.

“Retained Liabilities” means any all liabilities not constituting Assumed
Liabilities, including (a) the liabilities as listed indicatively as of July 29,
2008 and July 31, 2008 respectively in Schedule 1 RL, (b) any liabilities
associated with the matters described in § 3(l) of the Disclosure Schedule, (c)
any Boyteks Retained Liabilities, (d) any professional fees for legal, tax or
accounting services and (e) any liabilities associated with or related to (i)
any delinquencies in any payments owed to any Hired Employee for any wages,
salaries, commissions, bonuses or other compensation for any services performed
by them for the Seller up to the Closing Date or amounts required to be
reimbursed to such employees for such services, (ii) any loans or other
obligations payable or owing by the Seller to any officer, director or employee
of the Seller with respect to the Business, however, for the avoidance of doubt,
excluding any liabilities of the Seller to the Hired Employees which shall be
the responsibility of the Buyer according to §6(e).

“Seller” has the meaning set forth in the preface above.

“Seller Contracts” means the contracts and other agreements listed in Schedule 1
AC.

6

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

“Seller’s Accounting Practices” means GAAP, subject to being on a consistent
basis with the accounting policies and practices used by the Seller in the
preparation of its audited financial statements for fiscal year ended June 30,
2007.

“Statement of Objection” has the meaning set forth in §2(d)(ii) below.

“Survival Period” shall mean, with respect to any representation or warranty
contained in §3 or §4 hereof, a period of one (1) year starting on and including
the Closing Date except for the guarantee of the Buyer under §4(e) hereof, for
which the period shall not lapse before the determination of the Closing Balance
Sheet and the Closing Net Working Capital is final and binding between the
Parties (provided, however, that no matters involving fraud shall be subject to
any Survival Period).

“Tangible Personal Property” means all machinery, equipment, tools, furniture,
office equipment, fixtures, computer hardware, supplies, materials, vehicles and
other items of tangible personal property (other than Inventories) of every kind
included in Schedule 1 AA (which schedule is intended to set forth all such
types of property relating to the operation of the Business).

“Tempurpedic” means any entity belonging to the Tempurpedic International, Inc
group companies as further identified under http://www.tempurpedic.com.

“Territory” means USA, Canada and Mexico.

“Transfer Date” has the meaning set forth in §6(d)(ii) below.

“Transfer Employees” has the meaning set forth in §6(e)(iii) below.

“Third-Party Claim” has the meaning set forth in §8(d) below.

§ 2       Basic Transaction

(a) Purchase and Sale of Assets.  On and subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell,
transfer, convey, and deliver to Buyer, all of the Acquired Assets at the
Closing for the consideration specified below in this §2. For the avoidance of
doubt the Parties wish to clarify that any and all receivables of the Seller
shall not be transferred to the Buyer, but shall remain with the Seller and that
as far as receivables of the Seller against the Buyer are concerned, the Buyer
shall settle these receivables in the Ordinary Course of Business, including any
and all outstanding Boyteks Receivables.  

The Acquired Assets specified in §3(d) of the Disclosure Schedule are encumbered
by liens of RBC Bank, 200 Providence Road Suite 300, Charlotte, NC 28207 (“RBC
Bank”). RBC Bank will release the liens upon payment of an amount equal to US$
204,900.08 according to the confirmation of RBC Bank attached hereto as Schedule
2(a) or any other amount as indicated from the Seller to the Buyer on or prior
to Closing in writing (it being understood that any such amounts paid at Closing
to RBC Bank by Buyer will be deducted from the amount received by Seller at
Closing).

7

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

(b) Assumption of Liabilities.  On and subject to the terms and conditions of
this Agreement, Buyer agrees to assume, discharge, perform and be responsible
for all of the Assumed Liabilities at the Closing.  Buyer will not assume
discharge, perform or be responsible, however, with respect to any other
obligation or liability of Seller that is not expressly included within the
definition of Assumed Liabilities, it being understood that such other
obligations and liabilities (referred to herein as “Retained Liabilities”) will
be retained by the Seller.

(c) Preliminary Purchase Price.

The consideration paid by the Buyer for the Acquired Assets will consist of the
following:

(i)       the payment of US$10,500,000 (the “Preliminary Purchase Price”), as
may be adjusted pursuant to §2(d) below (as so adjusted, the “Purchase Price”);

 (ii)     the assumption of the Assumed Liabilities.   

Post-Closing Purchase Price Adjustment.

(i)                          Closing Statement.  As soon as reasonably
practicable following the Closing Date, and in any event within thirty (30) days
after the Closing Date, Seller shall prepare and deliver to Buyer:  (i) an
unaudited consolidated balance sheet for the Business (“Closing Balance Sheet”)
as of the end of the day on the Closing Date and (ii) a calculation of the
combined Net Working Capital (the “Closing Net Working Capital”) as determined
from the Closing Balance Sheet.  The Closing Balance Sheet shall be prepared on
a consistent basis with the Sellers’ Accounting Practices.  

In the event Inventories need to be written off according to Sellers’ Accounting
Practices or applicable accounting rules on the Closing Balance Sheet, such
write offs shall not be reflected in the Closing Net Working Capital.

(ii)                         Adjustment to and Final Closing Net Working
Capital; Resolution of Disputes.  If the Buyer disagrees with the calculation of
the Closing Net Working Capital or any element of a Closing Balance Sheet
relevant thereto, Buyer shall notify Seller of such disagreement in writing (the
“Statement of Objection”), setting forth in reasonable detail the particulars of
such disagreement and providing its calculation in reasonable detail of the
Closing Net Working Capital within thirty (30) days after its receipt of the
Closing Balance Sheet.   In the event Buyer does not provide such Statement of
Objection within such thirty (30) day period (or earlier provides written notice
of its acceptance of the calculations of Closing Net Working Capital prepared by
Seller), Buyer shall be deemed to have accepted the Closing Balance Sheets and
the calculation of the Closing Net Working Capital delivered by Seller, which
shall, in the absence of fraud or manifest error, be final, binding and
conclusive for purposes of this §2(d).  In the event any Statement of Objection
is timely provided, Seller and Buyer shall use commercially reasonable efforts
for a period of fifteen (15) days (or such longer period as they may mutually
agree) to resolve any disagreements with respect to the calculation of Closing
Net Working Capital.  If, at the end of such period, they are unable to resolve
such disagreements, then all issues having a bearing on such disagreement shall
be referred to the Accounting Expert for resolution in accordance with
§2(d)(iv).  The date on which the Closing Net Working Capital is finally
determined in accordance with this §2(d) is hereinafter referred to as the “NWC
Determination Date.”

8

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

(iii)                        Working Capital Adjustment Calculation.  In the
event that Closing Net Working Capital is not equal to the estimated closing net
working capital and as set forth on Schedule 2 NWC attached hereto (“Estimated
Closing Net Working Capital”), there shall be calculated a “Post Closing
Adjustment Amount”, equal to the difference between (x) the Closing Net Working
Capital and (y) the Estimated Closing Net Working Capital.

(A)                                    In the event that the Closing Net Working
Capital is greater than the Estimated Closing Net Working Capital, such excess
is referred to herein as the “Excess Net Working Capital.”

(B)                                    In the event that the Closing Net Working
Capital is less than the Estimated Closing Net Working Capital, such deficiency
is referred to herein as the “Net Working Capital Deficiency.”

(C)                                    If there is a Net Working Capital
Deficiency, within five (5) Business Days of the NWC Determination Date, Seller
shall pay to Buyer one hundred percent (100%) of any Net Working Capital
Deficiency (such amount shall be referred to herein as the “Net Working Capital
Deficiency Payment Amount”).  Any such Net Working Capital Deficiency Payment
Amount shall be paid by wire transfer of immediately available funds to the
account(s) designated in writing by Buyer.

