Exhibit 1.1
STOCK AND OPTION PURCHASE AGREEMENT
THIS STOCK AND OPTION PURCHASE AGREEMENT ("Agreement") is made as of May
24, 1994, between TEXFI INDUSTRIES, INC., a Delaware corporation (the
"Company"), and XXXXXXXXXX CORPORATION, a Delaware corporation (the "Purchaser"
or the "Optionee").
On the terms and subject to the conditions set forth in this Agreement, the
Company desires to issue and sell to the Purchaser, and the Purchaser desires to
purchase from the Company, shares of the Company's Common Stock, par value $1.00
per share ("Common Stock"), and the option to purchase additional shares of
Common Stock (the "Option"). Accordingly, the parties hereto agree as follows:
I. AUTHORIZATION AND CLOSING
1.1. Authorization of the Common Stock. The Company has authorized the sale
to the Purchaser of 924,000 shares of Common Stock (the "Purchased Shares") and
the issuance and sale to the Optionee pursuant to the Option of up to 600,000
shares of Common Stock.
1.2. Purchase and Sale of the Common Stock and the Option. At the Closing
(as defined below), the Company shall sell to the Purchaser and, subject to the
terms and conditions set forth herein, the Purchaser shall purchase from the
Company the Purchased Shares, and the Company shall grant to the Optionee (and
deliver to the Optionee a certificate in the form attached as Exhibit A hereto)
and, subject to the terms and conditions set forth herein, the Optionee shall
purchase from the Company the Option, all at the aggregate price of
$5,000,000.00 (the "Purchase Price").
1.3. The Closing. The closing of the purchase and sale of the Purchased
Shares and the Option (the "Closing") shall take place at the offices of
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A. at 2:00 p.m. on May 24, 1994, or at such other
place or on such other date as may be mutually agreeable to the Company and the
Purchaser, but in no event later than May 30, 1994. At the Closing, the Company
shall deliver to the Purchaser one or more stock certificates evidencing the
Common Stock to be purchased by the Purchaser, registered in the Purchaser's or
its nominee's name, upon payment of the Purchase Price therefor.
II. CONDITIONS TO THE PURCHASER'S OBLIGATION AT CLOSING
The obligation of the Purchaser to purchase and pay for the Purchased
Shares and the Option at the Closing is subject to the satisfaction as of the
Closing of the following conditions:
2.1. Representations and Warranties; Covenants. The representations and
warranties contained in Article IV hereof shall be true and correct at and as of
the Closing as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein, and the Company
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shall have performed in all material respects all of the covenants required to
be performed by it hereunder prior to the Closing.
2.2. Closing Certificate. The Company shall have delivered to the Purchaser
a certified copy of the resolutions duly adopted by the Company's board of
directors authorizing the execution, delivery and performance of this Agreement
and each of the other agreements contemplated hereby, the sale of the Purchased
Shares, the grant of the Option, the issuance and sale of the shares that may be
purchased pursuant to the Option to the Purchaser, and the consummation of all
other transactions contemplated by this Agreement.
2.3. Legal Opinion. The Purchaser shall have received from Xxxxxx Xxxx
Xxxxxx Xxxx & Xxxxxxxxxx, counsel for the Company, an opinion which shall be
addressed to the Purchaser, dated the date of Closing, and in form and substance
satisfactory to the Purchaser.
2.4. Proceedings. All corporate and other proceedings taken or required to
be taken by the Company in connection with the transactions contemplated hereby
to be consummated at or prior to the Closing and all documents incident thereto
shall be satisfactory in form and substance to the Purchaser.
2.5. Waiver. Any condition specified in this Article II may be waived if
consented to by the Purchaser; provided that no such waiver shall be effective
against the Purchaser unless it is set forth in a writing executed by the
Purchaser.
III. CONDITIONS TO COMPANY'S OBLIGATION AT CLOSING
The obligation of the Company to sell to the Purchaser the Purchased Shares
and the Option at the Closing is subject to the satisfaction as of the Closing
of the following conditions:
3.1. The Purchaser shall have performed in all material respects all of the
covenants required to be performed by it hereunder prior to the Closing.
