Document:

EXHIBIT 10.1

    

     

    

     

    

    
      ANNUAL INCENTIVE AWARD AGREEMENT

       

      THIS ANNUAL INCENTIVE AWARD AGREEMENT (the “Agreement”), dated as of __________________, is between CULP, INC., a North Carolina corporation (the “Corporation”), and ____________________ (“Recipient”).

       

      Background Statement

       

      The Corporation desires to grant to Recipient an Annual Incentive Award (the “Award”) pursuant to the Culp, Inc. 2015 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 Award.  The Corporation hereby grants to Recipient the Award described below.

       

      The Award will pay an incentive bonus for the Performance Period stated below to Recipient upon final determination by the Compensation Committee (the “Committee”) of the Corporation’s board of directors that a bonus payment is due pursuant to the terms of this Agreement and the Plan.

       

      The bonus payment due hereunder is calculated with reference to the Bonus Percentage for the Reporting Unit in which the Recipient participates.  The
        bonus due to Recipient is the Bonus Percentage for Recipient’s Reporting Unit multiplied by Recipient’s Bonus Opportunity.

       

      Performance Period:  The Corporation’s fiscal year ending ________________.

       

      Reporting Unit:  _____________________ [or the ______________ Division (the “Division”)]

       

      Bonus Opportunity:  Recipient’s Bonus Opportunity is _____% of Recipient’s base salary approved for the
        Performance Period.

       

      Bonus Percentage for a Reporting Unit is the amount derived from Schedule A attached hereto, based upon the Total
        EVA results for Recipient’s Reporting Unit during the Performance Period, with straight line interpolation being used to determine Bonus Percentage amounts between the amounts shown on Schedule A.  The maximum Bonus Percentage for this award is
        ___%.

       

      Economic Value Added (“EVA”) for a Reporting Unit is the amount, if any,
        by which Adjusted Operating Income earned by the Reporting Unit for each month during the Performance Period exceeds (or if lower, a negative number) the Capital Charge for the Reporting Unit in the relevant month.  Total EVA for the Performance Period is the sum of the total amounts of EVA for each month of the Performance Period.

       

       

      Capital Charge:  ___%

       

      
        
          

      

        
      “Adjusted Operating Income” is defined as operating income for a Reporting Unit as recorded on the Reporting
        Unit’s financial statements, but excluding (prior to) the payment of bonus payments related to the EVA-based annual incentive plan, and excluding extraordinary and non-recurring items including restructuring and related charges, goodwill or fixed
        asset impairment charges, prepayment fees on debt, other extraordinary charges or credits, and the effects of acquisitions.

       

      “Operating Capital Employed” for a Reporting Unit is the sum of all
        capital items allocated to the Reporting Unit on the Corporation’s financial records, but excluding such items, if any, which may include property, plant and equipment construction in progress, goodwill and other intangibles related to
        acquisitions, newly acquired assets or operations, etc., that the Committee deems appropriate for exclusion.

        

      

      Section 2. Vesting.  The bonus amount to be paid hereunder will vest and become payable upon final determination of the amount to be paid by the Corporation and the
          Committee.

       

      Notwithstanding the foregoing, all unvested Awards (and a bonus payment at Recipient’s Bonus Opportunity) shall immediately vest and become payable upon
        the occurrence of the following:

       

      
        
          (a) the termination by the Corporation of the employment of Recipient without Cause or by reason of the death or Disability of Recipient; or

           

          

        

      

      
        
          (b) Recipient’s employment is terminated by the Corporation in anticipation of a Change of Control, or

           

          

        

      

      
        
          (c) Recipient is employed by the Corporation or an affiliate thereof at the time a Change of Control occurs, and at any time during the
            18-month period following such Change of Control (provided that the bonus payment provided for hereunder shall have not already become due and been paid),

           

          

        

      

      
        
          (i) Recipient’s employment
            is terminated by the Corporation or an affiliate thereof for any reason other than for death, Disability or Cause, or

           

          

        

      

      
        
          (ii) Recipient terminates
            his/her employment for Good Reason within one year following the initial existence of the conditions giving rise to such Good Reason.

