STATE OF NORTH CAROLINA
COUNTY OF XXXXXXX
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT is made and entered into this 29th day of
December, 1995, by and between WELLCO ENTERPRISES, INC., a North Carolina
corporation with its principal office and place of business at 000 Xxxxxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx, and hereinafter referred to as the
"Company"; and XXXXX Xx. XXXXX, hereinafter referred to individually
as "Xxxxx"; and the undersigned corporate signators to this Agreement,
hereinafter referred to collectively as "The Coronet Group".
W I T N E S S E T H :
WHEREAS, The Coronet Group are stockholders of the Company and as of the
date of this Agreement collectively beneficially own a total of 535,424
shares of the Company's presently outstanding 884,806 shares of common stock;
and
WHEREAS, the Company is authorized to repurchase said shares held by
The Coronet Group pursuant to the provisions of N.C.G.S. Section 55-6-31(a);
and
WHEREAS, the Company has received from Interstate/Xxxxxxx Xxxx, Inc., of
Charlotte, North Carolina an opinion that the entering into of this transaction
is fair from a financial point of view to the common shareholders of the
Company, and has given notification of this transaction to the
American Stock Exchange as required by the rules and regulations of said
Exchange; and
WHEREAS, the Board of Directors of Company has determined that the repurchase
of 510,424 shares of the Company's stock from The Coronet Group in accordance
with the terms of this Agreement is in the best interest of the Company and its
common shareholders; and
WHEREAS, The Coronet Group are willing to sell said 510,424 shares of the
Company's stock in accordance with the terms of this Agreement;
WHEREAS, the corporate signators to this Agreement from The Xxxxx Group are
as follows: (i) WELLCO HOLDINGS COMPANY, a Illinois corporation, which
beneficially owns the Company's stock which is the subject of this Agreement;
(ii) RDIS Corporation, a Delaware corporation, of which Xxxxx owns more than
50% of its outstanding stock and itself is the parent corporation of SUNSTATES
CORPORATION;
(iii) SUNSTATES CORPORATION, a Delaware corporation, which is the parent
corporation of NORMANDY INSURANCE AGENCY, INC., an Illinois insurance
corporation;
(iv) NORMANDY INSURANCE AGENCY, INC., a Illinois corporation, which is the
parent corporation of CORONET INSURANCE COMPANY, an Illinois corporation;
(v) CORONET INSURANCE COMPANY, an Illinois insurance corporation, which is the
parent corporation of WELLCO HOLDINGS COMPANY, an Illinois corporation;
(vi) TELCO CAPITAL CORPORATION, a Delaware corporation, which owns a
majority of the equity interest in HICKORY FURNITURE COMPANY, a Delaware
corporation; and
(vii) HICKORY FURNITURE COMPANY, a Delaware corporation, which owns a
majority of the equity interest in WISCONSIN REAL ESTATE INVESTMENT TRUST, a
Wisconsin business trust;
Attached hereto as Exhibit "A" are the respective direct beneficial owners of
the Company's stock which is the subject of this Agreement and which will
receive the payments to be made by the Company under this Agreement. By
signing of this Agreement, each of these named owners agree
that all the consideration paid by the Company will be to LaSalle National
Bank as payment to each of them;
NOW THEREFORE, the Company and The Coronet Group (by their respective
corporate signatures hereinafter affixed enter into this Agreement) and subject
to the following terms and conditions, hereby agree as follows:
1. The Company hereby repurchases from The Coronet Group and The Coronet
Group hereby sells to the Company, FIVE HUNDRED TEN THOUSAND FOUR HUNDRED
AND TWENTY FOUR (510,424) shares of the Company's stock currently owned by The
Coronet Group at a purchase price of $10,346,753.00 ($20.2709 per share),
payment to be made by a cash payment of $5,460,205.00 and transfer by Company of
the Company's 400,000 shares of the outstanding common stock of Alba-
Waldensian, Inc., a Delaware corporation, at an agreed upon price of
$4,886,548.00 (consisting of the Company's initial cash cost of $4,250,000,
the cost of acquisition of $224,786, a return on this investment of $357,983,
and the cumulative accounting loss recorded by the Company of its equity
share of the losses of Alba through September 30, 1995 of $53,779), to the
respective owners of the Company's stock purchased hereunder as reflected on
Exhibit "A" hereto. Payment of the above cash, transfer of the 400,000
shares of the common stock of Alba Waldensian, Inc. and transfer of the
510,424 shares of the Company's stock will be made simultaneously and on
December 29, 1995 or the earliest possible date thereafter.