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Purchaser to enter into this Agreement and
purchase the Purchased Shares and the Option, the Company hereby represents and
warrants that:
4.1. Organization and Corporate Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified or licensed to do business and is in good standing in
every jurisdiction where the nature of its business or the ownership of its
properties requires it to be so qualified or licensed and where the failure to
be so qualified or licensed would have a material adverse effect on the business
prospects, financial condition, operating results, assets or operations of the
Company and its subsidiaries taken as
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a whole. The Company has all requisite corporate power and authority and all
material licenses, permits and authorizations necessary to own and operate its
properties, to carry on its businesses and to carry out the transactions
contemplated by this Agreement.
4.2. Capital Stock. As of the Closing and immediately after the Closing,
the authorized capital stock of the Company shall consist of 20,000,000 shares
of Common Stock and 5,000,000 shares of Preferred Stock, par value $1.00 per
share, of which only 8,630,996 shares of Common Stock shall be issued and
outstanding, which includes the Purchased Shares.
4.3. Authorization; No Breach. The execution, delivery and performance of
this Agreement and all other agreements contemplated hereby to which the Company
is a party have been duly authorized by the Company and do not require the
approval of the Company's shareholders. This Agreement and all other agreements
contemplated hereby have been validly executed and delivered by the Company and
each such agreement constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally or by general equitable principles.
As of the Closing, after giving effect to the consummation of the transactions
contemplated hereby the Company will not be in default under any contract,
agreement, instrument or indenture related to the borrowing of money to which it
is a party or by which it or any of its property is bound. The execution and
delivery by the Company of this Agreement and all other agreements contemplated
hereby to which the Company is a party and the fulfillment of and compliance
with the respective terms hereof and thereof by the Company, the offering, sale
and issuance of the Purchased Shares and the Option hereunder (assuming the
accuracy of the Purchaser's investment representations set forth in Section
7.1), do not and shall not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any lien, security interest, charge or encumbrance upon the
Company's or any subsidiary's capital stock or assets pursuant to, (iv) give any
third party the right to modify, terminate or accelerate any obligation under,
(v) result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice to any court or administrative
or governmental body pursuant to, the Certificate of Incorporation or bylaws of
the Company or any subsidiary, or any law, statute, rule or regulation to which
the Company or any subsidiary is subject, or any material agreement, instrument,
order, judgment or decree to which the Company or any subsidiary is a party or
by which it, or any of its property, is bound.
4.4. Authorization and Consent. Assuming the accuracy of the Purchaser's
investment representations set forth in Section 7.1, no authorization,
exemption, consent or approval of, notice to, or declaration to or filing with,
any governmental authority is required for the valid execution, delivery and
performance by the Company of this Agreement or the other agreements
contemplated hereby, or the consummation by the Company of any other
transactions contemplated hereby or thereby. The Company has
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obtained all material third party consents, waivers, approvals and exemptions
necessary to consummate the transactions contemplated hereby, except for any
such third party consents, waivers, approvals and exemptions required for any of
the shares that may be purchased pursuant to the Option to be listed on the New
York Stock Exchange.
4.5. Listing of Shares. The Purchased Shares are listed on the New York
Stock Exchange. The Company will use its best efforts to insure that, within
ninety (90) days from the date of Closing, the shares that may be purchased
pursuant to the Option are approved for listing on the New York Stock Exchange
subject to the issuance thereof.
4.6. Reports with Securities and Exchange Commission. The Company has made
all filings with the Securities and Exchange Commission which it is required to
make under the Securities and Exchange Act of 1934, and the Company has not
received any request from the Securities and Exchange Commission to file any
amendment or supplement to any of the reports filed therewith.
4.7. Other Shareholder Rights. Except as disclosed in Notes 7 and 8 to the
financial statements contained in the Company's Annual Report for the fiscal
year ended October 29, 1993 or as otherwise contemplated hereby, no registration
rights are outstanding with respect to the Company's securities and no rights
exist to acquire securities of the Company.
4.8. Rights Agreement. The effectuation of this Agreement and the
transactions contemplated hereby will not result in any person having the right
to exercise any rights pursuant to that certain Rights Agreement dated as of
July 22, 1988, between the Company and First Union National Bank of North
Carolina.
