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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) June 20, 1994
DIXIE YARNS, INC.
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(Exact Name of Registrant as specified in its Charter)
Tennessee 0-2585 62-0183370
(State or other jurisdiction (Commission File Number) I.R.S. Employer
of incorporation) Identification No.)
1100 SOUTH WATKINS STREET, CHATTANOOGA, TN 37404
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (615) 698-2501
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to an Asset Purchase Agreement dated May 25, 1994 with a subsequent
closing date of June 20, 1994, Dixie Yarns, Inc. (the "REGISTRANT" or "DIXIE")
acquired certain of the assets of Patrick of California, Inc. ("PATRICK"), a
manufacturer of principally commercial as well as residential carpet, with
annual sales of approximately $20 million (the "ACQUISITION"). The assets
acquired by Dixie from Patrick consist of leased carpet tufting and warehouse
facilities located in Compton, California and Rancho Dominguez, California,
together with related equipment, inventory, receivables and other related
assets. Dixie intends to continue the operation of Patrick's business through a
wholly-owned subsidiary. Prior to the Acquisition, Dixie supplied carpet yarns
to Patrick through Dixie's Candlewick Yarns Group.
Under the terms of the Asset Purchase Agreement, Dixie acquired certain of
Patrick's assets in exchange for: (1) the assumption of approximately $2.6
million of Patrick's liabilities; (2) release of an obligation of approximately
$2.3 million owed by Patrick to Dixie; and (3) cash in the amount of $330,000
(collectively, the "PURCHASE PRICE"). Pursuant to the terms of the Asset
Purchase Agreement, the Purchase Price is subject to an adjustment, depending on
the net change in assets and liabilities of Patrick from April 30, 1994 until
the date of the closing of the Asset Purchase Agreement (June 20, 1994). At the
time of this filing, the amount of any such adjustment had not yet been
determined. The Purchase Price was determined as a result of arms-length
negotiations between the parties based upon the estimated current fair market
values of the assets acquired. Dixie's working capital provided the cash
component of the Purchase Price.
The Acquisition represents another step in Dixie's previously announced strategy
for expansion in the carpet industry. Dixie management believes that the
Acquisition will diversify and enhance Dixie's carpet manufacturing capabilities
and will increase Dixie's presence on the West Coast.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The financial statements of Patrick required pursuant to Article 3 of
Regulation S-X are not currently available, but will be filed as an
amendment to this Report, together with any additional required exhibits,
as soon as practicable, but in no event later than sixty (60) days after
the latest date on which this Report is required to be filed.
(b) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information required pursuant to Article 11 of
Regulation S-X is not currently available, but will be filed as an
amendment to this Report, together with any additional required exhibits,
as soon as practicable, but in no event later than sixty (60) days after
the latest date on which this Report is required to be filed.
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(c) EXHIBITS.
Exhibit (2a) listed below omits certain schedules and exhibits, which
are listed therein. The Registrant hereby agrees to furnish a copy of any
such omitted schedule or exhibit supplementally upon request of the
Commission's Staff.
(1) Listing of Exhibits Incorporated by Reference:
None.
(2) Listing of Exhibits Filed with this Report:
(2a) Asset Purchase Agreement dated May 25, 1994, by and
among Dixie Yarns, Inc., Patrick of California, Inc.,
Regent Industries, Inc. and Frank V. Celiberti.
(2b) Assignment and Assumption Agreement and Bill of Sale
dated June 20, 1994, by and between Dixie Yarns, Inc.
and Patrick of California, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
DIXIE YARNS, INC.
(Registrant)
By: /s/ D. Eugene Lasater
___________________________
D. Eugene Lasater
Controller
Date: July 1, 1994
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DIXIE YARNS, INC.
CURRENT REPORT ON FORM 8-K
EXHIBIT INDEX
Sequential
Page No.
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Exhibit
No. Description
- - ------- -----------
(2a) Asset Purchase Agreement dated May 25, 1994, by and
among Dixie Yarns, Inc., Patrick of California, Inc.,
Regent Industries, Inc. and Frank V. Celiberti.
(2b) Assignment and Assumption Agreement and Bill of Sale
dated June 20, 1994, by and between Dixie Yarns, Inc.
and Patrick of California, Inc.
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ASSET PURCHASE AGREEMENT
This Agreement, made as of this 25th day of May, 1994 by
and between Dixie Yarns, Inc., a Tennessee corporation
(hereinafter referred to as "DIXIE"), PATRICK OF CALIFORNIA, INC.
d/b/a PATRICK CARPET MILLS, a California corporation (hereinafter
referred to as "PATRICK"), FRANK V. CELIBERTI and REGENT
INDUSTRIES, INC., a California corporation ("REGENT").
W I T N E S S E T H:
WHEREAS, Patrick operates a Carpet Company, in Rancho
Dominguez, California; and
WHEREAS, Patrick desires to sell and Dixie desires to
acquire certain of the assets and liabilities of Patrick;
NOW, THEREFORE, for and in consideration of the premises,
and intending to be legally bound hereby, the parties hereto
covenant, stipulate, represent, warrant and agree as follows:
1.0. DEFINITIONS.
1.1 "CLOSING" shall have the meaning set forth in Section
14.1.
1.2 "CLOSING DATE" means June 14, 1994, or such other date
as may be agreed to in writing by the parties for the closing of
the transactions contemplated by this Agreement.
1.3 "PLANTS" means all physical facilities (including both
the real estate and any improvements thereon) where any of the
Purchased Assets are located, whether owned or leased by Patrick.
