FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 27, 1999
Commission File Number 0-2585
THE DIXIE GROUP, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-0183370
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 South Watkins Street
Chattanooga, Tennessee 37404
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (423) 698-2501
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of April 30, 1999
Common Stock, $3 Par Value 10,629,879 shares
Class B Common Stock, $3 Par Value 735,228 shares
Class C Common Stock, $3 Par Value 0 shares
THE DIXIE GROUP, INC.
INDEX
Part I. Financial Information: Page No.
Consolidated Condensed Balance Sheets --
March 27, 1999 and December 26, 1998 3
Consolidated Statements of Income --
Three Months Ended March 27, 1999
and March 28, 1998 5
Consolidated Condensed Statements of Cash Flows --
Three Months Ended March 27, 1999
and March 28, 1998 6
Consolidated Statement of Stockholder's Equity --
Three Months Ended March 27, 1999 8
Notes to Consolidated Condensed Financial Statements 9
Management's Discussion and Analysis of Results of
Operations and Financial Condition 15
Part II. Other Information:
Item 6 - Exhibits and Reports on Form 8-K 18
PART I - ITEM 1
FINANCIAL INFORMATION
THE DIXIE GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
March 27, December 26,
1999 1998
_____________ ____________
(dollar amounts in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,782 $ 2,815
Accounts receivable (less allowance for
doubtful accounts of $1,843 in 1999
and $1,294 in 1998) 19,074 8,364
Inventories 91,224 72,671
Net assets held for sale 67,565 67,508
Other 15,255 14,810
_____________ ____________
TOTAL CURRENT ASSETS 194,900 166,168
PROPERTY, PLANT AND EQUIPMENT 281,814 265,702
Less accumulated amortization and
depreciation (124,463) (120,517)
_____________ ____________
NET PROPERTY, PLANT AND EQUIPMENT 157,351 145,185
INTANGIBLE ASSETS (less accumulated
amortization of $4,940 in 1999
and $4,687 in 1998) 52,034 52,394
OTHER ASSETS 11,224 10,899
_____________ ____________
TOTAL ASSETS $ 415,509 $ 374,646
_____________ ____________
_____________ ____________
See Notes to Consolidated Condensed Financial Statements.
THE DIXIE GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
March 27, December 26,
1999 1998
_____________ ____________
(dollar amounts in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 38,668 $ 39,264
Accrued expenses 28,559 24,028
Accrued losses of discontinued operations 11,367 12,649
Current portion of long-term debt 9,582 9,645
_____________ ____________
TOTAL CURRENT LIABILITIES 88,176 85,586
LONG-TERM DEBT
Senior indebtedness 99,984 64,466
Subordinated notes 50,000 50,000
Convertible subordinated debentures 39,737 39,737
_____________ ____________
TOTAL LONG-TERM DEBT 189,721 154,203
OTHER LIABILITIES 11,908 11,869
DEFERRED INCOME TAXES 23,126 22,998
STOCKHOLDERS' EQUITY
Common Stock ($3 par value per share)
authorized 80,000,000 shares -
issued and outstanding,
14,073,879 shares in 1999 and
14,071,629 shares in 1998 42,222 42,215
Class B Common Stock ($3 par value per share)
authorized 16,000,000 shares -
issued and outstanding, 735,228 shares
in 1999 and 1998 2,206 2,206
Common Stock Subscribed - 573,463 shares
in 1999 and 1998 1,720 1,720
Additional paid-in capital 134,727 134,720
Stock subscriptions receivable (3,719) (3,719)
Unearned stock compensation (716) (716)
Retained earnings (deficit) (17,270) (19,850)
Accumulated other comprehensive income (799) (799)
_____________ ____________
158,371 155,777
Less Common Stock in treasury at cost -
3,443,700 shares in 1999 and
3,442,900 shares in 1998 (55,793) (55,787)
_____________ ____________
TOTAL STOCKHOLDERS' EQUITY 102,578 99,990
_____________ ____________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 415,509 $ 374,646
_____________ ____________
_____________ ____________
See Notes to Consolidated Condensed Financial Statements.