V. PROVISIONS WITH RESPECT TO OPTION TO PURCHASE SHARES
5.1. Exercise Price. The initial exercise price for the Option shall be
$4.25 per share. The initial exercise price shall be increased by $0.25 per
share (the "EP Increase"), or such other amount as shall be determined in the
manner set forth in the last sentence of this Section 5.1, on each anniversary
of the date of the Closing. The initial exercise price as so increased (the
"Exercise Price") is subject to adjustment as provided in Section 5.4 hereof. If
there has been an adjustment to the Exercise Price as provided in Section 5.4
hereof, then, in such event, the EP Increase will be proportionately adjusted to
reflect the percentage increase or decrease to the Exercise Price in effect on
the anniversary date for which the EP Increase is taking effect from the
Exercise Price in effect on the immediately preceding anniversary date or the
date hereof as the case may be.
5.2. Term and exercise. The Option may be exercised in whole or in part as
to any whole number of shares at any time and from time to time prior to five
years from the date of the Closing by (i) delivery to the Company of a written
notice of exercise stating the number of shares that the Optionee then elects to
purchase and (ii) payment of the Exercise Price
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in certified funds or by wire transfer of immediately available funds to an
account designated by the Company.
5.3. Covenants of Issuer. The Company covenants and agrees that all shares
that may be issued upon the exercise of the Option will, upon issuance, be fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof (other than transfer taxes in respect of any transfer
occurring contemporaneously with such issue) and shall be approved for listing
on the New York Stock Exchange subject to the issuance thereof if the Company's
securities are then listed on the New York Stock Exchange. The Company further
covenants and agrees that during the period within which the rights represented
by the Option may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise in full of the rights represented by the Option. The Company will
provide to, or make available to, as the case may be, the optionee the same
information, reports and notices as it shall provide to, or make available to,
the holders of its Common Stock, and at the same time as such information,
reports and notices are provided to, or made available to, the holders of its
Common Stock.
5.4. Anti-Dilution Provisions.
A. Exercise Price Adjustments. The Exercise Price shall be subject to
adjustment from time to time as follows:
(i) In the event the Company should at any time or from time to time
after the date hereof fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination
of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock
(hereinafter referred to as "Common Stock Equivalents") without payment of
any consideration by such holder for the additional shares of Common Stock
or the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such dividend distribution, split or
subdivision if no record date is fixed), the Exercise Price shall be
approximately decreased and the number of shares of Common Stock issuable
pursuant to the Option shall be appropriately increased in proportion to
such increase of the aggregate of shares of Common Stock and those issuable
with respect to Common Stock Equivalents to be outstanding immediately
following such transaction compared with the aggregate of the shares of
Common Stock and those shares issuable with respect to Common Stock
Equivalents then outstanding immediately prior to such transaction.
(ii) If the number of shares of Common Stock outstanding at any time
after the date hereof is decreased by a reverse split or other combination
of the outstanding shares of Common Stock, then, following the record date
of such combination, the Exercise Price shall be appropriately increased
and the number of shares of Common Stock issuable upon exercise
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shall be appropriately decreased in proportion to such decrease in the
outstanding shares of Common Stock.
(iii) Issuance of Common Stock Below Exercise Price. If the Company
shall, at any time or from time to time, directly or indirectly, sell or
issue shares of Common Stock for cash or property or in payment of an
obligation which could be made in cash at the election of the Company, or
rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of Common Stock in
either case at a price per share of Common Stock (determined, in the case
of rights, options, warrants or convertible or exchangeable securities, by
dividing (x) the total amount received or receivable by the Company
(including the amount of payment of an obligation which could be made in
cash at the election of the Company) in consideration of the sale or
issuance of such rights, options, warrants or convertible or exchangeable
securities, plus the total consideration payable to the Company upon
exercise or conversion or exchange thereof, by (y) the total number of
shares of Common Stock covered by such rights, options, warrants or
convertible or exchangeable securities) lower than the Exercise Price of
the Option immediately prior to such sale or issuance, then the applicable
Exercise Price shall be reduced to a price determined by multiplying the
applicable Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number of shares
of Common Stock outstanding immediately prior to such sale or issuance plus
the number of shares of Common Stock which the aggregate consideration
received (determined as provided below) for such sale or issuance would
purchase at the applicable Exercise Price immediately prior to such sale or
issuance and the denominator of which shall be the total number of shares
of Common Stock outstanding immediately after such sale or issuance. Such
adjustment shall be made successively whenever such sale or issuance is
made. For the purposes of such adjustments, the shares of Common Stock
which the holder of any such rights, options, warrants, or convertible or
exchangeable securities shall be entitled to subscribe for or purchase
shall be deemed to be issued and outstanding as of the date of such sale or
issuance and the consideration received by the Company therefor shall be
deemed to be the consideration received by the Company (plus any
underwriting discounts or commissions in connection therewith) for such
rights, options, warrants or convertible or exchangeable securities, plus
the consideration stated in such rights, options, warrants or convertible
or exchangeable securities to be paid for the shares of Common Stock
covered thereby. If the Company shall sell or issue shares of Common Stock
for a consideration consisting, in whole or in part, of property other than
cash or its equivalent, then in determining the "price per share of Common
Stock" and the "consideration received by the Company" for purposes of the
first sentence and the immediately preceding sentence of this Section
5.4(A)(iii), the fair value of such property shall be determined in good
faith by the Board of Directors of the Company. The determination of
whether any adjustment is required under this Section 5.4(A)(iii), by
reason of the sale and issuance of rights, options, warrants or convertible
or exchangeable securities and the amount of such adjustment, if any, shall
be made only at the time of such issuance or sale and not at the subsequent
time of issuance or sale of Common Stock upon the exercise of such rights
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to subscribe or purchase.
