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Exhibit 10.1
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REGISTRATION RIGHTS AND SHAREHOLDER AGREEMENT
BETWEEN
CULP, INC.
AND
INTERNATIONAL TEXTILE GROUP, INC.
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Dated as of January 22, 2007
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
REGISTRATION UNDER SECURITIES ACT
2.1 Registration on
Request..................................................3
2.2 Incidental
Registration..................................................4
2.3 Registration
Procedures..................................................5
2.4 Underwritten
Offerings...................................................8
2.5 Preparation; Reasonable
Investigation....................................8
2.6 Participation in Underwritten
Registrations..............................9
2.7 Adjustments Affecting Registrable
Securities.............................9
ARTICLE III
STANDSTILL AGREEMENT
3.1 No Purchase of Additional
Securities.....................................9
ARTICLE IV
VOTING AGREEMENT
4.1 Voting Agreement and Grant of
Proxy.....................................10
ARTICLE V
MISCELLANEOUS
5.1 Other Registration
Rights...............................................10
5.2
Indemnification.........................................................10
5.3 Amendments and
Waivers..................................................13
5.4 Assignment; No Third-Party
Rights.......................................13
5.5
Notices.................................................................13
5.6 Binding
Agreement.......................................................14
5.7 Descriptive
Headings....................................................14
5.8 Specific
Performance....................................................14
5.9 Governing
Law...........................................................14
5.10
Counterparts............................................................14
5.11
Severability............................................................14
5.12 Entire
Agreement........................................................14
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REGISTRATION RIGHTS AND SHAREHOLDER AGREEMENT
This REGISTRATION RIGHTS AND SHAREHOLDER AGREEMENT (this
"Agreement") is
made and entered into this 22nd day of January, 2007 by and
among CULP, INC., a
North Carolina corporation (the "Company"), and INTERNATIONAL
TEXTILE GROUP,
INC., a Delaware corporation (the "Shareholder").
BACKGROUND STATEMENT
The Company and the Shareholder are parties to an Asset Purchase
Agreement,
dated as of January 11, 2007 (the "Asset Purchase Agreement"),
pursuant to which
the Company purchased certain assets of the Shareholder's
mattress ticking
business (the "Business"). As partial consideration for the
purchase of the
assets pursuant to the Asset Purchase Agreement, the Company
issued ________
Common Shares (as defined below) to the Shareholder. The Company
and the
Shareholder now desire to enter into this Agreement to set forth
certain
agreements regarding the Company's obligation to register such
Common Shares and
the Shareholder's ownership of such Common Shares.
STATEMENT OF AGREEMENT
In consideration of the parties entering into the agreements and
carrying
out the transactions described in this Agreement, and for other
good and
valuable consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, unless the context otherwise requires, the
following terms
have the following respective meanings:
"Affiliate" means with respect to any Person, each of the
Persons that
directly or indirectly, through one or more intermediaries, owns
or controls, is
controlled by or is under common control with, such Person. For
the purpose of
this Agreement, "control" means the possession, directly or
indirectly, of the
power to direct or cause the direction of management and
policies, whether
through the ownership of voting securities, by contract or
otherwise.
"Commission" means the United States Securities and Exchange
Commission or
any other United States agency at the time administering the
Securities Act.
"Common Shares" means shares of common stock, par value $.05 per
share, of
the Company.
"Exchange Act" means the Securities Exchange Act of 1934, or any
successor
United States statute, and the rules and regulations of the
Commission
thereunder, all as the same shall be in effect at the time.
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"Person" means an individual, a partnership, a joint venture,
a
corporation, a limited liability company, a trust, an
unincorporated
organization or other entity, a government or any department or
agency thereof.
"Public Offering" means any primary or secondary public offering
of Common
Shares pursuant to an effective registration statement under the
Securities Act
other than a registration statement on a form registering the
types of
transactions generally eligible for registration on Form S-4 or
S-8 or any
successor or similar form.
"Public Sale" means any Public Offering or any sale of Common
Shares to the
public pursuant to Rule 144 effected through a broker or
dealer.
"Registrable Securities" means (i) the Common Shares (and
associated rights
to purchase series A participating preferred stock of the
Company) issued or
issuable to the Shareholder and (ii) any securities issued or
issuable with
respect to any such Common Shares by way of stock dividend or
stock split or in
connection with a combination of shares, recapitalization,
merger, consolidation
or other reorganization or otherwise. As to any particular
Registrable
Securities, once issued, such securities shall cease to be
Registrable
Securities when (i) a registration statement with respect to the
sale of such
securities shall have become effective under the Securities Act
and such
securities shall have been distributed pursuant to such
registration statement,
(ii) such securities have been sold pursuant to Rule 144 under
the Securities
Act, (iii) such securities shall have been otherwise transferred
and the
subsequent disposition thereof shall not require registration or
qualification
under the Securities Act or any similar state law then in force
or (iv) such
securities shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to the
Company's
performance of or compliance with Article II, including, without
limitation, (i)
all registration, filing and NASD fees, (ii) all fees and
expenses of complying
with securities or blue sky laws, (iii) all word processing,
duplicating and
printing expenses, (iv) messenger and delivery expenses, (v) the
fees and
disbursements of counsel for the Company and of its independent
public
accountants, including the expenses of any special audits or
"cold comfort"
letters required by or incident to such performance and
compliance, (vi) fees
and expenses of any Persons engaged by the Company to assist the
Company in
preparing or assisting in preparing any filings, agreements, and
other documents
contemplated hereby, (vii) the fees and disbursements of one
counsel for the
Shareholder (but only in respect of a registration effected
pursuant to Section
2.1), (viii) premiums and other costs of policies of insurance
against
liabilities arising out of the public offering of the
Registrable Securities
being registered (if the Company elects to obtain any such
insurance) and (ix)
any fees and disbursements of underwriters customarily paid by
issuers or
sellers of securities, but excluding underwriting discounts and
commissions and
transfer taxes, if any.
