Exhibit 10.1 ASSET PURCHASE AGREEMENT

Exhibit 10.1



ASSET PURCHASE AGREEMENT

BETWEEN

CULP, INC.
(the "Buyer")

and

INTERNATIONAL TEXTILE GROUP, INC.
(the "Seller")






Dated as of January 11, 2007

<PAGE>


TABLE OF CONTENTS

Page
----

ARTICLE I

DEFINITIONS AND CONSTRUCTION

1.1 Definitions.............................................................1
1.2 Construction............................................................1

ARTICLE II

PURCHASE, TERMS OF PAYMENT AND CLOSING

2.1 Purchase and Sale of Assets.............................................2
2.2 Purchased Assets........................................................2
2.3 No Assumption of Liabilities............................................2
2.4 Purchase Price; Materials Credit........................................4
2.5 Manner of Payment; Closing Date Inventory...............................4
2.6 Closing.................................................................5
2.7 Closing Obligations.....................................................5
2.8 Certain Expenses........................................................6

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLER

3.1 Organization; Good Standing.............................................6
3.2 Authority; Enforceability...............................................6
3.3 Consents and Approvals; No Violation....................................7
3.4 Books and Records.......................................................7
3.5 Absence of Certain Changes or Events....................................8
3.6 Litigation..............................................................8
3.7 Governmental Authorizations.............................................8
3.8 Compliance with Laws and Governmental Authorizations....................8
3.9 Assets..................................................................9
3.10 Inventory...............................................................9
3.11 Proprietary Rights......................................................9
3.12 Warranties and Products................................................11
3.13 Suppliers..............................................................11
3.14 Customers..............................................................11
3.15 Brokers................................................................11
3.16 Full Disclosure........................................................12
3.17 Securities Matters.....................................................12


i
<PAGE>


ARTICLE IV

REPRESENTATIONS AND WARRANTIES RELATING TO THE BUYER

4.1 Organization...........................................................13
4.2 Authority; Enforceability..............................................13
4.3 Consents and Approvals; No Violation...................................13
4.4 Litigation.............................................................14
4.5 Brokers................................................................14
4.6 Buyer's Stock..........................................................14

ARTICLE V

COVENANTS AND AGREEMENTS

5.1 Access to Information..................................................14
5.2 Confidentiality........................................................14
5.3 Operation of the Business of the Seller................................15
5.4 Efforts to Satisfy Closing Conditions..................................15
5.5 Notification...........................................................16
5.6 Employees..............................................................16
5.7 Exclusivity............................................................16
5.8 Mattress Covers........................................................17
5.9 Securities Matters.....................................................17
5.10 Noncompetition.........................................................17

ARTICLE VI

CLOSING CONDITIONS

6.1 Mutual Conditions......................................................18
6.2 Buyer's Conditions.....................................................18
6.3 Seller's Conditions....................................................19

ARTICLE VII

INDEMNIFICATION

7.1 Survival; Knowledge....................................................19
7.2 Seller's Agreement to Indemnify........................................19
7.3 Buyer's Agreement to Indemnify.........................................20
7.4 Limitations on Seller's Indemnity......................................20
7.5 Limitations on Buyer's Indemnity.......................................21
7.6 Procedure for Indemnification - Third-Party Claims.....................21
7.7 Alleged Breaches.......................................................23
7.8 Indemnification Procedure - Direct Claims..............................23
7.9 Interest...............................................................24
7.10 Return of Buyer's Stock................................................24
7.11 Remedies Not Exclusive.................................................24


ii
<PAGE>


ARTICLE VIII

TERMINATION

8.1 Termination............................................................24
8.2 Procedure and Effect of Termination....................................25

ARTICLE IX

GENERAL PROVISIONS

9.1 Expenses...............................................................25
9.2 Amendment and Modification.............................................26
9.3 Waiver of Compliance; Consents.........................................26
9.4 Notices................................................................26
9.5 Publicity..............................................................27
9.6 Assignment; No Third-Party Rights......................................27
9.7 Governing Law..........................................................27
9.8 Jurisdiction; Service of Process.......................................28
9.9 Further Assurances; Records............................................28
9.10 Severability...........................................................28
9.11 Construction...........................................................28
9.12 Disclosure Schedule....................................................28
9.13 Time of Essence........................................................29
9.14 Counterparts...........................................................29
9.15 Specific Performance...................................................29
9.16 Entire Agreement.......................................................29


