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UNITED STATES OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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OMB Number: 3235-0145
Expires: October 31, 1997
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hours per response.......14.90
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3 )*
Culp, Inc.
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(Name of Issuer)
Common Stock, Par Value $.05 per share
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(Title of Class of Securities)
230215 10 5
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(CUSIP Number)
Robert G. Culp, III
P.O. Box 2686, 101 South Main Street, High Point, North Carolina 27261-2686
(910) 889-5161
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
February 4, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition of this Schedule 13D, and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
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CUSIP NO. 230215 10 5 PAGE OF PAGES
- ---------------------------- ----------------------------
- -------------------------------------------------------------------------------
1
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert G. Culp, III
###-##-####
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2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3
SEC USE ONLY
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4
SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6
CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7
NUMBER OF SOLE VOTING POWER
SHARES
BENEFICIALLY 2,926,167
OWNED BY
EACH
REPORTING
PERSON
WITH
---------------------------------------------------
8
SHARED VOTING POWER
0
---------------------------------------------------
9
SOLE DISPOSITIVE POWER
517,417
---------------------------------------------------
10
SHARED DISPOSITIVE POWER
2,926,167
- --------------------------------------------------------------------------------
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,926,167
- --------------------------------------------------------------------------------
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
(excludes 63,338 shares held of record by Reporting Person's spouse
and 4,904 Shares held of record by Reporting Person's children or
their spouses)
- --------------------------------------------------------------------------------
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.1%
- --------------------------------------------------------------------------------
14
TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
PRELIMINARY STATEMENT
This Amendment No. 3 (this "Amendment") amends the Statement on
Schedule 13D (the "Initial Statement") filed by Robert G. Culp, III (the
"Reporting Person") with the Securities and Exchange Commission on November 7,
1989, as amended on or about December 15, 1993 and on January 3, 1994, with
respect to the shares (the "Shares") of common stock, par value $.05 per share,
of Culp, Inc., a North Carolina corporation (the "Issuer"). This Amendment
reports the disposition of 640,000 Shares held by the Robert G. Culp, Jr. Family
Trust (the "Trust"). Such shares were sold by the subtrusts of the Trust for
the benefit of Judith Culp Walker (the Reporting Person's sister) and Harry
R. Culp (the Reporting Person's brother). The Reporting Person has the sole
power to vote and shares the power to dispose or direct the disposition of
the Shares held by the Trust.
The following items of the Initial Statement, as amended, are hereby
amended and restated as follows.
Item 1. Security and Issuer.
This Amendment relates to the Shares. The principal executive offices
of Culp are located at 101 South Main Street, High Point, North Carolina 27261.
Item 2. Identity and Background.
This Statement is filed by Robert G. Culp, III, (the "Reporting
Person"). The business address of the Reporting Person is 101 South Main Street,
High Point, North Carolina 27261. The Reporting Person is Chairman of the Board
and Chief Executive Officer of the Issuer. During the past five years, the
Reporting Person has not been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). During the past five years, the
Reporting Person was not a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction that as a result of which subjects
or subjected him to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws. The
Reporting Person is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
The Reporting Person used personal funds for the open-market purchase
of 100 Shares on December 31, 1996, which were the first Shares traded on the
New York Stock Exchange.
Item 4. Purpose of Transaction.
