a5912487ex10_7.htm


    EXHIBIT
10.7

     

    


    RESTRICTED
STOCK AGREEMENT

    


    


    THIS RESTRICTED STOCK AGREEMENT
(the “Agreement”), dated as of
January 7, 2009, is between CULP, INC., a North Carolina
corporation (the “Corporation”), and ROBERT
G. CULP, IV (“Employee”).

     

    Background
Statement

    


    The Corporation desires to grant to
Employee shares of Restricted Stock pursuant to the Culp, Inc. 2007 Equity
Incentive Plan (the “Plan”).  Capitalized
terms used but not defined in this Agreement shall have the meanings given to
them in the Plan.

    


    STATEMENT OF
AGREEMENT

    


    NOW, THEREFORE, the parties hereby
agree as follows:

    


    Section
1.     Grant of Restricted
Stock.  The Corporation hereby grants and issues to Employee
15,000 shares of Restricted Stock consisting of 15,000 shares of common stock,
par value $0.05 per share, of the Corporation (the “Shares”).  The
Shares shall be fully paid, nonassessable and subject to the restrictions and
limitations set forth herein.

     

    Section
2.     Restrictions.  Prior
to the vesting of the Shares pursuant to Section 3
hereof:

     

    (a)  the
Shares shall not be transferable and shall not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of; and

     

    (b)  the
stock certificate(s) evidencing the Shares shall contain the following
legend:

     

    “The
shares represented by this certificate are subject to the terms of a Restricted
Stock Agreement, dated as of January 7, 2009, a copy of which is available at
the principal office of the corporation.”

     

    Except as
expressly stated herein, Employee shall have all rights as a shareholder with
respect to the Shares, commencing as of the date of issuance thereof and
continuing for so long as Employee remains the record owner of the Shares,
including the right to receive dividends in cash or other property and other
distributions or rights in respect of the Shares and to vote the Shares as the
record owner thereof.  For the avoidance of doubt, no cash dividends
paid in respect of the Shares shall be deferred and reinvested in additional
shares of Restricted Stock as permitted by the second sentence of Section 4.4 of
the Plan.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
3.     Vesting.  The
restrictions described in Section 2 shall lapse and
the Shares shall vest in Employee on the following dates:

     

    (a)  on
May 1, 2012, to the extent of 5,000 Shares;

     

    (b)  on
May 1, 2013, to the extent of 5,000 Shares;

     

    (c)  on
May 1, 2014, to the extent of any and all unvested Shares as of such date;
and

     

    (d)  at
any time upon the occurrence of a Change of Control or if the employment of
Employee is terminated by the Corporation without Cause or by reason of the
death or Disability of Employee, to the extent of any and all unvested Shares as
of such date.

     

    For
purposes of this Agreement, the following terms shall have the meanings
indicated below:

    


    “Cause” shall mean (i) the
commission by Employee of a felony (or crime involving moral turpitude); (ii)
theft, conversion, embezzlement or misappropriation by Employee of funds or
other assets of the Corporation or its Subsidiaries or any other act of fraud
with respect to the Corporation or its Subsidiaries (including without
limitation the acceptance of bribes or kickbacks or other acts of self dealing);
(iii) intentional, grossly negligent or unlawful misconduct by Employee that
causes significant harm to the Corporation or its Subsidiaries; or (iv) repeated
instances of intoxication with alcohol or drugs while conducting business during
regular business hours.

    


    “Change of Control” shall have
the meaning given to such term in the Plan.  In addition, a “Change of Control” shall be
deemed to have occurred upon the consummation of a sale of the Division by the
Corporation to an unaffiliated third party.

    


    “Disability” shall have the
meaning given to such term in the primary disability benefit plan of the
Corporation in which Employee participates.  In the absence of any
such plan, “Disability”
shall mean any physical or mental impairment that renders Employee unable to
perform the essential functions of his job with the Corporation and its
Subsidiaries for a period of at least 120 days, either with or without
reasonable accommodation.  At the Corporation’s request, Employee
shall submit to an examination by a duly licensed physician who is mutually
acceptable to the Corporation and Employee for the purpose of ascertaining the
existence of a Disability, and shall authorize the physician to release the
results of Employee’s examination to the Corporation.

    


    “Division” shall mean the
Corporation’s Mattress Fabrics division.

    


    Upon the
vesting of any Shares, Employee shall be entitled to receive replacement stock
certificate(s) evidencing such vested Shares and such certificate(s) shall not
contain the legend set forth in Section 2(b).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
4.     Forfeiture.  If,
prior to vesting of any Shares, the employment of Employee with the Corporation
or its Subsidiaries is terminated by Employee for any reason or by the
Corporation for Cause, then all of the Shares that are not vested under Section 3 as of the date
of termination shall be forfeited to the Corporation (such event being referred
to herein as a “Forfeiture
Event”).  Upon the occurrence of a Forfeiture Event, Employee
shall return for cancellation all stock certificates
representing unvested Shares, and irrespective of whether such stock
certificates are so returned and cancelled, all unvested Shares shall
automatically, without further action, be cancelled and shall no longer be
issued and outstanding.

     

    Section
5.     Taxes and Related
Matters.

