SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-2.
ONEITA INDUSTRIES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j) (2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Fee paid previously with preliminary materials
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule, and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
ONEITA INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 26, 1996
To the Stockholders of ONEITA INDUSTRIES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Oneita
Industries, Inc. will be held at _________________________________________ New
York, New York on February 26, 1996 at 10:00 a. m., or at any adjournment
thereof, for the following purposes:
1. To elect seven (7)ectors to the Board of Directors.
2. To consider and act upon a proposal to approve and adopt the Company's
Employee Stock Purchase Plan, as set forth in Exhibit "A".
3. To consider and act upon a proposal to approve the issuance of warrants to
purchase 125,000 shares of Common Stock to Robert M. Gintel in connection
with a $3,750,000 loan made by him to the Company, as set forth in Exhibit
"B".
4. To consider and act upon such other business as may properly come before
this meeting or any adjournment thereof.
The above matters are set forth in the Proxy Statement attached to this Notice
to which your attention is directed.
Only stockholders of record on the books of the Company at the close of
business on January 16, 1996 will be entitled to vote at the Annual Meeting of
Stockholders or at any adjournment thereof. You are requested to sign, date and
return the enclosed Proxy at your earliest convenience in order that your shares
may be voted for you as specified.
By Order of the Board of Directors,
Edward I. Kramer
Secretary
January 22, 1996
Charleston, South Carolina
<PAGE>
ONEITA INDUSTRIES, INC.
4130 Faber Place Drive
Suite 200
Charleston, South Carolina 29405
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
February 26, 1996
The Annual Meeting of Stockholders of ONEITA INDUSTRIES, INC. (the
"Company") will be held on Monday, February 26, 1996 at
________________________________________New York, New York, at 10:00 a.m. for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. The enclosed proxy is solicited by and on behalf of the Board of
Directors of the Company for use at the Annual Meeting of Stockholders to be
held on February 26, 1996 and at any adjournments of such meeting. The
approximate date on which this proxy statement and the enclosed proxy are being
first mailed to stockholders is January 22, 1996.
If a proxy in the accompanying form is duly executed and returned, the
shares represented by such proxy will be voted as specified. Any person
executing the proxy may revoke it prior to its exercise either by letter
directed to the Company or in person at the Annual Meeting.
Voting Rights
Only stockholders of record on January 16, 1996 (the "Record Date") will be
entitled to vote at the Annual Meeting or any adjournment thereof. The Company
has outstanding one class of voting capital stock, namely 6,878,506 shares of
Common Stock, $.25 par value. Each share of Common Stock issued and outstanding
on the Record Date is entitled to one vote at the Annual Meeting of
Stockholders.
The affirmative vote of a majority of the votes cast at the Annual Meeting
of Stockholders is required for approval of each matter to be submitted to a
vote of the shareholders. For purposes of determining whether proposals have
received a majority vote, abstentions will not be included in the vote totals
and, in instances where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not returned a proxy (so called "broker
non-votes"), those votes will not be included in the vote totals. Therefore,
abstentions and broker non-votes will have no effect on the vote, but will be
counted in the determination of a quorum.
<PAGE>
SECURITY OWNERSHIP
The following table sets forth as of the Record Date certain information
with regard to ownership of the Company's Common Stock by, (i) each beneficial
owner of 5% or more of the Company's Common Stock, based on reports filed with
the Securities and Exchange Commission; (ii) each director and each executive
officer named in the "Summary Compensation Table"; and (iii) all executive
officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Shares of
Name and Address Common Stock Percent of
of Beneficial Owner Beneficially Owned Class (1)
- ------------------- ------------------ ----------
<S> <C> <C>
Robert M. Gintel 2,075,000 (2) 29.0%
6 Greenwich Office Park
Greenwich, Conn. 06831
Gintel Equity 975,000 (2) 13.6%
Management, Inc.
6 Greenwich Office Park
Greenwich, Conn. 06831
Gintel Fund 665,000 (2) 9.3%
6 Greenwich Office Park
Greenwich, Conn. 06831
Albert Fried, Jr. 873,100 (3) 12.2%
40 Exchange Place
New York, New York 10005
Herbert J. Fleming 125,229 (4) 1.8%
4130 Faber Place Drive
Charleston, South Carolina 29405
Lewis Rubin 21,500 (5) _
1 Devonshire Place
Boston, Massachusetts 02109
Meyer A. Gross 8,850 (6) _
230 Park Avenue
New York, New York 10169
John G. Hudson 29,500 (7) _
1 Deerwood
Shoalcreek, Alabama 35242
H. Varnell Moore 6,750 (8) _
1 Mill Street
Woolrich, PA 17779
James L. Ford 22,500 (9) _
4130 Faber Place Drive
North Charleston, South Carolina 29405
<PAGE>
Joe E. Brinson 28,129 (10) _
4130 Faber Place Drive
North Charleston, South Carolina 29405
J. Roger Holland 50,000 (11) _
4130 Faber Place Drive
North Charleston, South Carolina 29405
Directors and 3,262,088 (12) 45.63%
officers as a
group (13 persons)
<FN>
(1) Unless otherwise indicated, (a) no director beneficially owns more than
1% of the Company's Common Stock; and (b) ownership represents sole
voting and investment power.
(2) Includes 1,100,000 shares of the Company's Common Stock directly owned of
record by Mr. Gintel and an aggregate of 975,000 shares of the Company's
Common Stock beneficially owned by Gintel Equity Management, Inc. ("GEM")
(85,000 shares), Gintel ERISA Fund (225,000 shares), and Gintel Fund
(665,000 shares). GEM acts as investment advisor for Gintel Fund and
Gintel ERISA Fund.
(3) Includes 6,000 shares of the Company's Common Stock directly owned of
record by Mr. Fried and 862,600 shares of the Company's Common Stock
owned of record by Albert Fried & Company, a New York Stock Exchange
member firm, of which Mr. Fried is the managing general partner, and
options exercisable within sixty (60) days for 4,500 shares under the
Company's Outside Director Stock Option Plan.
(4) Includes options exercisable within 60 days for 21,194 shares of the
Company's Common Stock under the Company's Stock Option Plan and 45,581
shares under the Company's Non-Qualified Stock Option Plan. Also,
includes 16,586 shares of Common Stock owned by Mr. Fleming's wife and
children as to which Mr. Fleming has disclaimed beneficial ownership.
(5) Includes options exercisable within sixty (60) days for 4,500 shares
under the Company's Outside Director Stock Option Plan.
(6) Includes options exercisable within sixty (60) days for 6,750 shares
under the Company's Non-Qualified Stock Option Plan and 1,000 shares
under the Company's Outside Director Stock Option Plan.
(7) Includes options exercisable within sixty (60) days for 4,500 shares
under the Company's Outside Director Stock Option Plan.
(8) Includes options exercisable within sixty (60) days for 2,750 shares
under the Company's Outside Director Stock Option Plan.
(9) Includes options exercisable within sixty (60) days for 6,250 shares of
the Company's Common Stock under the Company's Stock Option Plan and
6,250 shares under the Company's Non-Qualified Stock Option Plan.
(10) Includes options exercisable within sixty (60) days for 11,102 shares of
the Company's Common Stock under the Company's Stock Option Plan and
11,952 shares under the Company's Non-Qualified Stock Option Plan.
(11) Includes options exercisable within sixty (60) days for 13,636 shares of
the Company's Common Stock under the Company's Stock Option Plan and
36,364 shares under the Company's Non-Qualified Stock Option Plan.
(12) Includes options exercisable within 60 days for an aggregate of 58,137
shares of the Company's Common Stock under the Company's Stock Option
Plan, 116,002 shares under the Company's Non-Qualified Stock Option Plan,
and 17,250 shares under the Company's Outside Director Stock Option Plan.
</FN>
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation presently provides for a Board
of Directors consisting of not less than three nor more than nine directors, who
serve until the next Annual Meeting of Stockholders or until their successors
have been chosen and qualify. The Company's Board of Directors now consists of
seven directors as set forth below, including Albert Fried, Jr., who informed
the Board of Directors that he will not stand for reelection at this meeting.
Jack R. Altherr, Jr. has been nominated by the Board of Directors for election
by stockholders at this meeting.
<TABLE>
<S> <C> <C>
Jack R. Altherr, Jr.(Nominee) Herbert J. Fleming(4) Albert Fried, Jr.(1)(2)(4)
Robert M. Gintel(1)(2)(4)(5) Meyer A. Gross(3) John G. Hudson(1)(4)
Stephen H. Kain (6) H. Varnell Moore(1) Lewis Rubin (2)(3)
<FN>
(1) Member of Compensation Committee.
(2) Member of Nominating Committee.
(3) Member of Audit Committee.
(4) Member of Executive Committee.
(5) Ex Officio Member of Audit Committee.
(6) Resigned from the Board of Directors on February 24, 1995.
</FN>
</TABLE>
Each of the directors will serve until the next Annual Meeting of
Stockholders or until their successors have been chosen and qualify. Shares
represented by executed proxies in the form enclosed will be voted, if authority
to do so is not withheld, for the election as directors of the aforesaid
nominees unless any such nominee shall be unavailable, in which case such shares
will be voted for a substitute nominee designated by the Board of Directors. The
Board of Directors has no reason to believe that any of the nominees will be
unavailable or, if elected, will decline to serve.
Directors who are not employees of the Company receive an annual fee of
$10,000 and a fee of $1,000 for each Board of Directors meeting attended and
$750 for each Committee meeting attended($1,000 for the committee chairmen) and
are reimbursed for expenses incurred relating to their directorship. All
directors also receive $100,000 of term life insurance and are eligible to
participate in the Company's medical insurance plan at the expense of the
Company.
There were four meetings of the Board of Directors during the fiscal year
ended September 30, 1995. For the fiscal year ended September 30, 1995, there
were four meetings of the Audit Committee, three meetings of the Compensation
Committee, one meeting of the Nominating Committee and ten meetings of the
Executive Committee. Each director attended or participated in at least 75% of
the meetings of the Board of Directors and the committees thereof on which he
served. The Company's Audit Committee is involved in discussions with the
Company's independent public accountants with respect to the scope and results
of the Company's year-end audit, the Company's internal accounting controls and
the professional services furnished by the independent auditors to the Company.
The Compensation Committee recommends to the Board of Directors executive
compensation and the granting of stock options to key employees. See
"Compensation Committee Report on Executive Compensation." The Nominating
Committee identifies and proposes to the full Board of Directors nominees to
fill vacancies on the Board of Directors as they occur. The Executive Committee
is empowered when the Board of Directors is not in session to authorize
transactions entered into by the Company in the ordinary course of business,
borrow money, issue notes or other obligations and evidence of indebtedness and
lease or rent real property.
Principal Occupations of Directors
The following is a brief account of the business experience for the past
five years of the Company's directors:
Mr. Robert M. Gintel (67 years of age), Chairman of the Board of the
Company since October 1993, has been Senior Partner of Gintel & Co., a New York
Stock Exchange member firm, since 1969; Chairman and Chief Executive Officer of
Gintel Equity Management Inc., an investment advisor registered under the
Investment Advisors Act of 1940, since 1971; and Trustee, Chairman and Chief
Executive Officer of Gintel ERISA Fund and Gintel Fund, each an open-end
non-diversified investment company registered under the Investment Company Act
<PAGE>
of 1940, since 1981 and 1980, respectively. Mr. Gintel is also Vice Chairman and
a director of XTRA Company and a director of Amtec, Inc. See "Certain
Transactions".
Mr. Jack R. Altherr, Jr. (46), a director nominee of the Company, has been
Vice President, Chief Financial Officer, Secretary and a Director of Avondale
Mills, Inc. since October 1988. In addition, Mr. Altherr served in various
administrative and financial positions with Avondale Mills, Inc. from July 1982
to October 1988. See "Certain Transactions".
Mr. Herbert Fleming (49), a director of the Company since June 1988, has
been employed by the Company in various executive capacities since October 1984.
Mr. Fleming has been President of the Company since November 1986. Mr. Fleming
is also a Director of Commonwealth Finance, Inc., a consumer finance company.