Any Shares that the Reporting Person has acquired since the date of
filing of the last amendment to the Initial Statement were acquired in
connection with the grant of stock options or as described above in Item 3 and
were acquired for investment purposes. The Reporting Person has no plans or
proposals that relate to or would result in any of the changes or transactions
enumerated in subsections (a) - (j) of Item 4 of the General Instructions for
Complying with Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) As of February 12, 1997, the Reporting Person reports beneficial
ownership of 2,926,167 Shares, or 23.1% of the outstanding Shares which
includes 92,500 currently exercisable stock options beneficially owned by the
Page 3 of 15
<PAGE>
Reporting Person (See Item 6). The number of Shares reported does not include
(i) 63,338 Shares held of record by Susan B. Culp (the Reporting Person's wife),
(ii) 1,218 Shares held of record by Robert G. Culp, IV (the Reporting Person's
son), (iii) 1,250 Shares held of record by Graham B. Culp (the Reporting
Person's son), (iv) 1,218 Shares held of record by Susan B. Culp, Custodian for
Lee F. Culp (the Reporting Person's daughter), under the North Carolina Uniform
Transfers to Minors Act and (v) 1,218 Shares held of record by Leslie S. Culp
(the Reporting Person's daughter-in-law). Pursuant to Rule 13d-4, the Reporting
Person disclaims beneficial ownership of these Shares held by his immediate
family members.
(b) The Reporting Person has sole voting power with respect to
2,926,167 Shares and the sole power to dispose of 517,417 Shares. Of the
2,926,167 Shares beneficially owned by the Reporting Person, 2,408,750 Shares
are held of record by Winsal & Co., a nominee for the Trustee (First Union
National Bank of Virginia) of the Trust, which holds the Shares in three
subtrusts for the benefit of the Reporting Person, Judith Culp Walker (the
Reporting Person's sister) and Harry R. Culp, (the Reporting Person's
brother), respectively. Under the terms of the Trust, the Reporting Person
has the sole power to vote or direct the voting of all 2,408,750 Shares held
by the Trust, but the Reporting Person shares with the Trustee the power to
dispose or direct the disposition of those Shares.
(c) On February 4, 1997, 640,000 Shares were sold by the subtrusts of
the Trust for the benefit of Judith Culp Walker and Harry R. Culp in a public
offering of Shares pursuant to a Form S-3 filed with the Securities and Exchange
Commission declared effective on January 27, 1997.
On December 31, 1996, the Reporting Person purchased 100 Shares at
$15.75 per share in an open-market transaction. The Reporting Person purchased
these Shares as the first Shares traded on the New York Stock Exchange.
On December 23, 1996, the Reporting Person disposed of by gift to his
children and a spouse of one of his children 4,904 Shares.
Other than these three specified transactions, the Reporting Person
has not effected any transactions in the Shares during the past 60 days.
(d) The Trustee of the Trust has the right to receive and the power to
direct the receipt of dividends from, or the proceeds from the sale of,
2,408,750 of the 2,926,167 Shares beneficially owned by the Reporting Person.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
The terms of the Robert G. Culp, Jr. Family Trust give sole voting
power to the Reporting Person and joint dispositive power to the Reporting
Person and the Trustee, as more particularly described in Item 5.
The Reporting Person owns 92,500 presently exercisable stock
purchase options which are more particularly described as follows:
Page 4 of 15
<PAGE>
(i) The Issuer granted on June 16, 1992 to the Reporting Person an
option to purchase 58,500 Shares at $4.62564 per share (as adjusted for a 30%, a
25% and a 50% stock dividend since the date of grant) pursuant to the Culp, Inc.
Incentive Stock Option Plan. Such option terminates on June 15, 1997 unless
sooner terminated due to the Reporting Person's death, disability or termination
of employment;
(ii) The Issuer granted on March 22, 1994 to the Reporting Person the
option to purchase 10,000 Shares at $14.03 per share pursuant to the Culp, Inc.
1993 Stock Option Plan. Such option terminates on December 31, 2003 unless
terminated earlier due to the Reporting Person's death, disability or
termination of employment with the Issuer;
(iii) The Issuer granted on September 20, 1994 to the Reporting Person
an option to purchase 12,000 Shares at $9.90 per share pursuant to the Culp,
Inc. 1993 Stock Option Plan. Such option terminates on September 19, 1999 unless
sooner terminated due to the Reporting Person's death, disability or termination
of employment; and
(iv) The Issuer granted on July 3, 1995 to the Reporting Person an
option to purchase 12,000 Shares at $8.53 per share pursuant to the Culp, Inc.