           

          

        

      

      Section 3. Additional Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated below:

       

      “Cause” shall mean (i) the commission by Recipient of a felony (or crime involving moral
        turpitude); (ii) theft, conversion, embezzlement or misappropriation by Recipient 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 Recipient 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.

       

      
        2

        
          

      

       

      

      “Change of Control” shall have the meaning given to such term in the Plan.  In addition, for an award that vests
        according to Total EVA of a Division, “Change of Control” shall be deemed to have occurred upon consummation of a sale of all or substantially all of the assets of such 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 Recipient participates.  In the absence of any such plan, “Disability” shall mean any physical or mental impairment that renders Recipient unable to perform the essential functions of his/her 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, Recipient shall submit to an examination by a duly licensed physician who is mutually
        acceptable to the Corporation and Recipient for the purpose of ascertaining the existence of a Disability, and shall authorize the physician to release the results of Recipient’s examination to the Corporation.

       

      “Good Reason” shall mean, without Recipient’s express written consent, the existence of any of the following
        conditions unless such conditions are fully corrected within thirty days after Recipient notifies the Corporation of the existence of such conditions as hereinafter provided:

      

      

      
        
          (a) a material diminution in Recipient’s authority, duties or responsibilities;

           

          

        

      

      
        
          (b) a material diminution in the authority, duties or responsibilities of the supervisor to whom Recipient is required to report;

           

          

        

      

      
        
          (c) a material diminution in Recipient’s base salary, other than as a result of across-the-board salary reductions similarly affecting all management
            personnel of the Corporation; or

           

          

        

      

      
        
          (d) a material change in the geographic location at which Employee must regularly perform services for the Corporation.

           

          

        

      

      Recipient shall notify the Corporation that he/she believes that one or more of the conditions described above exists, and of his/her intention to
        terminate employment for Good Reason as a result thereof, within sixty days after the time that he/she gains knowledge of such conditions.  Recipient shall not deliver a notice of termination of employment for Good Reason until thirty days after
        he/she delivers the notice described in the preceding sentence, and Recipient may do so only if the conditions described in such notice have not been fully corrected by the Corporation.

       

      Section 4. Settlement.

       

      As soon as reasonably practicable following a determination by the Corporation that a bonus payment is due hereunder, the bonus will be paid in cash, or
        will be paid in accordance with any proper and valid election under the Culp, Inc. Deferred Compensation Plan for Key Employees, but only if such election has been made in accordance with the policies and procedures of the Corporation pursuant to
        such plan.

       

      

      
        3

        
          

      

       

      Section 5. Forfeiture.  All bonus amounts that do not vest pursuant to Section 2 shall automatically be cancelled and
          forfeited by Recipient effective as of the earlier to occur of (a) the first day after the end of the Performance Period (to the extent that Total EVA for the relevant Reporting Unit is not sufficient to cause any bonus payment to vest pursuant
          to the terms of this Agreement), (b) the termination by Recipient of his/her employment with the Corporation or its Subsidiaries for any reason or (c) the termination by the Corporation of Recipient’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 bonus amounts shall automatically, without further action
          by the Corporation or Recipient, be cancelled and forfeited.

       

      Section 6. Tax Matters.

       

      
        
          (a) Recipient 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 or payment of a bonus hereunder, and the Corporation, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to Recipient 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 or payment of a bonus earned hereunder.

           

          

        

      

      
        
          (b) Notwithstanding anything in this Agreement to the contrary, if a Change of Control occurs and if Recipient 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 Recipient 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 Recipient’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 Recipient from receiving, with respect to a Change of Control, an excess parachute payment within the meaning of Section 280G of the Code.

           

          

        

      

      Section 7. Clawback.  If the Corporation’s reported financial or operating results become subject to a material negative restatement, the Committee may require the
          Recipient to pay to the Corporation an amount corresponding to the amount that the Committee determines would not have been vested or paid if the Corporation’s results as originally published had been equal to the Corporation’s results as
          subsequently restated; provided that any requirement or claim under this Section must be made, if at all, within five years after the date the amount claimed was originally vested or paid, whichever is later.