B. No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization, transfer or
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 5.4 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Optionee against dilution.
C. Exclusions. This Section 5.4 shall not be applicable to any sale or
issuance of any securities by the Company in respect of rights to convert or
acquire securities described in Notes 7 or 8 to the financial statements
contained in the Company's Annual Report for the fiscal year ended October 29,
1993.
5.5. Rights as a shareholder. The Optionee will have no rights as a
shareholder with respect to any shares covered by the Option until the date that
the Optionee has fully complied with the terms of Section 5.2 above. Except as
provided in Section 5.4 above, no adjustment will be made for dividends, other
distributions, or other rights for which the record data is prior to the date of
such issuance.
5.6. Cash in Lieu of Fractional Shares. The Company shall not be required
to issue fractional shares upon the exercise of the Option. If, by reason of any
change made pursuant to Section 5.4, the Optionee would be entitled, upon the
exercise of any rights evidenced hereby, to receive a fractional interest in a
share, the Company shall, upon such exercise, purchase such fractional interest
for an amount in cash equal to the fair market value of such fractional interest
(as determined in good faith by the Board of Directors of the Company),
determined as of the date of the exercise of the Option.
VI. REGISTRATION RIGHTS
6.1. Piggyback Registrations.
A. Right to Piggyback. Whenever the Company proposes to register any of its
securities under the Securities Act of 1933, as amended, or any similar federal
law then in force (the "Securities Act") in any primary, secondary or combined
offering (other than pursuant to a Demand Registration), and the registration
form to be used may be used for the registration of Registrable Securities (a
"Piggyback Registration"), the Company will give prompt written notice to the
Purchaser of its intention to effect such a registration and will (subject to
the priorities established below) include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 30 days after the receipt of the Company's notice.
B. Piggyback Expenses. The Company's Registration Expenses
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will be paid by the Company in all Piggyback Registrations.
C. Priority on Piggyback Registrations. If a Piggyback Registration is an
underwritten registration, and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities requested to
be included in such registration exceeds the number of Registrable Securities
that can be sold in an orderly manner in such offering after the Company has
been able to sell the number of securities it proposes to sell within a price
range acceptable to the Company, the Company will include in such registration
the number of securities the Company proposes to sell and then the number of the
Purchaser's Registerable Securities that, in the opinion of the managing
underwriter, can be sold in an orderly manner in such offering after the Company
has been able to sell the number of securities it proposes to sell within a
price range acceptable to the Company. If, pursuant to this Section 6.1(C), the
number of the Purchaser's Registrable Securities included in such registration
is more than twenty percent (20%) less than the number of Registrable Securities
the Purchaser has requested to be included in such registration, then such
registration will not be deemed to be an "opportunity" as that word is used in
Section 6.2(A) hereof.
D. Selection of Underwriters. If any Piggyback Registration is in
connection with an underwritten offering, the Company will have the right to
select the investment banker(s) and manager(s) to administer the offering.