iii
<PAGE>


EXHIBITS

A Form of Registration Rights and Shareholder Agreement
B Form of Bill of Sale
C-1 Form of Patent and Trademark Assignment
C-2 Form of Copyright Assignment
D Form of Transition and Manufacturing Services Agreement


iv
<PAGE>


ASSET PURCHASE AGREEMENT


This Asset Purchase Agreement, dated as of January 11, 2007, is between
Culp, Inc., a North Carolina corporation (the "Buyer"), and International
Textile Group, Inc., a Delaware corporation (the "Seller").

Background Statement

The Seller desires to sell, and the Buyer desires to purchase, certain of
the Seller's mattress ticking assets (consisting of inventory and related
proprietary rights), for the consideration and on the terms set forth herein.

Statement of Agreement

The parties agree as follows:

ARTICLE I

DEFINITIONS AND CONSTRUCTION

1.1 Definitions. Capitalized terms used in this Agreement have the meanings
given to them in Appendix 1.

1.2 Construction.

(a) The article and section headings contained in this Agreement are solely
for the purpose of reference and convenience, are not part of the agreement of
the parties, and shall not in any way limit, modify or otherwise affect the
meaning or interpretation of this Agreement.

(b) References to "Sections" or "Articles" refer to corresponding Sections
or Articles of this Agreement unless otherwise specified.

(c) Unless the context requires otherwise, the words "include," "including"
and variations thereof mean without limitation, the words "hereof," "hereby,"
"herein," "hereunder" and similar terms refer to this Agreement as a whole and
not any particular section or article in which such words appear, and any
reference to a statute, regulation or law shall include any amendment thereof or
any successor thereto and any rules and regulations promulgated thereunder.

(d) Unless the context requires otherwise, words in the singular include
the plural, words in the plural include the singular, and words importing any
gender shall be applicable to all genders.

(e) If a term is defined as one part of speech (such as a noun), it shall
have a corresponding meaning when used as another part of speech (such as a
verb).

<PAGE>


(f) Currency amounts referenced herein are in U.S. Dollars.

(g) References to a number of days refer to calendar days unless Business
Days are specified. Except as otherwise specified, whenever any action must be
taken on or by a day that is not a Business Day, then such action may be validly
taken on or by the next day that is a Business Day.

(h) All accounting terms used herein and not expressly defined herein shall
have the meanings given to them under GAAP.

ARTICLE II

PURCHASE, TERMS OF PAYMENT AND CLOSING

2.1 Purchase and Sale of Assets. On the terms and subject to the conditions
of this Agreement, on the Closing Date, the Seller shall sell, convey, assign,
transfer and deliver to the Buyer, and the Buyer shall purchase, acquire and
accept from the Seller, all of the Purchased Assets, free and clear of all
Liens, except for Permitted Liens, in exchange for payment of the Purchase
Price.

2.2 Purchased Assets. For purposes of this Agreement, the term "Purchased
Assets" means all of the following assets of the Seller and all of the Seller's
rights therein:

(a) all Finished Goods Inventories of the Seller related to the Product
Line, including all rights to all such Inventories that have been manufactured
by third parties and that are in transit to the Seller and to which Seller has
taken title as of the Effective Time (the "In-Transit Inventories" and, together
with all other such Finished Goods Inventories, the "Purchased Inventories");

(b) the Proprietary Rights of the Seller listed in Schedule 2.2(b) hereto
(the "Purchased Proprietary Rights"), which shall include, without limitation,
all artwork and patterns relating to the Purchased Inventories and all
copyrights and related copyright information with respect thereto;

(c) all electronic design files and specifications for each pattern
described above, and all client and customer lists and records, research and
development reports and records, service and warranty records, bills of
material, design and creative records and product accounting records, as and to
the extent related to the Product Line.

It is expressly understood that the Purchased Assets will not include any
accounts receivable or any furniture, fixtures or other property, plant or
equipment of the Seller, or any trademarks or trade names of Seller that are
used in any business of the Seller other than in connection with the Product
Line, including the "Burlington" name and the weave logo associated with that
name ("Excluded Assets").