1.4 "PURCHASED ASSETS" means all assets of every kind,
character and description, whether tangible, intangible, real,
personal, or mixed, and wherever located, of Patrick, all as set
forth in the April 30, 1994 balance sheet of Patrick (heretofore
provided to Dixie and appended to this Agreement as EXHIBIT A)
and as used in the operations of Patrick as of the date thereof
and as of Closing, and all after-acquired assets, including, but
not limited to:
(a) all of Patrick's right, title and interest in and to
the fixtures, machinery and equipment attached to or located
at
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the Plants (hereinafter the "FIXED ASSETS") including those
Fixed Assets described in EXHIBIT B hereto;
(b) all furniture and furnishings located at the Plants
(hereinafter the "FURNITURE AND FURNISHINGS"), including the
Furniture and Furnishings described in EXHIBIT C;
(c) all spare parts and accessories located at the Plants
(hereinafter the "SPARE PARTS") and the inventory
(hereinafter the "INVENTORY") located at the Plants and at
other locations disclosed to Dixie;
(d) to the extent transferable, all equipment warranties
that relate to the assets listed on EXHIBITS B and C and all
repair, instruction, safety and maintenance manuals in
Patrick's possession and located at the Plants which are
necessary to the operation of the Fixed Assets;
(e) to the extent transferable, an assignment of Patrick's
rights and an assumption of its obligations under the leases
and service agreements identified on EXHIBIT D hereto;
(f) to the extent applicable to the Plants, an assignment
of all licenses, certificates and permits from all federal,
state and other public authorities issued in connection with
the operation of the Plants, to the extent transferable and
shown on EXHIBIT E hereto;
(g) all financial, business and other records related to
the business of Patrick ("Records") (provided that Patrick
shall have the right to retain copies of such records and to
have reasonable access to the originals for appropriate
business purposes);
(h) any and all rights to the exclusive use of the names
"Patrick of California, Inc.", "Patrick Carpets", "RHS
Carpet Mills, Inc." and any trade name used by Patrick.
Notwithstanding anything herein contained, the parties
acknowledge that the Purchased Assets exclude the following:
(i) cash wherever located (e.g., petty cash, Union Bank
general account, Union Bank payroll accounts and Credit
Union); and
(j) Amounts due from related parties of Patrick.
1.5 "ASSUMED LIABILITIES" means only liabilities of
Patrick, incurred in the ordinary course of business, and listed
in EXHIBIT F (and excluding any liabilities owed to any party
owned by or having an ownership interest in, or otherwise related
to, Patrick)
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except for liabilities for dyeing and finishing incurred from and
after the date hereof.
1.6 "NET ASSETS ACQUIRED" means the Net Assets Acquired as
set forth on EXHIBIT G.
1.7 OTHER DEFINITIONS. All other capitalized terms used
herein are defined either in the preamble to this Agreement or in
the remainder of the text hereof.
2.0. TRANSFER OF AND PURCHASE PRICE OF PURCHASED ASSETS.
2.1 TRANSFER. Subject to the terms and conditions hereof,
Patrick shall sell, transfer and convey to Dixie, and Dixie shall
purchase, receive, accept and assume from Patrick the Purchased
Assets and Assumed Liabilities on the Closing Date.
2.2 PURCHASE PRICE. The purchase price for the Purchased
Assets shall be as follows:
(a) Assumption of the Assumed Liabilities; and
(b) Release of the obligation owed by Patrick to
Dixie, with release of all security and guarantees
therefor to be made upon Closing.
(c) The sum of Three Hundred and Thirty Thousand
Dollars ($330,000.00) (the "ESCROW FUNDS") which shall
be paid to Wilshire Escrow, 4720 Wilshire Bvld., Los
Angeles, California 90010 (the "ESCROW AGENT") by wire
transfer of immediately available funds and held, ad-
ministered and disbursed by the Escrow Agent pursuant
to the terms of the escrow agreement in the form
attached hereto as ANNEX B.
The Purchase Price shall be adjusted as follows:
(a) To the extent that the Net Assets Acquired as of
Closing exceeds $4,346,183.01, then the difference
shall be paid by Dixie, in cash; and
(b) To the extent that the Net Assets Acquired as of
the Closing is less than $4,346,183.01, then the
difference shall be paid by Patrick to Dixie in the
following manner:
(i) first by delivery of the Escrow Funds to Dixie by
the Escrow Agent in the amount of such difference; and
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(ii) if the amount of the Escrow Funds is inadequate to
satisfied by amount due in (i) above, then Patrick
shall pay such shortfall to Dixie in cash.
Patrick shall, at its expense, prepare a calculation of the
book value of the Purchased Assets and the Net Assets Acquired as
of Closing, which shall be delivered to Dixie no later than 10
days following Closing.
For purposes of calculating the foregoing adjustment, the
Net Assets Acquired shall be determined as set forth in EXHIBIT
G, and book values shall be determined in a manner consistent
with the preparation of the April 30, 1994 balance sheet. Dixie
shall, at its expense, and acting by and through its employees
and independent auditors, review and audit the calculation of the
purchase price adjustment. If Dixie disagrees with the
calculation, it must notify Patrick within 10 days of delivery of
such calculation to Dixie, and Dixie and Patrick shall negotiate
to resolve any disagreement. If any such disagreement is not
resolved within 5 days of the notice provided by Dixie, then the
dispute shall be submitted to binding arbitration in accordance
with the Rules of the American Arbitration Association.
2.3 CONFIRMATION OF PHYSICAL ASSETS.
(a) At a mutually agreeable time on or prior to the Closing
Date, representatives of Patrick and Dixie shall meet at the
Plants and (i) confirm, in writing, the presence of all
physical assets, including, but not limited to all Inventory
(including samples, products and supplies), Fixed Assets,
Spare Parts, Records and Furniture and Furnishings.
(b) In the event that there are any minor discrepancies
between the Inventory, Fixed Assets, Spare Parts, Records
and Furniture and Furnishings listed on EXHIBITS B and C,
and set forth on the April 30, 1994 Balance Sheet attached
as EXHIBIT A, and the physical count of such items on the
Closing Date, the Closing shall nevertheless take place as
set forth herein, and the parties shall make a monetary
settlement of such discrepancies at fair market value within
five (5) working days after the Closing. In the event that
there are any such discrepancies between such items, and the
physical count of such items on the Closing Date, where, in
Dixie's reasonable opinion, such discrepancies would have a
material adverse effect on the operation of the business,
then Dixie shall have the right to terminate this Agreement.