E. Other Registrations. If the Company has previously filed a registration
statement with respect to Registrable Securities pursuant to this Section 6.1
and if such previous registration has not been withdrawn or abandoned, the
Company will not file or cause to be effected any other registration of any of
its Registrable Securities or securities convertible or exchangeable into or
exercisable for its Registrable Securities under the Securities Act (except on
Form S-8 or Form S-4 or any successor forms), whether on its own behalf or at
the request of any holder or holders of such Registrable Securities, until a
period of at least ninety (90) days has elapsed from the effective date of such
previous registration.
6.2. Demand Registrations.
A. Right to Demand Registrations. At any time after three years from the
date of Closing, if the Company has failed to provide the Purchaser with at
least two (2) opportunities to register securities pursuant to the PiggyBack
Registration Rights granted herein, the Purchaser may request registration under
the Securities Act of all or any part of the Purchaser's Registrable Securities
(a "Demand Registration"); provided, however, that the Purchaser may not request
any Demand Registration after the Company has given the notice of a Piggyback
Registration referred to in Section 6.1(A) until the first to occur of (i) 150
days (or, in the event the Company is permitted to use any applicable short
form, 90 days) after the date of such notice, (ii) 90 days (or, in the event the
Company is permitted to use any applicable short form, 45 days) after the date
of such notice if the Company has not yet filed a registration statement with
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respect to such Piggyback Registration, (iii) the withdrawal of any registration
statement the Company has filed with respect to such Piggyback Registration (or
any public announcement by the Company that it no longer intends to pursue such
public offering), or (iv) five Business Days after the effectiveness of such
Piggyback Registration. The Purchaser will be entitled to request up to two (2)
Demand Registrations. Each request for a Demand Registration shall specify the
approximate number of such Registrable Securities requested to be registered and
the anticipated per share price range for such offering and proposed manner of
distribution including whether or not the offering will be underwritten. Demand
Registrations will be on Forms S-2 or S-3 or any similar short-form registration
statement whenever the Company is permitted to use any applicable short form.
B. Priority on Demand Registrations. If in a Demand Registration the
managing underwriters (if any) advise the Company in writing that in their
opinion the number of Registrable Securities requested to be included in such
registration together with the number of securities the Company proposes to be
included in such registration for its own account exceeds the number of
securities that can be sold in an orderly manner in such offering within a price
range acceptable to the Purchaser, the Company will include in such registration
first, the number of Registrable Securities requested to be included in such
registration by the Purchaser, and next, the number of securities requested to
be included in such registration by the Company for its own account.
C. Restrictions on Demand Registrations. The Company may postpone for up to
ninety (90) days the filing or the effectiveness of a registration statement for
a Demand Registration if the Company reasonably determines that such Demand
Registration would have an adverse effect other than of an immaterial nature on
any proposal or plan by the Company or any of its subsidiaries to engage in any
acquisition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or similar transaction; provided that in
such event, the Purchaser will be entitled to withdraw such request and, if such
request is withdrawn, such Demand Registration shall not count as one of the
permitted Demand Registrations hereunder and the Company will pay all expenses
incurred by the Purchasers in such withdrawn Demand Registration. The Company
will not be obligated to effect any Demand Registration within six (6) months
after the effective date of a previous Demand Registration, or such lesser
period after such effective date as agreed to in writing by the managing
underwriter(s) for such previous Demand Registration.
D. Selection of Underwriters. In any underwritten Demand Registration, the
Company will have the right to select the investment banker(s) and manager(s) to
administer the offering, subject to the approval of the Purchaser, which
approval will not be unreasonably withheld.
E. Other Registration Rights. Except as provided in this Agreement and for
so long as the Purchaser maintains ownership of 5% or more of the outstanding
Common Stock of the Company, the Company will not
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grant to any persons the right to request the Company to register any equity
securities of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the written consent of the Purchaser.
F. Expenses of Demand Registration. The Purchaser shall bear all expenses
of any Demand Registration hereunder unless the Company includes in such
registration securities to be registered for its own account, in which case the
Purchaser will pay the expenses allocable to the registration of the Purchaser's
securities included in the registration, and any expenses not so allocable will
be borne by the Purchaser in proportion to the aggregate selling price of the
securities to be so registered.
6.3. Holdback Agreement.
A. The Purchaser agrees not to effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the 180-day period beginning on the effective date of any
underwritten Piggyback Registration in which Registrable Securities are included
(except as part of such underwritten registration or as bona fide gifts), unless
the underwriters managing the registered public offering otherwise agree.