2.3 No Assumption of Liabilities. It is understood that in connection with
the transactions contemplated hereby, the Buyer shall not assume any obligations
or liabilities of the Seller, except for payment obligations in respect to
purchase orders for finished goods that are open as of the Effective Time ("Open
Purchase Order Obligations"), which Open Purchase Order Obligations the Buyer
will assume on the Closing Date. It is further understood that, without limiting
the foregoing, the Buyer shall not assume any liabilities or obligations of the
Seller or any Affiliate of the Seller incurred, arising from or out of, in
connection with or relating to:

2
<PAGE>


(i) any claims made by or against the Seller or any Affiliate of the
Seller, whether before or after the Closing Date, that arise out of events
prior to the Effective Time, including any and all accounts payable,
accrued expenses, customer rebates or quality claims relating to goods sold
or shipped prior to Closing, and including any liabilities or obligations
relating to investigations by any Governmental Authority;

(ii) any Taxes, including any Taxes arising by reason of the
transactions contemplated herein;

(iii) products manufactured, sold or distributed prior to the
Effective Time, including liabilities or obligations related to product
warranties, recalls of such products or defects with respect to such
products;

(iv) any liabilities or obligations under any supply contracts to
which the Seller or any Affiliate of the Seller is party or otherwise
relating to the Product Line;

(v) any liability associated with Seller's employees or employee
benefit plans;

(vi) any employment, severance, retention or termination agreement
with any employee (except as provided in the Transition and Manufacturing
Services Agreement);

(vii) any employee grievance;

(viii) any obligation to indemnify, reimburse or advance amounts to
any officer, director, employee or agent;

(ix) any Proceeding pending as of the Effective Time or any Proceeding
commenced after the Effective Time that arises out of or relates to any
occurrence or event happening prior to the Effective Time;

(x) any compliance or noncompliance with any Legal Requirement of any
Governmental Authority;

(xi) any credit facility or any security interest related thereto;

(xii) any fees and expenses in connection with the transactions
contemplated hereby;

(xiii) any obligation relating to any assets of the Seller not being
conveyed to the Buyer; and


3
<PAGE>


(xiv) any obligation of the Seller under this Agreement or any other
document executed in connection with the transactions contemplated hereby.

2.4 Purchase Price; Materials Credit. In consideration of the sale of the
Purchased Assets and in exchange for the granting of the Materials Credit (as
defined below), at the Closing and subject to the conditions contained herein,
the Buyer shall pay to the Seller an aggregate amount equal to $8,300,000 (the
"Base Purchase Price"), adjusted as follows: (i) plus the amount, if any, by
which the amount of the Closing Date Inventory is greater than $9,200,000 or
(ii) minus the amount, if any, by which the amount of the Closing Date Inventory
is less than $9,200,000, as applicable (as so adjusted, the "Purchase Price").

The Seller and the Buyer acknowledge and agree that the Purchase Price is
based in part on the value of the Seller's Inventories not consisting of
Finished Goods Inventories and on hand as of the Effective Time. Accordingly, it
is understood that a portion of the Purchase Price is payable in exchange for a
credit to be established for the Buyer's account for the amount of Inventories
on hand as of the Effective Time, which Inventories do not consist of Finished
Goods Inventories (the "Materials Credit"). The Materials Credit, which
effective as of the Effective Time is hereby granted to the Buyer, will be
applied to the payment of certain amounts owing by the Buyer to the Seller
pursuant to Sections 3.1(c) and (d) of the Transition and Manufacturing Services
Agreement (as defined in Section 2.7(a)(iii)).

2.5 Manner of Payment; Closing Date Inventory.

(a) The Purchase Price shall be paid as follows:

(i) On the Closing Date, the Buyer shall pay to the Seller, by wire
transfer of immediately available funds to an account or accounts that the
Seller shall designate in writing to the Buyer at least two Business Days
prior to the Closing Date, an aggregate amount equal to $2,500,000 (the
"Cash Payment"); and