     

    (a)  If
Employee properly elects, within 30 days of the date on which he acquires the
Shares, to include in gross income for federal income tax purposes an amount
equal to the fair market value (as of the date of issuance) of the Shares
granted pursuant to this Agreement, Employee shall pay to the Corporation, in
the year of this Agreement, all federal, state and local income, social security
and payroll taxes required to be withheld with respect to the grant of the
Shares.  If Employee fails to make such tax payments as required, the
Corporation shall, to the extent permitted by law, have the right to deduct from
any payment of any kind otherwise due to Employee all federal, state and local
income, social security and payroll taxes of any kind required by law to be
withheld with respect to the Shares.

     

    (b)  If
Employee does not make the election described in subparagraph (a) of this
section, he shall, on the date as to which the restrictions described in Section 3 shall lapse as
to any Shares, pay to the Corporation all federal, state and local income,
social security and payroll taxes of any kind required by law to be withheld
with respect to such vested Shares.  Subject to the approval of the
Committee, Employee may elect to satisfy this obligation by having the
Corporation withhold a number of Shares that have vested having a Fair Market
Value (as of the date that the amount of the withholding requirement is to be
determined) equal to the amount of such withholding requirement.  If
Employee fails to make such payments as required (in cash or by withholding
Shares), the Corporation shall, to the extent permitted by law, have the right
to deduct from any payment of any kind otherwise due to Employee all federal,
state and local income, social security and payroll taxes of any kind required
by law to be withheld with respect to such vested Shares.

     

    (c)  Notwithstanding
anything in this Agreement to the contrary, if a Change of Control occurs and if
Employee is entitled under any agreement or arrangement (including, without
limitation, this Agreement) to receive compensation that would constitute a
parachute payment (including, without limitation, the vesting of any rights)
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”) but
for the operation of this sentence, then the amount of all such payments shall
be reduced, as determined by the Corporation, to the extent necessary to cause
the aggregate present value of all payments in the nature of compensation to
Employee that are contingent on a change in the ownership or effective control
of the Corporation, or in the ownership of a substantial portion of the assets
of the Corporation, not to exceed 2.99 times Employee’s “base amount,” all
within the meaning of Section 280G of the Code and the regulations promulgated
thereunder.  The parties intend for the immediately preceding sentence
to be interpreted and applied so as to prevent Employee from receiving, with
respect to a Change of Control, an excess parachute payment within the meaning
of Section 280G of the Code.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
6.     Miscellaneous.

     

    (a)  Governing Law.  This
Agreement shall be construed, administered and governed in all respects under
and by the applicable internal laws of the State of North Carolina, without
giving effect to the principles of conflicts of laws thereof.

     

    (b)  Entire Agreement; Amendment and
Waiver.  This Agreement and the Shares issued hereunder shall
be subject to the terms of the Plan, which hereby is incorporated into this
Agreement as if set forth in full herein.  Employee hereby
acknowledges that he has received a copy of the Plan.  This Agreement
and the Plan reflect the entire agreement between the parties hereto and
supersede any prior or contemporaneous written or oral understanding or
agreement regarding the subject matter hereof.  This Agreement may not
be modified, amended, supplemented or waived except by a writing signed by the
parties hereto, and such writing must refer specifically to this
Agreement.

     

    (c)  Assignment; Binding
Effect.  This Agreement, as amended from time to time, shall be
binding upon, inure to the benefit of and be enforceable by the heirs,
successors and assigns of the parties hereto; provided, however, that this
provision shall not permit any assignment in contravention of the terms
contained elsewhere herein.

     

    (d)  No Right to
Employment.  Nothing in this Agreement shall confer on Employee
any right to continue in the employ of the Corporation or any of its
Subsidiaries.

     

    (e)  Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  Delivery of an executed counterpart of this Agreement by
facsimile or other electronic device shall be equally as effective as delivery
of an original executed counterpart of this Agreement.  Any party
delivering an executed counterpart of this Agreement by facsimile or other
electronic device shall also deliver an original executed counterpart of this
Agreement, but the failure to deliver an original executed counterpart of this
Agreement shall not affect the validity, enforceability and binding effect of
this Agreement.

     

    (f)   Notices.  Any notice
hereunder to the Corporation shall be addressed to the Corporation’s principal
executive office, Attention: Compensation Committee, and any notice hereunder to
Employee shall be addressed to Employee at his last address in the records of
the Corporation, subject to the right of either party to designate at any time
hereafter in writing a different address.  Any notice shall be deemed
to have been given when delivered personally, one (1) day after dispatch if sent
by reputable overnight courier, fees prepaid, or three (3) days following
mailing if sent by registered mail, return receipt requested, postage prepaid
and addressed as set forth above.

     

    


    [Signature
page is the next page.]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN WITNESS WHEREOF, this
Agreement has been duly executed on the 7th day of
January, 2009.

     

    
       

      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                	
                                  CULP,
      INC.,

                                	 
	
                                	
                                  a
      North Carolina corporation

                                	 
	 	 	 
	
                                	
                                  By:

                                	 
	 
      	
                                  /s/
      Kenneth R. Bowling

                                	 
	 
      	
                                  Title:
      Corporate Secretary

                                	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	
                                  EMPLOYEE

                                	 
	
                                	 
      	 
	 	 	 
	 
      	
                                  /s/
      Robert G. Culp, IV