Mr. Meyer A. Gross (59), a director of the Company since June 1988, has
been a practicing attorney in the State of New York since 1961 and, since 1985
has been a partner in the law firm of Schweitzer Cornman & Gross, intellectual
property counsel to the Company, and its predecessor firms. For the fiscal year
ended September 30, 1995, the Company paid $24,263 in legal fees to the firm.
Mr. Lewis Rubin (58), a director of the Company since October 1993, has
been President and Chief Executive Officer of XTRA Corp., a transportation
equipment leasing company, since April 1990. Mr. Rubin is also a director of
XTRA Corporation.
Mr. John G. Hudson (70), a director of the Company since December 1993, was
the President and Chief Operating Officer of Avondale Mills, Inc. from 1986
through 1990. Mr. Hudson is a director of West Point Stevens, Inc.
Mr. H. Varnell Moore (59), a director of the Company since November 1994,
has been President, Chief Executive Office and a director of Woolrich, Inc., a
manufacturer of outdoor wear, since 1993. For more than four years prior
thereto, he was Vice President of VF Corporation, a manufacturer of sportswear
and other apparel.
MANAGEMENT
Officers of the Company
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Office Held
<S> <C>
Robert M. Gintel . . . . . Chairman of the Board
Albert Fried, Jr.. . . . . Vice Chairman of the Board
Herbert J. Fleming . . . . President
Joe E. Brinson. . . . . . Executive Vice President-Operations
James L. Ford. . . . . . . . . . . Executive Vice President-Finance and
Chief Financial Officer
J. Roger Holland. . . . . Executive Vice President-Sales and Marketing
William H. Boyd . . . . . Vice President-Administration and Treasurer
E. Franklin Impson, Jr. . Vice President and Controller
Edward I. Kramer. . . . . Secretary
</TABLE>
Mr. Joe E. Brinson (47), Executive Vice President of Operations since June
1994, has been employed by the Company from June 1987 to September 1989 as a
Director of Infantswear Manufacturing and from September 1989 to June 1994 as
Vice President-Manufacturing.
Mr. James L. Ford (55), has been Executive Vice President-Finance of the
Company since June 1994. From April 1989 through December 1992, he was Vice
Chairman of the Board, Executive Vice President and Chief Financial Officer of
Sunbelt Coca-Cola Bottling, Inc. Prior thereto, he was Vice President and
<PAGE>
Controller of Coca-Cola Enterprises, Inc. Mr. Ford also is President of Ford
Management Consulting, a consulting firm, which is no longer actively engaged in
any new projects.
Mr. J. Roger Holland (55), has been Executive Vice President-Sales since
joining the Company in April 1994. From May 1990 through August 1993, Mr.
Holland was the Chief Executive Officer of Signal Apparel Company, Inc., an
activewear company. From August 1985 through January 1990, Mr. Holland was Chief
Executive Officer of Champion Products, Inc., a sportswear company.
Mr. William H. Boyd (48), Vice President-Administration since January 1986
and Treasurer since September 1994, has been employed by the Company in various
accounting and financial positions since August 1982.
Mr. E. Franklin Impson, Jr. (37), has been Vice President of the Company
since September 1994 and Controller since February 1994. Mr. Impson has been
employed by the Company in various finance positions since January 1993. Prior
to joining the Company, Mr. Impson held various accounting positions, including
that of Controller for Buster Brown Apparel, a division of Gerber Products
Company.
Mr. Edward I. Kramer (61), has been a practicing attorney in the State of
New York since 1960, and is a member of the law firm of Blau, Kramer, Wactlar &
Lieberman, P.C., counsel to the Company. For the fiscal year ended September 30,
1995, the Company paid $89,940 in legal fees and disbursements to the firm. Mr.
Kramer was appointed Secretary in August 1988.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation with
respect to the Chief Executive Officer and each of the three other highest-paid
executive officers of the Company whose total annual salary and bonus equaled or
exceeded $100,000 in fiscal 1995, for services rendered for the fiscal years
ended September 30, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation(1 Long-Term Compensation
Name and Fiscal Option All Other
Principal Position Year Salary Bonus Awards(#) Compensation (2)
<S> <C> <C> <C> <C> <C>
Herbert J. Fleming 1995 $293,750 $ 16,000(4) 20,000 $ 1,875
President (3) 1994 275,000 50,375(4) 50,000 1,780
1993 262,500 116,000(4) - 2,854
J. Roger Holland 1995 $293,750$ - 50,000 $ 1,200
Executive Vice President- 1994 137,500 16,952 50,000 500
Sales and Marketing 1993 - - - -
Joe E. Brinson 1995 $161,250$ - 10,000 $ 1,863
Executive Vice Presiden 1994 150,000 18,750 23,750 1,660
Manufacturing 1993 140,095 33,362 - 1,781
James L. Ford 1995 $149,987$ - 12,500 $ 1,200
Executive Vice President- 1994 41,932 - 12,500 1,080
Finance 1993 - - - -
<FN>
(1) No Other Annual Compensation is shown because the amounts of perquisites and
other non-cash benefits provided by the Company do not exceed the lesser of
$50,000 or 10% of the total annual base salary and bonus disclosed in this
table for the respective officer.
(2) All Other Compensation includes (a) for fiscal 1995, $1,200, $1,200, $1,188
and $1,250 of premiums paid by the Company in respect of term life insurance
policies on Messrs. Fleming, Holland, Brinson and Ford, respectively, and
$675 contributed by the Company to each such person's account (other than J.
Roger Holland and James L. Ford) pursuant to the Company's 401(k) Savings
Plan; (b) for fiscal 1994, $1,200,$1,080, $1,080 and $500 of premiums paid
by the Company in respect of term life insurance policies on Messrs.
Fleming, Holland, Brinson and Ford, respectively, and $580 contributed by
the Company to each such person's account (other than J. Roger Holland)
pursuant to the Company's 401(k) Savings Plan; and (c) for fiscal 1993,
$2,160 and $1,087 of premiums paid by the Company in respect of term life
insurance policies on Messrs. Fleming and Brinson, respectively, and $694
contributed by the Company to each such person's account pursuant to the
Company's 401(k) Savings Plan. Effective May 1993, the Company's 401(k)
Savings Plan and its profit sharing plan were merged.
(3) While the Company currently has no Chief Executive Officer, for purposes of
this proxy statement Mr. Fleming is deemed to be the Company's Chief
Executive Officer.
(4) Includes a $16,000 annual travel expense allowance paid to Mr. Fleming.
</FN>
</TABLE>
<PAGE>
Stock Option Grants in Last Fiscal Year
The following table sets forth all stock option grants to the executive
officers named in the "Summary Compensation Table" during the fiscal year ended
September 30, 1995:
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed Annual Rates Of
Individual Grants(1)(3) Stock Price Appreciation for Option Term(1)(5)
Number of Shares % of Total
Underlying Options Granted
Options To Employees in Exercise Expiration Stock Price Dollar Stock Price Dollar
Name Granted(2) Fiscal Year(4) Price($/Sh) Date 5%(5) Gain(1) 10%(5) Gain(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Herbert J. Fleming 20,000 11.3% $12.375 2/23/00 $15.79 $ 68,300 $19.93 $151,100
J. Roger Holland 50,000 28.3% 12.375 2/23/00 15.79 170,750 19.93 377,750
Joe E. Brinson 10,000 5.7% 12.375 2/23/00 15.79 34,150 19.93 75,550
James L. Ford 12,500 7.1% 12.375 2/23/00 15.79 42,688 19.93 94,438
<FN>
- ---------------
(1) All grants are under the Company's stock option plans. Dollar gains are
based on the assumed annual rates of appreciation above the exercise price
of each option for the five-year term of the option. Potential Realizable
Value is based on the assumed annual growth rates for the five-year option
term. Actual gains, if any, on stock option exercises are dependent on the
future performance of the stock. There can be no assurance that the
amounts reflected in this table will be achieved.
(2) Grants were made in fiscal 1995 at the market value of the Company's
Common Stock on the date of grant. Grants vest 50% one year after date of
grant and the remaining balance two years after the date of grant.
(3) Total options granted to employees in fiscal 1995 were for 176,700 shares
of Common Stock.
(4) The stock price represents the price of the Company's Common Stock if
the assumed annual rates of stock price appreciation are achieved over
the term of each of the options.
(5) The increase in market value of the Company's Common Stock for all
stockholders as of January 2, 1996, assuming annual rates of stock
appreciation from September 29, 1995 (stock price at $8.50 per share) over
the five-year option period used in this table, aggregate $16,153,437 at a
5% rate and $35,694,872 at a 10% rate.
</FN>
</TABLE>
Aggregate Option/Sar Exercises in Last Fiscal Year and
Fiscal Year-End Option/Sar Values
The following table sets forth stock options exercised during fiscal 1995
and all unexercised stock option grants to the executive officers named in the
"Summary Compensation Table" as of September 30, 1995.
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-The-Money
Acquired on Value Options at Fiscal Year-End Options at Fiscal Year End(2)
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Herbert J. Fleming 12,154 $39,197 51,774 45,000 $306,204 $212,500
J. Roger Holland - - 12,500 87,500 106,250 318,750
Joe E. Brinson 3,646 11,303 16,179 21,875 119,672 100,938
James L. Ford - - 6,250 18,750 53,125 53,125
<FN>
(1) Values are calculated by subtracting the exercise price from the fair
market value of the Common Stock as of the exercise date.
(2) Based upon the closing price of the Company's Common Stock of $8.50
on September 29, 1995.
</FN>
</TABLE>
<PAGE>
Employment Agreements
Mr. Fleming has entered into an employment agreement with the Company dated
January 1, 1993, as amended, for a rolling two-year term which may not be
terminated prior to May 5, 1997 without cause. Pursuant to this agreement, Mr.
Fleming will receive compensation consisting of an annual salary of $275,000 and
an annual bonus under the Company's executive management incentive program, or
similar program, which is based upon sales, earnings and other proposed
objectives which will be approved by the Board of Directors from time to time.
The employment agreement with Mr. Fleming further provides that in the event
there is a change in the control of the Company, as defined therein, or in any
person directly or indirectly controlling the Company, as also defined therein,
the employee has the option, exercisable within six months of becoming aware of
such event, to terminate his employment agreement. Upon such termination, unless
either (i) a majority of the board of directors in office immediately prior to
the change in control determine that such change is in the best interests of the
Company or (ii) if a majority of the board of directors in office immediately
prior to such change in control determine that such change is not in the best
interests of the Company, and the employee thereafter cooperates, assists or
acts, directly or indirectly, on behalf of or in connection with the party
seeking to acquire control, he has the right to receive as a lump sum payment an
amount equal to three (3) times the amount paid to him pursuant to his
employment agreement minus one dollar ($1.00) with respect to the last fiscal
year of the Company prior to exercising this right.
Mr. Holland has entered into an employment agreement with the Company dated
April 4, 1994 for a term ending on April 3, 1997. Pursuant to this agreement,
Mr. Holland will receive compensation consisting of an annual salary of $275,000
and an annual bonus under the Company's executive management incentive program,
or similar program, which is based upon sales, earnings and other proposed
objectives which will be approved by the Board of Directors from time to time.
This agreement also provides for the Company to issue to Mr. Holland options
exercisable for 50,000 shares of Common Stock in each of the first two years of
his employment by the Company.
Executive Management Incentive Program
The Company has an executive management incentive program which is intended
to provide financial incentives to senior management and other key employees, as
defined, of the Company upon meeting certain predetermined objectives. These
objectives include the Company attaining certain levels of earnings and eligible
employees achieving individual performance goals as determined by the Board of
Directors. The Board of Directors, in its sole discretion, shall determine those
employees eligible for the executive management incentive program at the
beginning of each year.
For the year ended September 30, 1995, approximately 72 employees were
eligible to participate in the executive management incentive program. No
amounts have been or will be paid under the executive management incentive
program for the fiscal year ended September 30, 1995.