3.0. BULK SALES COMPLIANCE. The parties agree to comply with
the Bulk Sales Transfer Laws of the State of California. Dixie
shall give notice, in compliance with Division 6 of the
California Commercial Code of the bulk transfer contemplated by
this
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Agreement. Patrick shall furnish Dixie with the information
necessary to prepare this notice, including, but not limited to,
all names and business addresses used by it within the last three
(3) years and the location of the Assets to be transferred under
this Agreement, at least twenty (20) days before the Closing
Date.
4.0. AGREEMENT ON ALLOCATION. Within 30 days after the Closing
Date, the parties shall agree on an allocation of the purchase
price to the Purchased Assets for purposes of completing Form
8594 pursuant to Section 1060 of the Internal Revenue Code of
1986, as amended.
5.0. REAL PROPERTY LEASES. As a condition to Closing, Patrick's
outstanding leases, relating to 172-210 East Manville Street,
City of Compton, County of Los Angeles, State of California
(appended to this Agreement as EXHIBIT H), and 2937 East Maria
Street, Rancho Dominguez, City of Rancho Dominguez, County of Los
Angeles, State of California (appended to this Agreement as
EXHIBIT I) shall be assigned and the Lessors thereof shall
consent to such assignment to Dixie at the same rental rate
presently paid by Patrick for Patrick's leases of such
properties.
6.0. OTHER CONTRACTS. Patrick agrees that Dixie shall not be
required to assume any employment contracts and agreements of
Patrick, any entity owned by Patrick, any entity with an
ownership interest in Patrick or any entity otherwise related to
Patrick, nor shall Dixie be obligated to assume or be assigned
any contract or agreement of Patrick other than those, if any,
related to the Assumed Liabilities. As a condition to Closing,
all contracts material or necessary to the conduct of the
business and operations of Patrick as presently conducted may,
however, be assigned to or assumed by Dixie, at its option.
7.0. YARN SUPPLY OF PATRICK UNTIL CLOSING. Dixie shall not
increase or extend any further credit to Patrick. Instead, until
the Closing, Dixie shall supply Patrick with yarn for Patrick to
process on consignment to convert into carpet. Patrick shall
sell such carpet for the benefit of Dixie utilizing Patrick's
customary trademarks and trade names. Patrick shall, however, be
compensated by Dixie for Patrick's processing services in connec-
tion with its use of such yarn in accordance with the schedule
set forth in EXHIBIT J.
8.0. REPRESENTATIONS AND WARRANTIES OF PATRICK. Patrick
represents and warrants to Dixie that as of the date hereof and
on the Closing Date:
8.1 ORGANIZATION. Patrick is a corporation existing in
good standing under the laws of the State of California.
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8.2 TITLE TO THE PURCHASED ASSETS; DEFECTS. The Purchased
Assets constitute all of the properties and assets owned by
Patrick and used or held for use in connection with the business
and operations of Patrick. Patrick owns the Purchased Assets,
has good title to all of the Purchased Assets, free and clear of
all liens, encumbrances, mortgages, easements, covenants, leases,
agreements, restrictions, security interests or pledges, except
as may be disclosed herein or on the Exhibits hereto. The
Purchased Assets currently used in the business and operations of
Patrick are in normal operating condition except for general
maintenance and repair required in the ordinary course of
business.
8.3 COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. Except as
set forth on EXHIBIT K, to its knowledge and belief:
(a) Patrick holds all licenses, certificates, permits,
franchises and rights from all appropriate Federal, state,
municipal and other public authorities necessary for the
conduct of its current operations at the Plants, which
licenses, certificates, permits, franchises and rights are
specified on EXHIBIT K;
(b) To the best knowledge of Patrick, Patrick is not
charged with nor is it under governmental investigation
relating to or involving its operations at the Plants with
respect to any actual or alleged violation of any statute,
law, regulation, ordinance, order or rule, nor is it the
subject of any pending or, to the best of its knowledge,
threatened adverse proceeding by any regulatory authority;
and
(c) Patrick's business and operations conducted at the
Plants are in compliance with all applicable laws, regula-
tions and orders of any Federal, state, municipal or other
public authorities and the present uses by Patrick of the
Purchased Assets do not violate any such laws, regulations,
orders or requirements of any such authority.
(d) ENVIRONMENTAL MATTERS.
(i) Patrick has complied in all material respects with all
applicable Federal, State, local and other statutes,
ordinances, rules and regulations and all orders, judgments
or decrees of any court or governmental agency relating to
the environment or to the protection of public health or
safety from pollution or environmental contamination of any
kind;
(ii) Patrick has obtained and complied in all material
respects with the terms of each and every permit relating to
the environment or to the protection of public health or
safety from pollution or environmental contamination of any
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kind which are required in connection with the conduct of
Patrick's business;
(iii) No environmental notice has been issued, no complaint
has been filed, no penalty has been assessed and no
investigation or review is pending or, to Patrick's
knowledge, threatened by any governmental or any other
agency arising out of, or in connection with, the matters
described in subsections (i) or (ii) above or arising out of
or in connection with any presence, use, generation,
treatment, storage, recycling, transportation, disposal or
release (as those terms are defined in Federal and State
Laws of the United States of America), of any substance or
waste, whether solid, semi-solid, liquid or gaseous, that is
toxic, flammable, corrosive, carcinogenic, or otherwise
potentially harmful to health or the environment; or,
(iv) To the best of Patrick's knowledge, no circumstances
exist which could give rise to any notice, notification,
demand, request for information, citation, summons or order
or to any complaint or penalty of the type described in
subsection (iii) above.
8.4 LITIGATION. Patrick has not received service of any
pending court action, and to the knowledge of Patrick, there is
no court action threatened against Patrick, where the foregoing
directly or indirectly involves any of the Purchased Assets.
Patrick has not received notice of any proceeding pending or, to
Patrick's knowledge, threatened against Patrick relating to or
involving the Purchased Assets or the operations at the Plants by
or before any governmental board, department, commission or
agency. To the knowledge of Patrick, and except as set forth in
EXHIBIT K hereto, it is not in violation of any order, decree, or
judgment of any court or governmental board, department,
commission or agency relating to or involving the Plants.
