Exhibit 10.1
COOPERATION AGREEMENT
This Cooperation Agreement (this “Agreement”) is made and entered into as of June 17, 2024 (the “Effective Date”) by and among Culp, Inc., a North Carolina corporation (the “Company”), and each of the persons listed on Exhibit A hereto (each, an “Investor” and collectively, the “Investors” or the “Investor Group”). The Company and each of the Investors are each herein referred to as a “party” and collectively, the “parties”). Unless otherwise defined herein, capitalized terms shall have the meanings given to them in Section 12 herein.
WHEREAS, each of the Investors beneficially owns the number of shares of the Company’s common stock, par value $0.05 per share (the “Common Stock”), listed on Exhibit A hereto;
WHEREAS, the Company and the Investor Group have engaged in discussions regarding the Company’s Board of Directors (the “Board”), business, financial performance, and strategic plans;
WHEREAS, the Company and the Investor Group believe that the best interests of the Company and its shareholders would be served at this time by, among other things, (i) increasing the size of the Board from eight to nine directors and appointing, at the request and recommendation of the Investor Group, Alexander B. Jones (in such capacity, the “New Director”) to fill the vacancy resulting from the increase in the size of the Board, with such appointment to be effective upon the execution and delivery of this Agreement; (ii) the Company nominating, at the request and recommendation of the Investor Group, the New Director to stand for election to the Board at the Company’s 2024 Annual Meeting of Shareholders (the “2024 Annual Meeting”), (iii) entering into this Agreement to provide for the foregoing appointment and nomination, and (iv) agreeing to the other covenants and agreements contained herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
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If to the Company:
Culp, Inc.
1823 Eastchester Drive
High Point, NC 27265
Email: ACDurbin@culp.com
Attention: Ashley C. Durbin, Esq., Senior Vice President, General Counsel and Corporate Secretary
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With copies (which shall not constitute notice) to:
Paul Hastings LLP
200 Park Avenue
New York, NY 10166
Email: seandonahue@paulhastings.com
Attention: Sean M. Donahue, Esq.
If to any Investor:
22NW, LP
590 1st Avenue South
Seattle, WA 98104
Email: English@englishcap.com
MarkWilson@22nwservies.com
Attention: Aron R. English
Mark Wilson
With copies (which shall not constitute notice) to:
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
E-mail: rnebel@olshanlaw.com
rvanderlaske@olshanlaw.com
Attention: Ryan Nebel
Rebecca Van Derlaske
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[SIGNATURE PAGE TO AGREEMENT]
IN WITNESS WHEREOF the parties have duly executed and delivered this Agreement as of the date first above written.
CULP, INC.
By: /s/ Robert G. Culp, IV
Name: Robert G. Culp, IV
Title: President and Chief Executive Officer
22NW FUND, LP
By: 22NW Fund GP, LLC, its General Partner
By: /s/ Aron R. English
Name: Aron R. English
Title: Manager
22NW, LP
By: 22NW GP, Inc., its General Partner
By: /s/ Aron R. English
Name: Aron R. English
Title: President and Sole Shareholder
22NW FUND GP, LLC
By: /s/ Aron R. English
Name: Aron R. English
Title: Manager
22NW GP, INC.
By: /s/ Aron R. English
Name: Aron R. English
Title: President and Sole Shareholder
/s/ Aron R. English
ARON R. ENGLISH
/s/ Bryson O. Hirai-Hadley
BRYSON O. HIRAI-HADLEY
/s/ Alexander B. Jones
ALEXANDER B. JONES
EXHIBIT A
Investor | Shares of Common Stock Beneficially Owned |
22NW Fund, LP 22NW, LP 22NW Fund GP, LLC 22NW GP, Inc. | 1,236,789 |
Aron R. English | 1,238,239 |
Bryson O. Hirai-Hadley | 799 |
Alexander B. Jones | 525 |
EXHIBIT B
FORM OF PRESS RELEASE
Alexander B. Jones from 22NW, LP to be Added to the Board and Nominated to Serve on Culp, Inc. Board of Directors at 2024 Annual Shareholders Meeting.
High Point, NC: June , 2024
Culp, Inc. (the Company) (NYSE: CULP) today announced that it has entered into a cooperation agreement with 22NW, LP, one of the Company’s largest shareholders.
Pursuant to the agreement, the Company will add Mr. Alexander B. Jones to the board, effectively immediately, and Mr. Jones will serve as a nominee to its slate of directors at the September 2024 Annual Shareholders Meeting. Mr. Jones is a Vice President and Sr. Research Analyst at 22NW where he oversees the firm’s investments in the industrials, materials, and consumer sectors. Mr. Jones is currently an Independent Director at the L.B Foster Company, (NASDAQ: FSTR).
Franklin Saxon, Culp, Inc. Chairman of the Board of Directors, commented on the agreement, “We are pleased to have reached this agreement with 22NW for Alex to join the board. Our interactions with Alex and 22NW have been constructive over the years, and as we execute our recently announced restructuring plan, we are pleased to have Alex’s perspectives and insights as a Board member”
Aron R. English, 22NW’s Portfolio Manager and Founder, commented “We appreciate the constructive dialogue we have had with Culp. We are encouraged by and supportive of the Company’s restructuring initiatives, and we look forward to Alex’s contributions to the board for the benefit of all shareholders.”
Alexander B. Jones, Vice President, and Sr. Research Analyst at 22NW, LP commented “I am honored to be joining the CULP Board. I look forward to working constructively with management and the Board on topics relevant for all shareholders, particularly on issues like investor communications and capital allocation.”
In the Agreement, Culp, Inc. and 22NW have agreed to customary standstill, voting and other provisions. The complete agreement between Culp, Inc. and 22NW will be filed with the SEC as an exhibit to a form 8-k.
About Culp, Inc.
Culp, Inc. is one of the world’s largest marketers of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture. The company markets a variety of fabrics to its global customer base of leading bedding and furniture companies, including fabrics produced at Culp’s manufacturing facilities and fabrics sourced through other suppliers. Culp has
manufacturing and sourcing capabilities located in the United States, Canada, China, Haiti, Turkey, and Vietnam.
About 22NW, LP
22NW, LP is a Seattle-based investment firm that specializes in microcap investments that have a multiyear investment horizon.