(ii) Following Closing, on the Business Day next succeeding the date
on which the Buyer and the Seller agree upon the Closing Date Inventory
pursuant to Section 2.5(b) below, the Buyer will issue and deliver to the
Seller the number of shares of the common stock of Buyer (the "Buyer's
Stock") valued in the aggregate at an amount equal to the Purchase Price
minus the amount of the Cash Payment, based on a price per share of the
Buyer's Stock of $6.60 per share (as adjusted for any stock dividends,
stock splits or other changes in the Buyer's capital stock since December
31, 2006 having a dilutive effect on the Buyer's Stock being issued to the
Seller), which issuance shall be made subject to the terms set forth in the
registration rights and shareholder agreement substantially in the form of
Exhibit A attached hereto executed by the Seller and the Buyer (the
"Registration Rights and Shareholder Agreement"). No fractional shares of
the Buyer's Stock shall be issued in connection with this Agreement. If the
Seller otherwise has the right to receive .5 or more of a share of the
Buyer's Stock, the Seller shall receive an additional share of the Buyer's
Stock; otherwise, the Seller shall receive no such shares or other
consideration for such a fractional interest. The Buyer's Stock shall be
evidenced by a stock certificate that shall bear legends reflecting any
restrictions on the resale of the underlying shares imposed by the
Securities Act and the regulations promulgated thereunder. A condition
precedent to the Buyer's obligation to issue such Buyer's Stock shall be
the delivery by the Seller of a certificate of an executive officer of the
Seller re-confirming the warranties set forth in Section 3.17 hereof.

4
<PAGE>


(b) Following the execution and delivery of this Agreement, the Buyer and
the Seller shall jointly conduct a physical count and calculation of the
Inventories on hand as of the Closing Date, which shall be based upon the
Seller's normal lower of cost or market valuation methodology, applied on a
basis consistent with prior practice. It is anticipated that the determination
of the Closing Date Inventory will be finalized following the Closing Date. If
the Buyer and the Seller are unable to agree on such Closing Date Inventory, the
parties shall engage a mutually agreeable independent certified public
accounting firm to resolve the issues in dispute. The accounting firm shall
apply accounting principles, in accordance with the provisions of this Section
2.5(b), to the issues at hand and shall not have the power to alter, modify,
amend, add to or subtract from any term or provision of this Agreement, and the
accounting firm's engagement shall be limited in scope to the disputed issues or
amounts identified in the notice of objection. The parties shall instruct the
accounting firm to render its decision within 10 days of the engagement, and
such decision shall be binding on the parties. The cost of the accounting firm
shall be borne by the party that does not prevail in the dispute.

2.6 Closing. The closing (the "Closing") of the purchase and sale of the
Purchased Assets shall take place at the offices of the Buyer in High Point,
North Carolina, beginning at 10:00 a.m., local time, on January 22, 2007 or on
such other date or at such other time or place as the parties shall agree. The
Closing shall be effective as of 12:01 a.m. on the Closing Date (the "Effective
Time") and all actions scheduled in this Agreement for the Closing Date shall be
deemed to occur simultaneously at the Effective Time. Subject to the provisions
of Article VIII, failure to consummate the purchase and sale provided for in
this Agreement on the date determined pursuant to this Section will not result
in the termination of this Agreement and will not relieve any party of any
obligation under this Agreement.

2.7 Closing Obligations. At the Closing:

(a) The Seller shall deliver to the Buyer:

(i) a bill of sale, assignment and assumption agreement substantially
in the form of Exhibit B attached hereto (the "Bill of Sale") executed by
the Seller and the Buyer, conveying the Purchased Assets to the Buyer and
providing for the assumption by the Buyer of the Open Purchase Order
Obligations;

(ii) an assignment of patents and trademarks substantially in the form
of Exhibit C-1 attached hereto, and an assignment of copyrights
substantially in the form of Exhibit C-2, each executed by the Seller (the
documents referenced in this clause (ii), collectively, the "Intellectual
Property Assignments") executed by the Seller;

(iii) a transition and manufacturing services agreement substantially
in the form of Exhibit D attached hereto executed by the Seller (the
"Transition and Manufacturing Services Agreement"); and

5
<PAGE>


(iv) the Registration Rights and Shareholder Agreement.

(b) The Buyer shall deliver to the Seller:

(i) the Cash Payment to be paid to the Seller pursuant to Section
2.5(a)(i);

(ii) the Transition and Manufacturing Services Agreement executed by
the Buyer;

(iii) the Registration Rights and Shareholder Agreement executed by
the Buyer; and

(iv) the Bill of Sale executed by the Buyer.

