SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 12, 1999
CULP, INC.
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(Exact Name of Registrant as Specified in its Charter)
North Carolina 0-12781 56-1001967
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(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation)
101 South Main Street
High Point, North Carolina 27261-2686
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(Address of Principal Executive Offices) (Zip Code)
336-889-5161
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former name or address, if changed from last report)
Item 5. Other Events
On September 21, 1999, the Board of Directors of Culp, Inc. (the
"Corporation") declared a dividend distribution of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $0.05
per share, of the Corporation (the "Common Stock" to shareholders of record at
the close of business on October 12, 1999. Each Right entitles the holder to
purchase from the Corporation a unit (a "Unit") consisting of one one-hundredth
of a share of Series A Participating Preferred Stock, par value $0.05 per share,
of the Corporation (the "Preferred Stock") at a price of $36.00 per Unit (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement, dated as of October 8, 1999, as the
same may be amended from time to time (the "Rights Agreement"), between the
Corporation and EquiServe Trust Company, N.A., as Rights Agent (the "Rights
Agent").
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) ten (10) days following
public announcement that a Person or group of affiliated or associated Persons,
with such exceptions as are set forth in the Rights Agreement (an "Acquiring
Person"), has acquired, or obtained the right to acquire, beneficial ownership
of fifteen percent (15%) or more of the outstanding shares of Common Stock (the
"Stock Acquisition Date") or (ii) ten (10) Business Days (or such later date as
may be determined by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) following the commencement of, or first
public announcement of the intent of a Person or group to commence, a tender
offer or exchange offer that would result in a Person or group (with such
exceptions as are set forth in the Rights Agreement) beneficially owning fifteen
percent (15%) or more of such outstanding shares of Common Stock. The principal
exception to the definition of "Acquiring Person" is the family of Robert G.
Culp, III, Chief Executive Officer and a founder of the Corporation, who
currently controls more than fifteen percent (15%) of the outstanding shares of
Common Stock of the Corporation. Until the Distribution Date, (i) the Rights
will be evidenced by the Common Stock certificates and will be transferred with
and only with such Common Stock certificates, (ii) new Common Stock certificates
issued after October 12, 1999 will contain a notation incorporating the Rights
Agreement by reference and (iii) the transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and, under the
circumstances summarized in the second succeeding paragraph, until the Rights
are no longer redeemable. The Rights will expire at the Close of Business on
October 12, 2009, unless earlier redeemed or exchanged by the Corporation as
described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the Close of
Business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock outstanding prior to the
Distribution Date will be issued with Rights.
In the event that an Acquiring Person becomes the beneficial owner of
fifteen percent (15%) or more of the then outstanding shares of Common Stock,
each holder of a Right will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Corporation), having a value equal to two times the Exercise Price of the
Right. The Exercise Price is the Purchase Price times the number of shares of
Common Stock associated with each Right (initially, one). Notwithstanding any of
the foregoing, following the occurrence of an event set forth in this paragraph,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void. However, Rights are not exercisable following the occurrence of an event
set forth in this paragraph until such time as the Rights are no longer
redeemable by the Corporation as set forth below.
In the event that, following the Stock Acquisition Date, (i) the
Corporation is acquired in a merger or consolidation in which the Corporation is
not the surviving corporation, (ii) the Corporation engages in a merger or
consolidation in which the Corporation is the surviving corporation and the
Common Stock of the Corporation is changed or exchanged, or (iii) more than
fifty percent (50%) of the Corporation's assets or earning power is sold or
transferred, each holder of a Right (except Rights which have previously been
voided as set forth above) shall thereafter have the right to receive, upon
exercise of the Right, Common Stock of the acquiring company having a value
equal to two times the Exercise Price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock or
other securities or property issuable upon exercise of the Rights, are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or securities convertible into
Preferred Stock at less than the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least one percent (1%) of the
Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise.
At any time after a Person or group of affiliated or associated Persons
becomes an Acquiring Person and prior to the acquisition by such Person or group
of fifty percent (50%) or more of the outstanding Common Stock, the Board of
Directors may exchange the Rights (other than Rights owned by such Person or its
affiliates and associates, which have become void), in whole or in part, at an
exchange ratio of one share of Common Stock, or one one-hundredth of a share of
Preferred Stock (or of a share of a series of the Corporation's preferred stock
having equivalent preferences, limitations and relative rights), per Right
(subject to adjustment).
At any time until ten (10) days following the Stock Acquisition Date, the
Corporation may redeem the Rights in whole, but not in part, at a price of $.01
per Right. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. Although the distribution of the Rights
should not be taxable to shareholders or to the Corporation, shareholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of the
Corporation as set forth above or in the event that the Rights are redeemed.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors prior to the Distribution Date. After the Distribution Date,
the provisions of the Rights Agreement may be amended by the Board of Directors
in order to cure any ambiguity, to make changes which do not adversely affect
the interests of holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the Rights Agreement;
provided, however, that no amendment to lengthen the time period governing
redemption may be made at such time as the Rights are not redeemable and the
Final Expiration Date may not be advanced.
As of September 28, 1999, there were 11,447,484 shares of Common Stock
issued and outstanding and 891,689 shares of Common Stock reserved for issuance
pursuant to outstanding options issued under the Corporation's employee benefit
plans. As long as the Rights are attached to the Common Stock, the Corporation
will issue one Right with each new share of Common Stock so that all such shares
will have Rights attached.
The Rights Agreement is filed herewith as Exhibit 99.1, and is incorporated
herein by reference. A copy of the Rights Agreement is available free of charge
from the Corporation. This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, as the same may be amended from time to time.
Item 7. Exhibits
Exhibit No. Description
99.1 Rights Agreement, dated as of October 8,
1999, between Culp, Inc. and EquiServe
Trust Company, N.A., as Rights Agent,
including the form of Articles of Amendment
with respect to the Series A Participating
Preferred Stock included as Exhibit A to
the Rights Agreement, the forms of Rights
Certificate included as Exhibit B to the
Rights Agreement, and the form of Summary
of Rights included as Exhibit C to the
Rights Agreement.
99.2 Press Release, dated as of September 21,
1999, announcing adoption of the Rights
Plan by the Board of Directors of Culp, Inc.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized.
CULP, INC.
By: /s/Phillip W. Wilson
Name: Phillip W. Wilson
Title: Vice President and Chief
Financial Officer
Date: October 12, 1999
EXHIBIT INDEX
Item 7. Exhibits
Exhibit No. Description
99.1 Rights Agreement, dated as of October 8,
1999, between Culp, Inc. and EquiServe
Trust Company, N.A., as Rights Agent,
including the form of Articles of Amendment
with respect to the Series A Participating
Preferred Stock included as Exhibit A to
the Rights Agreement, the forms of Rights
Certificate included as Exhibit B to the
Rights Agreement, and the form of Summary
of Rights included as Exhibit C to the
Rights Agreement.
99.2 Press Release, dated as of September 21,
1999, announcing adoption of the Rights
Plan by the Board of Directors of Culp, Inc.