       

      
        4

        
          

      

       

      

      In the alternative, the Committee may require Recipient to repay or return compensation awarded hereunder pursuant to such rules as may be adopted from
        time to time pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to the extent applicable.  By acceptance of any Award or bonus payment hereunder, Recipient expressly acknowledges and agrees that any and all
        amounts paid to Recipient hereunder are and will be fully subject to the terms of any policy regarding repayment, recoupment or clawback of compensation now or hereafter adopted by the Corporation in response to the requirements of the Dodd-Frank
        Wall Street Reform and Consumer Protection Act, rulemaking of the Securities and Exchange Commission or otherwise.  Recipient acknowledges and agrees that any such policy will apply to any and all bonus amounts paid hereunder in accordance with its
        terms, whether retroactively or prospectively, and agrees to cooperate fully with the Corporation to facilitate the recovery of any that the Committee determines in its sole discretion is required to be recovered pursuant to the terms of such
        policy.

       

      The obligations of Recipient to make payments or return bonus amounts paid hereunder under this Section are independent of any involvement by such
        Recipient in events that led to the restatement.  The provisions of this Section are in addition to, not in lieu of, any remedies that the Corporation may have against any persons whose misconduct caused or contributed to a need to restate the
        Corporation’s reported results.

       

      Section 8. 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 Award 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. 
              Recipient 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.  Except as permitted by the Plan, this Agreement and the Award granted hereunder may not be assigned, pledged, hypothecated or transferred by Recipient in any manner.  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 Recipient any right to continue in the employ of the Corporation or any of its Subsidiaries.

           

          

          
            5

            
              

          

        

      

      
        
           

            

          (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 Recipient shall be addressed to Recipient
              at his/her 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.]

       

      

      
        6

        
          

      

      

      

      IN WITNESS WHEREOF, this Agreement has been duly executed as of the
          date first written above.

       

       

        

      	 	
              CULP, INC.,

            
	 	a North Carolina corporation  

            
	 	 	 	 	 
	 	 	 	 	 
	 	By: 

            	 	 	 
	 	 	Name: 

            	 	 
	 	 	Title: 

            	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	RECIPIENT 

            	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

      

      

      
        7

        
          

      

       
      SCHEDULE A

       

        

       

      	
              Bonus Percentage

            	
              Total EVA Results

            
	
              0%

            	
              ___

            
	
              X

            	
              X

            
	
              X

            	
              X

            
	
              X

            	
              X

            
	
              100%

            	
              Target Level

            
	
              X

            	
              X

            
	
              X

            	
              X

            
	
              X

            	
              X

            
	
              ___%

            	
              [Maximum]

            

       

      

       

      

      A-1EXHIBIT 10.2

    

     

    

     

    

    
      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_________________ (“Recipient”).

       

      Background Statement

       

      The Corporation desires to grant to Recipient Restricted Stock Units (the “Units”) pursuant to the Culp, Inc. 2015 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 Recipient ______ Units, ______ of which shall vest in accordance with Section 2(a) herein (the “Time-Based Units”) upon a final determination by the Compensation Committee (the “Committee”) of the satisfaction of the vesting conditions set forth herein and the number of Time-Based
          Units that have vested in connection therewith; and ______ of which shall vest in accordance with Section 2(b) herein (the “Performance-Based Units”) upon a final determination by the Committee of the
          satisfaction of the vesting conditions set forth herein and the number of Performance-Based Units that have vested in connection therewith.  Each Time-Based Unit shall entitle Recipient 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”).  Each Performance-Based Unit shall entitle Recipient to receive, upon vesting thereof
          in accordance with this Agreement and the Plan, up to ______ shares of Common Stock.  Except as permitted by the Plan, the Units may not be assigned, pledged, hypothecated or transferred in any manner.  Recipient 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.

       

      
        
          (a) Time-Based Units. 