1993 Stock Option Plan. Such option terminates on July 2, 2000 unless sooner
terminated due to the Reporting Person's death, disability or termination of
employment.
Item 7. Material to be Filed as Exhibits.
The following documents are attached to this Amendment as Exhibits:
<TABLE>
<CAPTION>
Page on Which
Exhibit Document Exhibit Appears
<S> <C> <C>
F Memorandum of Option Page 7 of 15
for 10,000 Shares
(Date of grant: March 22, 1994)
G Memorandum of Option Page 10 of 15
for 12,000 Shares
(Date of grant: September 20, 1994)
H Memorandum of Option Page 13 of 15
for 12,000 Shares
(Date of grant: July 3, 1995)
</TABLE>
[Intentionally Left Blank]
Page 5 of 15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment is true, complete and
correct.
Date: February 19, 1997 Signature: /s/ Robert G. Culp, III
Page 6 of 15
<PAGE>
MEMORANDUM OF OPTION
This memorandum of option evidences the grant of an option to Robert G.
Culp, III ("Employee") pursuant to the Culp, Inc., 1993 Stock Option Plan (the
"Plan"). This memorandum also describes the terms and conditions of the option.
1. GRANT OF OPTION. Culp, Inc. (the "Corporation") hereby
grants to the Employee an option to purchase 10,000 shares of the
Corporation's common stock, $.05 par value, at a price of $14.03
per share. This option is granted as of March 22, 1994.
2. TERM.
(a) NORMAL TERM. The term of this option commences on March
22, 1994, and terminates on March 21, 1999; provided, however, that the option
may be terminated earlier as provided below.
(b) EARLY TERMINATION. The option will terminate upon any of
the following events:
(i) DEATH. The option will terminate three months after
the death of the Employee who dies while employed by
the Corporation or one of its subsidiaries.
(ii) DISABILITY. The option will terminate three months
after the Employee's employment with the Corporation
and its Subsidiaries terminates on account of the
Employee's disability.
(iii) TERMINATION OF EMPLOYMENT. The option will terminate
three months after the date the Employee's employment
with the Corporation and its subsidiaries terminates
for any reason other than death or disability.
3. PAYMENT OF EXERCISE PRICE. The exercise price will be payable in
full upon exercise of the option to purchase shares. Payment of the exercise
price may be made in cash, or with shares of Culp common stock, valued at the
fair market value on the date of exercise.
4. TRANSFERABILITY. The option may not be transferred by the Employee,
except upon the Employee's death by will or by the laws of descent and
distribution.
5. EXERCISE. This option may not be exercised until March 22, 1995
During the Employee's lifetime, only the Employee may exercise the option. If
the Employee dies prior to the expiration date of this option, without having
exercised his option as to all of the
Page 7 of 15
<PAGE>
shares covered thereby, the option may be exercised, to the extent of the shares
with respect to which the option could have been exercised on the date of the
Employee's death, by the estate or a person who acquired the right to exercise
the option by bequest or inheritance or by reason of the death of the Employee.
The option shall be exercised by delivery to the Corporation of a
Notice of Exercise in the form attached to this memorandum of option.
6. ADMINISTRATION OF PLAN. The Plan is administered by a Committee
appointed by the Corporation's Board of Directors. The Committee has the
authority to construe and interpret the Plan, to make rules of general
application relating to the Plan, to amend outstanding options, and to require
of any person exercising this option, at the time of such exercise, the
execution of any paper or the making of any representation or the giving of any
commitment that the Committee shall, in its discretion, deem necessary or
advisable by reason of the securities laws of the United States or any State, or
the execution of any paper or the payment of any sum of money in respect of
taxes or the undertaking to pay or have paid any such sum that the Committee
shall, in its discretion, deem necessary by reason of the Internal Revenue Code
or any rule or regulation thereunder, or by reason of the tax laws of any State.
This option is granted pursuant to the Plan and is subject to the terms
thereof.