"Rule 144" means Rule 144 promulgated by the Commission under
the
Securities Act as such rule may be amended from time to time, or
any successor
rule then in force.
"Securities Act" means the Securities Act of 1933, or any
successor United
States statute, and the rules and regulations of the Commission
thereunder, all
as the same shall be in effect at the time.
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ARTICLE II
REGISTRATION UNDER SECURITIES ACT
2.1 Registration on Request.
(a) Request. If at any time following the date of this
Agreement, the
Shareholder requests in writing that the Company effect the
registration under
the Securities Act of a specified number of the Registrable
Securities held by
it (which may be all or a portion of such Registrable
Securities), specifying
the intended method of disposition thereof, the Company, in
accordance with the
provisions of Section 2.3, will use its commercially reasonable
efforts to
effect the registration under the Securities Act of the
Registrable Securities
which the Company has been so requested to register for
disposition in
accordance with the intended method or methods of disposition
stated in such
request, to the extent requisite to permit the disposition (in
accordance with
the intended methods thereof as aforesaid) of Registrable
Securities so to be
registered, and shall file the registration statement necessary
to effect such
registration as set forth herein. Subject to Section 2.1(f), the
Company shall
be required to effect only one registration pursuant to this
Section 2.1(a).
(b) Effective Registration Statement. A registration requested
pursuant to
this Section 2.1 shall not be deemed to be effected for purposes
of the last
sentence of Section 2.1(a) (i) if a registration statement with
respect thereto
shall not have become effective within the time period specified
herein, (ii)
if, after it has become effective, such registration is
terminated or withdrawn
by the Company or is interfered with for any reason (excluding
any postponement
undertaken by the Company pursuant to the penultimate paragraph
of Section 2.3)
or by any stop order, injunction or other order or requirement
of the Commission
or any other governmental agency or any court, and the result of
such
interference is to prevent the Shareholder from disposing the
Registrable
Securities to be sold thereunder in accordance with the intended
methods of
disposition, or (iii) if the conditions to closing specified in
the purchase
agreement or underwriting agreement entered into in connection
with any
underwritten registration shall not be satisfied or waived with
the consent of
the Shareholder, other than as a result of any breach by the
Shareholder of its
obligations thereunder or hereunder.
(c) Registration Statement Form. Registrations under this
Section 2.1 shall
be on such appropriate form of registration statement
promulgated by the
Commission as shall be selected by the Company and as shall
permit the
disposition of the Registrable Securities so to be registered in
accordance with
the intended method or methods of disposition specified in the
request of the
Shareholder for such registration. The Company agrees to include
in any such
registration statement all information which the Shareholder
shall reasonably
request.
(d) Expenses. The Company and the Shareholder will each pay 50%
of all
Registration Expenses in connection with any registration
requested pursuant to
this Section 2.1; provided, that the Shareholder shall not be
responsible for
such Registration Expenses under this Section 2.1 (together with
any
Registration Expenses paid by the Shareholder under Section 2.2)
in excess of
$50,000.
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(e) Selection of Underwriters. If a requested registration
pursuant to this
Section 2.1 involves a request by Shareholder for an
underwritten offering, the
managing underwriter or underwriters shall be selected by the
Company's Board of
Directors, subject to the approval of the Shareholder (which
approval shall not
be unreasonably withheld).
(f) Priority in Requested Registrations. If a requested
registration
pursuant to this Section 2.1 involves a request by Shareholder
for an
underwritten offering, and the managing underwriter shall advise
the Company in
writing (with a copy to the Shareholder) that, in its opinion,
the number of
securities requested to be included in such registration exceeds
the number
which can be sold in such offering within a price range
acceptable to the
Company and the Shareholder, the Company will include in such
registration to
the extent of the number which the Company is so advised can be
sold in such
offering Registrable Securities requested to be included in such
registration.
In the event that less than 80% of Registrable Securities
requested to be
included in the registration statement are included pursuant to
this Section
2.1(f), the Company shall be required to effect one, and only
one, additional
registration pursuant to Section 2.1(a); provided, however, that
no request for
such additional registration may be made by the Shareholder
prior to the
expiration of 180 days after its initial request under Section
2.1(a).