(D)                                    If there is Excess Net Working Capital,
within five (5) Business Days of the Determination Date, Buyer shall pay to
Seller one hundred percent (100%) of any Excess Net Working Capital (such amount
shall be referred to herein as the “Excess Net Working Capital Payment
Amount”).  Any such Excess Net Working Capital Payment Amount shall be paid by
wire transfer of immediately available funds to the account(s) designated in
writing by Seller.  

9

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

(iv)                         Resolution of Adjustment Disputes.  The “Accounting
Expert” means, for the purposes of this Agreement, McGladrey & Pullen, or in the
event that such firm is unable or unwilling to take on such assignment, such
other accounting firm as is mutually agreed to by Seller and Buyer.  The
Accounting Expert shall, in resolving any disagreements referred to it pursuant
to §2(d), act as an expert and not an arbitrator.  The parties will reasonably
cooperate with the Accounting Expert during the period of the Accounting
Expert’s engagement.  The Accounting Expert shall determine as promptly as
practicable (but in no event later than thirty (30) days following its
engagement), and as applicable depending on which (if any) matters are referred
to it pursuant to §2(d), whether with respect to Closing Net Working Capital (A)
the Buyer’s preparation of the Closing Balance Sheet or calculations of the
Closing Net Working Capital was in accordance with GAAP or the Seller’s
Accounting Practices, (B) the amounts set forth in the Closing Balance Sheets or
the Closing Net Working Capital were obtained from and in accordance with the
books and records of the Buyer relating to the Acquired Assets and Assumed
Liabilities and in a manner consistent with the Sellers’ Accounting Practices,
and/or (C) there were any errors of fact or mathematical errors in the Closing
Balance Sheet or the Closing Net Working Capital.  In resolving a disputed item,
the Accounting Expert may not assign a value to any particular item greater than
the greatest value for such item claimed by either Party to the dispute or less
than the smallest value for such item claimed by either such Party, in each case
as presented in writing to the Accounting Expert.  Within fifteen (15) days
after the engagement of the Accounting Expert, Seller and Buyer shall present
their respective positions with respect to the items set forth in the Statement
of Objections in the form of a written binder of supporting materials to the
Accounting Expert and the other Party to the dispute and no ex parte
conferences, oral examinations, testimony, depositions, discovery or other form
of evidence gathering or hearings shall be conducted or allowed; provided that,
at the Accounting Expert’s request, or as mutually agreed by Seller and Buyer,
Seller and Buyer may meet with the Accounting Expert so long as representatives
of both Seller and Buyer are present.  The supporting binders shall set forth
the arguments supporting the applicable Party’s position, along with such
supporting materials and other information (including facts and figures) as such
Party shall desire.  Seller and Buyer will also furnish to the Accounting Expert
such other work papers, documentation and information directly relating to the
disputed items as the Accounting Expert may reasonably request.  The Buyer may
require that the Accounting Expert enter into a customary form of
confidentiality agreement with respect to the work papers and other documents
and information regarding the Acquired Assets and Assumed Liabilities provided
to the Accounting Expert pursuant to this § 2(d)(iv).  Seller and Buyer will
each use their commercially reasonable efforts to cause the Accounting Expert to
deliver to Seller and Buyer its determination in writing within thirty (30) days
following its engagement, which determination shall be made subject to the
definitions and principles set forth in this Agreement and shall be binding on
both Seller and Buyer (i) consistent with either the position of Seller or Buyer
or (ii) between the positions of Seller and Buyer.  In the absence of fraud or
manifest error, the determination of the Accounting Expert shall be final,
conclusive and binding on the Parties.  The fees and expenses of the Accounting
Expert shall be allocated ratably among Seller, on the one hand, and Buyer, on
the other hand, in the same proportion that the aggregate dollar amount of items
unsuccessfully disputed by each such party (as finally determined by the
Accounting Expert) bears to the aggregate dollar amount of all disputed items
submitted to the Accounting Expert.  With respect to other costs, Seller, on one
hand, and Buyer, on the other hand, shall pay their own costs in connection with
the determination made pursuant to this §2(e)(iv), including the fees and
expenses of their respective attorneys and accountants, if any.  

(v)                          Adjustments to Purchase Price.  The purpose of
§2(d) is to determine the Purchase Price to be paid by the Buyer under this
Agreement.  Accordingly, any adjustment pursuant to such section will neither be
deemed to be an indemnification pursuant to Article 8, nor preclude the Buyer
from exercising any indemnification rights pursuant to Article 8.  Any payment
made pursuant to §2(d) will be treated by the parties for all purposes as an
adjustment to the Preliminary Purchase Price.

10

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

(e) The Closing.  The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place on date of signing of this Agreement or such
other date as the Parties may mutually determine (the “Closing Date”).

Deliveries at the Closing by Seller.  At the Closing Seller will deliver to
Buyer:

(i)                          a bill of sale in the form of Exhibit A for all of
the Acquired Assets that are tangible personal property (the “Bill of Sale”),
executed by Seller;

(ii)                         an assignment and assumption agreement in the form
of Exhibit B for all of the Acquired Assets that are intangible personal
property (other than Intellectual Property) (which assignment will also contain
Buyer’s undertaking and assumption of the Assumed Liabilities) (the “Assignment
and Assumption Agreement”), executed by Seller;

(iii)                        an assignment agreement in the form of Exhibit C
for Intellectual Property (“IP Assignment Agreement”) included in the Acquired
Assets, executed by Seller;

(iv)                         the Consulting and Development Agreement, Leasehold
Assignment and Release Agreement, Agency Agreement and Authorized Dealer
Termination Agreement in the forms as Exhibits D through G (collectively
referred to as “Ancillary Agreements”), executed by Seller or the other
applicable party thereto;

Deliveries at the Closing by Buyer.   At the Closing, Buyer will

(i)                          pay (x) USD 10,295,099.92 by wire transfer to the
Seller to a bank account specified by Seller and (y) USD 204,900.08 or any other
amount as indicated by Seller in writing to the Buyer according to §2(a) hereof
to the account of RBC Bank as indicated in Schedule 2(a); for the avoidance of
doubt, the Seller shall be entitled to demand payment from the Buyer of the
amount indicated by RBC Bank in writing required for the release of the liens on
the Acquired Assets specified on §3(d) of the Disclosure Schedule only to RBC
Bank;

(ii)                         deliver the Ancillary Agreements, executed by
Buyer;

(iii)                        deliver evidence satisfactory to Seller that Buyer
has offered employment to the persons specified on §3(k) of the Disclosure
Schedule (the “Hired Employees”) on substantially the same employment terms and
with substantially the same benefits as such Hired Employees receive from Seller
(it being acknowledged that, for purposes of the foregoing, the Buyer’s existing
benefits are substantially the same as the Seller’s).

(iv)                         a delivery notice duly signed by the Buyer in the
form as set forth in Exhibit H (“Delivery Notice”).

(h) Consents to Assignment.  Seller Contracts requiring the consent of a
third-party in order to assign the same are so indicated on Schedule 1 AC.  To
the extent that the assignment of any Seller Contract requires the consent of
another person, this Agreement will not constitute an agreement to assign such
Seller Contract if an attempted assignment would constitute a breach
thereof.  Buyer will use all reasonable efforts to obtain any required consents
to the assignment of each Seller Contract. If and as long as a required consent
to the assignment of a Seller Contract is not obtained, Seller and Buyer will
put each other in a position they would be if such Seller Contract had been
validly assigned to the Buyer on the Closing Date.  Seller will cooperate with
Buyer to provide for Buyer the risks and benefits associated with such Seller
Contract, including enforcement, at the cost of and for the benefit of Buyer, of
any and all rights of Seller against any other party.  The Buyer shall indemnify
the Seller for all and any liabilities under Seller Contracts that become due on
or after the Closing Date.  The Seller will exercise all rights under such
Seller Contracts according to the instructions and at the costs of the
Buyer.  The Seller is entitled to duly terminate such Seller Contract if the
Buyer fails in obtaining the consent of all other parties to the assignment of
the respective Seller Contract within 6 (six) months after the Closing Date.  