8.5 AUTHORITY OF PATRICK. All corporate action necessary
to authorize the execution, delivery and performance of this
Agreement has been taken by Patrick. Patrick has the corporate
power and authority to enter into and carry out this Agreement,
there being no contractual or other restrictions upon it so
doing. This Agreement has been duly authorized, executed and
delivered by Patrick and constitutes the legal, valid and binding
obligation of Patrick, enforceable in accordance with its terms,
except as the enforceability hereof may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the enforcement of creditors' rights generally.
The execution, delivery and performance of this Agreement by
Patrick will not violate any law or conflict or result in any
breach of or constitute a default under the governing instru-
ments, charter, articles of incorporation, or by-laws of Patrick
or, under any indenture,
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mortgage, lease, agreement or other instrument to which Patrick
is a party or by which it or its assets are bound. This
Agreement and the transactions contemplated hereby have been
approved by the Board of Directors of Patrick.
8.6 CONSENTS. Except as set forth on Schedule 8.6, no
approval, authorization, consent or other order or action of or
filings with any court, administrative agency, governmental
authority, or third party is required to be obtained by Patrick
for the execution and delivery or performance by Patrick of this
Agreement, or such other agreements or instruments as are
necessary for the consummation of the transactions contemplated
hereby or thereby.
8.7 BROKERS. No broker or finder acted or is acting for
Patrick in connection with the transfer of the Purchased Assets.
9.0. REPRESENTATIONS AND WARRANTIES OF DIXIE.
9.1 AUTHORITY OF DIXIE. Dixie represents and warrants to
Patrick that Dixie (i) is a corporation existing in good standing
under the laws of the State of Tennessee and (ii) is duly
qualified to do business as a foreign corporation in the State of
California; that as of the Closing all corporate action necessary
to authorize the execution and delivery of this Agreement shall
have been taken by it; that it has the corporate power to enter
into and carry out this Agreement, there being no contractual or
other restrictions upon its so doing; and that this Agreement is
duly authorized, executed and delivered and constitutes the
binding obligation of Dixie in accordance with its terms except
as the enforceability hereof may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting generally the enforcement of creditors' rights.
9.2 BROKERS. No broker or finder acted or is acting for
Dixie in connection with the transfer of the Purchased Assets.
10.0 OBLIGATIONS OF THE PARTIES. The parties agree to carry out
the following obligations prior to and through the Closing Date,
and as applicable, to continue the discharge of the obligations
subsequent to the Closing:
10.1 INSPECTION.
(a) After the execution hereof, Dixie shall be permitted,
through its authorized representatives and during normal
business hours, to interview the officers and key employees
of Patrick engaged in operating the Plants and to examine
financial records, properties, and operations at the Plants
and the Purchased Assets in order that Dixie may have the
full
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opportunity to make such legal and business review or
investigations as it may desire. Dixie agrees to notify
Patrick, prior to the Closing Date, of any matter of which
it has actual knowledge that indicates a possible breach by
Patrick of any warranty or representation made herein.
Dixie's inspection of the Plants does not prevent Dixie's
reliance upon the representations, warranties, covenants and
other agreements made under this Agreement.
(b) Patrick represents that it has provided Dixie or
Dixie's agents with copies (as they may pertain to the
Plants) of (i) any and all environmental reports and any
outstanding citations, notices or orders of violation or
noncompliance which have been issued to and served upon
Patrick, relating to its business assets, property or
leaseholds under any federal, state or local environmental
laws, rules, ordinances or regulations, and notice of any
conditions which, if known by the proper authorities, could
result in any of the foregoing, (ii) any material safety
data sheets for chemicals in use at, manufactured at,
imported to or stored on the Plants, (iii) all materials
filed with the Federal Occupational Safety and Health Agency
under the OSHA Hazard Communication Standard and (iv) all
materials filed with the Department of Health, Department of
Environmental Protection or any other federal, state or
local agency or entity.
10.2 CONDUCT OF BUSINESS. As of April 30, 1994, through
the Closing Date and as applied to the Purchased Assets, Patrick
shall have:
(a) operated the business of Patrick only in the usual,
ordinary and customary manner and used its best efforts to
preserve its present business organization intact so as to
preserve its present business relationships with customers,
suppliers, and others having business dealings with it;
(b) followed historical maintenance practices with respect
to all physical assets necessary for the conduct of its
business, whether owned or leased;
(c) maintained its books, records, and accounts in the
usual manner on a basis consistent with prior periods
utilizing historical bookkeeping practices;
(d) duly complied with all laws material to the conduct of
the business;
(e) not entered into any contract, commitment, lease or
sublease relating to or affecting its business, other than
in the ordinary course of business, without the prior
written approval of Dixie;
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(f) used its best efforts to preserve for Dixie the rela-
tionships existing with Patrick's customers, employees and
others having business relationships with Patrick; and
(g) maintained insurance consistent with Patrick's prior
practice upon the Purchased Assets until Closing.
10.3 UTILITY SERVICE. Prior to the Closing Date, Patrick
will not take any action, or fail to take an action which would
cause the utility services being provided to the Plants to be
disconnected.
10.4 CHANGE OF NAME. Immediately subsequent to Closing,
Patrick shall take whatever actions required under the laws of
the State of California to change its name and any assumed named
used by it.
11.0 CONDITIONS TO OBLIGATIONS OF DIXIE. The obligations of
Dixie under this Agreement shall be subject to and conditioned
upon the following conditions, any or all of which (except
Section 11.3) may be waived in writing by Dixie in whole or in
part:
11.1 ACCURACY OF REPRESENTATIONS. Each of the representa-
tions and warranties of Patrick made herein shall be true and
correct on the date hereof and shall be true and correct on and
as of the Closing Date; and Patrick shall have executed and
delivered to Dixie on the Closing Date a certificate to that
effect dated that date.
11.2 PERFORMANCE. Each of the agreements, covenants,
stipulations, terms and conditions hereof to be performed and
complied with by Patrick on or prior to the Closing Date shall
have been performed and complied with on or prior thereto; and
Patrick shall have executed and delivered to Dixie a certificate
to that effect dated that date.