401(k) Savings Plan
The Company sponsors a retirement plan (the "401(k) Savings Plan") intended
to be qualified under section 401(k) of the Internal Revenue Code of 1986, as
amended. All employees over age 21 who have completed at least 1,000 hours in
their first year of employment by the Company are eligible to participate in the
401(k) Savings Plan. Employees may contribute to the 401(k) Savings Plan on a
tax deferred basis up to 15% of their total annual salary, but in no event more
than the maximum permitted by the Code ($9,240 in calendar 1995). The Company
matches all employee contributions up to $500 per year per employee, and all
Company contributions are fully vested. As of September 30, 1995, approximately
1,218 employees had elected to participate in the 401(k) Savings Plan. For the
fiscal year ended September 30, 1995, the Company contributed approximately
$850,000 to the 401(k) Savings Plan, of which $500 was a contribution for each
of Messrs. Fleming, Holland, Brinson and Ford.
Effective May 1, 1993, the Company's profit sharing plan was merged with
and into the 401(k) Savings Plan, and now operates as part of the 401(k) Savings
Plan. For each plan year, the Company contributes to the profit sharing
component of the 401(k) Savings Plan an amount equal to the lesser of (a)
$450,000, (b) the greater of (i) 3.765% of its net income, as defined, for the
fiscal year ending during such plan year, or (ii) $120,000 (c) 15% of that
year's participants' earnings plus any available carryover from prior years or
(d) the maximum amount permitted by law based on available or accrued profits.
<PAGE>
Employees may also contribute one to ten percent (in whole multiples) of
their earnings to the profit sharing component of the 401(k) Savings Plan, up to
a maximum of (i) 25% of compensation for the plan year; or (ii) $30,000. All
Company contributions are fully vested and are allocated to employees accounts
proportionally based on their respective earnings, up to a maximum of $20,000
per year per participant.
Stock Plans
Stock Option Plan
Under the Company's Stock Option Plan (the "Plan"), key employees,
directors and officers may be granted options to purchase an aggregate of
514,652 shares of the Company's Common Stock. The term "key employees" includes
employees whose judgment, initiative and efforts are deemed valuable for the
successful conduct and development of the Company's business. The Plan is
administered by the Compensation Committee (the "Committee"), consisting of at
least three members of the Board of Directors. The Committee, subject to
provisions in the Plan, will designate, in its discretion, which persons are to
be granted options, the number of shares subject to each option, the number of
options to be granted and the period of each option. Each recipient must be an
employee of the Company at the time of grant and throughout the period ending on
the day three months before the date of exercise. Under the terms of the Plan,
the exercise price of the shares subject to each option granted will be not less
than 100% of the fair market value at the date of grant, or 110% of such fair
market value for options granted to any employee or director who owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company. Adjustments will be made to the purchase price
in the event of stock dividends, corporate reorganizations, or similar events.
During fiscal 1995, 54,985 options were granted under the Plan at exercises
prices of $6.625 to $12.375. As of September 30, 1995, options to purchase
59,984 shares were exercisable and options to purchase 215,881 shares have been
exercised.
Non-Qualified Stock Option Plan
In February 1990, the Company's stockholders approved a Non-Qualified Stock
Option Plan (the "Non-Qualified Plan") which covers 453,876 shares of the
Company's Common Stock. The options become exercisable in installments as
determined at the time of grant by the Board of Directors. During fiscal 1995,
the Company granted options to purchase 108,215 shares of Common Stock under the
Non-Qualified Plan at exercise prices of $11.50 to $12.375 per share. As of
September 30, 1995, options to purchase 88,484 shares were exercisable, and
57,040 options have been exercised.
Outside Director Stock Option Plan
In February 1995, the Company's stockholders approved an Outside Director
Stock Option Plan (the "Director Plan") which covers 60,000 shares of the
Company's Common Stock and became effective November 15, 1994. All directors of
the Company who are not employees of the Company, of which there are presently
six (6), are eligible to participate in the Director Plan. The Director Plan is
administered by the Board of Directors. Under the Director Plan, each
non-employee director annually is granted options to purchase 2,000 shares of
Common Stock at a price equal to the fair market value on the date of grant.
During fiscal 1995, the Company granted options to purchase 10,000 shares of
Common Stock at an exercise price of $12.375.
Certain Transactions
The Company has entered into a Note Purchase Agreement (the "Note Purchase
Agreement") with Robert M. Gintel and Avondale Mills, Inc. pursuant to which Mr.
Gintel and Avondale Mills, Inc. will make an aggregate of $15,000,000 principal
amount of loans (the "Loans") to the Company. The proceeds of the Loans will be
used for working capital and capital expenditure purposes. The Loans will be
unsecured, bear interest at the rate of ten percent (10%) per annum, and mature
on January 31, 1999. The Loans will be subordinate to the Company's new
$60,000,000 credit facility and certain other senior debt of the Company. In
connection with the Loans, the Company will issue a subordinated note in the
principal amount of $7,500,000 to Avondale Mills, Inc. and two subordinated
notes in the principal amount of $3,750,000 each to Robert M. Gintel. In
addition, subject to approval of Proposal 3, in connection with the $3,750,000
Loan (the "Long-Term Gintel Subordinated Note") which will remain outstanding
after the consummation of the Company's proposed rights offering described
below, the Company will issue to Robert M. Gintel a warrant (the "Warrant") to
<PAGE>
purchase up to 125,000 shares of Common Stock at $7.00 per share. The Note
Purchase Agreement provides that upon the completion of such rights offering,
the $11,250,000 aggregate proceeds received by the Company in connection
therewith will be used to repay the $7,500,000 subordinated note held by
Avondale Mills, Inc. and one of the Company's $3,750,000 subordinated notes held
by Robert M. Gintel. Pursuant to the terms of both the Note Purchase Agreement
and the Standby Agreement entered into by Mr. Gintel, Avondale Mills, Inc. and
the Company, Mr. Gintel and Avondale Mills, Inc. may satisfy their respective
obligations to purchase all unsubscribed shares in the Rights Offering by
tendering the outstanding amount of all principal and accrued and unpaid
interest under their subordinated notes from the Company. The Note Purchase
Agreement further provides that if this offering is not consummated by May 31,
1996, Avondale Mills, Inc. will have the right, for thirty (30) days, to convert
and exchange its $7,500,000 subordinated note for a convertible note,
convertible for a period of sixty (60) days into shares of Common Stock at the
rate of $7.00 per share. Robert M. Gintel also has the same exchange and
conversion rights with respect to the Long-Term Gintel Subordinated Note.
The Company intends to offer (the "Rights Offering") up to 1,607,143 shares
of its Common Stock to stockholders, pursuant to non-transferable rights (the
"Rights") to purchase shares of Common Stock at a price of $7.00 per share. Each
stockholder will receive one Right for each share of Common Stock held on the
Record date. Each Right will entitle the stockholder to subscribe for
one-quarter of one share of Common Stock. The Company has entered into a Standby
Purchase Agreement (the "Standby Agreement") with Avondale Mills, Inc., the
Company's largest raw material supplier, and Robert M. Gintel, the Chairman of
the Board of Directors of the Company, whereby Avondale Mills, Inc. and Mr.
Gintel have jointly and severally agreed to acquire from the Company all
remaining unsubscribed shares of Common Stock available as a result of the
Rights Offering at $7.00 per share. Pursuant to the terms of the Standby
Agreement, the first 750,000 unsubscribed shares of Common Stock will be
purchased by Avondale Mills, Inc. and the remaining unsubscribed shares of
Common Stock will be purchased, in equal amounts by each purchaser, subject to
the respective $3,750,000 and $7,500,000 maximum standby commitments of Robert
M. Gintel and Avondale Mills, Inc., respectively.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors consisted
during fiscal 1995 of Messrs. Hudson (Chairman), Gintel, Fried and Moore. Except
as otherwise disclosed herein, none of these persons had any relationship
requiring disclosure in this Proxy Statement.
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the captions "Compensation Committee
Report on Executive Compensation" and "Company Stock Performance" will not be
deemed to be filed or to be proxy soliciting material or incorporated by
reference in any prior or future filings by the Company under the Securities Act
of 1933 or the Securities Exchange Act of 1934.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is generally
determined by the Compensation Committee of the Board of Directors. Except as
otherwise disclosed herein, each member of the Compensation Committee is a
director who is not an employee of the Company or any of its affiliates.
General Policies
The Company's compensation programs are intended to enable the Company to
attract, motivate, reward and retain the management talent required to achieve
aggressive corporate objectives in a rapidly changing industry, and thereby
increase stockholder value. It is the Company's policy to provide incentives to
its senior management to achieve both short-term and long-term objectives and to
reward exceptional performance and contributions to the development of the
Company's business. To attain these objectives, the Company's executive
compensation program includes a competitive base salary, coupled with a
substantial cash incentive component under its executive management incentive
program which is "at risk" based on the performance of the Company's business,
primarily as reflected in the achievement of financial goals. As a general
matter, as an executive officer's level of management responsibility in the
Company increases, a greater portion of his or her potential total compensation
depends upon the Company's performance as measured by objective standards over
one or more years.
<PAGE>
Stock options are granted to employees, including the Company's executive
officers, by the Compensation Committee under the Company's Stock Option Plan
and Non-Qualified Stock Option Plan. The Committee believes that stock options
provide an incentive that focuses the executive's attention on managing the
Company from the perspective of an owner with an equity stake in the business.
Options are awarded with an exercise price equal to the market value of Common
Stock on the date of grant, have a maximum term of five to ten years and
generally become exercisable for half of the option shares one year from the
date of grant and for all of the option shares two years from the date of grant.
Among the Company's executive officers, the number of shares subject to options
granted to each individual generally depends upon the level of that officer's
responsibility. The largest grants are awarded to the most senior officers who,
in the view of the Compensation Committee, have the greatest potential impact on
the Company's profitability and growth. Previous grants of stock options are
reviewed but are not considered the most important factor in determining the
size of any executive's stock option award in a particular year.
From time to time, the Compensation Committee utilizes the services of
independent consultants to perform analyses and to make recommendations to the
Committee relative to executive compensation matters. No compensation consultant
is paid on a retainer basis.
Relationship of Compensation to Performance
The Compensation Committee annually establishes, subject to the approval of
the Board of Directors and any applicable employment agreements, the salaries
which will be paid to the Company's executive officers during the coming year.
In setting salaries, the Compensation Committee takes into account several
factors, including competitive compensation data, the extent to which an
individual may participate in the incentive compensation and stock option plans
maintained by the Company and its affiliates, and qualitative factors bearing on
an individual's experience, responsibilities, management and leadership
abilities, and job performance.
The Compensation Committee also determines the terms of the Company's
executive management incentive program. In doing so, the Compensation Committee
reviews management's plans for the Company's growth and profitability,
determines the criteria to be used for the determination of bonus awards under
the executive management incentive program and fixes the levels of target and
maximum awards for participants and the level of attainment of financial
performance objectives necessary for awards to be made under each incentive
compensation plan.
For fiscal 1995, no bonuses were paid or will be paid pursuant to the
Company's executive management incentive program. Under that plan, target awards
for such officers ranging from 40% to 50% of the participant's salary at year
end were payable depending upon the level of the Company's operating income (or,
in the case of certain officers who had management responsibility for one of the
Company's operating groups, depending in part on the performance of such
individual and his operating group). Under the terms of this plan, no incentive
bonus was payable to an executive officer unless a specified level of the
Company's operating income or the operating group's or individual's performance
target, as the case may be, was achieved. The plan was designed in such a way as
to disproportionately increase or decrease a participant's incentive bonus in
the event that actual results exceed or fall short of targeted levels.
Stock options are granted to key employees, including the Company's
executive officers, by the Compensation Committee under the Plan and the
Non-Qualified Plan. Among the Company's executive officers, the number of shares
subject to options granted to each individual generally depends upon his or her
base salary and the level of that officer's management responsibility. The
largest grants are awarded to the most senior officers who, in the view of the
Compensation Committee, have the greatest potential impact on the Company's
profitability and growth.