11

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

(i) Allocation. Seller shall prepare an allocation of the Purchase Price (and
all other capitalized costs) among the Acquired Assets in accordance with Code
§1060 and the Treasury regulations thereunder. Such amounts will be adjusted in
accordance with Section 1060 of the Code and the Treasury Regulations
promulgated thereunder as a result of any adjustments to the Preliminary
Purchase Price pursuant to §2(d) hereof or any other provision of this
Agreement.  Seller shall deliver such proposed allocation to Buyer within 60
days after the Closing Date. Such proposal shall be subject to the approval of
the Buyer, which approval shall be timely and not unreasonably withheld.  Upon
such approval, Seller and Buyer and its Affiliates shall report, act and file
Tax Returns (including, but not limited to Internal Revenue Service Form 8594)
in all respects and for all purposes consistent with such allocation as is
agreed upon. Buyer shall timely and properly prepare, execute, file and deliver
all such documents, forms and other information as Seller may reasonably request
to prepare such allocation. The Seller and the Buyer (x) will be bound by the
allocation contained in the allocation schedule for purposes of determining any
and all consequences with respect to taxes of the transactions contemplated
herein, (y) will prepare and file all tax returns to be filed with any tax
authority in a manner consisting with the allocation schedule, and (z) will take
no position inconsistent with the allocation schedule on any tax return, any
discussion with or proceeding before any tax authority, or otherwise.  In the
event that the allocation schedule is disputed by any tax authority, the party
receiving notice of such dispute will promptly notify the other party thereof
and both parties will defend the allocation schedule in all reasonable ways.

§ 3       Seller’s Representations and Warranties

Seller and the Shareholder jointly and severally represent and warrant to Buyer
that the statements contained in this §3 are correct and complete as of the date
of this Agreement, except as set forth in the Disclosure Schedule accompanying
this Agreement and initialed by the Parties (the “Disclosure Schedule”) (it
being understood that the Shareholder shall have no responsibility for any of
the following representations and warranties that do not relate specifically to
the Shareholder, unless the Seller fails to perform its obligations as set forth
in §6(f)).

12

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

(a) Organization, Etc.  

(i)                          The Seller is a domestic limited partnership duly
formed, validly existing and in good standing under the laws of the State of
North Carolina.  The General Partner is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of North
Carolina.  The Seller has full limited partnership power and authority to own or
use the Acquired Assets and to conduct its business as presently conducted.  The
General Partner has full [corporate] power and authority to act as general
partner of the Seller and to enter into this Agreement and to consummate the
transactions contemplated hereby on behalf of the Seller.  Unless disclosed in
§ 3(a)(i) of the Disclosure Schedule, the Seller is duly qualified to do
business as a limited partnership and is in good standing in all the states,
provinces and jurisdictions in which either the nature of the activities of the
Seller, or the ownership or use of the Acquired Assets, makes such qualification
necessary, except where failure to so qualify would not reasonably be expected
to have a Material Adverse Effect.  No other jurisdiction has given written
notice to the Seller indicating that the Seller should be qualified in any other
jurisdiction.

(ii)                         Shareholder is a limited liability partnership duly
formed, validly existing and in good standing under the laws of Germany.

(b) Authorization of Transaction.  The General Partner has the absolute and
unrestricted right, authority, power and capacity to (i) execute and deliver
this Agreement and each certificate, document and agreement to be executed by
the Seller in connection herewith on behalf of the Seller (the certificates,
documents and agreements to be executed by the General Partner on behalf of the
Seller or by the Shareholder in connection with this Agreement, collectively,
the “Seller Documents”) and (ii) perform the obligations of the Seller hereunder
and thereunder.  The Shareholder has the absolute and unrestricted right,
authority, power and capacity to (i) execute and deliver each Seller Document to
which it is party and (ii) perform the obligations of the Shareholder hereunder
and thereunder.  The execution and delivery of this Agreement and the Seller
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Seller, the General Partner
and the Shareholder, and no other proceedings on the part of the Seller, the
General Partner or the Shareholder are necessary to authorize this Agreement or
any Seller Document or to consummate the transactions contemplated hereby or
thereby.  This Agreement has been duly and validly executed and delivered by the
General Partner on behalf of the Seller and the Shareholder and constitutes a
legal, valid and binding obligation of each of the Seller and the Shareholder,
enforceable against such Party in accordance with its terms.  Upon execution and
delivery by the Seller, the General Partner and the Shareholder of each Seller
Document to which it is a party, such Seller Document shall constitute a legal,
valid and binding obligation of the Seller, the General Partner and the
Shareholder in each case enforceable against it in accordance with its terms.  

(c) Non-contravention.  To the Knowledge of any Responsible Officer, the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in §2 above), will violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Seller is subject or
any provision of the charter or bylaws of Seller.

13

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

(d) Title to Tangible Assets.  Except as set forth in §3(d) of the Disclosure
Schedule, Seller owns good and valid title to all of the Acquired Assets,
whether tangible or intangible, that it purports to own, including all of the
Acquired Assets reflected on the Interim Balance Sheet (except for Acquired
Assets held under capitalized leases and Acquired Assets sold since the date of
the Interim Balance Sheet in the Ordinary Course of Business), free and clear of
all the Liens except for the Permitted Liens.

(e) Inventories.

(i)                          To the Knowledge of any Responsible Officer, all
Non-Culp Suppliers Inventories are in all material aspects of a quality useable
and with respect to finished goods, sellable in the Ordinary Course of Business,
except where provided for on the Seller’s books and records.

(ii)                         To the Knowledge of any Responsible Officer, the
Seller has not caused any damage to the Culp Suppliers Inventories that would
impair their quality in any material aspect and with respect to finished goods,
would make them non-sellable in the Ordinary Course of Business, except where
provided for on the Seller’s books and records. Any damage to the Culp Suppliers
Inventories caused by any subcontractor of the Seller processing the Culp
Suppliers Inventories shall not be imputed to the Seller.  

(iii)                        The Seller shall not be liable under §3(e)(i) and
(ii) for any damages to the Inventories that have been caused by Beverly Knits
or Colortex USA or an independent contractor of the Seller transporting or
otherwise handling the Inventories.  

(iv)                         All of the Inventories are located on the real
property leased by the Seller from Affiliates of the Buyer, are kept with
Beverly Knits, Colortex USA or are in transit.

(f) Tangible Personal Property.  To the Knowledge of any Responsible Officer,
each item of Tangible Personal Property of Seller that will be included in the
Acquired Assets is in all material aspects in good operating condition and
repair, ordinary wear and tear excepted and is suitable for immediate use in the
Ordinary Course of Business.

(g) Recent Changes.  Since January 31, 2008, there has not been any Material
Adverse Change.  Other than the entry into this Agreement, since January 31,
2008, the Seller has not engaged in any practice, taken any action, or entered
into any material transaction outside the Ordinary Course of Business.

(h) Legal Compliance.  To the Knowledge of any Responsible Officer, the Seller
has complied in all material respects with all applicable laws (including
statutes, rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local and foreign
governments (and all agencies thereof).

(i)                Intellectual Property.

14

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

  §3(i) of the Disclosure Schedule identifies each patent or registration in
respect of any other item of intellectual property of the Seller, identifies
each pending patent application or other application for registration that
Seller has made with respect to any of its intellectual property, and identifies
each material license, agreement, or other permission that Seller has granted to
any third party with respect to any of its intellectual property (including the
Intellectual Property).  To the Knowledge of the Responsible Officers (i), the
use by the Seller of the Intellectual Property in connection with the Business
does not infringe on the rights of any third party with respect to such
Intellectual Property, and (ii) no third party is currently making use of such
Intellectual Property in a manner that infringes on the rights of the Seller
therein.