7. CAPITAL ADJUSTMENTS. The number of shares of common stock covered by
this option, and the option price thereof, will be subject to an appropriate and
equitable adjustment, as determined by the Committee, to reflect any stock
dividend, stock split or share combination, and will be subject to such
adjustment as the Committee may deem appropriate to reflect any exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like, of or by the Corporation.
8. RIGHTS AS A SHAREHOLDER. The Employee, or a transferee of any
option, shall have no rights as a shareholder with respect to any shares subject
to this option until the date of the issuance of a stock certificate to him for
such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in paragraph 7 hereof.
9. INCENTIVE STOCK OPTION RULES. It is intended that this option may
qualify for treatment for federal income tax as an "incentive stock option" as
that term is defined by Section 422 of the Internal Revenue Code, provided that
the Employee observes with the following additional rules concerning the
exercise of the option:
Page 8 of 15
<PAGE>
(a) None of the shares acquired upon exercise of this option
may be sold or otherwise disposed of by the Employee within 2 years of
the date this option is granted.
(b) None of the shares acquired upon exercise of this option
may be sold or otherwise disposed of within 1 year of the date on which
such shares are transferred to the Employee.
(c) At all times beginning on the date this option is granted
and ending 3 months prior to the date on which the option is exercised,
the Employee must remain employed by the Corporation or one of its
Subsidiaries.
Note: Failure to follow these rules will disqualify the Employee from
treating the acquisition of shares pursuant to this option as an
acquisition of shares pursuant to an "incentive stock option" under the
Internal Revenue Code. The Employee should consult his own tax adviser
concerning the tax treatment of this option.
To evidence their agreement to the terms and conditions of this option,
the Corporation and the Employee have signed this memorandum of option.
CORPORATION:
Culp, Inc.
By /s/ Kenneth M. Ludwig
EMPLOYEE:
/s/ Robert G. Culp, III
Page 9 of 15
<PAGE>
MEMORANDUM OF OPTION
This memorandum of option evidences the grant of an option to Robert G.
Culp, III ("Employee") pursuant to the Culp, Inc., 1993 Stock Option Plan (the
"Plan"). This memorandum also describes the terms and conditions of the option.
1. GRANT OF OPTION. Culp, Inc. (the "Corporation") hereby grants
to the Employee an option to purchase 12,000 shares of the
Corporation's common stock, $.05 par value, at a price of $9.90 per
share. This option is granted as of September 20, 1994.
2. TERM.
(A) NORMAL TERM. The term of this option commences on September 20,
1994, and terminates on September 19, 1999, provided, however, that the option
may be terminated earlier as provided below.
(b) EARLY TERMINATION. The option will terminate upon any of the
following events:
(i) DEATH. The option will terminate three
months after the death of the Employee who
dies while employed by the Corporation or
one of its subsidiaries.
(ii) DISABILITY. The option will terminate three
months after the Employee's employment with
the Corporation and its Subsidiaries
terminates on account of the Employee's
disability.
(iii) TERMINATION OF EMPLOYMENT. The option will
terminate three months after the date the
Employee's employment with the Corporation
and its subsidiaries terminates for any
reason other than death or disability.
3. PAYMENT OF EXERCISE PRICE. The exercise price will be payable
in full upon exercise of the option to purchase shares. Payment of
the exercise price may be made in cash, or with shares of Culp
common stock, valued at the fair market value on the date of
exercise.
4. TRANSFERABILITY. The option may not be transferred by the
Employee, except upon the Employee's death by will or by the laws
of descent and distribution.
5. EXERCISE. This option may not be exercised until
September 20, 1995. During the Employee's lifetime, only the
Page 10 of 15
<PAGE>
Employee may exercise the option. If the Employee dies prior to the expiration
date of this option, without having exercised his option as to all of the shares
covered thereby, the option may be exercised, to the extent of the shares with
respect to which the option could have been exercised on the date of the
Employee's death, by the estate or a person who acquired the right to exercise
the option by bequest or inheritance or by reason of the death of the Employee.
