a5912487ex10_10.htm


    EXHIBIT
10.10

     

    FORM
OF

    RESTRICTED
STOCK UNIT AGREEMENT

    


    THIS RESTRICTED STOCK UNIT AGREEMENT
(the “Agreement”), dated as of
________________, is between CULP, INC., a North Carolina
corporation (the “Corporation”), and _____________________ (“Employee”).

     

    Background
Statement

    


    The Corporation desires to grant to
Employee Restricted Stock Units (the “Units”) 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 Units.  The
Corporation hereby grants to Employee _________ Units.  Each Unit
shall entitle Employee to receive, upon vesting thereof in accordance with this
Agreement and the Plan, one (1) share of common stock, par value $0.05 per
share, of the Corporation (“Common
Stock”).   Except as permitted by the Plan, the Units may
not be assigned, pledged, hypothecated or transferred in any
manner.  Employee shall not have, with respect to any Units, any
rights of a shareholder of the Corporation, including without limitation any
right to vote as a shareholder of the Corporation or any right to receive
distributions from the Corporation in respect of the Units.

     

    Section
2.     Vesting.  Except as
may otherwise be provided in the Plan or this Agreement, the Units shall vest as
set forth in the table below if the Division shall achieve the following Return
on Capital performance targets:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        Performance
      Level

                                      	
                                        Return
      on Capital Targets

                                      	
                                        Number
      of Units to Vest

                                      
	
                                        Tier
      1 Level

                                      	
                                        ≥  ____%
      but < ____%

                                      	
                                        _______
      Units

                                         

                                      
	
                                        Tier
      2 Level

                                      	
                                        ≥  ____%
      but < ____%

                                      	
                                        _______
      Units

                                         

                                      
	
                                        Tier
      3 Level

                                      	
                                        ≥  ____%

                                      	
                                        _______
      Units

                                      


                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    For
purposes of this Agreement, vesting of Units in respect of a Performance Period
shall be determined in accordance with the following guidelines:

     

    (a)           No
more than _______ Units (or _______ Units, as applicable) shall vest in respect
of any one Performance Period.

     

    (b)           A
Performance Period that would result in the vesting of Units (but for this
clause (b)) may not overlap with another Performance Period that resulted in the
vesting of any Units.

     

    (c)           There
may be only one (1) Tier 1 Performance Period that results in the vesting of
Units (a “Tier 1 Vesting
Period”).   Following the occurrence of a Tier 1 Vesting
Period, no Units shall vest in respect of any subsequent Tier 1 Performance
Period(s).

     

    (d)           There
may be only one (1) Tier 2 Performance Period that results in the vesting of
Units (a “Tier 2 Vesting
Period”).  Following the occurrence of a Tier 2 Vesting Period,
no Units shall vest in respect of any subsequent Tier 2 Performance Period(s);
provided, however, that if
there has been no Tier 1 Vesting Period prior to the second Tier 2 Performance
Period, then _______ Units shall vest in respect of the second Tier 2
Performance Period, and no Units shall vest in respect of any subsequent Tier 1
Performance Period or Tier 2 Performance Period.

     

    (e)           There
may be only one (1) Tier 3 Performance Period that results in the vesting of
Units (a “Tier 3 Vesting
Period”).  Following the occurrence of a Tier 3 Vesting Period,
no Units shall vest in respect of any subsequent Tier 3 Performance Period(s);
provided, however, that if
there has been no Tier 1 Vesting Period or Tier 2 Vesting Period prior to the
second Tier 3 Performance Period (the “Second Tier 3 Period”), then
(i) _______ Units shall vest in respect of the Second Tier 3 Period and (ii)
_______ Units shall vest upon the next Performance Period occurring after the
Second Tier 3 Period in which Return on Capital for the Division is at the Tier
1 Level, Tier 2 Level or Tier 3 Level (after which all Units shall be vested in
full).

     

    Notwithstanding
the foregoing, all unvested Units shall immediately vest upon (a) the occurrence
of a Change of Control or (b) the termination by the Corporation of the
employment of Employee without Cause or by reason of the death or Disability of
Employee.

     

    Section
3.     Definitions.  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 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 __________________ division.

     

    “Performance Period” shall
mean any period of two (2) consecutive fiscal quarters in the period commencing
with the fourth fiscal quarter in the Corporation’s 2008-2009 fiscal year and
ending as of the end of the Corporation’s 2011-2012 fiscal year.

    


    “Return on Capital” for the
Division shall be the same amount as determined by the Corporation for purposes
of its annual cash incentive bonus plan.

    


    “Tier 1 Performance Period”
shall mean a Performance Period in which Return on Capital is at the Tier 1
Level.

    


    “Tier 2 Performance Period”
shall mean a Performance Period in which Return on Capital is at the Tier 2
Level.

    


    “Tier 3 Performance Period”
shall mean a Performance Period in which Return on Capital is at the Tier 3
Level.

    


    Section
4.     Settlement.  As soon
as reasonably practicable following a determination by the Corporation that all
or part of the Units have vested pursuant to the terms of this Agreement, the
Corporation shall issue to Employee shares of Common Stock with respect to all
such Units that have vested.  Such shares of Common Stock shall not be
treated as issued and outstanding until such shares have been issued by the
Corporation in accordance with all applicable laws and the Corporation’s bylaws
and articles of incorporation.  Any certificate(s) evidencing shares
of Common Stock shall bear such legends as the Corporation shall determine to be
necessary to comply with all laws, including all applicable federal and state
securities laws.  All such shares of Common Stock issued pursuant to
this Agreement shall be fully paid and nonassessable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
5.     Forfeiture.  All
Units that do not vest pursuant to Section 2 shall
automatically be cancelled and forfeited by Employee effective as of the earlier
to occur of (a) the first day of the Corporation’s 2012-2013 fiscal year
(to the extent that Return on Capital for the Division during any Performance
Period is not sufficient to cause such Units to vest pursuant to the terms of
this Agreement), (b) the termination by Employee of his employment with the
Corporation or its Subsidiaries for any reason or (c) the termination by
the Corporation of Employee’s employment with the Corporation or its
Subsidiaries for Cause (each such event being referred to herein as a “Forfeiture
Event”).  Upon the occurrence of a Forfeiture Event, all
unvested Units shall automatically, without further action by the Corporation or
Employee, be cancelled and forfeited.

     

    Section
6.     Tax Matters.

     

    (a)           Employee
shall promptly 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 the vesting of any Units and the issuance of shares of Common
Stock in respect thereof.  Subject to the approval of the Committee,
Employee may elect to satisfy this obligation by having the Corporation withhold
shares of Common Stock that would otherwise be issued to Employee with respect
to any Units that have vested, which shares of Common Stock shall have 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
(whether in cash or having shares of Common Stock withheld), 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 vesting of Units and the issuance of shares of Common Stock
in respect thereof.

     

    (b)           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
7.     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 Units granted hereunder shall
be subject to the terms of the Plan, which hereby is incorporated into this
Agreement as though set forth in full herein.  Employee hereby
acknowledges receipt of 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 __ day of ___________,
20__.

     

    
      
         

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                	
                                                                      	
                                                                        CULP,
      INC.,

                                                                      	 
	
                                                                      	
                                                                        a
      North Carolina corporation

                                                                      	 
	 	 	 
	
                                                                      	

                                                                        By:

                                                                      	 	 
	 
      	

                                                                        Name: 

                                                                      	 	 
	 	

                                                                        Title: 

                                                                      	 	 
	 
      	
                                                                      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	
                                                                        EMPLOYEE