11.3 APPROVAL OF DIXIE BOARD OF DIRECTORS. Approval of this
Agreement by the Board of Directors of Dixie Yarns, Inc.
11.4 ABSENCE OF LITIGATION. No action or proceeding shall
have been instituted to set aside the transactions provided for
herein or to enjoin or prevent the consummation thereof.
11.5 GOVERNMENTAL APPROVALS. All governmental approvals
required of Patrick for the transfer of the Purchased Assets
contemplated by this Agreement shall have been obtained.
11.6 ASSIGNMENT AND ASSUMPTION AGREEMENT AND BILL OF SALE.
Patrick shall have executed and delivered to Dixie an assignment
and assumption agreement and bill of sale in the form attached
hereto as EXHIBIT L transferring all of the Purchased Assets to
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Dixie and providing for assumption by Dixie of all of the Assumed
Liabilities.
11.7 CERTIFIED RESOLUTIONS. Patrick shall have delivered
to Dixie certified copies of the resolutions of Patrick's Board
of Directors and shareholders authorizing and approving this
Agreement and the transactions contemplated hereby.
11.8 NO CHANGE IN FINANCIAL CONDITION. There shall not
have been any material adverse change in the financial condition
of Patrick and Patrick shall not have sustained any material loss
or damage to the Purchased Assets nor shall there be any material
liability (contingent or otherwise) of Patrick other than as set
forth on the balance sheet as of April 30, 1994 as set forth in
EXHIBIT A (for purposes of this Section 11.9, and except as
incurred in the ordinary course of business from April 30, 1994
to the date of Closing, and in the case of material adverse
change that affects the value of the Purchased Assets, any change
or changes in the aggregate amount of $100,000 shall be deemed to
be material).
11.9 DUE DILIGENCE. Immediately after the execution
hereof, Dixie shall perform a due diligence investigation of
Patrick. Such investigation shall not have disclosed any
condition, event or circumstance which , taken individually or in
the aggregate, would be reasonably likely to result in a material
adverse change as set forth in Section 11.8.
11.10 PAYMENT OF ADJUSTMENT TO PURCHASE PRICE. Upon
completion of calculation of the Purchase Price Adjustment, there
shall be payment in cash of the adjustment to the Purchase Price,
as set forth in Section 2.2 of this Agreement. At Closing,
Patrick shall make adequate provision for the payment of
liabilities not assumed by Dixie, in such manner as shall be
required by and reasonably acceptable to Dixie.
11.11 LESSORS' CONSENT TO ASSIGNMENT OF REAL PROPERTY
LEASES. In accordance with Section 5.0, Patrick shall deliver
written consent of Lessors to the Assignment to all the leases
set forth in EXHIBITS I and J at the same rental rate presently
paid by Patrick for Patrick's leases of such properties
(approximately $48,000 per month).
11.12 GUARANTY OF OBLIGATIONS OF PATRICK. Frank Celiberti,
individually, and Regent Industries, Inc., shall have executed
and delivered their several guarantees of the obligations of
Patrick, hereunder, in the form attached hereto as ANNEX A.
11.13 DELIVERY OF NON-COMPETITION AGREEMENTS. Patrick shall
deliver, at Closing, non-competition agreements of key employees,
in a form and substance reasonably satisfactory to Dixie. For
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purposes of this Section 11.14, Key Employees shall be identified
by Dixie 5 days prior to closing.
11.14 EXECUTION AND DELIVERY OF RELEASE. At the
Closing, Patrick, Celiberti and Regent shall execute and deliver
to Dixie a general release and covenant not to sue in
substantially the form attached hereto as EXHIBIT M.
12.0 CONDITIONS TO OBLIGATIONS OF PATRICK.
The obligations of Patrick under this Agreement shall be
subject to and conditioned upon the following conditions, any or
all of which may be waived in writing by Patrick in whole or in
part:
12.1 ACCURACY OF REPRESENTATIONS. Each of the representa-
tions and warranties of Dixie shall be true and correct on the
date hereof and shall be true and correct on and as of the
Closing Date.
12.2 PERFORMANCE. Each of the agreements, covenants,
stipulations, terms and conditions hereof to be performed and
complied with by Dixie on or prior to the Closing Date shall have
been performed and complied with on or prior thereto.
12.3 ABSENCE OF LITIGATION. No action or proceeding shall
have been instituted to set aside the transactions provided for
herein or to enjoin or prevent the consummation thereof.
12.4 CERTIFIED RESOLUTIONS. Dixie shall have delivered to
Patrick certified copies of the resolutions of its Board of
Directors authorizing the transactions contemplated by this
Agreement.
12.5 ASSIGNMENT AND ASSUMPTION AGREEMENT. Dixie shall have
executed and delivered to Patrick the assignment and assumption
and bill of sale agreement referenced above as EXHIBIT L.
13.0 COSTS AND EXPENSES. Patrick shall pay all fees and expens-
es incurred by it in connection with this transaction, including
the fees and expenses of its counsel, consultants and accoun-
tants, and Dixie shall pay all fees and expenses incurred by it
in connection with this transaction, including the fees and
expenses of its counsel, consultants and accountants.
14.0 CLOSING.
14.1 CLOSING. The payment of the Purchase Price pursuant
to Section 2.2 above, the sale, assignment and transfer of the
Purchased Assets pursuant to Section 2.1 above, and the delivery
of the instruments required hereunder (the "CLOSING"), shall take
place commencing at 10:00 a.m. local time on the Closing Date at
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the company offices of Patrick, in California, or at such other
place and time as the parties mutually agree.
14.2 FURTHER ASSURANCES. At any time on or after the
Closing Date, Patrick will execute, acknowledge and deliver any
further deeds, assignments, conveyances and other assurances,
documents and instruments of transfer reasonably requested by
Dixie, and will take any other action consistent with the terms
of this Agreement that may reasonably be requested by Dixie for
the purpose of transferring to Dixie any or all of the Purchased
Assets and other rights and benefits intended to be conveyed by
this Agreement.