(j) Contracts.  §3(j) of the Disclosure Schedule lists all Seller Contracts and
all other contracts and other agreements to which the Seller is a party and the
performance of which will involve consideration in excess of $50,000.  Seller
has delivered to Buyer a correct and complete copy of each written Seller
Contract (as amended to date) listed in §3(j) of the Disclosure Schedule.

(k) Employees.  

(i)                          §3(k) of the Disclosure Schedule contains an
accurate list of the following information for each Hired Employee of the
Seller:  name; job title; date of birth; date of hiring; whether employment is
subject to the terms of any employment agreement; current compensation paid or
payable, any disability status, terms of severance (if any), and sick and
vacation leave accrued.  To the Knowledge of any Responsible Officer, no Hired
Employee plans to refuse to accept employment with Buyer.  

(ii)                         To the Knowledge of any Responsible Officer, no
Hired Employee with respect to the Business is a party to, or otherwise bound
by, any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement, between such Hired Employee
and any other Person that in any way has adversely affected up to the Closing
Date (i) the performance of his or her duties as an employee of the Seller, (ii)
the ability of the Seller to conduct the Business or (iii) the ability of such
individual to assign to the Seller any rights under any invention, improvement
or discovery.

(iii)                        The Seller has provided to the Buyer access to true
and complete copies of all employment manuals of the Seller.

(iv)                         There are no outstanding EEOC, OSHA or workers
compensation claims with respect to the Buyer or the Business.

(l) Litigation.  Except as set forth in §3(l) of the Disclosure Schedule, there
is no suit, claim, action or proceeding pending or, to the Knowledge of any
Responsible Officer, threatened, against Seller with respect to the Business.

(m) Financial Statements.  The Seller has delivered to the Buyer true and
correct copies of each of the Financial Statements.  As far as the Financial
Statements have been audited, they have been prepared in accordance with
GAAP.  All Financial Statements (i) present the results of operations, cash
flows and financial position of the Seller or the periods and as of the dates
referred to therein (as far as the Financial Statements have been audited, all
in accordance with GAAP), and (ii) are consistent with the books and records of
the Seller.

15

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

(n) Benefit Plans.  Except as set forth in §3(n) of the Disclosure Schedule,
neither the Seller nor any ERISA Affiliate thereof maintains, participates in or
contributes to any Plans.

(o) Environmental Matters.  To the Knowledge of any Responsible Officer, except
as would not reasonably be expected to have a Material Adverse Effect, the
Seller has not caused any contamination or pollution of the soil or the ground
water of the property, on which Seller’s Business has been conducted in the past
by an act or omission that has not been in compliance with any Environmental
Laws, including but not limited to the improper handling of Hazardous
Substances. The Seller shall not be liable to the Buyer hereunder if and to the
extent the circumstances leading to a breach of this guarantee also constitute a
breach by the Seller of the lease agreement entered into between the Seller and
Partnership 52 Associates dated January 1, 2005 as amended by an undated
amendment.

(p) Disclaimer of Other Representations and Warranties.  Except as expressly set
forth in this §3, Seller makes no representation or warranty, express or
implied, at law or in equity, in respect of any of its assets (including,
without limitation, the Acquired Assets), liabilities or operations, including,
without limitation, with respect to merchantability or fitness for any
particular purpose, and any such other representations or warranties are hereby
expressly disclaimed.  Buyer hereby acknowledges and agrees that, except to the
extent specifically set forth in this §3, Buyer is purchasing the Acquired
Assets on an “as-is, where-is” basis.  Without limiting the generality of the
foregoing, Seller makes no representation or warranty regarding any assets other
than the Acquired Assets or any liabilities other than the Assumed Liabilities,
and none shall be implied at law or in equity.

§ 4       Buyer’s Representations and Warranties, Covenants

Buyer represents and warrants to Seller that the statements contained in this §4
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
§4), except as set forth in the Disclosure Schedule.  The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this §4.

(a) Organization of Buyer.  Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of North Carolina.

(b) Authorization of Transaction.  Buyer has full power and authority (including
full corporate or other entity power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder.  This Agreement constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms and conditions.  The execution, delivery and performance of this
Agreement and all other agreements contemplated hereby have been duly authorized
by Buyer.

16

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

(c) Non-contravention.  Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in §2 above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Buyer is subject or any provision of its charter, bylaws, or
other governing documents or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Buyer is a party or by which it is bound or to which any of its assets
are subject.  Buyer does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in §2 above), other than certain required consents of parties to
certain contracts, which consents will have been obtained as of the Closing.

(d) Independent Investigation.  The Buyer has conducted its own independent
investigation, review and analysis of the business, operations, assets,
liabilities, results of operations, financial condition, and prospects of the
Business, which investigation, review and analysis was done by the Buyer and its
representatives.  The Buyer acknowledges that it and its representatives have
been provided adequate access to the personnel, properties, premises and records
of the Business for such purpose.  In entering into this Agreement, the Buyer
acknowledges that it has relied in part upon the aforementioned investigation,
review and analysis and not on any factual representations or opinions of the
Seller or its representatives (except the Seller Representations and the
Disclosure Schedule).  The Buyer hereby acknowledges and agrees that (a) other
than the Seller Representations, none of the Seller, any other member of the
Seller Group, or any of their respective officers, directors, employees or
representatives make or have made any representation or warranty, express or
implied, at law or in equity, with respect to the Business, the Acquired Assets
or the Assumed Liabilities including as to (i) merchantability or fitness for
any particular use or purpose, (ii) the operation of the Business by the Buyer
after the Closing in any manner or (iii) the probable success or profitability
of the Business after the Closing, and (b) other than the indemnification
obligations of the Seller and the Shareholder set forth in § 8 and subject to
the limitations in § 6(f) hereof, none of the Selling Parties, or any of their
respective officers, directors, employees or representatives will have or will
be subject to any liability or indemnification obligation to the Buyer or any
other person resulting from the distribution to the Buyer, its Affiliates or
representatives of, or the Buyer’s use of, any information relating to the
Business including, without limitation, any descriptive memoranda, summary
business descriptions or any information, documents or material made available
to the Buyer or its representatives, whether orally or in writing, in certain
“data rooms,” management presentations, functional “break-out” discussions,
responses to questions submitted on behalf of the Buyer or in any other form in
expectation of the contemplated transactions.

(e)                Accounting Expert

The Buyer represents that neither the Buyer nor any of its affiliates has had
any business relationship with the Accounting Expert in the last five years
before the Closing Date or will enter into any with the Accounting Expert until
the determination of the Closing Balance Sheet and the Closing Net Working
Capital is final and binding between the Parties.  

17

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

§ 5       [Reserved]

§ 6       Post-Closing Covenants

The Parties agree as follows with respect to the period following the Closing:

(a) General.  In case at any time after the Closing any further actions are
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further actions (including the execution and delivery of such further
instruments and documents) as the other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefore under §8 below).

(b) Litigation Support.  In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Business, the other Party will cooperate with the contesting or
defending Party and its counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books and records as
shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefore under §8 below).

(c) Non-Competition Agreement.  

(i)                          Each of the Seller and the Shareholder acknowledges
that (A) the Business maintains relationships with customers and suppliers
throughout the Territory; (B) the Products and services related to the Business
are marketed throughout the Territory; (C) the Business competes with other
businesses that are or could be located in any part of the world; (D) the Buyer
has required that each of the Seller and the Shareholder make the covenants set
forth in this §6(c) as a condition to the Buyer’s consummation of the
transactions contemplated by this Agreement and would not otherwise consummate
such transactions; (E) the provisions of this §6(c) are reasonable and necessary
to protect and preserve the Buyer’s interests in the Business and the operation
of the Business from and after the Closing Date; (F) the Seller and the
Shareholder will benefit from the consummation of the transactions contemplated
by this Agreement; and (G) the Buyer would be irreparably damaged if the Seller
or the shareholder or any of their respective Affiliates were to breach the
covenants set forth in this §6(c).