Compensation of President and Chairman of the Board
For fiscal 1995, pursuant to the terms of his employment agreement with the
Company, Mr. Herbert J. Fleming, the Company's President, received a base salary
of $293,750 and a travel expense allowance of $16,000. See "Executive
Compensation-Employment Agreements". In light of this employment agreement, the
Compensation Committee was not required to make any decision regarding the base
compensation of Mr. Fleming. The Compensation Committee determined that no bonus
(other than the contractually required travel allowance) was appropriate in
light of the Company's financial results for the 1995 fiscal year,
notwithstanding the substantial contribution Mr. Fleming has made to the
<PAGE>
Company's operating performance and future prospects. In fiscal 1995, the
Compensation Committee granted to Mr. Fleming options to purchase an aggregate
of 20,000 shares of Common Stock exercisable at $12.375 under the Plan and the
Non-Qualified Plan. Each of these options were granted at exercise prices equal
to the market value of the Company's Common Stock on the date of grant. The
Compensation Committee believes that these options provide an incentive for Mr.
Fleming to maximize long-term shareholder value.
During fiscal 1995, the Compensation Committee recommended the payment of
$50,000 annually to Mr. Robert M. Gintel, the Company's Chairman of the Board,
which the Compensation Committee believed was appropriate in light of Mr.
Gintel's contributions to the Company. During fiscal 1995, Mr. Gintel declined
to accept any options to purchase shares of Common Stock under the Company's
stock option plans.
The Compensation Committee
John G. Hudson, Chairman
Robert M. Gintel
Albert Fried, Jr.
H. Varnell Moore
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors and persons who own more than ten percent of a registered
class of the Company's equity securities ("Reporting Persons") to file reports
of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities
and Exchange Commission (the "SEC") and the New York Stock Exchange (the
"NYSE"). These Reporting Persons are required by SEC regulation to furnish the
Company with copies of all Forms 3, 4 and 5 they file with the SEC and the NYSE.
Based solely upon the Company's review of the copies of the forms it has
received, the Company believes that all Reporting Persons complied on a timely
basis with all filing requirements applicable to them with respect to
transactions during fiscal 1995.
<PAGE>
COMPANY STOCK PERFORMANCE
The following graph sets forth the cumulative total stockholder return to
the Company's stockholders during the five year period ended September 30, 1995
as well as an overall stock market index (S & P 500 Index) and the Company's
peer group index (S & P Textiles):
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG ONEITA INDUSTRIES,
INC., T HE S&P 500 INDEX AND THE S&P TEXTILES INDEX.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C> <C> <C> <C> <C> <C>
9/90 9/91 9/92 9/93 9/94 9/95
Oneita Inds. Inc. ONA 100 137 203 97 164 127
S&) 500 1500 100 131 146 165 171 221
S&P Textiles ITXA 100 178 183 141 155 151
<FN>
*$100 invested on September 30, 1990 in Stock or Index, including reinvestment
of dividends. Fiscal year ending September 30.
</FN>
</TABLE>
<PAGE>
PROPOSAL NO. 2 TO APPROVE THE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors approved a proposed Employee Stock Purchase Plan
(the "Stock Purchase Plan") on September 14, 1995 subject to approval by the
stockholders at the Annual Meeting. If approved, the Stock Purchase Plan would
make available 250,000 shares of the Company's Common Stock for purchase by
eligible employees of the Company and certain of its subsidiaries. Management
estimates that these 250,000 shares will satisfy the share of requirements of
the Stock Purchase Plan for approximately five (5) years from its effective
date. However, this period can vary depending upon the future number of
participants in the Stock Purchase Plan and market price of the shares purchased
from time to time. The Stock Purchase Plan provides that the shares available
for the purchase thereunder may be unissued shares or treasury shares available
from time to time.
The Company believes that stock ownership among its employees is a
substantial benefit to the Company's progress and growth. An employee who is a
stockholder has a common goal with management in achieving greater earnings,
thereby increasing the value of the employee's investment in the Company's
Common Stock purchased under the Stock Purchase Plan. In addition, such stock
ownership may improve employee morale and efficiency and reduce employee
turnover.
A summary of the principal provisions of the Stock Purchase Plan is set
forth below, but such summary is qualified in its entirety by reference to the
full text of the Stock Purchase Plan, which is attached to this Proxy Statement
as Exhibit A.
Description of the Stock Purchase Plan
All regular employees of the Company and its designated subsidiaries,
except certain part-time employees or owners of 5% or more of the total combined
voting power or value of all classes of stock of the Company or any of its
subsidiaries are eligible to participate in the Stock Purchase Plan. An eligible
employee may elect to participate in the Stock Purchase Plan by authorizing
payroll deductions of not less than $5 per week or more than 10% of the
employee's regular pay to be applied toward the purchase of stock. Four
offerings to purchase shares will be made in each calendar year, beginning on
the first Monday of February, May, August and November (each a "grant date") and
ending on the first Monday of the next succeeding calendar quarter (each an
"exercise date"). The option price per share is the lesser of (a) 95% of its
fair market value on the grant date or (b) 95% of its fair market value on the
exercise date. Fair market value is defined as the average of the highest and
lowest quoted selling prices per share reported on the New York Stock Exchange
Composite Transactions Tape on the applicable date. The number of shares
purchasable by a participant in any quarterly offering is determined by dividing
the amount of accumulated payroll deductions in the participant's account by the
option price per share. A participant may not purchase more than 300 shares
during any Offering. Purchases of shares are made automatically on the same
date, and a new grant is extended automatically on the same date. A participant
may withdraw from the Stock Purchase Plan at any time and cannot rejoin
thereafter for two successive quarterly offerings. If a participant's employment
is terminated for any reason or if his employer ceases to be a designated
subsidiary of the Company, the participant, or the participant's estate, may
elect to receive the balance remaining in his or her account or have such
balance retained until the next succeeding exercise date, at which time it shall
be applied to the purchase of shares. A participant may not assign his or her
rights under the Stock Purchase Plan. Appropriate adjustments in the number of
shares reserved under the Stock Purchase Plan and to the option price and number
of shares subject to each then outstanding option shall be made in the event of
any future stock dividends, stock splits or corporate reorganizations.
The Stock Purchase Plan will be administered by the Compensation Committee
of the Board of Directors. The members of the Compensation Committee are not
eligible to participate in the Stock Purchase Plan. The Stock Purchase Plan may
be suspended or terminated or amended by the Board of Directors. However, no
amendment can increase the number of shares authorized for issuance under the
Stock Purchase Plan, change the formula for determining the option price per
share, withdraw the administration of the Stock Purchase Plan from the
Compensation Committee or further limit the eligibility requirements of
participants. The Stock Purchase Plan will terminate when all shares subject to
the Stock Purchase Plan have been optioned or at such other time as the Board of
Directors may determine. The Stock Purchase Plan will be suspended whenever a
current registration statement or amendment thereto with respect to the shares
subject to purchase under the Stock Purchase Plan is not in effect .
<PAGE>
Federal Income Tax Consequences
Under the Internal Revenue Code, an employee participating in the Stock
Purchase Plan will not realize taxable income either on the grant or exercise of
the stock purchase option. In order to receive this favorable tax treatment, at
all times during the period beginning with the date of grant and ending on the
day not more than three months before the date of exercise, the employee must be
employed by the Company or its designated subsidiaries.
If shares purchased under the Stock Purchase Plan are disposed of more than
2 years after the grant date or 1 year after the exercise date, whichever is
later, the participant will realize ordinary income equal to the lesser of (a)
the excess of the fair market value of the share at the time of such disposition
or death over the amount paid for the share, or (b) the excess of the fair
market value of the share at the time the option was granted over the option
price. Any gain in excess of the amount set forth in the preceding paragraph
shall be treated as capital gain.
If shares purchased under the Stock Purchase Plan are disposed of less than
2 years after the grant date or 1 year after the exercise date, the participant
will realize ordinary income equal to the difference between the fair market
value of the stock on the date of exercise over the option price. Additionally,
if the shares are sold, capital gain or loss will be realized equal to the
difference between the selling price of the shares, after such purchase price
has been increased by the amount required to be realized as ordinary income.
The affirmative vote of the majority of the votes case on this proposal
shall constitute approval of the Stock Purchase Plan.
The Board of Directors recommends a vote FOR the approval of the Stock
Purchase Plan.
PROPOSAL NO. 3 TO ISSUE WARRANTS TO PURCHASE 125,000 SHARES OF COMMON STOCK
TO ROBERT M. GINTEL IN CONNECTION WITH A LOAN TO THE COMPANY
Upon approval by the Company's stockholders at the Annual Meeting, the
Company intends, pursuant to the terms of a Note Purchase Agreement dated as of
December 28, 1995 (the "Note Purchase Agreement") among Robert M. Gintel,
Avondale Mills, Inc. (collectively, the "Purchasers") and the Company, to issue
(i) a Subordinated 10% Promissory Note in the principal amount of $7,500,000 to
Avondale Mills, Inc., (the "Avondale Note"), (ii) a Subordinated 10% Promissory
Note in the principal amount of $3,750,000 to Robert M. Gintel (the "Initial
Gintel Note") and (iii) a $3,750,000 Subordinated 10% Promissory Note in the
principal amount of $3,750,000 (the "Long-Term Gintel Subordinated Note") and,
subject to the approval of this proposal no. 3, a warrant (the "Warrant") to
purchase up to 125,000 shares of Common Stock at $7.00 per share to Robert M.
Gintel (the "Avondale Note", the "Initial Gintel Note" and the "Long-Term Gintel
Subordinated Note" are sometimes hereinafter collectively referred to as the
"Notes"). In the event of any material change in the terms of the Note Purchase
Agreement, or any change in the consideration to be paid by the Purchasers, the
Company will, unless the change is not adverse to the Company or its
stockholders, submit the changed terms to the stockholders of the Company for
their approval. The Board of Directors will abandon its plan to issue the
Warrant issued in connection with the Long-Term Gintel Subordinated Note if such
transaction is not approved by the stockholders of the Company. The Company
intends to make a Common Stock rights offering (the "Rights Offering"), on the
terms and conditions set forth in the Standby Agreement (as described below), to
the holders of shares of the Company's Common Stock to raise sufficient funds to
repay in full the Avondale Note and the Initial Gintel Note; however, the
Long-Term Gintel Subordinated Note will not be so repaid and will remain
outstanding.
Relationship of Purchasers to the Company
Robert M. Gintel has agreed to lend the Company $7,500,000 pursuant to the
terms of the Note Purchase Agreement. Mr. Gintel has been Chairman of the Board
of Directors of the Company since October 1993. As of January 9, 1996, Mr.
Gintel beneficially owns 2,075,000 shares (or approximately 29.4%) of the
Company's Common Stock, of which he directly owns 1,100,000 shares of Common
Stock representing 15.6% of the outstanding shares. An aggregate of 975,000 of
<PAGE>
these shares are beneficially owned by Gintel Equity Management, Inc., Gintel
ERISA Fund and Gintel Fund, each of which is controlled by Mr. Gintel. Mr.
Gintel possesses sole investment power, sole dispositive power and sole voting
power for all of said shares, with the exception of 24,500 shares of the
Company's Common Stock in which Gintel Equity Management, Inc. has sole
dispositive power, but no voting power. Mr. Gintel has advised the Company that
he intends to vote all shares of Common Stock which he beneficially owns and has
the power to vote in favor of the approval of this Proposal No. 3.
Avondale Mills, Inc. ("Avondale") has agreed to lend the Company $7,500,000
pursuant to the terms of the Note Purchase Agreement. Avondale is the Company's
largest raw material supplier. In addition, Mr. John G. Hudson, a director of
the Company, was the President and Chief Operating Officer of Avondale from 1986
through 1990. Further Mr. Jack R. Altherr, Jr., a director nominee of the
Company nominated for election at this meeting, has been Vice President, Chief
Financial Officer, Secretary and a director of Avondale since October 1988 and
served in various other administrative and financial positions from July 1982 to
October 1988.