The option shall be exercised by delivery to the Corporation of a
Notice of Exercise in the form attached to this memorandum of option.
6. ADMINISTRATION OF PLAN. The Plan is administered by a Committee
appointed by the Corporation's Board of Directors. The Committee has the
authority to construe and interpret the Plan, to make rules of general
application relating to the Plan, to amend outstanding options, and to require
of any person exercising this option, at the time of such exercise, the
execution of any paper or the making of any representation or the giving of any
commitment that the Committee shall, in its discretion, deem necessary or
advisable by reason of the securities laws of the United States or any State, or
the execution of any paper or the payment of any sum of money in respect of
taxes or the undertaking to pay or have paid any such sum that the Committee
shall, in its discretion, deem necessary by reason of the Internal Revenue Code
or any rule or regulation thereunder, or by reason of the tax laws of any State.
This option is granted pursuant to the Plan and is subject to the terms
thereof.
7. CAPITAL ADJUSTMENTS. The number of shares of common stock covered by
this option, and the option price thereof, will be subject to an appropriate and
equitable adjustment, as determined by the Committee, to reflect any stock
dividend, stock split or share combination, and will be subject to such
adjustment as the Committee may deem appropriate to reflect any exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like, of or by the Corporation.
8. RIGHTS AS A SHAREHOLDER. The Employee, or a transferee of any
option, shall have no rights as a shareholder with respect to any shares subject
to this option until the date of the issuance of a stock certificate to him for
such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in paragraph 7 hereof.
9. INCENTIVE STOCK OPTION RULES. It is intended that this option
may qualify for treatment for federal income tax as an "incentive
stock option," as that term is defined by Section 422 of the
Page 11 of 15
<PAGE>
Internal Revenue Code, provided that the Employee observes with the following
additional rules concerning the exercise of the option
(a) None of the shares acquired upon exercise of this option
may be sold or otherwise disposed of by the Employee within 2 years of
the date this option is granted.
(b) None of the shares acquired upon exercise of this option
may be sold or otherwise disposed of within 1 year of the date on which
such shares are transferred to the Employee.
(c) At all times beginning on the date this option is granted
and ending 3 months prior to the date on which the option is exercised,
the Employee Must remain employed by the Corporation or one of its
Subsidiaries.
Note: Failure to follow these rules will disqualify the Employee from
treating the acquisition of shares pursuant to this option as an
acquisition of shares pursuant to an "incentive stock option" under the
Internal Revenue Code. The Employee should consult his own tax adviser
concerning the tax treatment of this option.
To evidence their agreement to the terms and conditions of this option,
the Corporation and the Employee have signed this memorandum of option.
CORPORATION:
Culp, Inc.
By /s/ Kenneth M. Ludwig
EMPLOYEE:
/s/ Robert G. Culp, III
Page 12 of 15
<PAGE>
MEMORANDUM OF OPTION
This memorandum of option evidences the grant of an option to Robert G.
Culp, III ("Employee") pursuant to the Culp, Inc., 1993 Stock Option Plan (the
"Plan"). This memorandum also describes the terms and conditions of the option.
1. GRANT OF OPTION. Culp, Inc. (the "Corporation") hereby grants
to the Employee an option to purchase 12,000 shares of the
Corporation's common stock, $.05 par value, at a price of $8.53 per
share. This option is granted as of July 3, 1995.
2. TERM.
(a) NORMAL TERM. The term of this option commences on July 3, 1995, and
terminates on July 2, 2000, provided, however, that the option may be terminated
earlier as provided below.
(b) EARLY TERMINATION. The option will terminate upon any of the
following events:
(i) DEATH. The option will terminate three
months after the death of the Employee who
dies while employed by the Corporation or
one of its subsidiaries.
(ii) DISABILITY. The option will terminate three
months after the Employee's employment with
the Corporation and its Subsidiaries
terminates on account of the Employee's
disability.