2.8 Certain Expenses. The Seller shall pay any sales or use Taxes arising
out of the transactions contemplated herein.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Buyer that:

3.1 Organization; Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Seller has full corporate power and authority to own or use the
Purchased Assets and to conduct its business as presently conducted. The Seller
is duly qualified to do business as a foreign corporation and is in good
standing in the states, provinces and jurisdictions in which either the nature
of the activities of the Seller or the ownership or use of the Purchased Assets
makes such qualification necessary. No other jurisdiction has given notice to
the Seller indicating that the Seller should be qualified in any other
jurisdiction.

3.2 Authority; Enforceability. The Seller 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 (the certificates, documents and agreements to be executed
by the Seller in connection with this Agreement, collectively, the "Seller
Documents") and (ii) perform its obligations 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, and no other proceedings on the part of
the Seller 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 Seller and constitutes a
legal, valid and binding obligation of the Seller, enforceable against it in
accordance with its terms. Upon execution and delivery by the Seller of each
Seller Document, such Seller Document shall constitute a legal, valid and
binding obligation of the Seller, in each case enforceable against it in
accordance with its terms.

6
<PAGE>


3.3 Consents and Approvals; No Violation.

(a) No Governmental Authorization is required in connection with (i) the
execution or delivery by the Seller of this Agreement or the Seller Documents,
(ii) the performance of the Seller's obligations under this Agreement or the
Seller Documents or (iii) the consummation of the transactions contemplated
hereby.

(b) Except as disclosed in Section 3.3 of the Disclosure Schedule, neither
the execution and delivery of this Agreement and the Seller Documents by the
Seller nor the performance of the Seller's obligations hereunder or thereunder
nor the consummation of the transactions contemplated hereby will, directly or
indirectly (with or without notice or lapse of time):

(i) contravene, conflict with or result in any violation of any
provision of the certificate of incorporation or bylaws of the Seller, any
resolution adopted by the board of directors or shareholders of the Seller
or any agreement among shareholders of the Seller;

(ii) contravene, conflict with or result in a breach of any of the
terms or provisions of, or give any Person a right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate or modify any Contract that is material to the
business of the Seller;

(iii) result in the creation of any Lien upon any of the Purchased
Assets;

(iv) contravene, conflict with, violate, or give any Governmental
Authority or other Person the right to challenge any of the transactions
contemplated hereby or exercise any remedy (including revocation,
withdrawal, suspension or modification of any Governmental Authorization)
or obtain any relief under, any Legal Requirement applicable to the Seller;

(v) cause the Buyer to become subject to, or to become liable for the
payment of, any Tax;

(vi) contravene, conflict with or violate the terms or requirements
of, or result in any loss, or right of revocation, withdrawal, suspension,
termination or modification of, any Governmental Authorization;

(vii) cause any of the Purchased Assets to be reassessed or revalued
by any taxing authority or other Governmental Authority; or

(viii) otherwise require the Seller or the Buyer to give any notice
to, or obtain any consent from, any Person.

3.4 Books and Records. The books and records, files and other materials
relating to the Purchased Assets and the Seller's operation and use thereof in
connection with its business (including without limitation sales records and
customer lists) and that have been furnished or made available by the Seller to
the Buyer in connection with the transactions contemplated hereby are true and
correct in all material respects.


7
<PAGE>


3.5 Absence of Certain Changes or Events. Since November 15, 2006, except
as set forth in Section 3.5 of the Disclosure Schedule, there has not been any:

(i) event or condition that has had, or could reasonably be expected
to have, a Material Adverse Effect;

(ii) loss or damage (whether or not covered by insurance) affecting
any of the Purchased Assets;

(iii) indication by any customer or supplier of the Seller in
connection with the Product Line of any intention to discontinue or change
the terms of its relationship with the Seller; or

(iv) the loss of any material Purchased Proprietary Right as a result
of the failure to make any filing with or pay any fee to any Governmental
Authority; or

(b) agreement, whether oral or written, by the Seller to do any of the
foregoing.

3.6 Litigation.

(a) There are no Proceedings that have been commenced by or against the
Seller in connection with any of the Purchased Assets or, to the Seller's
Knowledge, that have been threatened against or may affect the Seller (including
its officers, directors or employees in their capacity as such) in connection
with any of the Purchased Assets, or that challenge, or that may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, the
transactions contemplated by this Agreement. No event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding.