The terms of the Note Purchase Agreement were negotiated by representatives
of the Company and representatives of the Purchasers in good faith on an arm's
length basis. Because of the relationships described above, the Board of
Directors of the Company appointed a committee comprised of the disinterested
directors of the Company who are not Purchasers, namely Lewis Rubin (Chairman),
Meyer A. Gross, H. Varnell Moore and John G. Hudson to review the transactions
contemplated by the Note Purchase Agreement and the Rights Offering. This
committee has concluded that the terms of the Note Purchase Agreement, the
Warrant and the Rights Offering are as favorable to the Company as if negotiated
with a third party with no common affiliations with the Company and are fair to
the Company's Stockholders. Further, the Company has received the opinion of
Butler, Chapman & Co., Inc. ("Butler, Chapman") to the effect that the
transactions contemplated by the Note Purchase Agreement, the Warrant and the
Rights Offering are fair from a financial point of view to the Company and the
holders of Common Stock of the Company.
Market Price of the Company's Common Stock
On December 28, 1995, the day before the date the transactions contemplated
by the Note Purchase Agreement were publicly disclosed, the closing price per
share of the Company's Common Stock was $6.875. On January 5, 1996, the closing
price per share of the Company's Common Stock was $7.125. The Company's
management believes this increase reflects both market support of the
transactions contemplated by the Note Purchase Agreement and the Rights Offering
and recognition of improvements in the Company's financial condition and
operations.
Description of Note Purchase Agreement
A copy of the Warrant and the Note Purchase Agreement, together with
certain of the exhibits thereto, is attached hereto as Exhibit B, and the
following description of the Warrant and the Note Purchase Agreement is
qualified in its entirety by reference to such exhibit.
General. The Company agreed to sell to the Purchasers, and the Purchasers
agreed to purchase from the Company, subject to certain conditions, $15,000,000
aggregate principal amount of Subordinated 10% Promissory Notes of the Company
due January 31, 1999 at a price equal to 100% of the aggregate principal amount
of the Notes, such Notes to be subordinated to certain indebtedness of the
Company on the terms and conditions further set forth in the Notes. To evidence
the loan, Avondale will be issued the Avondale Note and Gintel will be issued
the Initial Gintel Note and the Long-Term Gintel Subordinated Note.
Conditions to the Purchasers' Obligations.
The obligations of the Purchasers to purchase their respective Notes are
subject to the following conditions, among others:
Bank Financing. The Company shall have consummated a new bank financing to
make available to the Company $60,000,000 under a new revolving line of credit.
The proceeds of this new bank credit facility will be used to pay off an
existing bank credit facility and existing short-term bank lines totaling
$50,000,000 at November 1995. The additional $10,000,000 of proceeds from the
<PAGE>
new revolving credit facility will be used for working capital and capital
expenditures. The new revolving line of credit will be collateralized by
inventories and accounts receivable and will mature on December 31, 1998. The
Company has received a commitment from its banks to extend the Company this new
revolving credit facility.
Registration Rights Agreement. The Company shall have executed and
delivered to Avondale and Gintel a registration rights agreement (the
"Registration Rights Agreement"), pursuant to which, among other things, the
Company, if requested by Avondale and/or Gintel, or their assignees, shall
register for sale, pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), up to six times, (i) any shares of Common Stock of the
Company acquired pursuant to the Standby Agreement, and/or (ii) should the
Rights Offering not be consummated by May 31, 1996, at which time, Avondale and
Gintel shall have the right to convert the Avondale Note and the Initial Gintel
Note into shares of Common Stock at $7.00 per share, such shares issuable upon
the conversion of all or any portion of the Initial Gintel Note and/or the
Avondale Note and/or (iii) issuable upon the exercise of all or any portion of
the Warrants.
Fairness Opinion. The Board of Directors of the Company, acting upon the
recommendation of a committee of disinterested members of the Board of Directors
of the Company (the "Independent Committee"), shall have received the opinion of
Butler, Chapman to the effect that the transactions contemplated by the Note
Purchase Agreement, the Warrant and the Rights Offering are fair from a
financial point of view to the Company and the holders of Common Stock of the
Company and such opinion shall not have been withdrawn as of the Closing Date.
Standby Agreement
The Purchasers and the Company shall enter into a standby agreement (the
"Standby Agreement") pursuant to which, among other things, the Purchasers shall
agree to acquire all shares of Common Stock not subscribed for by stockholders
of the Company in the Rights Offering, all in accordance with the terms and
conditions set forth in the Standby Agreement. Notwithstanding the foregoing,
the parties acknowledge that the Company will not issue more than 1,607,143
shares of Common Stock in the Rights Offering, that Gintel's and Avondale's
maximum aggregate standby commitment will not exceed the difference obtained by
subtracting from $11,250,000, the aggregate of all subscription proceeds
received by the Company from stockholders in the Rights Offering and that
Gintel's and Avondale's individual maximum standby commitments shall not exceed
$3,750,000 and $7,500,000, respectively. Pursuant to the terms of the Standby
Agreement, the first 750,000 unsubscribed shares of Common Stock will be
purchased by Avondale Mills, Inc. and the remaining unsubscribed shares of
Common Stock will be purchased, in equal amounts by each Purchaser, subject to
the respective $3,750,000 and $7,500,000 maximum standby commitments of Robert
M. Gintel and Avondale Mills, Inc., respectively.
Gintel Rights
Robert M. Gintel has agreed that he will not subscribe for any shares of
Common Stock underlying any of the subscription rights to be issued to him, as a
stockholder in the Company, in the Rights Offering. Instead, Mr. Gintel will
participate in the Rights Offering through his purchases under the Standby
Agreement.
Advantages of the Proposal
The Board of Directors has determined that the issuance of the Warrant to
purchase 125,000 shares of Common Stock to Robert M. Gintel in connection with
the Long-Term Gintel Subordinated Note is in the best interest of the Company.
Pursuant to the terms of the Warrant, the exercise price, subject to
certain adjustment and anti-dilution provisions is $7.00 per share. The exercise
price was established pursuant to arms-length negotiations between
representatives of the Company and Robert M. Gintel and represents the same
price per share as all stockholders will have the right to purchase shares of
Common Stock for in connection with the Rights Offering. Should Mr. Gintel
exercise all or part of the Warrant, the Company could realize up to a maximum
of $875,000 capital infusion. The Board believes that such additional capital
would strengthen the Company and increase stockholder value over the long term.
The Company's agreement to issue the Warrant in connection with Mr. Gintel
extending to the Company a loan of $3,750,000 represented by the Long-Term
Gintel Subordinated Note was an inducement for Mr. Gintel to extend such loan to
<PAGE>
the Company. The Board believes that such loan was required for the Company to
complete its new bank credit facility and to obtain the remaining $11,750,000 of
short-term loans to be repaid from the proceeds of the Rights Offering. In
connection with the Warrant, a special committee comprised of disinterested
directors has obtained an opinion from Butler, Chapman, an independent
investment banking firm, to the effect that the issuance of the warrant is fair
to the Company's stockholders.
Mr. Gintel, as owner of approximately 29.8% of the Company's voting power
as of the Record Date, has informed the Board that he intends to vote those
shares in favor of this Proposal No. 3.
Disadvantages of Proposal
The issuance of the Warrant will allow Mr. Gintel to benefit from any
future increase in the value of the Common Stock without requiring him to invest
the exercise price thereof in the Company until such benefit is realizable. Mr.
Gintel has already agreed to make the loan to the Company which will be
evidenced by the Long-Term Gintel Subordinated Note, and this loan will remain
in effect whether or not Proposal No. 3 is approved.
The issuance of the Common Stock for which the Warrant is exercisable
which, if fully exercised, would total 125,000 out of 6,878,560 (or
approximately 1.8%) of the Company's outstanding Common Stock as of the January
9, 1996, would cause the existing stockholders of the Company a loss of
proportionate voting power and economic interest in the Company. The Company's
contractual obligation to register the Common Stock issuable upon exercise of
the Warrants may depress the current market price of outstanding shares of
Common Stock. In addition, the anti-dilution protections covering the Warrants
may limit the Company's ability to raise additional capital in the private or
public capital markets, and may limit interest in the Company's securities in
the public capital markets. The Board of Directors believes the benefits of
raising the additional capital through the Long-Term Gintel Subordinated Note,
the issuance of which has been induced by the Company's agreement to issue the
Warrant, outweigh the disadvantages.
Stockholder Derivative Litigation
If Proposal No. 3 is approved, the Company would assert this approval as a
defense to any stockholder derivative suit alleging issues related to the
Warrant.
Recommendation
The independent committee of disinterested directors has unanimously
approved the issuance of the Warrant and recommended that the Board of Directors
submit the proposal to the Company's stockholders for their approval. Pursuant
to such recommendation, the Board of Directors has unanimously approved the
issuance of the Warrant and the submission of this Proposal No. 3 to the
stockholders.
The Board of Directors recommends a vote FOR approval of Item 3 on the
Proxy Card.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP acted as the Company's independent auditors for the
year ended September 30, 1995 and has been selected by the Board of Directors,
upon the recommendation of the Audit Committee, to continue to act as the
Company's independent auditors in the Company's 1996 fiscal year.
A representative of Arthur Andersen LLP plans to be present at the Annual
Meeting with the opportunity to make a statement if he desires to do so, and
will be available to respond to appropriate questions.
<PAGE>
FINANCIAL STATEMENTS
The Company has enclosed its Annual Report of Stockholders for the fiscal
year ended September 30, 1995 with this Proxy Statement. Stockholders are
referred to the report for financial and other information about the Company,
but such report is not incorporated in this Proxy Statement and is not a part of
the proxy soliciting material.
MISCELLANEOUS INFORMATION
As of the date of this Proxy Statement, the Board of Directors does not
know of any business other than specified above to come before the meeting, but,
if any other business does lawfully come before the meeting, it is the intention
of the persons named in the enclosed Proxy to vote in regard thereto, in
accordance with their judgment.
The Company will provide without charge to any stockholder as of the Record
Date, copies of the Company's Annual Report on Form 10-K, upon written request
delivered to Edward I. Kramer, Secretary, at the Company's offices at 4130 Faber
Place Drive, Suite 200, Charleston, South Carolina 29405.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mails, certain officers and
regular employees of the Company may solicit proxies by telephone, telegraph or
personal interview. The Company may also request brokerage houses and other
custodians, and, nominees and fiduciaries, to forward soliciting material to the
beneficial owners of stock held by record by such persons, and may make
reimbursement for payments made for their expense in forwarding soliciting
material to the beneficial owners of the stock held of record by such persons.
Stockholder proposals with respect to the Company's next Annual Meeting of
Stockholders must be received by the Company no later than October 25, 1996 to
be considered for inclusion in the Company's next Proxy Statement.
By Order of the Board of Directors,
Edward I. Kramer
Secretary
January 22, 1996
Charleston, South Carolina
<PAGE>
EXHIBIT A
ONEITA INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN
This Employee Stock Purchase Plan (herein called the "Plan") provides
eligible employees at Oneita Industries, Inc., a Delaware corporation (herein
called the "Company") and its subsidiaries a continual opportunity to purchase
common stock of the Company through payroll deductions.
1. Definitions.
(a) Subsidiaries -- "Subsidiaries" are corporations, 50% or more of each
class of the outstanding voting stock or voting power of which is beneficially
owned, directly or indirectly, by the Company.
(b) Basic Compensation -- The "Basic Compensation" of each participating
employee for each payroll period is the regular compensation or commissions
earned during such payroll period, before any deductions or withholding, but
excluding overtime, bonuses, amounts paid as reimbursement of expenses
(including those paid as part of commissions) and other additional compensation.
(c) Offering -- An "Offering" is a three month period beginning on the
first Monday of each February, May, August and November, respectively, and
ending on the first Monday of the next succeeding three month period. If no such
stock is sold on either first Monday, then the Offering shall commence or end,
as the case may be, on the next succeeding day on which there is a sale.
(d) Grant Date -- The "Grant Date" is the first Monday of each Offering on
which sales of the Company's stock are reported on the New York Stock Exchange
Composite Transactions Tape ("Composite Tape"), or if no such stock is sold on
such first Monday, then on the next succeeding day on which there is a sale.
(e) Exercise Date -- The "Exercise Date", with respect to any Offering, is
the date upon which shares are purchased by a participating employee pursuant to
the provisions of Section 8 below and will be the same date as the Grant Date of
the next succeeding Offering.