2. In addition to the cash purchase price for said 510,424 shares provided for
in Paragraph 1 above, the Company shall further be obligated to pay the
respective owners of stock owned by The Coronet Group and sold to the Company
hereunder, or their respective heirs, successors or assigns, an additional
amount not to exceed $1,531,272.00 but payable only from sixty (60%) percent
of the cumulative after-tax profits of the Company as determined by the annual
audited consolidated financial statements of the Company in excess of
$400,000.00 for each of the six (6) fiscal years of the Company commencing
with the fiscal year starting June 30, 1996. Such payment shall be made by
the Company within ten (10) days after the receipt by the Company of its
audited financial statement for its fiscal year ending June 28, 1997, and
the subsequent five (5) fiscal years, until the selling shareholders have
collectively been paid a maximum total of $1,531,272.00. Said audited
financial statement shall be furnished to the Company by the Company's
then-regularly engaged independent auditors. The Company shall have the right
at any time to prepay the principal of any unpaid balance of the maximum
$1,531,272.00, in whole or in part, at its discounted present value applying
a SEVEN (7.0%) PERCENT discount factor per annum from its execution date to
the prepayment date and assuming a total payout period of six (6) years
from June 30, 1996. Said obligation shall be unsecured and subordinate to all
financial obligations of the Company for money borrowed, whether now or
hereafter secured or unsecured and no payments on said obligation may be made
if there then exists any default in the terms of any such secured or unsecured
financial obligations of the Company and said obligation shall be
subordinate to such other secured or unsecured financial obligations. The
Company will expeditiously prepare a Contingent Note containing the above
provisions.
3. The Coronet Group hereby warrant, acknowledge and represent to the Company
that the report of beneficial ownership of the Company's stock held by The
Coronet Group as reported in SEC Form 4 for the month of November, 1995 attached
hereto as Exhibit "B" and filed with the United States Securities and
Exchange Commission and the Company, is and remains true and correct and that
the identity and respective stock holdings of the Company's stock of the
Coronet Insurance Company subsidiaries not named in Exhibit "B" are as stated in
Exhibit "A" hereto.
4. The Coronet Group hereby warrants and represents to the Company that The
Coronet Group is acquiring said shares of Alba Waldensian, Inc. for its own
account, for the purpose of investment only and not for the purpose of or
with a view to the sale or other disposition thereof within the meaning of
the Securities Act of 1933, as amended (the "Act"), except as may be
permitted by such Act and the rules and regulations promulgated under such Act.
The Coronet Group acknowledges that said shares are not registered with the SEC
or with any regulatory agencies charged with the administration of state
securities laws. The Coronet Group acknowledges that a legend to such effect
will be placed on certificates representing the shares. As a condition
to said purchase and sale transaction, the Company hereby relinquishes and
transfers to The Coronet Group all rights and obligations of the Company and
The Coronet Group hereby relinquishes and transfers to the Company all rights
and obligations of The Coronet Group arising under December 29, 1994 Stock
Purchase Agreement between the Company and Coronet Insurance Company
relating to said 400,000 shares of Alba-Waldensian, Inc. stock which were
subject of said Stock Purchase Agreement. Accordingly, upon transfer of said
Alba-Waldensian shares said Stock Purchase Agreement shall become null and
void and no longer of any force and effect by or against the Company and The
Coronet Group.
5. The Coronet Group hereby irrevocably agree that neither they nor any
person, firm or corporation with which they are associated (as defined by
applicable rules and regulations of the United States Securities and Exchange
Commission) will acquire direct or indirect beneficial ownership of any of
the Company's common stock exceeding 20% of the common stock outstanding
at any time for a period of ten (10) years after the consummation of this
Agreement. The Coronet Group hereby irrevocably designate the Board of
Directors of the Company as their attorney-in-fact and proxy for this ten (10)
year period after consummation of this purchase transaction as to the
voting rights attendant to all shares of the Company's stock now or hereafter
owned by The Coronet Group at any annual or special meeting of the Company's
stockholders as to any and all matters which may properly come before the
Company's stockholders for vote at all of said meetings.