(b) There are no Orders to which the Seller is subject in connection with
any of the Purchased Assets or the Seller's use or operation thereof or that
challenge, or that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, the transactions contemplated by this Agreement,
or that could affect the enforceability of this Agreement against the Seller or
impair the Seller's ability to consummate the transactions contemplated by this
Agreement. To the Seller's Knowledge, no officer, director, agent, or employee
of the Seller is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct, activity, or
practice relating to the use or operation of the Purchased Assets.

3.7 Governmental Authorizations. No Governmental Authorization is necessary
in order for the Seller to own, operate or use any of the Purchased Assets in
connection with the Product Line.

3.8 Compliance with Laws and Governmental Authorizations(a) . The Seller
is, and at all times since August 2, 2004, has been, in compliance with (i) all
Legal Requirements applicable to the Seller in connection with the Product Line
and (ii) all Governmental Authorizations of the Seller in connection with such
business.

8
<PAGE>


3.9 Assets. Except as set forth in Section 3.9 of the Disclosure Schedule
(which exceptions shall be cleared as of the Effective Time), the Seller owns
good and valid title to all of the Purchased Assets, whether tangible or
intangible, free and clear of all Liens, except for Permitted Liens.

3.10 Inventory. All of the Purchased Inventories consist of a quality and
quantity usable and salable in the Ordinary Course, except for obsolete items
and items of below-standard quality that have been written off or written down
to net realizable value in the accounting records of the Seller as of the
Closing Date. All of the Purchased Inventories have been priced at the lower of
cost or market in accordance with GAAP on a first in, first out basis. The
quantities of each item included in the Purchased Inventories are not excessive
but are reasonable in the present circumstances of the Seller's business. The
Seller is not in possession of any Finished Goods Inventories in connection with
the Product Line not owned by the Seller, including goods already sold. No
customer of the Seller in connection with the Product Line has the right to
return for credit or refund items that, if returned, would be included in the
Purchased Inventories pursuant to any agreement, understanding or practice of
the Seller with respect to taking back any product (other than with respect to
defective products). Without limiting the generality of the foregoing, there is
no product of the Seller in connection with the Seller's mattress ticking
business in the possession of customers of the Seller on consignment or on a
similar basis.

3.11 Proprietary Rights.

(a) Ownership and Right to Use. The Seller owns, has been granted a license
to use or otherwise has the right to use all of the Purchased Proprietary
Rights. The Purchased Proprietary Rights constitute all of the Proprietary
Rights used by the Seller in connection with the Product Line. Except as set
forth in Section 3.11(a) of the Disclosure Schedule, the Seller does not have,
and the Buyer will not have upon the Closing, (i) any contractual limitation or
restriction on its right to use any Purchased Proprietary Right, (ii) any
obligation to pay any royalty or other fee to any Person relating to any
Purchased Proprietary Right or (iii) any obligation to any other Person to
register, protect or otherwise take any action with respect to any Purchased
Proprietary Right. There is no agreement or commitment on the part of the Seller
that grants any Person a license in any Purchased Proprietary Right.

(b) Acquired Proprietary Rights. Section 3.11(b) of the Disclosure Schedule
identifies each Purchased Proprietary Right that was created for the Seller by
any Person other than an employee acting within the scope of the employee's
duties for the Seller. Except as set forth in Section 3.11(b) of the Disclosure
Schedule, each such Person has entered into an agreement or contract with the
Seller pursuant to which it has assigned to the Seller all of such Person's
rights in such Purchased Proprietary Rights, free of any restrictions, and
agreed not to use or disclose any Trade Secrets included in such Purchased
Proprietary Rights. Section 3.11(b) of the Disclosure Schedule identifies each
Purchased Proprietary Right that is owned by any other Person and licensed to
the Seller and identifies each Purchased Agreement pursuant to which the Seller
has licensed such Purchased Proprietary Right, together with any additional
contracts that modify the Company's rights or obligations with respect to such
Purchased Proprietary Right.