(ii)                         As an inducement for the Buyer to enter into this
Agreement and in consideration for the Buyer’s consummation of the transactions
contemplated hereby (including the payments made to the Seller in connection
with such consummation), with the intent to maintain a collaborative
relationship between the Parties, each of the Seller and the Shareholder agrees
that for a period of six years following the Closing Date (such period, the
“Term”), such Selling Parties shall not sell running meters of Products in the
Territory, excluding, for the avoidance of doubt, (x) any sewn panel mattress
covers and sewn single jersey fire protectors/socks, and (y) the sale of all and
any products to IKEA and/or any direct or indirect suppliers of IKEA in the
Territory (it being understood that nothing herein shall limit the Buyer’s
ability to sell products to IKEA or any direct or indirect supplier of IKEA) and
(z) the sale of any and all Products, sewn panel mattress covers and sewn single
jersey fire protectors/socks to Tempurpedic and/or any direct or indirect
suppliers of Tempurpedic (the exception set forth in this clause (z) being
referred to as “Seller’s Tempurpedic Exception”).  The Buyer and its affiliates
may not sell or deliver any Product, sewn panel mattress covers and sewn single
jersey fire protectors/socks to Tempurpedic and/or any direct or indirect
suppliers of Tempurpedic (the “Buyer’s Tempurpedic Restriction”). In the event
that a majority of shares in Tempurpedic or a substantial portion of the assets
of the Tempurpedic business are sold to a third-party (a “Successor Business”),
then for purposes of this § 6(c)(ii) the Seller and the Shareholder shall not
have the benefit of the Seller’s Tempurpedic Exception and the Buyer shall not
be bound by the Buyer’s Tempurpedic Restriction, except to the extent that the
Successor Business either (x) operates such Tempurpedic business through a
separate subsidiary or other distinct business unit or (y) relates to or
involves Tempurpedic-branded visco foam mattresses.  

18

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

(iii)                        The foregoing restriction under §6(c)(ii) is
limited to direct sales of running meters of Products by Selling Parties or
Selling Parties’ affiliates or representatives in the Territory.  The Selling
Parties agree that, in the event the Buyer obtains knowledge thereof, the Buyer
may inform either Selling Party of any distributor or agency or similar
arrangement with which either Selling Party has established a distributor,
agency or similar commercial arrangement that permits the sale of running meters
of Products into the Territory, whether such distributor or agency is supplying
the running meters of Products to the Territory.  In the event the Buyer so
informs either Selling Party, the Selling Parties shall use their reasonable
best efforts to prevent the distributor or agency to supply such Products to the
Territory. If the distributor or agency does not cease to supply running meters
of the Products to the Territory within 2 months after the Selling Parties have
been informed by Buyer, the Selling Parties shall terminate the distributor,
agency or similar commercial arrangement with the respective distributor or
agency, whereas the termination shall be effective at the earliest possible date
in accordance with the terms and conditions of such arrangement. Any sale of
running meters of Products into the Territory by any such distributor or agent
after (1) the termination has become effective and (2) the distributor or agency
has sold off any running meters of Products on stock delivered by either Selling
Party under the terminated distribution, agency or similar commercial
arrangement shall constitute a violation of this § 6(c), unless the running
meters of Products such distributor or agency is supplying into the Territory
have not been delivered by the Selling Parties or any Affiliates of the Selling
Parties.  

(iv)                         In the event of a breach by the Seller, the
Shareholder or any of their respective Affiliates of any covenant set forth in
this §6(c), the Term of such covenant with respect to such Person shall be
extended by the period of the duration of such breach.

19

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

(v)                          If any provision or part of this §6(c) is
unenforceable because of its duration or its geographic coverage, or because it
is too expansive in any other respect, the parties hereto agree to modify this
§6(c), and that the court making such determination shall have the power to
interpret and modify this §6(c), to reduce the duration, the geographic
coverage, or such other provision and to delete specific words or phrases
herefrom (“blue-penciling”), so that this §6(c) shall extend over the longest
time, the largest geographic area and in any other respect as is enforceable
under applicable law and, in its reduced or blue-penciled form, such provision
shall then be enforceable and shall be enforced.

(vi)                         The parties to this Agreement agree that the
covenants in this Agreement impose a reasonable restraint on the Seller and the
Shareholder and their respective Affiliates in light of the activities and
business of the Buyer and its Affiliates.  In addition, the restrictions set
forth in this §6(c) as to the Seller and the Shareholder may be waived in
writing by the board of directors of the Buyer, upon the written request of such
Person.

(vii)                        Each of the Seller and the Shareholder acknowledges
that the injury that would be suffered by the Buyer as a result of a breach of
the provisions of this Agreement (including any provision of this §6(c) would be
irreparable and that an award of monetary damages alone to the Buyer for such a
breach would be an inadequate remedy.  The Buyer shall have the right, in
addition to any other rights it may have, to obtain injunctive relief to
restrain any breach or threatened breach or otherwise to specifically enforce
any provision of this Agreement, and the Buyer shall not be obligated to prove
actual damages or to post bond or other security in seeking such relief.

(d) Agency Agreement.  The Selling Parties and the Buyer will enter into the
Agency Agreement attached as Exhibit F.

(e) Employees.

(i)                          Effective as of the Closing Date, Buyer shall offer
employment to each Hired Employee (including those on vacation, approved leave
of absence, or long or short term disability) on terms and conditions consistent
with this §6(e).  Except as otherwise specifically set forth in this §6(e),
neither Seller nor any of its Affiliates shall have any responsibility
whatsoever for any liabilities and obligations which relate in any way to any
Hired Employee or any current or former employee of the Seller (except for any
such liabilities or obligations that shall have arisen prior to the Closing),
and Buyer and its Affiliates shall be responsible for satisfying all liabilities
and obligations arising from and after Closing which relate in any way to any
Hired Employee of the Seller and any severance payments owed upon termination of
such employees by Seller and subsequent hiring of such employees by Buyer,
irrespective of whether such severance payments become due before, on or after
Closing or whether the Hired Employees accepted the offer of the Buyer.  Seller
and Buyer shall each cooperate with the other and shall provide to the other
such documentation, information and assistance as is reasonably necessary to
effect the provisions of this §6(e).  Buyer shall deliver to Seller, a
reasonable period of time prior to distribution, copies of any offer letter (or
other material correspondence with Hired Employees to be made prior to the
Closing Date) for Seller’s review and comment.  Buyer will exercise its
reasonable best efforts, subject to any applicable requirements of law, to
ensure that the benefit plans of the Buyer treat employment with Seller prior to
the Closing Date the same as employment with any of Buyer and its subsidiaries
from and after the Closing Date for purposes of eligibility, vesting, and
benefit accrual.  

20

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

(ii)                         Nothing in this §6(e) shall create any third party
beneficiary right in any Person other than the parties to this Agreement,
including any current or former Hired Employee, any participant in any Plan, or
any dependent or beneficiary thereof, or any right to continued employment with
the Seller, Buyer or any of their respective Affiliates.  Nothing in this §6(e)
shall constitute an amendment to any Plan or any other plan or arrangement
covering Hired Employees.  Seller and Buyer shall each cooperate with the other
and shall provide to the other such documentation, information and assistance as
is reasonably necessary to effect the provisions of this §6(e).  In the event
that Buyer or the Seller or any of their respective successors and assigns (i)
consolidates with or merges into any person and is not the continuing or
surviving corporation or entity in such consolidation or merger, or (ii)
transfers all or substantially all of its assets to any person or entity, then,
in each case, proper provision shall be made so that the successors and assigns
of Buyer or the Seller honor the obligations of Buyer set forth in this §6(e).