15.0 INDEMNIFICATION.
15.1 INDEMNIFICATION BY PATRICK. Patrick shall indemnify
Dixie, all persons or entities controlling, controlled by or
under common control with, Dixie and all officers, directors,
employees, stockholders, partners and agents of Dixie or
employee, stockholders, partners and agents of Dixie or any such
person or entity and hold each of them harmless from and against
any and all losses, claims, liabilities, costs, chargebacks or
expenses, including, but not limited to, reasonable attorneys'
fees and disbursements, suffered or incurred by Dixie or any
person or entity controlling, controlled by or under common
control with, Dixie and all officers, directors, employees
stockholders, partners and agents of Dixie or any other person or
entity on account of,
(a) Any breach by Patrick of any of the covenants,
agreements, representations or warranties of Patrick
contained herein or in any other document delivered or
deliverable by Patrick at the closing,
(b) Any liability or obligation of Patrick not
specifically assumed by Dixie hereunder, including, without
limitation, any liability or obligation arising out of, or
in connection with, any inventory sold or produced by
Patrick or Patrick's conduct of its business before or after
the Closing.
(c) (Except for any liabilities which Dixie shall have
assumed hereunder), any claim by any present or former
creditor, stockholder or employee of Patrick or by any other
third party resulting from, or relating to, the operations
of Patrick's business prior to the Closing Date, and,
(d) Any claim by any present or former creditor,
stockholder or employee of Patrick relating to the
transactions contemplated hereby.
15.2 INDEMNIFICATION BY DIXIE. Dixie shall indemnify
Patrick, all persons or entities controlling, controlled by, or
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under common control with, and all officers, directors,
employees, stockholders, partners, and agents of Patrick, or any
such person or entity, and hold each of them harmless from and
against any losses, claims, liabilities, costs, or expenses,
including without limitation, reasonable attorneys' fees and
disbursements, separate or incurred by Patrick, or any person or
entity, controlling, controlled by, or under common control with,
Patrick and all officers, directors, employees, stockholders,
partners, and agents off Patrick, or any such person or entity,
on account of,
(i) Any breach by Dixie of any of the
covenants, agreements, representations or
warranties of Dixie contained herein or in
any other document delivered or deliverable
by Dixie at the closing, and
(ii) The failure of Dixie to discharge any
liability or obligation of Patrick specifically
assumed by Dixie hereunder.
15.3 CONTENT OF NOTICE; PAYMENT OF CLAIMS. A party seeking
indemnification shall provide notice to the other party within a
reasonable time after the party seeking indemnification has
actual knowledge of the facts and circumstances which would give
rise to a claim for indemnification hereunder. The notifying
party shall give written notice to the other party of the claim,
specifying in detail the nature of the claim and the facts relied
upon by the notifying party as the basis for such claim. The
notified party shall then promptly pay to the notifying party the
amount of its claim, if undisputed. In the event that the
notified party shall dispute any claim or any portion thereof,
the notified party shall immediately provide the other party a
writing, specifying in detail the portion of such claim (if less
than all) which is disputed and the facts relied upon by the
notified party as the basis for such dispute. The parties agree
to negotiate in good faith to attempt to reach a resolution of
any disputed claim hereunder in order to attempt to avoid resort-
ing to a court for such resolution. Either party shall have the
right to cure, settle or participate in the defense (at its
expense and without admitting any liability) of any or all items
which are disclosed pursuant to the terms of this Agreement.
15.4 NO WAIVER. Except as provided in Section 13.0 above
concerning Closing with knowledge of breach, under no circum-
stances shall any action taken by either party pursuant to these
Sections 15 through 15.5 constitute or be construed to constitute
a waiver of any rights or remedies it may have pursuant to this
Agreement or otherwise in law or equity, or constitute or become
construed to constitute a basis for asserting against either
party any reliance or other legal or equitable theory for the
purpose of reducing or
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negating any rights or remedies under this Agreement, unless both
parties agree thereto in a writing signed by both of them.
15.5 LEGAL AND EQUITABLE REMEDIES. Each party agrees that
the remedy at law for any breach or violation by it of this
Agreement is and will be inadequate. Accordingly, each party
hereby consents and agrees that, in the event of any breach or
violation by it of any of the provisions of this Agreement, the
other party shall be entitled to obtain injunctive relief and/or
specific performance in addition to any other rights and remedies
that the other party may have at law or equity, including without
limitation, the recovery of money damages.
16.0 EMPLOYEES. All employees of the Plants shall be deemed, in
all respects, the employees of Patrick through the Closing.
Patrick shall cause all of its employees of the Plants to be
terminated effective as of the Closing. Any liability, cost or
expense associated with the termination of employees occurring
prior to or as of the Closing shall be borne solely by Patrick,
and Patrick shall defend, indemnify and hold Dixie harmless from
and against any and all claims, demands and judgments arising out
of any such termination or out of the employment of such employ-
ees of Patrick through the Closing. Prior to the Closing Date,
Patrick shall pay to each salaried employee of the Plants all
vacation pay, if any, due and owing to such employee on account
of employment with Patrick through the close of business on the
Closing Date.
17.0 RISK OF LOSS. All risk of loss of or to the Purchased
Assets, in whole or in part, by reason of fire or other casualty,
shall remain with Patrick until the Closing. If, before the
Closing, any casualty results in damage to the Purchased Assets
which would have a material adverse effect on the ability of the
Plants to operate, then Dixie shall have the option of either
terminating this Agreement or completing the transactions
contemplated herein at a price mutually acceptable to Dixie and
Patrick. Patrick shall notify Dixie promptly after Patrick has
notice of any casualty to the Purchased Assets. All insurance
proceeds shall be the sole property of Patrick; provided, that
provision for payment of any liability due and owing to Dixie
shall be made out of such proceeds.
18.0 CONDEMNATION. If the Purchased Assets shall be taken or
condemned in whole or in part, and if such condemnation would
have a material adverse effect on the ability of the Plants to
operate, then Dixie shall have the option of either terminating
this Agreement or completing the transactions contemplated herein
or, applying the condemnation proceeds to the obligation owed by
Patrick to Dixie. Patrick shall notify Dixie promptly after
Patrick has notice of any threatened condemnation of the
Purchased Assets. If Dixie elects to complete this transaction,
the Purchase Price shall be reduced in an amount commensurate
with the
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diminution in the fair market value (as ultimately determined by
the condemnation proceedings) of the Purchased Assets as they
existed immediately prior to the condemnation, but in no event
shall such reduction be in an amount greater than the Purchase
Price. All condemnation proceeds shall be the sole property of
Patrick; provided, however, that provision for payment of any
liability due and owing to Dixie shall be made out of such
proceeds.