6. Xxxxx Xx. Xxxxx further hereby irrevocably agrees to resign as a Director of
the Company effective with said consummation of this repurchase transaction as
above provided.
7. The Coronet Group hereby undertake to timely file with the Securities and
Exchange Commission all filings required by them as the result of
consummation of this Agreement and particularly SEC Form 4 and Form 13-D.
8. The Coronet Group warrants and represents to the Company that each of the
corporate members of The Xxxxx Group which are signators to this Agreement and
the individual signators signing on their respective behalves have full
corporate, statutory and regulatory authority to execute and consummate this
Agreement and that the Company's stock to be sold to the Company pursuant to
this Agreement will be at closing hereunder free of any liens or contractual
obligations of them or any of them that would preclude or in any manner restrict
or limit the sale of the Company's stock pursuant to this Agreement.
9. Attached hereto as Exhibit "C" is a schedule of all the Company's stock
acquired by The Coronet Group acquired by them after June 30, 1995 and the
respective purchase price for said stock so acquired. The Coronet Group
hereby acknowledge that they are respectively liable to the Company for any
profit realized by them based upon the selling price of $20.2709 per share
provided for under Paragraph 1 of this Agreement and the purchase price for said
stock as reported on said Exhibit "C". The Coronet Group as reported on said
Exhibit "C" shall pay to the Company upon the Company's purchase of the stock
hereby repurchased by the Company the profit realized pursuant to Section
16(d) of the Securities Exchange Act of 1934, on or before January 31, 1996.
10. This Agreement shall be interpreted under applicable laws of the State of
North Carolina and the United States of America. All notices to be given
hereunder shall be mailed (with
facsimile copies thereof) as follows:
To The Coronet Group: To the Company:
c/o Sunstates Corporation Xx. Xxxxxx Xxxxxxx
0000 Xxxxxxxx Xx. Chairman, Board of Directors
Xxxxxxx, XX 00000 Wellco Enterprises, Inc.
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxxx, XX 00000
Fax No: 000-000-0000 Fax No: (000) 000-0000
This Agreement has been executed and entered into by the Chairman of the Board
of the Company upon authorization duly given to them by the Board of Directors
of the Company at a Special Meeting thereof held on December 29, 1995, and by
the undersigned corporate members of The Coronet Group.
BY AUTHORIZED OFFICER
SIGNATURE
WELLCO ENTERPRISES, INC.
Chairman of the Board of
Directors
THE CORONET GROUP:
WELLCO HOLDINGS
COMPANY
NATIONAL ASSURANCE
INDEMNITY COMPANY
CORONET INSURANCE
COMPANY
NORMANDY INSURANCE
AGENCY
SUNSTATES CORPORATION
WISCONSIN REAL ESTATE
INVESTMENT FUND
HICKORY FURNITURE
COMPANY
TELCO CAPITAL
CORPORATION
RDIS CORPORATION
XXXXX XX. XXXXX,
individually and as a Director
of the Company
EXHIBIT A
STOCK REPURCHASE AGREEMENT ENTERED INTO ON DECEMBER 29, 1995
BETWEEN WELLCO ENTERPRISES, INC. AND THE CORONET GROUP
DIRECT BENEFICIAL OWNERS OF THE COMPANY'S STOCK SUBJECT TO THIS AGREEMENT
Wellco Holdings Company
National Assurance Indemnity Company
Coronet Insurance Company
Normandy Insurance Agency
Sunstates Corporation
Wisconsin Real Estate Investment Fund
Hickory Furniture Company
Telco Capital Corporation
RDIS Corporation
Xxxxx Xx. Xxxxx
EXHIBIT B
STOCK REPURCHASE AGREEMENT ENTERED INTO ON DECEMBER 29, 1995
BETWEEN WELLCO ENTERPRISES, INC. AND THE CORONET GROUP
SECURITIES AND EXCHANGE COMMISSION FORM 4 OF THE CORONET GROUP FOR
NOVEMBER, 1995
The attached eight pages are a true and exact copy of the Securites and
Exchange Commission Form 4 for The Coronet Group.