(iii)                        Throughout the two-year period immediately after
the Closing, neither the Seller nor the Shareholder shall, nor shall either
Seller or the Shareholder permit any of its Affiliates to, at any time, directly
or indirectly, entice away any of the Hired Employees from the Buyer without the
prior written consent of the Buyer (which written consent shall be effective
only as to the Hired Employee specified therein and to no other Person, and such
written consent shall not be unreasonably withheld for those Transfer Employees
that are terminated by the Buyer). The foregoing sentence shall apply mutatis
mutandis to the Buyer with respect to the employees of the Seller.

(f) Liquidation of Seller.  

(i)                          Until the later of (1) the expiration of the
Survival Period and (2) the date as of which all indemnification claims (x) that
shall have been asserted by Buyer in writing against the Seller on or before the
date of expiration of the Survival Period and (y) with regard to which the Buyer
has initiated within three months after asserting such claims in writing an
arbitration proceeding according to the terms of this Agreement shall have been
fully satisfied or resolved by the parties, the Seller shall (1) at all times
maintain net assets or equity of not less than $1,500,000 and (2) within 30 days
after the end of each fiscal quarter, furnish to the Buyer a balance sheet
demonstrating compliance with the foregoing as of the end of such fiscal
quarter, beginning with the fiscal quarter ending September 30, 2008.  

(ii)                         In the event the Seller complies with the
foregoing, it is understood that the Seller shall have no responsibility for (1)
any warranties in § 3 hereof that do not relate specifically to the Shareholder
or (2) any indemnification obligations as set forth in § 8 hereof.  In the event
the Seller fails to comply with the foregoing, it is understood that the Seller
and the Shareholder shall have joint and several liability for such warranties
and indemnification obligations, subject to the limitations set forth in § 8.

21

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

(g) Access to Information.  Subject to compliance with contractual obligations
and applicable requirements of law, during the five-year period following the
Closing, after not less than five days prior written notice, the Buyer, on the
one hand, and the Seller and the Shareholder, on the other shall each afford to
the other Party, and to such Party’s authorized accountants, counsel, bank
auditors and other designated representatives, during normal business hours in a
manner so as to not unreasonably interfere with the conduct of its business
(i) reasonable access and duplicating rights to all non-privileged records,
books, contracts, instruments, documents, correspondence, computer data and
other data and information (collectively, “Information”) within the possession
or control of such Party to the extent such access may reasonably be required by
the Party seeking access solely in connection with matters relating to or
affected by the operations of the Business or the Seller, as to the Seller and
the Shareholder, for periods prior to the Closing Date, and as to the Buyer, for
periods on and after the Closing Date and (ii) reasonable access to the
personnel of such Party.  Requests may be made under this §6(g) for financial
reporting and accounting matters, preparing financial statements, preparing and
filing of any Tax Returns, prosecuting any claims for refund, defending any Tax
claims or assessment, preparing securities law or securities exchange filings,
prosecuting, defending or settling any litigation or insurance claim, performing
obligations under this Agreement and the agreements contemplated hereby, and all
other proper business purposes, but may not be made, and access and duplicating
rights need not be afforded, under this §6(g) in connection with disputes
between the Parties, including disputes as to indemnification hereunder.

(h) Financial Statements.  Within the time periods mentioned in Schedule 6(h)
or, if no time period is mentioned in Schedule 6(h), within 45 days after the
Closing Date, the Selling Parties shall furnish to the Buyer the financial
statements and information described on Schedule 6(h) attached hereto, and will
otherwise cooperate with the Buyer to enable the Buyer to comply with its filing
obligations under applicable securities laws.  

22

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

(i) Trademarks.  The Parties agree that the trademarks listed in Schedule 6(i)
shall not be transferred to the Buyer. The Buyer shall be entitled to use these
trademarks free of charge for a term of one year starting from Closing Date to
the same extent the Buyer has used these trademarks prior to the Closing Date.
After the one year term has expired or in case the Buyer wishes to expand the
use of these trademarks, the Selling Parties are free, but not obligated to
enter into a licensing or a comparable agreement with the Buyer.   

(j) Cost for Physical Inventory.  In the event this Agreement is closed before
August 31, 2008, the Buyer shall be obligated to reimburse the Seller for any
and all costs related to the pre-Closing physical inventory of the Inventories
of Seller, if and to the extent Seller provides Buyer with invoices for any
related expenses.

§ 7       [Reserved]

§ 8       Remedies for Breaches of This Agreement

(a) Survival of Representations and Warranties.  All of the representations and
warranties of Seller contained in §3 of this Agreement shall survive the Closing
(unless Buyer knew or did not know due to gross negligence of any
misrepresentation or breach of a warranty at the time of Closing in which case
Buyer shall not be entitled to make a claim for breach of a representation or
warranty included in this Agreement) and continue in full force and effect until
the end of the Survival Period.  A Party’s consummation of the transactions
contemplated hereby after waiving any of the conditions to its obligation to
close (including the condition that the other Party’s representations and
warranties be true in all material respects) shall not limit or otherwise affect
its rights to recover under this §8.

(b) Indemnification Provisions for Buyer’s Benefit.

(i)                          In the event either the Seller or (subject to
§ 6(f)) the Shareholder breaches any of its representations, warranties, and
covenants contained in this Agreement, and, provided that Buyer makes a written
claim for indemnification against Seller pursuant to §10(g) below within the
Survival Period, then Seller and (subject to § 6(f)) the Shareholder shall
jointly and severally indemnify Buyer from and against the entirety of any
Adverse Consequences Buyer shall suffer (but excluding any Adverse Consequences
Buyer shall suffer after the end of any applicable Survival Period and any
incidental, consequential or special Adverse Consequences) caused by the breach;
provided, however, that Seller shall not have any obligation to indemnify Buyer
from and against any Adverse Consequences caused by the breach of any
representations or warranties contained in this Agreement (A) until Buyer has
suffered Adverse Consequences by reason of an individual breach in excess of $
$10,000, (B) until all such individual breaches equal to or in excess of $
10,000 exceed a deductible of  $100,000 (after which point Seller will be
obligated only to indemnify Buyer from and against further such Adverse
Consequences) and thereafter (C) to the extent the Adverse Consequences Buyer
has suffered by reason of any and all such breaches exceeds a $800,000 aggregate
ceiling (after which point Seller will have no obligation to indemnify Buyer
from and against further such Adverse Consequences) (D) to the extent that the
Adverse Consequences arise from any matter of which Buyer had actual Knowledge
or did not have actual Knowledge due to Buyer’s gross negligence at or prior to
the Closing.

23

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

(ii)                         Seller and (subject to § 6(f)) the Shareholder
jointly and severally agree to indemnify Buyer from and against the entirety of
any Adverse Consequences the Buyer shall suffer caused by any liability of
Seller that is not an Assumed Liability (including any liability of Seller that
becomes a liability of Buyer under any bulk transfer law of any jurisdiction,
under any common law doctrine of de facto merger or successor liability, or
otherwise by operation of law).

(iii)                        Each qualification and exception regarding
materiality or Material Adverse Effect in each such representation or warranty,
including those made in the certificate delivered at Closing, shall be
disregarded and given no effect, so that Adverse Consequences are determined
without regard to such qualifications and exceptions.

(c) Indemnification Provisions for Seller’s Benefit.