19.0 EXHIBITS, RESPONSIBILITY FOR PRODUCTION. Patrick shall be
responsible for preparing and delivering to Dixie all exhibits
required by this Agreement. All such exhibits shall be delivered
as of the execution hereof, with the exception of exhibits D, E
and K, which shall be delivered on or prior to the May 30, 1994,
which shall be in form and content reasonably acceptable to
Dixie. Dixie shall have until June 7, 1994 (or the Closing Date
if the Closing occurs prior to June 7th) to notify Patrick, in
writing, of its objection to the form and/or content of the
Exhibit. However, in the event that such objection is not timely
made, or if any Exhibit is delivered by Patrick within three (3)
business days of the Closing Date and Dixie elects to proceed
with the Closing without raising an objection to the form or
content of the Exhibit, then any such Exhibit shall be deemed to
be satisfactory to Dixie in both form and content. If there is
an objection and such objection is not resolved, then Dixie shall
have the right to terminate this Agreement without any further
liability. All of the foregoing Exhibits shall be deemed to be
incorporated herein by any reference thereto as if fully set
out.:
20.0 GENERAL.
20.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC. All of
the representations and warranties made by the parties shall
survive the Closing Date indefinitely.
20.2 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date,
without the consent of both parties to the release or disclosure
and to its contents, neither party will issue any press release
or otherwise make any public statement with respect to the
transactions contemplated herein (unless required by applicable
law or regulation). Notwithstanding the foregoing, either party
may issue any press release or make any public statement without
the approval of the other as may be required by law, in which
case such party shall use its best efforts to give the other
reasonable advance notice thereof.
20.3 ENTIRE AGREEMENT. This instrument contains the entire
agreement of the parties with respect to the subject matter
hereof; all previous agreements and discussions relating to the
same or similar subject matter being merged herein. This
Agreement may not be changed, amended, or modified INCLUDING
SPECIFICALLY THE
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PROVISIONS OF THIS PARAGRAPH, except by a writing signed by both
parties hereto. The provisions of this paragraph may not be
changed, amended, modified, terminated, or waived as a result of
any failure to enforce any provision or the waiver of any
specific breach or breaches thereof or any course of conduct of
the parties.
20.4 HEADINGS. The subject headings of the sections of
this Agreement are included for purposes of convenience only and
shall not affect the construction or interpretation of any of its
provisions.
20.5 ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties
hereto but shall not be assigned by any party hereto without the
prior written consent of the other party hereto.
20.6 GOVERNING LAW. The parties acknowledge and agree that
this Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of California, excluding
the body of law dealing with conflicts of law. The parties have
specifically directed their attention to the laws of the State of
California and recognize that this Agreement by its terms may
have applicability outside the State of California. In the event
that judicial interpretation or enforcement of this agreement is
sought, the parties hereto consent to the exclusive jurisdiction
of the state or federal courts with venue in Los Angeles County,
California. In the event that arbitration is necessary, the
situs for such arbitration shall be in Los Angeles County,
California.
20.7 ATTORNEYS' FEES. If any legal action or arbitration
or other proceeding is brought for the enforcement of this
Agreement or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of
this Agreement, the prevailing party or parties shall be entitled
to recover reasonable attorneys' fees and other costs incurred in
the proceeding. In the event that an equitable remedy is
fashioned by the court or arbitrator, the court or arbitrator
shall be requested to allocate the attorneys' fees and costs
among the parties in an equitable manner. Except as provided in
the preceding sentence, each party shall pay the expenses
incurred by it in connection with the preparation and execution
of this Agreement and in connection with the transactions
contemplated hereby as provided in Section 13.0 above.
20.8 NOTICES, DEMANDS AND COMMUNICATIONS. Any and all
notices or demands permitted or required to be made under this
Agreement shall be in writing, signed by the party giving such
notice or demand, and shall be delivered personally, or sent by
(i) facsimile transmission, (ii) recognized overnight delivery
service or (iii) registered or certified mail to the other party
at the address set forth below, or at such other address as may
be
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<PAGE>
supplied in writing pursuant to the terms of this Paragraph. The
recipient of such notice shall be deemed to have received the
notice (i) on the date of delivery or the date of transmission if
the notice was personally delivered or sent by facsimile
transmission (excluding Saturdays, Sundays and legal holidays),
(ii) on the day after dispatch (excluding Saturdays, Sundays and
legal holidays) if the notice was sent by recognized overnight
delivery service or (iii) five (5) days after dispatch if sent by
registered or certified mail. The rejection or inability to
deliver because of a change of address of which no notice has
been given shall not effect the validity of any notice or demand
sent in accordance with the provisions hereof. For purposes of
this Agreement:
If to Dixie:
Dixie Yarns, Inc.
1100 South Watkins Street
P. O. Box 751
Chattanooga, TN 37401
FAX (615) 493-7442
Attn: Daniel K. Frierson,
President
WITH A REQUIRED COPY TO:
John F. Henry, Jr., Esq.
Witt, Gaither & Whitaker
1100 American National Bank Building
Chattanooga, TN 37402
FAX (615) 266-4138
If to Patrick:
Leonard Lawrence
c/o Western Dyeing
3104 East Ana Street
Rancho Dominguez, CA 90221
FAX ____________________
WITH A REQUIRED COPY TO:
Bernard Shearer
Greenberg, Glusker, Fields, Claman & Machtinger
1900 Avenue of the Stars
Suite 2000
Los Angeles, California 90067-4590
FAX 310/201-7426
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20.9 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall consti-
tute an original hereof, but all of which shall constitute but
one and the same document.