B. The Company agrees not to effect any public sale or distribution of its
equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the 180-day period beginning on the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except (i) as part of such underwritten registration
(ii) as offerings pursuant to registrations on Form S-8 or any successor form or
(iii) upon the exercise or conversion of any Common Stock Equivalents then
outstanding), unless the underwriters managing the registered public offering
otherwise agree.
6.4. Registration Procedures. Whenever the Purchaser has requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
will use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:
A. prepare and file with the United States Securities and Exchange
Commission or any governmental body or agency succeeding to the functions
thereof (the "Securities and Exchange Commission") a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to counsel selected and retained by the Purchaser at
the Purchaser's expense copies of all such documents proposed to be filed, which
documents will be subject to the timely review of such counsel);
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B. prepare and file with the Securities and Exchange 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 effective for a period of not less than 270 days or until such earlier
time as all of the securities covered by such registration statement have been
sold and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
C. furnish to the Purchaser such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as the Purchaser may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by the Purchaser;
D. use its best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as the
Purchaser reasonably requests and do any and all other acts and things which may
be reasonably necessary or advisable to enable the Purchaser to consummate the
disposition in such jurisdictions of the Registrable Securities owned by the
Purchaser (provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 6.4(D), (ii) subject itself to taxation
in any such jurisdiction, (iii) consent to general service of process in any
such jurisdiction or (iv) register the Registrable Securities or seek an
exemption from registration under the securities laws of any state that
requires, as a condition to registration or such exemption, that the Company
indefinitely file in such jurisdiction substantially all reports required to be
filed by the Company with the Securities and Exchange Commission);
E. notify the Purchaser, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and, at the request of the
Purchaser, the Company will promptly prepare (and, when completed, give notice
to the Purchaser) a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
provided, however, that upon such notification by the Company, the Purchaser
will not sell Registrable Securities until the Company has notified the
Purchaser that it has prepared a supplement or amendment to such prospectus;
F. cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are
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then listed and, if not so listed, to be included on the NASD automated
quotation system;
G. provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
H. enter into such customary agreements (including underwriting agreements
in customary form) and take all such other actions as the Purchaser or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);
I. make available for inspection on a confidential basis by the Purchaser,
any underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by the Purchaser
or any such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees, attorneys and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
J. otherwise use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full fiscal quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
K. permit the Purchaser (if, in the Purchaser's sole and exclusive
judgment, the Purchaser might be deemed to be an underwriter or a controlling
person of the Company within the meaning of Section 15 of the Securities Act) to
participate in the preparation of such registration or comparable statement and
to require the insertion therein of material, furnished to the Company in
writing, which in the reasonable judgment of the Purchaser and its counsel
should be included, provided that such material shall be furnished under such
circumstances as shall cause it to be subject to the indemnification provisions
provided pursuant to Section 6.6(B) hereof;
L. in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order; and
M. furnish to the Purchaser at the time of the disposition of
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Registrable Securities to be registered an opinion of counsel for the Company,
in form and substance satisfactory to the Purchaser, to the effect that (i) the
Company is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation with full corporate power and
authority to own and hold its properties, including such properties as it holds
under lease, and to conduct its business as described in the registration
statement, and is qualified to conduct business and is in good standing in each
jurisdiction where the conduct of its business requires such qualification and
in which the failure to be so qualified could have a material adverse effect on
the Company; (ii) such Registrable Securities have been validly issued and are
fully paid in nonassessable; (iii) a registration statement covering such
Registrable Securities has been filed with the Securities and Exchange
Commission under the Securities Act and has been made effective by order of such
Commission; (iv) such registration statement and the prospectus contained
therein appear on their face to be appropriately responsive in all material
respects to the requirements of the Securities Act, and nothing has come to such
counsel's attention that would cause it to believe that either such registration
statement or such prospectus contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; (v) such Registrable Securities conform in all material
respects to the description thereof contained in such registration statement;
(vii) to the best of such counsel's knowledge, no stop order has been issued by
the Securities and Exchange Commission suspending the effectiveness of such
registration statement.