9
<PAGE>


(c) Marks, Trade Names and Domain Names. Section 3.11(c) of the Disclosure
Schedule lists each Mark and Trade Name that has been used by the Seller during
the last year in connection with the Product Line (exclusive of any Excluded
Assets), and lists each application for registration that has been filed and
each registration that has been obtained by the Seller with respect to any such
Marks. Section 3.11(c) of the Disclosure Schedule lists each domain name used by
the Seller during the last year in connection with the Product Line. All such
Marks, Trade Names and domain names are included in the Purchased Proprietary
Rights. The Seller has the exclusive right to use each such Mark and Trade Name
within the scope, and in the geographic area, of its present use and has the
right to continue to use each such domain name. To the Seller's Knowledge: (i)
no other Person is using a similar Trade Name to describe a business that is
similar to the Product Line; (ii) no other Person is using a similar Mark to
describe products or services that are similar to the products and services
relating to the Product Line; and (iii) no other Person has registered or is
currently using any Mark or Trade Name in a manner that would preclude the
Seller from using the Marks and Trade Names included in the Purchased
Proprietary Rights throughout the United States.

(d) Patents. Section 3.11(d) of the Disclosure Schedule lists each Patent
included in the Purchased Proprietary Rights and lists each country in which
each such issued Patent is valid. Each claim of each such Patent is valid and
enforceable and each such Patent provides to the Seller a meaningful range of
exclusivity in the practice of the invention covered by such Patent.

(e) Copyrights. Section 3.11(e) of the Disclosure Schedule lists each
Copyright registration owned by the Seller and included in the Purchased
Proprietary Rights.

(f) Trade Secrets. The Seller has taken efforts that are reasonable under
the circumstances to prevent unauthorized disclosure to any other Person of such
portions of the Seller's Trade Secrets included in the Purchased Proprietary
Rights that would enable such Person to compete with the Seller within the scope
of or with respect to the Product Line as now conducted and as presently
proposed to be conducted.

(g) No Infringement. The Seller has not interfered with, infringed upon or
misappropriated any Proprietary Right of any other Person in connection with the
Seller's use or operation of the Purchased Assets, and the continued use or
operation of such assets by the Buyer, in the manner that such assets are
currently used or operated or proposed to be used or operated, will not
interfere with, infringe upon or misappropriate any Proprietary Right of any
other Person. To the Seller's Knowledge, no Person is interfering with,
infringing upon or misappropriating any Purchased Proprietary Right. No claim
has been asserted against the Seller by any Person: (i) that such Person has any
right, title or interest in or to any of the Copyrights, Patents, Trade Secrets
or Know-How included in the Purchased Proprietary Rights; (ii) that such Person
has the right to use any of the Marks, Trade Names or domain names included in
the Purchased Proprietary Rights; (iii) to the effect that any past, present or
projected act or omission by the Seller in connection with the Product Line
infringes any Proprietary Right of such Person; or (iv) that challenges the
Seller's right to use any of the Purchased Proprietary Rights. No facts or
circumstances exist that, with or without the passing of time or the giving of
notice or both, might reasonably serve as the basis for any such claim.

10
<PAGE>


3.12 Warranties and Products.

(a) There are no defects in the design or manufacturing of any of the
products distributed or sold by the Seller in connection with the Product Line
(collectively, the "Products") that would adversely affect the quality of any
such Product, other than defects arising in the Ordinary Course of the
manufacturing process thereof, the exclusive remedy for which is a return of the
defective product and for which adequate reserves are maintained on the Seller's
accounting records. The Products have been designed and manufactured in
compliance with all regulatory, engineering, industrial and other codes
generally recognized as being applicable thereto, and there are no statements,
citations or decisions by any Governmental Authority or any product-testing
laboratory that indicate that any Product is unsafe or fails to meet any
standards promulgated by such Governmental Authority or testing laboratory.
Except as set forth in Section 3.12 of the Disclosure Schedule, the Seller has
not recalled any Product or received notice of any defect in any Product, any
claim of personal injury, death, or property or economic damages in connection
with any Product, or any claim for injunctive relief in connection with any
Product. There are no facts that are reasonably likely to give rise to a recall
of any Product or to give rise to a successful future claim of personal injury,
death, or property or economic damages, or a claim for injunctive relief in
connection with any Product.

(b) Section 3.12 of the Disclosure Schedule sets forth (i) a description of
all warranties of the Seller to third Persons with respect to all Products since
August 2, 2004, except warranties imposed by law; and (ii) the warranty
experience of the Seller in connection with the Product Line since August 2,
2004 for an amount in excess of $10,000. The Seller has not given any Product
warranties prior to August 2, 2004 that have not expired.