(f) Exercise Price -- The "Exercise Price" shall be the lesser of 95% of
the fair market value of a share of common stock of the Company on the Grant
Date or 95% of the fair market value of such share on the Exercise Date, but in
no event less than the par value of such shares. The fair market value per share
on any Grant Date or Exercise Date, as the case may be, shall be the average
between the highest and lowest quoted selling price per share of the Company's
common stock on the Composite Tape on each such date.
2. Stock Subject to the Plan. The Company shall make available 250,000
shares of its Common Stock for purchase under the Plan from authorized but
unissued shares.
3. Eligible Employees. All employees of the Company or any of its
Subsidiaries shall be eligible to participate in the Plan, except employees (i)
whose customary employment is 20 hours or less per week or not more than five
months in any calendar year, or (ii) who, immediately after any Grant Date, own
5% or more of the total combined voting power or value of all classes of stock
of the Company or any Subsidiary.
4. Participation in the Plan. An eligible employee may participate in the
Plan at any time by completing and filing with the appropriate payroll office a
Payroll Deduction Authorization Form which authorizes payroll deductions from
the employee's Basic Compensation. Such deductions shall commence with the pay
period beginning after such form is filed with and recorded in the appropriate
payroll office and shall continue until the employee terminates participation in
the Plan or the Plan is terminated.
<PAGE>
5. Payroll Deductions, Number of Shares Purchasable and Employee Accounts.
Payroll deductions shall be made from the Basic Compensation paid to each
participating employee for each payroll period in such amounts as the
participating employee shall authorize in his or her Payroll Deduction
Authorization Form, which amount shall not be less than $5 per week. No
participating employee may be granted an option hereunder which would permit the
employee's rights to purchase stock under the Plan and any other stock purchase
plan of the Company or its subsidiaries to accrue at a rate greater than 10% of
the participating employees annual basic compensation for each calendar year in
which any such option granted to such employee is outstanding at any time. The
Company shall maintain a payroll deduction account for each participating
employee (herein called "plan account") to which shall be credited all such
payroll deductions and from which shall be deducted amounts charged for the
purchase of shares hereunder and withdrawals, as hereinafter provided.
6. Changes in Payroll Deductions. Subject to the minimum and maximum
deductions set forth above, a participating employee may change the amount of
his or her payroll deduction no more than twice in each calendar year by filing
a new Payroll Deduction Authorization Form with the appropriate payroll office.
The change shall not become effective earlier than the first payroll period in
the next succeeding Offering after the form is received and recorded by the
appropriate payroll office.
7. Termination of Participation in Plan and Refund of Credit Balance in
Plan Account. A participating employee, at any time and for any reason, may
voluntarily terminate participation in the plan by written notification of
withdrawal delivered to the appropriate payroll office. An employee's
participation in the Plan shall be voluntarily terminated upon termination of
employment by the Company or its Subsidiaries for any reason, or upon the
employee no longer being eligible for participation. In the event of a
participating employee's voluntary or involuntary termination of participation
in the Plan, no payroll deduction shall be taken from any Basic Compensation due
thereafter; and at the election of such employee or employee's estate, as the
case may be, the balance in the employee's plan account shall be paid either to
the employee or the employee's estate, or shall be retained until the next
Exercise Date at which time it shall be applied to the purchase of stock under
the Plan pursuant to Section 8 below. An employee whose participation in the
Plan has terminated may not rejoin the Plan until the next two succeeding
Offerings following the date of such termination have expired. Except as above
provided, a participating employee may not withdraw any credit balance in the
employee's plan account, in whole or in part.
8. Grant and Exercise of Options. (a) The Company shall make four Offerings
during each calendar year to eligible employees to purchase stock under the
Plan. Each participating employee shall be offered an opportunity to purchase
stock on the Grant Date applicable to each Offering for the number of shares
(rounded downward to the nearest whole share) of the Company's common stock
determined by dividing the Exercise Price into the aggregate amount of the
payroll deductions withheld from the employee's Basic Compensation during an
Offering, plus any balance in the employee's plan account after the immediately
prior Exercise Date and, in the case of employees whose participation commenced
during the immediately prior Offering, payroll deductions accumulated prior to
the current Grant Date. A participant may not purchase more than 300 shares
during any Offering. Purchases shall be made automatically on the exercise date.
On such date, the participating employee's plan account shall be charged for the
amount of the purchase, and a new opportunity to purchase shares, as described
above, for the next succeeding Offering shall automatically be extended.
(b) No fractional shares shall be purchased, and any balance remaining in
the employee's plan account after the shares have been purchased on the Exercise
Date shall be carried forward to the next succeeding Offering. As soon as
practicable after the Exercise Date, either (i) a stock certificate shall be
delivered to the participating employee representing the shares purchased on the
Exercise Date, or (ii) a statement shall be delivered to the participating
employee which shall include the number of shares purchased on the Exercise Date
and the aggregate number of shares purchased on behalf of such employee under
the Plan. Stock certificates for shares purchased under the Plan shall be issued
in the name of the participating employee, or if so specified in the employee's
Payroll Deduction Authorization Form, in the employee's name and the name of
another person of legal age as joint tenants with right of survivorship or as
tenants in common.
(c) The option must be exercised within five years from the date of grant
of the option. If the option is not exercised by such date, such option shall
expire.
<PAGE>
9. Rights as a Stockholder. None of the rights or privileges of a
stockholder of the Company shall exist with respect to shares purchased under
the Plan unless and until a statement and/or certificates representing such
shares shall have been issued to the participating employee.
10. Rights Not Transferable. Rights under the Plan are not transferable by
a participating employee other than by will or the laws of descent, and are
exercisable during the employee's lifetime only by the employee.
11. Application of Funds. All funds received or held by the Company under
the Plan may be used for any corporate purposes.
12. Adjustments in Case of Changes Affecting Stock. In the event of a
subdivision of outstanding shares of Common Stock of the Company, or the payment
of a stock dividend, the number of shares approved for the Plan shall be
increased proportionately, and such other adjustment shall be made as may be
deemed equitable by the Board of Directors. In the event of any other change
affecting the Company's Common Stock, such adjustment shall be made as shall be
deemed equitable by the Board of Directors to give proper effect to such event.
13. Administration of Plan. The Plan shall be administered by the
Compensation and Employee Benefits Committee of the Board of Directors of the
Company ("Committee"), consisting of at least three of its members, none of whom
shall be eligible to participate in the Plan. The Committee shall have authority
to make rules and regulations for the administration of the Plan, and its
interpretations and decisions with regard thereto shall be final and conclusive.
14. Amendments to Plan. The Board of Directors of the Company, at any time,
or from time to time, may amend, suspend, or terminate the Plan, provided,
however, that except to conform the Plan to the requirements of the Internal
Revenue Code, no amendment shall be made (i) increasing or decreasing the number
of shares authorized for the Plan (other than as provided in Section 12), (ii)
changing the formula for determining the Exercise Price per share, (iii)
withdrawing the administration of the Plan from the Committee or permitting any
rights under the Plan to be granted to any employee who is a member of the
Committee administering the Plan, or (iv) further limiting the employees of the
Company or its Subsidiaries who may participate in the Plan.
15. Effective Date, Suspension and Termination of Plan. The Plan shall
become effective when (i) the Plan has been adopted by the Board of Directors
and approved by the stockholders of the Company by a majority vote of those
present and entitled to vote at any annual or special meeting at which a quorum
is present, (ii) a registration statement under the Securities Act of 1933, as
amended, has become effective with respect to the shares to be purchased under
the Plan and (iii) the Committee has specified the date of the first Offering.
The Plan shall terminate upon the termination of the Plan by the Board of
Directors of the Company or when no more shares remain to be purchased under the
Plan, whichever occurs first. Upon the termination of the Plan, all unexercised
options theretofore granted pursuant hereto and all authorized payroll
deductions hereunder shall remain in full force and be carried out and effected,
and upon the exercise or termination of such options, as the case may be, the
then remaining credit balances in the respective employee's plan accounts shall
be returned to the employees for whom such plan accounts were established. The
Plan shall be suspended and become inoperative with respect to shares not
theretofore optioned under the Plan (but not with respect to any uncompleted
offerings) during any period in which no registration statement or amendment
thereto under the Securities Act of 1933, as amended, is in effect with respect
to the shares so remaining to be purchased under the Plan.
16. Governmental Regulations. The Company's obligation to sell and deliver
its Common Stock under the Plan is subject to the approval of any governmental
authority required in connection with the authorization, issuance or sale of
such stock.
<PAGE>
EXHIBIT B
THIS WARRANT AND THE UNDERLYING COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON ____________, 2001, OR IF NOT A BUSINESS
DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING
BUSINESS DAY.
WARRANT TO PURCHASE
125,000 Shares of Common
Stock
WARRANT TO PURCHASE
COMMON STOCK
OF
ONEITA INDUSTRIES, INC.
TRANSFER RESTRICTED -- SEE SECTION 6.02
This certifies that, for good and valuable consideration, ROBERT M. GINTEL,
an individual with a principal place of business at 6 Greenwich Office Park,
Greenwich Connecticut 06831, and his registered, permitted assigns
(collectively, the "Warrantholder" or "Holder"), is entitled to purchase from
ONEITA INDUSTRIES, INC., a Delaware corporation (the "Company"), subject to the
terms and conditions hereof, at any time before 5:00 P.M., New York time, on
________________, 2001 (or, if such day is not a business day, at or before 5:00
P.M., New York time on the next following business day), the number of fully
paid and non-assessable shares of Common Stock, par value $.25 per share, of the
Company (the "Common Stock") stated above at the exercise price of $7.00 per
share (the "Exercise Price"). The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment as provided in Article II
hereof. This Warrant is being issued to the Holder in accordance with Section 2
of that certain Note Purchase Agreement dated as of December 28, 1995 among the
Holder, the Company and Avondale Mills, Inc. (the "Purchase Agreement").
Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to them in the Purchase Agreement.
ARTICLE I
Duration and Exercise of Warrant
Section 1.01: Duration of Warrant. Subject to the terms contained herein,
this Warrant may be exercised at any time before 5:00 P.M., New York time, on
_______________, 2001 (the "Expiration Date"), (or, if such day is not a
business day, at or before 5:00 P.M., New York time, on the next following
business day). If this Warrant is not exercised at or before 5:00 P.M., New York
time, on the Expiration Date, it shall become void, and all rights hereunder
shall thereupon cease.
Section 1.02: Exercise of Warrant.
(a) The Warrantholder may exercise this Warrant, in whole or in part, upon
surrender of this Warrant with the Subscription Form hereon duly executed, to
the Company at its corporate office at 4130 Faber Place, Suite 200, Ashley
Corporate Center, Charleston, South Carolina, or to such office as duly
designated by the Company to the Warrantholder, together with the full Exercise
<PAGE>
Price for each Warrant Share to be purchased by tendering in lawful money of the
United States, or by certified check or bank draft payable in United States
Dollars to the order of the Company.
(b) Upon receipt of this Warrant with the Subscription Form duly executed
and accompanied by payment of the aggregate Exercise Price for the Warrant
Shares for which this Warrant is then being exercised, the Company will cause to
be issued certificates for the total number of whole shares of Common Stock for
which this Warrant is being exercised (adjusted to reflect the effect of the
provisions contained in Article II hereof, if any, and as provided in Section
4.04 hereof) in such denominations as are required for delivery to the
Warrantholder, and the Company shall thereupon deliver such certificates to the
Warrantholder. If at the time this Warrant is exercised a registration statement
is not in effect to register under the Securities Act, the Warrant Shares
issuable upon exercise of this Warrant, the Company may require the
Warrantholder to make such representations, and may place such legends on
certificates representing the Warrant Shares, as may be reasonably required in
the opinion of counsel to the Company to permit the Warrant Shares to be issued
without such registration.
(c) In case the Warrantholder shall exercise this Warrant with respect to
less than all of the Warrant Shares that may be purchased under this Warrant,
the Company will execute a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the
Warrantholder.