6.5. Registration Expenses.
A. All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation all fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the Company and the
Company's independent certified public accountants, underwriters (excluding
discounts and commissions) and other persons retained by the Company (all such
expenses being herein called "Registration Expenses"), will be borne by the
Company, except as otherwise provided in this Agreement (including with respect
to Demand Registrations), except that the Company will, in any event, pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any liability insurance for the Company and its board of directors and the
expenses for listing the securities to be registered on each securities exchange
on which similar securities issued by the Company are then listed or on the NASD
automated quotation system.
B. To the extent Registration Expenses are not required to be paid by the
Company, the Purchaser will pay the Registration Expenses allocable to the
registration of the Purchaser's securities included in the registration, and any
Registration Expenses not so allocable will be borne by the Purchaser in
proportion to the aggregate selling price of the
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securities to be so registered. Such expenses would include, without limitation,
underwriters' discounts and commissions and fees of Purchaser's counsel.
6.6. Indemnification.
A. The Company agrees to indemnify, to the extent permitted by law, the
Purchaser, its officers, directors, employees and agents and each person who
controls the Purchaser (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses (including legal fees and
expenses) caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are (i) caused by
or contained in any information furnished in writing to the Company by the
Purchaser expressly for use therein, (ii) caused by the Purchaser's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished the Purchaser with a
sufficient number of copies of the same, or (iii) caused by the Purchaser's sale
of Registrable Securities in violation of the proviso to Section 6.4(E) hereof.
B. In connection with any registration statement in which the Purchaser is
participating, the Purchaser will furnish to the Company in writing such
information, affidavits and other material as the Company reasonably requests
for use in connection with any such registration statement or prospectus and, to
the extent permitted by law, will indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information, affidavit or other material so
furnished in writing by the Purchaser.
C. In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may properly be
sought pursuant to this Article VI, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel to which the indemnified party has no
reasonable objection to represent the indemnified party and any others the
indemnifying party may designate in such proceedings and shall pay the fees and
disbursements of such counsel related to such proceeding. Except as otherwise
provided in this paragraph, after the indemnifying party retains counsel in
accordance with the preceding sentence, the indemnifying party shall not be
liable to
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the indemnified party under this Article VI for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation. In any such proceeding,
any indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party shall have
mutually agreed in writing to the retention of such counsel and to the payment
by the indemnifying party of such counsel's fees and expenses or (ii) the named
parties to any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
conflicting interests between them. The indemnified party agrees to consult with
the indemnifying party prior to the retention of its own counsel in situations
covered by clause (ii) of the preceding sentence. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Purchaser and such
control persons of the Purchaser, such firm shall be designated in writing by
the Purchaser. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, such consent not to be unreasonably withheld, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such proceeding.
D. The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.
6.7. Participation in Underwritten Registrations. No person may participate
in any registration hereunder that is underwritten unless such person (a) agrees
to sell such person's securities on the basis provided in any underwriting
arrangements approved by the person or persons entitled hereunder to approve
such arrangements and (b) completes and executes all
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questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements and
which are customary in such transactions; provided, however, that the Purchaser
shall not be required to make any representations or warranties to the Company
or the underwriters other than representations and warranties regarding the
Purchaser and the Purchaser's intended method of distribution.
6.8. No Inconsistent Agreements. The Company will not hereafter enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the Purchaser in this Agreement.
6.9. Definition of "Registrable Securities." As used in this Article VI,
the term "Registrable Securities" means the Purchased Shares and shares of
Common Stock purchased upon exercise of the Option, and shares of Common Stock
issued in respect of either the Purchased Shares or the shares of Common Stock
purchased upon exercise of the Option by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities when they
have been distributed to the public through a broker, dealer or market purchaser
in compliance with Rule 144 under the Securities Act (or any similar rule then
in force) or pursuant to an effective registration statement under the
Securities Act.
VII. MISCELLANEOUS
7.1. Purchaser's Investment Representations. The Purchaser hereby
represents that:
A. The Purchaser is acquiring the Purchased Shares, the Option, and the
shares which may be purchased pursuant to the exercise of the Option (together,
for purposes of this Section 7.1, the "Investment Securities") for its own
account with the present intention of holding such Investment Securities for
purposes of investment, and that the Purchaser has no intention of selling such
Investment Securities in a public distribution in violation of the federal
securities laws or any applicable state securities laws.
B. The Purchaser is sophisticated in financial matters and is able to
evaluate the risks and benefits of his or its investment in the Investment
Securities.