              Except as may otherwise be provided in the Plan or this Agreement, the Time-Based Units shall vest in the amounts set forth below:

           

          

        

      

      On _______________, 20__        ___________ shares of Common Stock

       

      
        
          (b) Performance-Based Units.  Except as may otherwise be provided in the Plan or this Agreement, the Performance-Based Units shall vest in the amounts set forth below, depending upon the Cumulative Operating Income of the Corporation, as follows

        

      

      
        
          

          

          
            
              

          

           

      

       

      	
              Level

            	
              Cumulative

              Operating Income

            	
              Number of Shares

               

            
	 	 	 
	
              Entry Point (Threshold)

            	
              $____________ or below

            	
              0

            
	
              Target

            	
              $____________

            	
              ______

            
	
              Maximum

            	
              $____________

            	
                                ______

            
	 	 	 

      

      

      For Cumulative Operating Income amounts that are between the levels shown above, a pro rata number of shares will be awarded, calculated on a straight-line basis.

       

      [The number of Performance-Based Units vested and shares awarded shall further be subject to the TSR moderator provisions contained in this paragraph.  The number of shares
        to be awarded as determined above shall be adjusted as follows:  (1)  if the Total Shareholder Return of the Corporation’s Common Stock during the Performance Period is, when compared to the Total Shareholder Returns of each company in the Peer
        Group Companies during the same period, within the top __% of the Total Shareholder Returns for the Peer Group Companies, the number of shares to be awarded shall be increased by __%; provided, however, that in no event will the
        provisions of this paragraph result in the issuance of more than ______ shares per Performance-Based Unit; (2) if the Total Shareholder Return of the Corporation’s Common Stock during the Performance Period is, when compared to the Total
        Shareholder Returns of each company in the Peer Group Companies during the same period, within the bottom __% of the Total Shareholder Returns for the Peer Group Companies, the number of shares to be awarded shall be decreased by ___%; and (3) if
        the Total Shareholder Return of the Corporation’s Common Stock during the Performance Period is, when compared to the Total Shareholder Returns of each company in the Peer Group Companies during the same period, between the __ and __ percentile of
        the Total Shareholder Returns for the Peer Group Companies, there shall be no adjustment to the number of shares to be awarded.]1

       

      
        
          (c) The Units will vest, and the associated number of shares will become issuable by the Corporation, upon final determination by
            the Committee of the number of Units that have vested and shares issuable in connection therewith pursuant to the terms set forth in this Agreement and the Plan.

           

          

        

      

      
        
          (d) Notwithstanding the foregoing, all unvested Units (at the rate of one (1) share of Common Stock per Unit for Time-Based Units
            and at the number of shares at the Target level set forth above with respect to Performance-Based Units) shall immediately vest upon:

           

          

        

      

      (i) the termination by the Corporation of the
          employment of Recipient without Cause or by reason of the death or Disability of Recipient; or

       

      (ii) Recipient’s employment is terminated by the
          Corporation in anticipation of a Change of Control, or

       

        

    

    

      

      1 Applies only to awards for Named Executive Officers (NEOs).

      

      

      
      
        2

        
          

      

       

      (iii) Recipient is employed by the Corporation or an affiliate thereof at
          the time a Change of Control occurs, and at any time during the three-year period following such Change of Control (provided that the Units granted hereunder and related shares have not otherwise vested),

       

      (1)
        Employee’s employment is terminated by the Corporation or an affiliate thereof for any reason other than for death, Disability or Cause, or

       

      (2)
        Employee terminates his/her employment for Good Reason within one year following the initial existence of the conditions giving rise to such Good Reason.

       

      Section 3. Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated below:

       

      “Cause” shall mean (i) the commission by Recipient of a felony (or crime involving moral turpitude); (ii) theft,
        conversion, embezzlement or misappropriation by Recipient 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 Recipient 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, for an award that vests
        according to Cumulative Operating Income of a Division, “Change of Control” shall be deemed to have occurred upon consummation of a sale of all or substantially all of the assets of such Division by the
        Corporation to an unaffiliated third party.

       

      “Cumulative Operating Income” shall mean the total Operating Income of the Corporation, excluding extraordinary and
        non-recurring items including restructuring and related charges, goodwill or fixed asset impairment charges, prepayment fees on debt, other extraordinary charges or credits, and the effects of acquisitions, for the [three] fiscal years beginning ____________ and ending ____________ (the “Performance Period”).