(i)                          In the event the Buyer breaches any of its
representations, warranties, and covenants contained in this Agreement, and,
provided that Seller makes a written claim for indemnification against Buyer
pursuant to §10(g) below within the Survival Period, then Buyer shall indemnify
the Seller from and against the entirety of any Adverse Consequences Seller
shall suffer (but excluding any Adverse Consequences Seller shall suffer after
the end of any applicable Survival Period and any incidental, consequential or
special Adverse Consequences) caused by the breach; provided, however, that the
Buyer shall not have any obligation to indemnify the Seller from and against any
Adverse Consequences caused by the breach of any representations or warranties
contained in this Agreement (A) until Seller has suffered Adverse Consequences
by reason of an individual breach in excess of $10,000, (B) until all such
individual breaches equal to or in excess of $10,000 exceed a deductible
of  $100,000 (after which point Buyer will be obligated only to indemnify Seller
from and against further such Adverse Consequences) and thereafter (C) to the
extent the Adverse Consequences Seller has suffered by reason of any and all
such breaches exceeds a $800,000 aggregate ceiling (after which point Buyer will
have no obligation to indemnify Seller from and against further such Adverse
Consequences) (D) to the extent that the Adverse Consequences arise from any
matter of which Seller had actual Knowledge or did not have actual Knowledge due
to Seller’s gross negligence at or prior to the Closing.

(ii)                         Buyer shall indemnify Seller from and against the
entirety of any Adverse Consequences suffered that are caused by any liability
of Seller that is an Assumed Liability or that are associated with or arise from
the sale or use of the Acquired Assets after the Closing, including with respect
to third party claims.

(d) Matters Involving Third Parties.

(i)                          If any third party notifies any Party (the
“Indemnified Party”) with respect to any matter (a “Third-Party Claim”) that may
give rise to a claim for indemnification against the other Party (the
“Indemnifying Party”) under this §8, then the Indemnified Party shall promptly
(and in any event within 5 Business Days after receiving notice of the
Third-Party Claim) notify the Indemnifying Party thereof in writing.

24

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

(ii)                         The Indemnifying Party will have the right at any
time to assume and thereafter conduct the defense of the Third-Party Claim with
counsel of its choice; provided, however, that the Indemnifying Party will not
consent to the entry of any judgment on or enter into any settlement with
respect to the Third-Party Claim without the prior written consent of the
Indemnified Party (not to be unreasonably withheld) unless the judgment or
proposed settlement involves only the payment of money damages and does not
impose an injunction or other equitable relief upon the Indemnified Party.

(iii)                        Unless and until the Indemnifying Party assumes the
defense of the Third-Party Claim as provided in §8(d)(ii) above, the Indemnified
Party may defend against the Third-Party Claim in any manner it may reasonably
deem appropriate.

In no event will the Indemnified Party consent to the entry of any judgment on
or enter into any settlement with respect to the Third-Party Claim without the
prior written consent of the Indemnifying Party (not to be unreasonably
withheld).

(e) Insurance Claims.

All indemnification payments under this §8 shall be paid by the Indemnifying
Party net of any insurance coverage to the extent that any proceeds of any
insurance coverage are actually paid to the Indemnified Party. The Buyer shall
be obligated to exhaust any of its insurance claims covering the damages leading
to an indemnification payment under this §8. Before the Buyer has not exhausted
such claims, the Buyer is not entitled to bring any claims against either of the
Selling Parties under §§3 and 8 hereof.    

(f) Claims regarding Non-Culp Suppliers Inventories.

In the event of a breach of §3(e)(i) the Buyer shall be obligated to exhaust any
claims it may have against any suppliers of the Non-Culp Suppliers Inventories
or any subcontractors processing the Non-Culp Suppliers Inventories with regard
to the circumstances that lead to such breach. Before the Buyer has not
exhausted such claims, the Buyer is not entitled to bring any claims against
either of the Selling Parties under §§3(e)(i) and 8 hereof.

(g) Exclusive Remedy.  Buyer and Seller acknowledge and agree that the foregoing
indemnification provisions in this §8 shall be the exclusive remedy of Buyer
with respect to any Acquired Assets and Assumed Liabilities and any transactions
contemplated by this Agreement.

§ 9       Termination

(a) Termination of Agreement.  This Agreement may be terminated at any time
prior to the Closing:

25

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

(i)                          by mutual written consent of Seller and Buyer;

(ii)                         by written notice by Seller to Buyer or Buyer to
Seller, as the case may be, in the event the Closing has not occurred on or
prior to October 1, 2008 (the “Outside Date”); provided, however, that the right
to terminate this Agreement under this §9(a)(ii) shall not be available to any
Party whose breach of this Agreement or delay or nonperformance of any term of
this Agreement has been the primary cause of, or primarily resulted in, the
failure to consummate the transactions contemplated by this Agreement or before
the Outside Date;

(iii)                        by either Seller or Buyer if any court of competent
jurisdiction or governmental entity shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the Closing or the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become final and
non-appealable; provided, however, that the right to terminate this Agreement
pursuant to this §9(a)(ii) shall not be available to any Party whose breach of
this Agreement or delay or nonperformance of any term of this Agreement has been
the primary cause of, or primarily resulted in, any such order, decree, ruling
or other action, including, without limitation, such Party’s obligation to use
its reasonable best efforts to resist, resolve or lift, as applicable, any such
order, decree, ruling or other action;

(iv)                         by Seller upon a material breach by Buyer of any of
its respective obligations under this Agreement; and

(v)                          by Buyer upon a material breach by Seller of any of
its obligations under this Agreement.

(b) Effect of Termination.  If any Party terminates this Agreement pursuant to
§9(a) above, all rights and obligations of the Parties hereunder shall terminate
without any liability of any Party to the other Party (except for any liability
of any Party then in breach); provided, however, that (i) the provisions
contained in §10 below shall survive termination, except for §10(n), §10(o),
§10(q), and that (ii) Buyer shall pay a Break Fee to reimburse the Selling
Parties for any and all costs and expenses incurred in connection with the
transaction contemplated herein if Seller terminates this Agreement pursuant to
§9(a)(ii), (iii) or (iv) above or if Buyer terminates this Agreement for any
reason other than as set forth in §9(a).

§ 10      Miscellaneous

(a) Press Releases and Public Announcements.  No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or the rules of any exchange on which its
securities may be listed (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the
disclosure).

26

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

(b) No Third-Party Beneficiaries.  This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.

(c) Entire Agreement.  This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.

(d) Succession and Assignment.  This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors and
permitted assigns.  No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.

(e) Counterparts.  This Agreement may be executed in one or more counterparts
(including by means of facsimile), each of which shall be deemed an original but
all of which together will constitute one and the same instrument.

(f) Headings.  The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

(g) Notices.  All notices, requests, demands, claims, and other communications
hereunder shall be in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) when delivered personally
to the recipient, (ii) 1 Business Day after being sent to the recipient by
reputable overnight courier service (charges prepaid), (iii) 1 Business Day
after being sent to the recipient by facsimile transmission or electronic mail,
or (iv) 4 Business Days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid, and addressed to
the intended recipient as set forth below:

If to Seller: Copy to: Bodet & Horst GmbH & Co. KG,

Im Gewerbegebiet 9

09481 Elterlein

Germany

Attn.: Mr. Gerd-Hermann Horst

Fax: +49 0373 4969-796

Baker & McKenzie Partnerschaft von Rechtsanwälten, Steuerberatern,
Wirtschaftsprüfer und Solicitors

Friedrichstraße 79/80

10117 Berlin

Germany

Attn.: Dr. Thorsten Seidel

Fax: +49 30 2038 7699

If to Buyer: Copy to: Culp, Inc.

1823 Eastchester Street

High Point, North Carolina 27265

Attn: Franklin N. Saxon

Facsimile: (336) 887-7089

Robinson, Bradshaw & Hinson, P.A.

101 North Tryon Street, Suite 1900

Charlotte, North Carolina 28246

Attn: Henry H. Ralston

Facsimile: (704) 378-4000

27

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

Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.

(h) Governing Law.  This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of North Carolina without giving
effect to any choice or conflict of law provision or rule (whether of the State
of North Carolina or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of North Carolina.