C. The Purchaser is able to bear the economic risk of its investment in the
Investment Securities for an indefinite period of time because the Investment
Securities have not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available.
D. The Purchaser has had full opportunity to interview directors and
officers and to ask questions and receive answers concerning
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the Company and has had full access to such other information concerning the
Company as it has requested.
7.2. Restrictive Legend. Each certificate for the Purchased Shares or the
shares purchased pursuant to the exercise of the Option shall be imprinted with
a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT UPON REGISTRATION UNDER ALL APPLICABLE FEDERAL AND
STATE SECURITIES LAWS OR UPON DELIVERY TO THE CORPORATION OF EITHER (A) A
NO-ACTION LETTER FROM THE STATE AND FEDERAL AGENCIES HAVING JURISDICTION
THEREOF OR (B) AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT
NEITHER THE SALE NOR THE PROPOSED TRANSFER CONSTITUTES A VIOLATION OF ANY
FEDERAL OR STATE SECURITIES LAW.
7.3. Purchaser's Ownership Representations. The Purchaser hereby represents
and warrants that both the Purchaser and Mentmore Holdings Corporation are
corporations controlled, directly or indirectly, by Xxxxxxx Xxxxxx and Xxxxxxx
Xxxxxx or members of their immediate families.
7.4. Consent to Amendments. Except as otherwise expressly provided herein,
the provisions of this Agreement may be amended and the Company or the Purchaser
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, with the written consent of the Company and the
Purchaser. No other course of dealing between the Company and the Purchaser or
any delay in exercising any rights hereunder or under the Company's Certificate
of Incorporation shall operate as a waiver of any rights of the Purchaser.
7.5. Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by the Purchaser or on its behalf.
7.6. Successors and Assigns. Except as otherwise expressly provided herein,
all covenants and agreements contained in this Agreement by or on behalf of any
of the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement that are for the Purchaser's benefit as a purchaser
or holder of Purchased Shares are also for the benefit of, and enforceable by,
any subsequent holder of such Purchased Shares; provided that Purchased Shares
shall cease to be Purchased Shares under this Agreement when they have been (i)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them or (ii) distributed to the public
pursuant to Rule 144. This Agreement shall terminate at such time as all of the
Purchased Shares have been (i) effectively registered under the Securities Act
and disposed of in accordance with the registration
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statement covering them or (ii) distributed to the public pursuant to Rule 144.
7.7. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
7.8. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
7.9. Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. The use of the word "including" in this Agreement shall be by way of
example rather than by limitation.
7.10. Governing Law. The corporate law of the State of Delaware shall
govern all issues concerning the relative rights of the Company and its
shareholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits and schedules hereto shall be
governed by the internal law, and not the law of conflicts, of the State of
North Carolina.
7.11. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, one business day after sent to the recipient by reputable express
courier service (charges prepaid) or five business days after mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications shall be sent to the
Purchaser and to the Company at the addresses indicated below:
If to the Company: Texfi Industries, Inc.
Xxxx Xxxxxx Xxx 00000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Chief Financial Officer
with a copy to: Xxxxxx Xxxx Xxxxxx Xxxx & Xxxxxxxxxx
0000 Xxxxxxxxxxx Xxxxx
000 Xxxxx Xxx Xxxxxx
Post Office Box 21847
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, Esq.
If to the Purchaser: Xxxxxxxxxx Corporation
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
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Attn: President
with a copy to: Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attn: Xxxxxx X. Xxxxxxxx, Esq.
or to such other address or to the attention to such other person as the
recipient party has specified by prior written notice to the sending party.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date first written above.
TEXFI INDUSTRIES, INC.
By: L. Xxxxxxx Xxxxx, Xx.
Its President
XXXXXXXXXX CORPORATION
By: Xxxxxxx X. Xxxxxx
Its President
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EXHIBIT A
CERTIFICATE OF OPTION
For value received, Texfi Industries, Inc., does hereby grant to Xxxxxxxxxx
Corporation an option to purchase up to 600,000 shares of Common Stock, par
value $1.00 per share, of Texfi Industries, Inc., on the terms and conditions
set forth in that certain Stock and Option Purchase Agreement dated as of May
24, 1994, between Texfi Industries, Inc., and Xxxxxxxxxx Corporation.
TEXFI INDUSTRIES, INC.
By ________________________________
Its ________________________________
Date: ________________________________
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