       

      “Disability” shall have the meaning given to such term in the primary disability benefit plan of the Corporation in
        which Recipient participates.  In the absence of any such plan, “Disability” shall mean any physical or mental impairment that renders Recipient unable to perform the essential functions of Recipient’s 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, Recipient shall submit to an examination by a duly licensed physician who is mutually
        acceptable to the Corporation and Recipient for the purpose of ascertaining the existence of a Disability, and shall authorize the physician to release the results of Recipient’s examination to the Corporation.

       

      “Good Reason” shall mean, without Employee’s express written consent, the existence of any of the following
        conditions unless such conditions are fully corrected within thirty days after Employee notifies the Corporation of the existence of such conditions as hereinafter provided:

       

      

      
        3

        
          

      

      

      

      
        
          (a) a material diminution in Employee’s authority, duties or responsibilities;

           

          

        

      

      
        
          (b) a material diminution in the authority, duties or responsibilities of the supervisor to whom Employee is required to report, including a requirement that Employee
            report to a Corporation officer or employee instead of reporting directly to the Corporation’s board of directors;

           

          

        

      

      
        
          (c) a material diminution in Employee’s Base Salary, other than as a result of across-the-board salary reductions similarly affecting all management personnel of the
            Corporation; or

           

          

        

      

      
        
          (d) a material change in the geographic location at which Employee must regularly perform services for the Corporation.

        

      

       

      

      Employee shall notify the Corporation that he/she believes that one or more of the conditions described above exists, and of his/her intention to terminate
        employment for Good Reason as a result thereof, within sixty days after the time that he/she gains knowledge of such conditions.  Employee shall not deliver a notice of termination of employment for Good Reason until thirty days after he/she
        delivers the notice described in the preceding sentence, and Employee may do so only if the conditions described in such notice have not been fully corrected by the Corporation.

       

      “Operating Income” shall mean operating income as calculated and disclosed on the
        Corporation’s financial statements for the fiscal years in question.

       

      “Performance Period” shall mean the period over which Cumulative Operating Income is measured, as set forth in the
        definition of Cumulative Operating Income above.

       

      [“Peer Group Companies” shall mean the list of peer companies approved and used by the Committee to analyze the
        Corporation’s pay practices and compensation levels, as in effect as of the date of the Committee’s approval of the grant of Units set forth herein and identified in Exhibit A attached hereto; provided,
        however, that if any company identified on Exhibit A is no longer used by the Committee as a peer company as of the last day of the Performance Period because such company is no longer a public company at such time, then such company shall
        be excluded from the Peer Group Companies for purposes of this Agreement.]2

       

      [“Total Shareholder Return” (TSR) shall mean the total value at the end of a specified period of a hypothetical
        $100.00 investment, made at the beginning of the specified period, in a stock or index, including increases in trading value and all dividends paid during the specified period of time.]3

      

      

      

      2 Applies only to awards for NEOs.

      3 Applies only to awards for NEOs.

    

     

      
      
        4

        
          

      

       

      Section 4. Settlement.

       

      
        
          (a) 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 as provided in 4(b) below, 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.

           

          

        

      

      
        
          (b) Such shares shall be issued as follows:

           

          

        

      

      
        
          (i) _________% of such shares (rounded to the nearest whole share) shall be issued directly to the Recipient; and

           

          

        

      

      
        
          (ii) _________% of such shares (rounded to the nearest whole share) to Recipient’s Account under the Culp, Inc. Deferred
            Compensation Plan for Certain Key Employees (“Deferred Compensation Plan”), to be held and administered in accordance with the terms and conditions of the Deferred Compensation Plan and such other terms and conditions as the Corporation may
            establish in order to comply with legal requirements or otherwise.  Recipient understands and agrees that Recipient must also enter this election in the enrollment website for the Deferred Compensation Plan,
                in accordance with the terms of such plan.  If such election is not so entered by Recipient within 30 days from the date of this Agreement, the deferral election in this subparagraph (ii) will be null and void, and 100% of the shares of
                Common Stock to be distributed hereunder will be issued directly to Recipient upon vesting under subparagraph (i) above, notwithstanding the percentage shown in subparagraph (i).