3.13 Suppliers. To the Seller's Knowledge, the relationships of the Seller
with each of its suppliers in connection with the Product Line are good working
relationships, and no supplier of the Seller in connection with the Product Line
has cancelled or otherwise terminated, or threatened in writing to cancel or
otherwise terminate, its relationship with the Seller, or has since January 1,
2006 (at the volition of the supplier) decreased materially, or threatened to
decrease or limit materially, its services, supplies or materials to the Seller.

3.14 Customers. Section 3.14 of the Disclosure Schedule lists each customer
or account representing sales by the Seller in connection with the Product Line
in excess of $100,000 in the 12 months ended December 31, 2006. Except as set
forth in Section 3.14 of the Disclosure Schedule, to the Seller's Knowledge, (i)
no account or relationship with any such customer is being terminated or is
being considered for termination or nonrenewal; and (ii) no such customer is
considering any material reduction in its commercial relationship with the
Seller.

3.15 Brokers. No broker, finder or other Person is or shall be entitled to
any brokerage fees, commissions or finder's fees in connection with the
transactions contemplated hereby from the Seller by reason of any action taken
by the Seller with respect to this Agreement.

11
<PAGE>


3.16 Full Disclosure.

(a) No statement that relates to the Seller or the Product Line contained
in this Agreement, the Disclosure Schedule or any Seller Document (including
each representation and warranty in this Article III) contains or shall contain
any untrue statement of a material fact or omits or shall omit to state any
material fact that was necessary to make such statements, in light of the
circumstances in which they were made, not misleading.

(b) To the Seller's Knowledge, there are no facts that have specific
application to the Seller or the Product Line (other than general economic or
industry conditions) that materially adversely affect or, as far as the Seller
can reasonably foresee, materially threaten, the Purchased Assets that has not
been set forth in this Agreement or the Disclosure Schedule.

3.17 Securities Matters.

(a) The Seller is a corporation (i) with total assets in excess of
$5,000,000 and (ii) not formed for the specific purpose of acquiring the Buyer's
Stock.

(b) The Seller has been furnished with all materials that he or she has
requested relating to the Buyer and the issuance of the Buyer's Stock, and the
Buyer has been afforded the opportunity to obtain any additional information
necessary to verify the accuracy of any such information. The Buyer has answered
all inquiries that the Seller has made of it concerning the Buyer and the
issuance of the Buyer's Stock.

(c) The Seller is acquiring the Buyer's Stock for its own account and not
for the account of any other Person. The Seller agrees that it will not resell,
distribute or otherwise dispose of all or any part of the Buyer's Stock except
as permitted by law, including without limitation the Securities Act of 1933, as
amended (the "Securities Act"), and the Securities Exchange Act of 1934, as
amended.

(d) The Seller acknowledges that the offer and sale of the Buyer's Stock is
being made pursuant to an exemption from the registration requirements of the
Securities Act, and that, consequently, neither this agreement nor any
disclosure made by the Buyer to the Seller in connection herewith has been filed
with or reviewed by the Securities and Exchange Commission (the "SEC"), any
securities exchange or any state securities regulatory agency, and neither the
SEC, any such exchange nor any state securities regulatory agency has approved
or disapproved of the Buyer's Stock or the issuance thereof.

(e) The Seller understands that the Buyer's Stock has not been registered
under the Securities Act and therefore may not be sold or otherwise transferred
unless registered under the Securities Act or there is an exemption from such
registration.

(f) The Seller has such knowledge and experience in financial and business
matters as to be able to evaluate the merits and risks of an investment in the
Buyer. The Seller understands the nature of an investment in the Buyer and the
risks associated with such an investment. The Seller understands that there is
no guarantee of any financial return on this investment in the Buyer and that
the seller risks the complete loss of this investment.

12
<PAGE>


(g) The Seller is able now, and was able at the time of receipt of any
offer regarding the Buyer, to bear the economic risks of this investment in the
Buyer, including the complete loss of its investment in the Buyer.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES RELATING TO THE BUYER

The Buyer represents and warrants to the Seller as follows:

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

4.2 Authority; Enforceability. The Buyer has the absolute and unrestricted
legal right, authority, power and capacity to (i) execute and deliver this
Agreement and each certificate, document and agreement to be executed by the
Buyer in connection herewith (collectively, the "Buyer Documents") and (ii)
perform its obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Buyer Documents and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Buyer, and no other proceedings on t