(d) The Company covenants and agrees that it will pay when due and payable
any and all stock transfer and similar taxes which may be payable in respect of
the issue of this Warrant or in respect of the issue of any Warrant Shares. The
Company shall not, however, be required to pay any tax imposed on income or
gross receipts or any tax which may be payable in respect of any transfer
involved in the issuance or delivery of this Warrant or at the time of
surrender.
ARTICLE II
Adjustment of Warrant Shares Stock
Purchasable and of Exercise Price
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article II, provided, however, that the adjustments
contemplated by Sections 2.01(b), (c) and (g) below shall no longer be
applicable or have any force or effect following such time as the conversion
privileges set forth in the Avondale Replacement Note and the Gintel Replacement
Note have either been exercised in their entirety, canceled or terminated.
Section 2.01: Mechanical Adjustments.
(a) Anti-Dilution Provisions; Adjustment of Purchase Price. The Exercise
Price shall be subject to adjustment from time to time as hereinafter provided.
Upon each adjustment of the Exercise Price, the number of Warrant Shares shall
thereafter be the amount obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Purchase Price Adjustment Formulas. If and whenever after the date
hereof the Company shall issue or sell any shares of its Common Stock (other
than shares of Common Stock issued as permitted by Section 2.01(g) herein) for a
consideration per share less than the Exercise Price in effect immediately prior
to such issue or sale, then forthwith the Exercise Price shall be reduced to a
price (calculated to the nearest $0.0001) determined by dividing (1) an amount
equal to the sum of (aa) the number of shares of Common Stock acquired or
acquirable by all purchasers immediately prior to such issue or sale multiplied
by the then existing Exercise Price, and (bb) the net consideration, if any,
received and deemed received by the Company upon such issue or sale, by (2) an
amount equal to the sum of (xx) the total number of shares of Common Stock
acquired or acquirable by the Holder under this Warrant and (yy) the total
number of shares of Common Stock issued in connection with such issue or sale.
No adjustment of the Exercise Price, however, shall be made in an amount less
than $0.0001 per share, but any such lesser adjustment shall be carried forward
and shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall amount to $0.0001
per share or more.
<PAGE>
(c) Constructive Issuances of Stock; Convertible Securities; Rights and
Options; Stock Dividends. For the purposes of Section 2.01(b), the following
provisions (i) to (vi), inclusive, shall also be applicable:
(i) In case at any time the Company shall in any manner grant any
rights to subscribe for or to purchase, or options for the purchase
of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such convertible or exchangeable stock
or securities being herein called "Convertible Securities"), whether
or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise
of such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing a) the total amount,
if any, received or receivable by the Company as consideration for
the granting of such rights or options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company
upon the exercise of such rights or options, plus, in the case of any
such rights or options which relate to such Convertible Securities,
the minimum aggregate amount of additional consideration, if any,
payable upon the issue or sale of such Convertible Securities and
upon the conversion or exchange thereof, by b) the total maximum
number of shares of Common Stock issuable upon the exercise of such
rights or options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights or
options) shall be less than the Exercise Price in effect immediately
prior to the time of the granting of such rights or options, then the
total maximum number of shares of Common Stock issuable upon the
exercise of such rights or options or upon the conversion or exchange
of the total maximum amount of such Convertible Securities issuable
upon the exercise of such rights or options shall (as of the date of
granting of such rights or options) be deemed to be outstanding and
to have been issued for the price per share determined as set forth
hereinabove. Except as provided in clause (iii) below, no further
adjustments of the Exercise Price shall be made upon the actual issue
of such Common Stock or of such Convertible Securities upon exercise
of such rights or options or upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities.
(ii) In case at any time the Company shall in any manner issue or
sell any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing a) the total amount
received or receivable by the Company as consideration for the issue
or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company
upon the conversion or exchange thereof, by b) the total maximum
number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the
Exercise Price in effect immediately prior to the time of such issue
or sale, then the total maximum number of shares of Common stock
issuable upon conversion or exchange of all such Convertible
Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been
issued for such price per share; provided, that, except as otherwise
specified in clause (iii) below, (x) no further adjustments of the
Exercise Price shall be made upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities, and
(y) if any such issue or sale of such Convertible Securities is made
upon exercise of any rights to subscribe for or to purchase or any
option to purchase any such Convertible Securities for which
adjustments of the Exercise Price have been or are to be made
pursuant to other provisions of this Section 2.01(c), no further
adjustment of the Exercise Price shall be made by reason of such
issue or sale.
(iii) If the purchase price provided for in any right or option
referred to in clause (i) of this Section 2.01(c), or the rate at
which any Convertible Securities referred to in clauses (i) and (ii)
of this Section 2.01(c) are convertible into or exchangeable for
Common Stock, shall change or a different purchase price or rate
shall become effective from time to time (other than under or by
reason designed to protect against dilution) then, upon becoming
effective, the Exercise Price then in effect hereunder shall
forthwith be increased (but in no event to an amount greater than the
Exercise Price that would be in effect without giving effect to the
issuance of such Convertible Securities, rights or options) or
decreased to such Exercise Price as would have obtained had the
adjustments made upon the issuance of such rights or options or
<PAGE>
Convertible Securities been made upon the basis of (and the total
consideration received therefor) (a) the issuance of the number of
shares of Common Stock theretofore actually delivered upon the
exercise of such options or rights or upon the conversion or exchange
of such Convertible Securities, (b) the issuance of all Common Stock
and all other rights, options and Convertible Securities issued after
the issuance of such rights, options or Convertible Securities, and
(c) the original issuance at the time of such change of any such
options, rights and Convertible Securities then still outstanding. On
the expiration of any such option or right or the termination of any
such right to convert or exchange such Convertible Securities, the
Exercise Price then in effect hereunder shall forthwith be increased
(but in no event to an amount greater than the Exercise Price that
would be in effect without giving effect to the issuance of such
Convertible Securities, rights or options) or decreased to such
Exercise Price as would have obtained (x) had the adjustments made
upon the issuance of such rights or options or Convertible Securities
been made upon the basis of the issuance of only the number of shares
of Common Stock theretofore actually delivered (and the total
consideration received therefor) upon the exercise of such rights or
options or upon the conversion or exchange of such Convertible
Securities and (y) had adjustments been made on the basis of the
Exercise Price as adjusted under the immediately preceding clause (x)
for all issues or sales of Common Stock or rights, options or
Convertible Securities made after the issuance of such rights or
options or Convertible Securities. If the purchase price provided for
in any right or option referred to in clause (i) of this Section
2.01(c), or the rate at which any Convertible Securities referred to
in clauses (i) and (ii) of this Section 2.01(c) are convertible into
or exchangeable for Common Stock, shall decrease at any time to an
amount below the Exercise Price then in effect under or by reason of
provisions with respect thereto designed to protect against dilution,
then in the case of the delivery of shares of Common Stock upon the
exercise of any such right or option or upon conversion or exchange
of any such Convertible Securities, the Exercise Price then in effect
hereunder shall forthwith be decreased to such Exercise Price as
would have obtained had the adjustments made upon issuance of such
right or option or Convertible Securities been made upon the basis of
the issuance of (and the total consideration received for) the shares
of Common Stock delivered as aforesaid.
(iv) In case at any time the Company shall declare a dividend or make
any other distribution upon any stock of the Company payable in
Common Stock or Convertible Securities, any Common Stock or
Convertible Securities, as the case may be, issuable in payment of
such dividend or distribution shall be deemed to have been issued or
sold without consideration.
(v) In case at any time any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock
or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount
payable to the Company therefor, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions or
discounts paid or allowed by the Company in connection therewith. In
case any shares of Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be deemed
to be the fair value of such consideration as reasonably determined
by the Board of Directors of the Company, without deduction therefrom
of any expenses incurred or any underwriting commissions or
concessions or discounts paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock
or Convertible Securities shall be issued in connection with any
merger of another corporation into the Company, the amount of
consideration therefor shall be deemed to be the fair value as
reasonably determined by the Board of Directors of the Company of
such portion of the assets of such merged corporation as such Board
shall determine to be attributable to such Common Stock, Convertible
Securities, rights or options, as the case may be.
(vi) In case at any time the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in Common Stock or
in Convertible Securities, or (b) to subscribe for or purchase Common
Stock or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common
<PAGE>
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be.
(d) Effect of Certain Dividends. In case at any time the Company shall
declare a dividend upon the Common Stock (other than a dividend payable in
Common Stock) payable otherwise than out of net earnings after taxes for the
prior fiscal year, the Exercise Price in effect immediately prior to the
declaration of such dividend shall be reduced by an amount equal, in the case of
a dividend in cash, to the amount thereof payable per share of Common Stock or,
in the case of any other dividend, to the fair value thereof per share of Common
Stock as determined by the Board of Directors of the Company. Such reductions
shall take effect as of the date on which a record is taken for the purpose of
such dividend, or, if a record is not taken, the date as of which the holders of
record of Common Stock entitled to such dividend are to be determined. As used
in this Section 2.01(d), the term "dividend" shall mean any distribution to the
holders of Common Stock as such.
(e) Stock Splits and Reverse Splits. In case at any time the Company shall
subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of Warrant Shares immediately prior to
such subdivision shall be proportionately increased, and conversely, in case at
any time the Company shall combine its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
immediately prior to such combination shall be proportionately reduced. Except
as provided in this Section 2, no adjustment in the Exercise Price and no change
in the number of Warrant Shares so purchasable shall be made pursuant to this
Section 2 as a result of or by reason of any such subdivision or combination.
(f) Effect of Reorganization and Asset Sales. If any capital reorganization
or reclassification of the capital stock of the Company, or consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation, shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the Holder of this
Warrant shall thereafter have the right to receive, upon the terms and
conditions herein contained, upon exercise of this Warrant in accordance with
Section 1.02 above, in lieu of the shares of the Common Stock of the Company
immediately theretofore receivable upon the exercise of this Warrant, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore so receivable had
such reorganization, reclassification, consolidation, merger or sale not taken
place, and in any such case appropriate provision shall be made with respect to
the rights and interests of such holder to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Exercise Price
and of the number of shares issuable upon exercise) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise of this Warrant. The Company
shall not effect any such consolidation, merger or sale unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and mailed or
delivered to each Holder, the obligation to deliver to such holder such shares
of stock, securities or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to receive, and containing the express assumption of
such successor corporation of the due and punctual performance and observance of
each provision of this Warrant to be performed and observed by the Company and
of all liabilities and obligations of the Company hereunder.
(g) Excluded Shares. Notwithstanding the foregoing, no adjustments to the
Exercise Price shall be made or required with respect to (a) the issuance of
Common Stock as required upon the exercise of rights granted in the Rights
Offering or pursuant to any conversion of the Avondale Replacement Note or the
Gintel Replacement Note (each such capitalized term as defined in the Note
Purchase Agreement) and stock reserved for such purpose, (b) the issuance of
Common Stock pursuant to existing Stock Option Plans of the Company covering not
more than 758,607 shares of the Company's existing Common Stock, and (c) the
sale of not more than 250,000 shares of the Company's existing Common Stock (net
of repurchases) to employees, officers and consultants of the Company pursuant
to option or stock purchase plans hereafter adopted (in addition to shares
issued as contemplated in (b) above).
<PAGE>
(h) Accountants' Certificate. Upon each adjustment of the Exercise Price
and upon each change in the number of shares of Common Stock issuable upon the
exercise of this Warrant and in the event of any change in the rights of the
Holder of this Warrant by reason of other events herein set forth, then and in
each such case, the Company will promptly obtain a certificate of a firm of
independent certified public accountants of recognized standing selected by the
Company's Board of Directors (who may be the regular auditors of the Company),
stating the adjusted Exercise Price and the new number of shares so issuable, or
specifying the other shares of stock, securities or assets and the amount
thereof receivable as a result of such change in rights, and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company will promptly mail a copy of such accountants'
certificate to the registered Holder of this Warrant.
(i) Reservation of Stock Issuable Upon Exercise. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of effecting the exercise of the Warrant
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the exercise of the Warrant; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of the Warrant, in addition to such other remedies as shall
be available to the Holder of this Warrant, the Company will use its best
efforts to take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes; provided, if such
corporate action is not taken by the date 45 days preceding the date on which
this Warrant is exercisable, then the right to purchase shares pursuant to this
section shall be extended to a date 45 days after the effective date under the
Delaware General Corporation Law of any corporate act that makes available
sufficient authorized and unissued shares for purchase pursuant hereto.