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If, at any time
following the
date of this Agreement, the Company proposes to register any of
its securities
under the Securities Act (other than by a registration on Form
S-4 or S-8 or any
successor or similar forms or filed in connection with an
exchange offer, or any
offering of securities solely to the Company's existing security
holders, and
other than pursuant to Section 2.1), whether or not for sale for
its own
account, the Company will at each such time give prompt
confidential written
notice to the Shareholder of its intention to do so and of the
Shareholder's
rights under this Section 2.2. Upon the written request of the
Shareholder made
within 20 days after the receipt of any such notice (which
request shall specify
the Registrable Securities intended to be disposed of by the
Shareholder and the
intended method of disposition thereof), the Company will,
subject to the
provisions of Section 2.2(c), use its commercially reasonable
efforts to effect
the registration under the Securities Act of all Registrable
Securities which
the Company has been so requested to register by the
Shareholder, to the extent
requisite to permit the disposition (in accordance with the
intended methods
thereof) of the Registrable Securities so to be registered;
provided, that if,
at any time after giving written notice of its intention to
register any
securities and prior to the effective date of the registration
statement filed
in connection with such registration, the Company shall
determine for any reason
not to register or to delay registration of such securities, the
Company may, at
its election, give written notice of such determination to the
Shareholder and
(i) in the case of a determination not to register, shall be
relieved of its
obligation to register any Registrable Securities in connection
with such
registration and (ii) in the case of a determination to delay
registering, shall
be permitted to delay registering any Registrable Securities,
for the same
period as the delay in registering such other securities.
(b) Expenses. The Company will pay all Registration Expenses in
connection
with each registration of Registrable Securities requested
pursuant to this
Section 2.2.
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(c) Priority in Incidental Registrations. If a registration
pursuant to
this Section 2.2 involves an underwritten offering, and the
managing underwriter
shall advise the Company in writing, that, in its opinion, the
number of
securities requested and otherwise proposed to be included in
such registration
exceeds the number which can be sold in such offering (and, in
the case of a
Company Offering, within a price range reasonably acceptable to
the Company), or
that the kind of securities requested or otherwise proposed to
be included in
such registration statement would materially and adversely
affect the success of
such offering, the Company will include in such registration, to
the extent of
the number which the Company is so advised can be sold in such
offering, (i) if
the registration includes securities to be offered by the
Company, (A) first,
the securities proposed to be registered by the Company, (B)
second, Registrable
Securities requested to be included in such registration by the
Shareholder; and
(C) third, securities of other Persons, if any, requested to be
included in such
registration pro rata in accordance with the numbers of other
securities
proposed to be registered by the other Persons or otherwise
allocated among such
other Persons in such proportion as such holders and the Company
shall agree,
and (ii) if the registration is a secondary registration on
behalf of other
Persons, the Registrable Securities and securities of other
Persons included in
such registration pro rata in accordance with the numbers of
Registrable
Securities requested to be included by the Shareholder and the
numbers of other
securities proposed to be registered by the other Persons.
Without the written
consent of the Shareholder, the Company will not grant any
registration rights
inconsistent with the provisions of this Section 2.2. In the
event a
contemplated distribution does not involve an underwritten
public offering, the
determinations contemplated by this Section 2.2 shall be made by
the Company's
Board of Directors in good faith.
2.3 Registration Procedures. If and whenever the Company is
required to use
commercially reasonable efforts to effect the registration of
any Registrable
Securities under the Securities Act as provided in Sections 2.1
and 2.2, the
Company will as expeditiously as possible:
(a) use commercially reasonable efforts to prepare and within 45
days
thereafter file with the Commission the requisite registration
statement to
effect such registration, and thereafter use its commercially
reasonable efforts
to cause such registration statement to become effective within
60 days after
filing; provided, that before filing such registration statement
or any
amendments thereto, the Company will furnish to the Shareholder
copies of all
such documents proposed to be filed;
(b) prepare and file with the Commission such amendments and
supplements to
such registration statement and the prospectus used in
connection therewith as
may be necessary to keep such registration statement
continuously effective for
a period of either (i) not more than two years (subject to
extension pursuant to
the last paragraph of this Section 2.3) or, if such registration
statement
relates to an underwritten offering, such longer period as in
the opinion of
counsel for the underwriters a prospectus is required by law to
be delivered in
connection with sales of Registrable Securities by an
underwriter or dealer or
(ii) such shorter period as will terminate when all of the
securities covered by
such registration statement have been disposed of in accordance
with the
intended methods of disposition by the seller or sellers thereof
set forth in
such registration statement (but in any event not before the
expiration of any
longer period required under the Securities Act), and to comply
with the
provisions of the Securities Act with respect to the disposition
of all
securities covered by such registration statement until such
time as all of such
securities have been disposed of in accordance with the intended
methods of
disposition by the seller or sellers thereof set forth in such
registration
statement;
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(c) furnish to the Shareholder such number of conformed copies
of such
registration statement and of each such amendment and supplement
thereto (in
each case including all exhibits), the prospectus contained in
such registration
statement (including each preliminary prospectus and any summary
prospectus) and
any other prospectus filed under Rule 424 under the Securities
Act, in
conformity
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