20.10 SEVERABILITY. If any provision of this Agreement or
the application thereof to any person, entity, or circumstance
shall be invalid or unenforceable to any extent, then such
provision or application shall be modified to the minimum extent
necessary to render it valid and enforceable, and the remainder
of the Agreement and the application of such provisions to the
parties hereto and the transactions contemplated hereby shall not
be affected and shall be enforced to the greatest extent
permitted by law.
20.11 INTERPRETATION. Should the provisions of this
Agreement require judicial interpretation, it is agreed that the
judicial body interpreting or construing the same shall not apply
the assumption that the terms hereof shall be more strictly
construed against one party by reason of the rule of construction
that an instrument is to be construed more strictly against the
party which itself or though its agents prepared the same, it
being agreed that the agents of both parties have participated in
the preparation hereof equally.
20.12 UNDERTAKINGS OF CELIBERTI AND REGENT. As a material
inducement to Dixie to enter into this Agreement, Celiberti and
Regent jointly and severally agree to guarantee the obligations
of Patrick hereunder and, at Closing, to execute and deliver the
Guaranties required by Item 11.12 hereof.
*************************************************
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IN WITNESS WHEREOF, Patrick has caused this Agreement to be
executed by its President or other duly authorized officer and
Dixie has caused this Agreement to be executed by its President
or other duly authorized officer as of the date first above
written, each in counterpart originals.
PATRICK OF CALIFORNIA, INC.
dba PATRICK CARPETS
By: /s/ Leonard Lawrence
-----------------------------
Title: President
--------------------------
DIXIE YARNS, INC.
By: /s/ Daniel K. Frierson
-----------------------------
Title: Chairman
--------------------------
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IN WITNESS WHEREOF, Regent has caused this Agreement to be
executed by its President or other duly authorized officer and
Frank V. Celiberti has executed this Agreement as of the date
first above written, each in counterpart originals.
REGENT INDUSTRIES, INC.
By: /s/ Frank V. Celiberti
-----------------------------
Title: Chairman
--------------------------
/s/ Frank V. Celiberti
- - --------------------------------
FRANK V. CELIBERTI
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LIST OF OMITTED SCHEDULES AND EXHIBITS
OMITTED DOCUMENT DESCRIPTION
- - ---------------- -----------
Exhibit A Purchased Assets
Exhibit B Fixed Assets
Exhibit C Furniture and Furnishings
Exhibit D Lease and Service Agreements
Exhibit E Licenses, Certificates and
Permits
Exhibit F Assumed Liabilities
Exhibit G Net Assets Acquired
Exhibit H Lease of Real Property (Tufting
Plant)
Exhibit I Lease of Real Property
(Warehouse)
Exhibit J Consignment Agreement
Exhibit K Compliance with Environmental
Matters; Litigation Schedule
Exhibit L Assignment and Assumption
Agreement and Bill of Sale
Exhibit M Covenant Not to Sue
Schedule 8.6 Required Consents
Annex A Guaranty of Obligations Under
Agreement
Annex B Escrow Agreement
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT AND BILL OF SALE
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT AND BILL OF SALE (this "Assignment
and Bill of Sale") is made and entered into as of this ____ day of May, 1994 by
and between PATRICK CARPET MILLS OF CALIFORNIA, INC., a California corporation
("Patrick") and DIXIE YARNS, INC., a Tennessee corporation ("Dixie").
W I T N E S S E T H
WHEREAS, contemporaneously herewith an Asset Purchase Agreement is being entered
into by and among Patrick and Dixie (the "Asset Purchase Agreement"); and
WHEREAS, subject to the terms of the Asset Purchase Agreement, Patrick has
agreed to sell, transfer and convey to Dixie all of Patrick's right, title and
interest in and to the Purchased Assets; and
WHEREAS, subject to the terms of the Asset Purchase Agreement, Patrick has
agreed to assign to Dixie, and Dixie has agreed to assume the Assumed
Liabilities; and
WHEREAS, the execution and delivery of this Assignment and Bill of Sale is
required in connection with the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the execution and delivery
of the Asset Purchase Agreement, the receipt and legal sufficiency of such
consideration being hereby acknowledged, Patrick and Dixie agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings given
such terms in the Asset Purchase Agreement.
2. Pursuant to the terms of the Asset Purchase Agreement, Patrick hereby
sells, transfers and conveys to Dixie, and Dixie hereby purchases, receives and
accepts from Patrick the Purchased Assets.
3. TO HAVE AND TO HOLD all of the Purchased Assets unto Dixie, its successors
and assigns, for its and their own use and benefit forever.
4. Patrick hereby constitutes and appoints Dixie, its successors and assigns,
Patrick's true and lawful attorney, with full power of substitution, in
Patrick's name and stead, but on behalf of and for
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the benefit of Dixie, its successors and assigns, to demand and receive any and
all of the Purchased Assets transferred hereunder and to give receipts and
releases for and in respect of the same, and any part thereof, and from time to
time to institute and prosecute in Patrick's name, or otherwise, at the expense
and for the benefit of Dixie, its successors and assigns, any and all
proceedings at law, in equity or otherwise, which Dixie, its successors or
assigns, may deem proper for the collection or reduction to possession of any of
the Purchased Assets transferred hereunder or for the collection and enforcement
of any claim or right of any kind hereby sold, conveyed, transferred, assigned
and delivered, or intended so to be, and to do all reasonable acts and things in
relation to the Purchased Assets transferred hereunder, Patrick hereby declaring
that the foregoing powers are coupled with an interest and are and shall be
irrevocable by Patrick in any manner or for any reason whatsoever.
5. Pursuant to the terms of the Asset Purchase Agreement, Patrick hereby
assigns to Dixie and Dixie hereby assumes from Patrick the Assumed Liabilities.
IN WITNESS WHEREOF, Patrick and Dixie have caused this Bill of Sale to be
executed and delivered on the day and year aforesaid.
PATRICK CARPET MILLS OF
CALIFORNIA, INC.
d/b/a PATRICK CARPETS DIXIE YARNS, INC.
By: /s/ Frank V. Celiberti By: /s/ Gary A. Harmon
------------------------- -----------------------
Title: Chairman Title: Treasurer
---------------------- --------------------
2