           

              

        

      

      Section 5. Forfeiture.  All Units that do not vest pursuant to Section 2 shall automatically be cancelled and forfeited by Recipient effective
          as of the earlier to occur of (a) with respect to the Performance-Based Units, the first day after the end of the Performance Period (to the extent that Cumulative Operating Income for the Corporation is not sufficient to cause such
          Performance-Based Units to vest pursuant to the terms of this Agreement), (b) the termination by Recipient of his/her employment with the Corporation or its Subsidiaries for any reason or (c) the termination by the Corporation of Recipient’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 Recipient, be cancelled and forfeited.

       

      Section 6. Tax Matters.

       

      
        
          (a) Recipient 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, Recipient may elect to satisfy this obligation by having the Corporation withhold
            shares of Common Stock that would otherwise be issued to Recipient 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 Recipient 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 Recipient 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.

           

          

          
            5

            
              

          

        

      

      
        
           

            

          (b) Notwithstanding anything in this Agreement to the contrary, if a Change of Control occurs and if Recipient 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 Recipient 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 Recipient’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 Recipient from receiving, with respect to a Change of Control, an excess parachute payment within the meaning of Section 280G of the Code.

           

          

        

      

      Section 7. Clawback.  If the Corporation’s reported financial or operating results become subject to a material negative restatement, the Committee may require the Recipient to pay to
          the Corporation an amount corresponding to each award to the Recipient under this Agreement, or otherwise return such Units or Common Stock, that the Committee determines would not have been vested or paid if the Corporation’s results as
          originally published had been equal to the Corporation’s results as subsequently restated; provided that any requirement or claim under this Section must be made, if at all, within five years after the date the amount claimed was originally
          vested or paid, whichever is later.

       

      In the alternative, the Committee may require Recipient to repay or return compensation awarded hereunder pursuant to such rules as may be adopted from time to time pursuant
        to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to the extent applicable.  By acceptance of any award or Units hereunder, Recipient expressly acknowledges and agrees that any and all Units or Common Stock, as well
        as the equivalent cash value thereof with respect to any and all such Units or Common Stock, that have become vested, exercised, free of restriction or otherwise released to and/or monetized by or for the benefit of the Recipient or any transferee
        or assignee thereof (collectively, the “Award-Equivalent Value”), are and will be fully subject to the terms of any policy regarding repayment, recoupment or clawback of compensation now or hereafter adopted
        by the Corporation in response to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, rulemaking of the Securities and Exchange Commission or otherwise.  Recipient acknowledges and agrees that any such policy will
        apply to any and all Units or Common Stock, and Award-Equivalent Value in accordance with its terms, whether retroactively or prospectively, and agrees to cooperate fully with the Corporation to facilitate the recovery of any Units or Common Stock
        and/or Award-Equivalent Value that the Committee determines in its sole discretion is required to be recovered pursuant to the terms of such policy.

       

      
        6

        
          

      

       

      

      The obligations of Recipient to make payments or return Common Stock under this Section are independent of any involvement by such Recipient in events that led to the
        restatement.  The provisions of this Section are in addition to, not in lieu of, any remedies that the Corporation may have against any persons whose misconduct caused or contributed to a need to restate the Corporation’s reported results.

       

      Section 8. 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.  Recipient 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.  Except as permitted by the Plan, this Agreement and the Units granted hereunder may not be assigned, pledged, hypothecated or transferred by Recipient in any manner.  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 Recipient 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.

           

            

          
            7

            
              

          

           

            

        

      

      
        
          (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 Recipient shall be addressed to Recipient at his/her 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.]

       

      

    

    
      8

      
        

    

    

      

      

      

      IN WITNESS WHEREOF, this Agreement has been duly executed as of the
          date first written above.

       

        

      
         

          

        	 	
                CULP, INC.,

              
	 	a North Carolina corporation  

              
	 	 	 	 	 
	 	 	 	 	 
	 	By: 

              	 	 	 
	 	 	Name: 

              	 	 
	 	 	Title: 

              	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	RECIPIENT 

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

        

        

        
          9

          
            

        

         

      

      EXHIBIT A

       

      Peer Group Companies

       

      [_______]

       

      

      

    

    10

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