Section 2.02: Notice of Adjustment. Whenever the number of Warrant Shares
or the Exercise Price is adjusted as herein provided, the Company shall prepare
and deliver to the Warrantholder a certificate signed by its Chairman of the
Board, President, any Vice President, Treasurer or Secretary, setting forth the
adjusted number of Warrant Shares purchasable upon the exercise of this Warrant
and the Exercise Price of such Shares after such adjustment, setting forth a
brief statement of the facts requiring such adjustment and setting forth the
computation by which adjustment was made.
Section 2.03: No Adjustment for Dividends. Except as provided in Section
2.01 of this Agreement, no adjustment in respect of any cash dividends shall be
made during the term of this Warrant or upon the exercise of this Warrant.
Section 2.04: Form of Warrant After Adjustments. The form of this Warrant
need not be changed because of any adjustments in the Exercise Price or the
number or kind of the Warrant Shares, and any Warrant theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in this Warrant, as initially issued.
Section 2.05: Preservation of Purchase Rights in Certain Transactions.
(a) In case of any consolidation of the Company with or a merger of the
Company into another corporation or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, upon any such consolidation, merger, sale or conveyance and the
surviving entity is a publicly traded company, the Company agrees that a
condition of such transaction shall be that the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Warrantholder
an agreement granting the Warrantholder the right until the Expiration Date,
upon payment of the Exercise Price in effect immediately prior to such action,
to receive upon exercise of this Warrant the kind and amount of shares and other
securities and property which he would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale or conveyance
had this Warrant been exercised immediately prior to such action. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article II. The provisions
of this Section 2.05 shall similarly apply to successive consolidations,
mergers, sales or conveyances.
(b) In case of any consolidation of the Company with or a merger of the
Company into another corporation or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, upon any such consolidation, merger, sale or conveyance and the
surviving entity is a non-publicly traded company, the Company agrees that a
condition of such transaction will be that the Company shall mail to the
<PAGE>
Warrantholder at the earliest applicable time (and, in any event, not less than
20 days before any record date or other date set for definitive action) written
notice of the record date for such transaction to take place. Such notice shall
also set forth facts as shall indicate the effect of such action (to the extent
such effect may be known at the date of such notice) on the Exercise Price of
and the kind and amount of the shares of stock and other securities and property
deliverable upon exercise of this Warrant.
ARTICLE III
Compliance with the Securities Act
The Holder acknowledges that the Warrant Shares, in his hands, will be
restricted securities which may not be sold or offered for sale in the absence
of an effective registration statement under the Securities Act or an opinion of
counsel satisfactory to the Company that such registration is not required. With
respect to any offer, sale or other disposition of any Warrant Shares, the
Holder will give written notice to the Company prior thereto, describing briefly
the manner thereof, together with a written opinion of such Holder's counsel, to
the effect that such offer, sale or other distribution may be effected without
registration or qualification (under any federal or state law then in effect).
Promptly upon receiving such written notice and reasonably satisfactory opinion,
if so requested, the Company, as promptly as practicable, shall notify such
Holder that such Holder may sell or otherwise dispose of the Warrant Shares, all
in accordance with the terms of the notice delivered to the Company. If a
determination has been made pursuant to this Article III that the opinion of
counsel for the Holder is not reasonably satisfactory to the Company, the
Company shall so notify the Holder promptly after such determination has been
made. Each certificate representing the Warrant Shares thus transferred shall
bear a legend as to the applicable restrictions on transferability in order to
ensure compliance with the Securities Act, unless in the opinion of counsel for
the Company such legend is not required, in order to ensure compliance with the
Securities Act. The Company may issue stop transfer instructions to its transfer
agent and registrar in connection with such restrictions.
ARTICLE IV
Other Provisions Relating
to Rights of Warrantholder
Section 4.01: No Rights as Shareholder; Notice to Warrantholder. Nothing
contained in this Warrant shall be construed as conferring upon the
Warrantholder or his transferees the right to vote or to receive dividends or to
consent or to receive notice as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or of any other matter
or any rights whatsoever as shareholders of the Company, except to the extent
specifically provided for herein.
Section 4.02: Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may in its discretion impose (which shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination and tenor as, and in substitution for, this Warrant.
Section 4.03: Reservation of Shares.
(a) The Company covenants and agrees that at all times it shall reserve and
keep available for the exercise of this Warrant such number of authorized shares
of Common Stock or other securities as are sufficient to permit the exercise in
full of this Warrant.
(b) The Company shall use its best efforts to maintain or secure the
listing of the Warrant Shares upon the securities exchange or automated
quotation system, if any, upon which shares of its Common Stock are then listed.
(c) The Company covenants that all shares of Common Stock issued on
exercise of this Warrant will be validly issued, fully paid, non-assessable and
free of preemptive rights.
<PAGE>
Section 4.04: No Fractional Shares. Anything contained herein to the
contrary notwithstanding, the Company shall not be required to issue any
fraction of a share in connection with the exercise of this Warrant. In any case
where the Warrantholder would, except for the provisions of this Section 4.04,
be entitled under the terms of this Warrant to receive a fraction of a share
upon exercise of this Warrant and receipt of the Exercise Price, the Company
shall not be required to issue any fraction of a share, but rather, will adjust
the aggregate Exercise Price for such fraction of a share to which the
Warrantholder would otherwise be entitled.
ARTICLE V
Treatment of Warrantholder
Prior to due presentment for registration or transfer of this Warrant, the
Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
the purpose of any exercise hereof and for all other purposes of the Company
shall not be affected by any notice to the contrary.
ARTICLE VI
Split-Up, Combination,
Exchange and Transfer of Warrant
Section 6.01: Split-Up, Combination, Exchange and Transfer of Warrant.
Subject to and limited by the provisions of Section 6.02 hereof, this Warrant
may be split up, combined or exchanged for another Warrant or Warrants
containing the same terms to purchase a like aggregate number of Warrant Shares.
If the Warrantholder desires to split up, combine or exchange this Warrant, he
shall make such request in writing delivered to the Company and shall surrender
to the Company this Warrant and any other Warrants to be so split up, combined
or exchanged. Upon any such surrender for a split-up, combination or exchange,
the Company shall execute and deliver to the person entitled thereto a Warrant
or Warrants, as the case may be, as so requested. The Company shall not be
required to effect any split-up, combination or exchange which will result in
the issuance of a Warrant entitling the Warrantholder to purchase upon exercise
a fraction of a share of Common Stock or a fractional Warrant. The Company may
require such Warrantholder to pay a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any split-up,
combination or exchange of Warrants.
Section 6.02: Restrictions on Transfer. This Warrant may be exercised and
this Warrant and the Warrant Shares may not be sold, hypothecated, assigned or
transferred (a "Transfer"), except only in accordance with and subject to the
provisions of the Securities Act and the rules and regulations promulgated
thereunder. The Warrantholder shall have the benefit of the certain registration
rights for the Warrant Shares as provided in that certain Registration Rights
Agreement dated as of December ___, 1995 among the Company, the Holder and
Avondale Mills, Inc.
ARTICLE VII
Other Matters
Section 7.01: Successors and Assigns. All the covenants and provisions of
this Warrant shall be binding upon and inure to the benefit of the Company and
the Holder and their respective successors and assigns.
Section 7.02: Amendments and Waivers. The provisions of this Warrant,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waiver or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of the
Holder. The Warrantholder shall be bound by any consent authorized by this
Section whether or not certificates representing his Warrant have been marked to
indicate such consent.
<PAGE>
Section 7.03: Counterparts. This Warrant may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
Section 7.04: Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 7.05: Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
Section 7.06: Integration/Entire Agreement. This Warrant is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. This Warrant supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
Section 7.07: Notices. Any notice, request or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail or
overnight courier, postage prepaid, at the respective addresses of the parties
as set forth herein. Any party hereto may by notice so given change its address
for future notice hereunder. Notice shall conclusively be deemed to have been
given when delivered in the manner set forth above and shall be deemed to have
been received when delivered. Copies of all notices to the Company shall be
given to:
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Edward I. Kramer
and copies of all notices to Robert M. Gintel shall be given to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Leonard Gubar
Notice or demand pursuant to this Warrant to be given or made by the
Warrantholder to or on the Company shall be sufficiently given or made if sent
by first class mail or overnight courier, postage prepaid, to the Warrantholder
at his last known address as it shall appear on the books of the Company.
Section 7.08: Headings. The Article and Section headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
<PAGE>
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Company under its corporate seal as of the ____ day of ____________, 19___.
ONEITA INDUSTRIES, INC.
By: ________________________
(Corporate Seal)
ATTEST:
- --------------------------------
Secretary
<PAGE>
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, ____________________________ hereby sells, assigns and
transfers unto ________________________ the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _____ ____________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company with respect to the
number of Warrants set forth below, with full power of substitution in the
premises:
Name(s) of
Assignee(s) Address No. of Warrants
And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants represented by said
Warrant Certificate.
Dated: ________________, _____.
----------------------------------------
Note: The above signature should correspond exactly
with the name on the face of this Warrant Certificate.
<PAGE>
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant)
ONEITA INDUSTRIES, INC.
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
shares of Common Stock, as provided for therein, and tenders herewith payment of
the purchase price in full in the form of cash or a certified or official bank
check in the amount of $ .
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional share to:
Name_______________________________
(Please Print Name, Address and Social Security No.)
Signature___________________________
Note: The above signature should correspond exactly
with the name on the first page of this Warrant
Certificate or with the name of the assignee appearing
in the assignment form below.
And if said number of shares shall not be all the shares purchasable under
the within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder less any fraction of a share paid in cash.
<PAGE>
ONEITA INDUSTRIES, INC.
BOARD OF DIRECTORS
The undersigned hereby appoints Herbert J. Fleming and James L. Ford, or
either of them, attorneys and Proxies with full power of substitution in each of
them, in the name and stead of the undersigned to vote as Proxy all the stock of
the undersigned in ONEITA INDUSTRIES, INC., a Delaware corporation, at the
Annual Meeting of Stockholders scheduled to be held February 26, 1996 and any
adjournments thereof.
The Board of Directors recommends a vote FOR the following proposals:
1. Election of the following nominees, as set forth in the proxy statement:
FOR all nominees listed below WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary below) nominees listed below
Jack R. Altherr, Jr. Herbert J. Fleming Robert M. Gintel
Meyer A. Gross John G. Hudson H. Varnell Moore
Lewis Rubin
(INSTRUCTION: To withhold authority to vote for any individual nominee,
print that nominee's name on the line provided below
2. Proposal to approve the Company's Employee Stock Purchase Plan, as set
forth in Exhibit "A"; and
FOR AGAINST ABSTAIN
(Continued and to be signed on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
3. Proposal to approve the issuance of warrants to purchase 125,000 shares
of Common Stock to Robert M. Gintel in connection with a $3,750,000 loan made by
him to the Company, as set forth in Exhibit "B".
__________________________________________________________________________; and
FOR AGAINST ABSTAIN
5. Upon such other business as may properly come before the meeting
THE SHARES REPRESENTED HEREBY SHALL BE VOTED BY PROXIES, AND EACH OF THEM, AS
SPECIFIED AND, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING, SHAREHOLDERS MAY WITHHOLD THE VOTE FOR ONE OR MORE
NOMINEE(S) BY WRITING THE NOMINEE(S) NAME(S) IN THE BLANK SPACE PROVIDED ON THE
REVERSE HEREOF. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR THE
PROPOSALS SET FORTH ON THE REVERSE HEREOF.
Dated: , 1996
___________________________________________[L.S.]
___________________________________________[L.S.]
(Note: Please sign exactly as your name appears
hereon. Executors, administrators, trustees, etc.
should so indicate when signing, giving full title
as such. If signer is a corporation, execute in
full corporate name by authorized officer. If shares
are held in the name of two or more persons, all
should sign.)
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