(iii) TERMINATION OF EMPLOYMENT. The option will
terminate three months after the date the
Employee's employment with the Corporation
and its subsidiaries terminates for any
reason other than death or disability.
3. PAYMENT OF EXERCISE PRICE. The exercise price will be payable in
full upon exercise of the option to purchase shares. Payment of the exercise
price may be made in cash, or with shares of Culp common stock, valued at the
fair market value on the date of exercise.
4. TRANSFERABILITY. The option may not be transferred by the Employee,
except upon the Employee's death by will or by the laws of descent and
distribution.
5. EXERCISE. This option may not be exercised until July 3, 1996.
During the Employee's lifetime, only the Employee may exercise the option. If
the Employee dies prior to the expiration
Page 13 of 15
<PAGE>
date of this option, without having exercised his option as to all of the shares
covered thereby, the option may be exercised, to the extent of the shares with
respect to which the option could have been exercised on the date of the
Employee's death, by the estate or a person who acquired the right to exercise
the option by bequest or inheritance or by reason of the death of the Employee.
The option shall be exercised by delivery to the Corporation of a
Notice of Exercise in the form attached to this memorandum of option.
6. ADMINISTRATION OF PLAN. The Plan is administered by a Committee
appointed by the Corporation's Board of Directors. The Committee has the
authority to construe and interpret the Plan, to make rules of general
application relating to the Plan, to amend outstanding options, and to require
of any person exercising this option, at the time of such exercise, the
execution of any paper or the making of any representation or the giving of any
commitment that the Committee shall, in its discretion, deem necessary or
advisable by reason of the securities laws of the United States or any State, or
the execution of any paper or the payment of any sum of money in respect of
taxes or the undertaking to pay or have paid any such sum that the Committee
shall, in its discretion, deem necessary by reason of the Internal Revenue Code
or any rule or regulation thereunder, or by reason of the tax laws of any State.
This option is granted pursuant to the Plan and is subject to the terms
thereof.
7. CAPITAL ADJUSTMENTS. The number of shares of common stock covered by
this option, and the option price thereof, will be subject to an appropriate and
equitable adjustment, as determined by the Committee, to reflect any stock
dividend, stock split or share combination, and will be subject to such
adjustment as the Committee may deem appropriate to reflect any exchange of
shares, recapitalization, merger" consolidation, separation, reorganization,
liquidation or the like, of or by the Corporation.
8. RIGHTS AS A SHAREHOLDER. The Employee, or a transferee of any
option, shall have no rights as a shareholder with respect to any shares subject
to this option until the date of the issuance of a stock certificate to him for
such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in paragraph 7 hereof.
9. INCENTIVE STOCK OPTION RULES. It is intended that this option may
qualify for treatment for federal income tax as an "incentive stock option," as
that term is defined by Section 422 of the Internal Revenue Code, provided that
the Employee observes with the following additional rules concerning the
exercise of the option:
Page 14 of 15
<PAGE>
(a) None of the shares acquired upon exercise of this option
may be sold or otherwise disposed of by the Employee within 2 years of
the date this option is granted.
(b) None of the shares acquired upon exercise of this option
may be sold or otherwise disposed of within 1 year of the date on which
such shares are transferred to the Employee.
(c) At all times beginning on the date this option is granted
and ending 3 months prior to the date on which the option is exercised,
the Employee must remain employed by the Corporation or one of its
Subsidiaries.
Note: Failure to follow these rules will disqualify the Employee from
treating the acquisition of shares pursuant to this option as an
acquisition of shares pursuant to an "incentive stock option" under the
Internal Revenue Code. The Employee should consult his own tax adviser
concerning the tax treatment of this option.
To evidence their agreement to the terms and conditions of this option,
the Corporation and the Employee have signed this memorandum of option.
CORPORATION:
Culp, Inc.
By /s/ Kenneth M. Ludwig
EMPLOYEE:
/s/ Robert G. Culp, III
Page 15 of 15