(i)                          Arbitration.  The Parties agree to resolve any
disputes or disagreements arising under this Agreement or any of the other
agreements executed in connection herewith (except for any claims seeking
specific enforcement or other equitable relief, which may be brought in any
court of competent jurisdiction) through arbitration as follows (an “Arbitration
Dispute”):  

(ii)                         With respect to any Arbitration Dispute, any Party
may commence arbitration proceedings with the CPR Institute for Arbitration
Dispute Resolution (“CPR”) office by filing a demand for arbitration in writing
(a “Demand”) with the CPR and by simultaneously sending a copy of the Demand to
the other parties.  The arbitration proceedings shall be governed by and decided
in accordance with the CPR Rules for Non-Administered Arbitration then in
effect, unless the parties to the arbitration shall mutually agree otherwise in
writing.  Any evidentiary rules not expressly provided by the CPR Rules shall be
determined in accordance with the Federal Rules of Evidence.  The arbitration
shall be governed by the U.S. Arbitration Act, 9 U.S.C. § 1, et seq. and shall
be administered under the procedures set forth herein.

(iii)                        The arbitrator to be selected (the “Arbitrator”)
shall be one independent and impartial arbitrator selected pursuant to CPR Rule
6.4.

(iv)                         The arbitration shall be conducted in New York
City, New York; provided that the Arbitrator may, for the convenience of the
parties and without changing the sites of the arbitration proceeding, permit the
taking of evidence outside of New York City, New York.

(v)                          The Arbitrator shall permit and facilitate
discovery pursuant to CPR Rule 11, except each Party shall be limited to two
depositions.  Within 30 days after selection of an arbitrator, the Party filing
the demand for arbitration shall provide copies of all business documents and
other evidence in its possession that support its demand.  Within 30 days of
receipt of such information, the receiving Party shall produce all business
documents and evidence that support its defense or response.  Thereafter, each
Party shall have the right to such other discovery procedures as the Arbitrator
may determine to be reasonably necessary for a fair understanding of any
legitimate issue raised in the arbitration.

28

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

(vi)                         The award of the Arbitrator may be monetary
damages, an order requiring performance of obligations under this Agreement or
any other appropriate award or remedy, excluding, however, any award or remedy
mentioned in §10(ix).  The Arbitrator may not make any ruling, finding or award
that does not conform to the terms and conditions of this Agreement.  The award
of the Arbitrator shall be accompanied by a written explanation of the basis for
the award.

(vii)                        The fees and expenses of the Arbitrator shall be
shared equally by the parties and advanced by them from time to time as
required; provided that, at the conclusion of the arbitration, the prevailing
Party shall be entitled to recover all attorneys’ fees, filing fees, costs,
including the costs of the arbitration previously advanced, expert fees and
costs, and related expenses from the non-prevailing Party and such recovery
shall be made part of any judgment or arbitration award.

(viii)                       An appeal of an arbitration award arising out of or
related to this Agreement may be taken under the CPR Arbitration Appeal
Procedure.  The award rendered by the Arbitrator, after any appeal taken
pursuant to the foregoing, shall be final and not subject to judicial review,
and judgment thereon may be entered in any court of competent jurisdiction.  Any
amount owing by any Person as a result of this § 10(i) shall be paid within two
Business Days after final determination of such amount.

(ix)                         Notwithstanding anything to the contrary provided
in this § 10(i) and without prejudice to the above procedures, any of the
parties may apply to any court of competent jurisdiction for temporary
injunctive judicial relief if such action is necessary to avoid irreparable
damage or to preserve the status quo until such time as the arbitration panel is
convened and available to hear such Party’s request for temporary relief.

(i) Amendments and Waivers.  No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by Buyer and
Seller.  No waiver by any Party of any provision of this Agreement or any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be valid unless the same shall be in writing and
signed by the Party making such waiver, nor shall such waiver be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.

(j) Severability.  Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.

(k) Expenses.  Each of Buyer and the Selling Parties will bear its/their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby; provided, however,
that Buyer will also bear all of the costs and expenses relating to the
preparation and audit of the Closing Balance Sheet and the Schedule of Closing
Net Working Capital (but not any fees or expenses of any advisors or accountants
engaged by the Seller or the Shareholder, and not the fees and expenses of the
Accounting Expert, responsibility for which shall be divided evenly between the
Buyer, on the one-hand, and the Seller, on the other).  If this Agreement is
terminated, the obligation of each party to pay its own costs and expenses will
be subject to any rights of such party arising from a breach of this Agreement
by the other party.

29

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

(l) Construction.  The Parties have participated jointly in the negotiation and
drafting of this Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.  Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.  The word “including” shall
mean including without limitation.

(m) Incorporation of Exhibits and Schedules.  The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

(n) Tax Matters.

(i)                          Property and ad valorem taxes with respect to the
Acquired Assets for the period that includes the Closing Date shall be allocated
between Seller and Buyer based on a percentage determined by dividing the number
of days in such period occurring prior to the Closing Date, divided by the
number of days in such period.  Such percentage of tax will be allocated to the
Seller and the remainder shall be allocated to the Buyer.

(ii)                         Seller and Buyer shall cooperate in the
preparation, execution and filing of all tax returns, questionnaires,
applications or other documents regarding any sales, use, excise, documentary,
conveyance, transfer, value, stock transfer, stamp taxes or similar taxes that
become payable in connection with the transactions contemplated by this
Agreement.  All such taxes shall be borne by Buyer.

(iii)                        Seller and Buyer agree to furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance (including access to books and records) relating to
the Acquired Assets as is reasonably necessary for the preparation of any tax
return, claim for refund or audit or other tax matter relating to any of the
Acquired Assets, including the prosecution or defense of any claim, suit or
proceeding relating to any proposed adjustment of taxes.

(iv)                         To the extent permitted by applicable law, the
parties agree to treat all payments made under § 8 or under any other indemnity
provision contained in this Agreement as adjustments to the Purchase Price for
income tax purposes.  

(o) Bulk Transfer Laws.  Buyer acknowledges that Seller will not comply with the
provisions of any bulk transfer laws of any jurisdiction in connection with the
transactions contemplated by this Agreement.

30

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

(p) Governing Language.  This Agreement has been negotiated and executed by the
Parties in English.  In the event any translation of this Agreement is prepared
for convenience or any other purpose, the provisions of the English version
shall prevail.

(q) Tax Disclosure Authorization.  Notwithstanding anything herein to the
contrary, the Parties (and each Affiliate and Person acting on behalf of any
Party) agree that each Party (and each employee, representative, and other agent
of such Party) may disclose to any and all Persons, without limitation of any
kind, the transaction’s tax treatment and tax structure (as such terms are used
in regulations promulgated under Code §6011) contemplated by this agreement and
all materials of any kind (including opinions or other tax analyses) provided to
such Party or such Person relating to such tax treatment and tax structure,
except to the extent necessary to comply with any applicable federal or state
securities laws.  This authorization is not intended to permit disclosure of any
other information including (without limitation) (A) any portion of any
materials to the extent not related to the transaction’s tax treatment or tax
structure, (B) the identities of participants or potential participants, (C) the
existence or status of any negotiations, (D) any pricing or financial
information (except to the extent such pricing or financial information is
related to the transaction’s tax treatment or tax structure), or (E) any other
term or detail not relevant to the transaction’s tax treatment or the tax
structure.

* * * * *

31

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

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the
date first above written.

CULP, INC.  

By:

/s/ Franklin N. Saxon

Name:

Franklin N. Saxon

Title:

President and CEO

  BODET & HORST USA, LP BY BODET & HORST Corporation, its General Partner

By:

/s/ Gerd-Hermann Horst

Name:

Gerd-Hermann Horst

Title:

President

  BODET & HORST GMBH & CO. KG BY Horst-Beteiligungs GmbH

By:

/s/ Gerd Hermann Horst

Name:

Gerd-Herman Horst

Title:

Geschäftsführer

32