THE DIXIE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
______________________________
March 27, March 28,
1999 1998
_____________ _____________
(dollar amounts in thousands,
except per share data)
Net sales $ 141,224 $ 118,601
Cost of sales 112,014 94,641
_____________ _____________
GROSS PROFIT 29,210 23,960
Selling and administrative expenses 20,470 16,765
Other expense - net 1,120 975
_____________ _____________
INCOME BEFORE INTEREST AND TAXES 7,620 6,220
Interest expense 3,346 2,579
_____________ _____________
INCOME BEFORE INCOME TAXES 4,274 3,641
Income tax provision 1,694 1,395
_____________ _____________
Income from Continuing Operations $ 2,580 $ 2,246
Income from Discontinued Operations - 226
Net Income $ 2,580 $ 2,472
_____________ _____________
_____________ _____________
Earnings per Share:
Basic Earnings per share:
Income from continuing operations $ 0.23 $ 0.20
Income from discontinued operations - 0.02
Net Earnings $ 0.23 $ 0.22
_____________ ____________
Shares outstanding 11,282 11,259
Diluted Earnings per share:
Income from continuing operations $ 0.22 $ 0.19
Income from discontinued operations - 0.02
Net Earnings $ 0.22 $ 0.21
_____________ ____________
Shares outstanding 11,627 12,015
Dividends per share:
Common Stock $ -- $ .05
Class B Common Stock $ -- $ .05
See Notes to Consolidated Condensed Financial Statements.
THE DIXIE GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
______________________________
March 27, March 28,
1999 1998
_____________ _____________
(dollar amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,580 $ 2,472
Depreciation and amortization:
Continuing operations 6,260 4,529
Discontinued operations - 2,476
Provision (benefit) for deferred
income taxes 1 (298)
Gain on property, plant and
equipment disposals --- (50)
_____________ _____________
8,841 9,129
Changes in operating assets and
liabilities, net of effects
of business combination (17,684) (5,660)
_____________ _____________
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (8,843) 3,469
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of
property, plant, and equipment --- 224
Net proceeds from assets held for sale 9,943 ---
Purchase of property, plant, and equipment:
Continuing operations (4,745) (6,414)
Discontinued operations (657) (1,083)
Net cash paid in business combinations (32,194) ---
_____________ ____________
NET CASH USED IN INVESTING ACTIVITIES (27,653) (7,273)
See Notes to Consolidated Condensed Financial Statements.
THE DIXIE GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
- CONTINUED
(UNAUDITED)
Three Months Ended
______________________________
March 27, March 28,
1999 1998
_____________ _____________
(dollar amounts in thousands)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in credit line
borrowings 36,612 5,179
Payments on term loan (1,500) (625)
Dividends paid --- (566)
Other 351 (12)
_____________ _____________
NET CASH PROVIDED BY FINANCING
ACTIVITIES 35,463 3,976
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (1,033) 172
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 2,815 1,848
_____________ _____________
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 1,782 $ 2,020
_____________ _____________
_____________ _____________
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 4,122 $ 3,742
____________ _____________
____________ _____________
Income taxes paid, net of
tax refunds received $ 967 $ 401
____________ _____________
____________ _____________
See Notes to Consolidated Condensed Financial Statements.
<TABLE>
<CAPTION>
THE DIXIE GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
Common
Stock Accumulated
and Common Additional Retained Other Common Total
Class B Stock Paid-In Earnings Comprehensive Stock In Stockholders'
Stock Subscribed Capital Other (Deficit) Income Treasury Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 26, 1998 $44,421 $1,720 $134,720 $(4,435) $(19,850) $ (799) $(55,787) $ 99,990
Common Stock acquired for treasury -
800 shares (6) (6)
Common Stock sold under stock
option and restricted stock grant
plan - 2,250 shares 7 7 14
Net income for the year 2,580 2,580
BALANCE AT MARCH 27, 1999 $44,428 $1,720 $134,727 $(4,435) $(17,270) $ (799) $(55,793) $102,578
<FN>
See notes to consolidated financial statements.
</TABLE>
THE DIXIE GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(dollar amounts in thousands, except per share data)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial statements which do not include all of the
information and footnotes required in annual financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 27, 1999 are not
necessarily indicative of the results that may be expected for the entire
year.
Discontinued Operations: Financial statements for 1998 have been restated
to report results of discontinued operations separately from results of
continuing operations. Disclosures included herein pertain to the
Company's continuing operations unless noted otherwise. A portion of
interest cost not attributable to any specific operation of the Company is
allocated to discontinued operations based on the ratio of net assets
discontinued to the sum of consolidated net assets plus consolidated debt
(exclusive of debt attributable to specific operations).
Credit and Market Risk: For the periods presented, the Company sold
floorcovering to a wide variety of manufacturers and retailers located
primarily throughout the United States. The Company performs ongoing
credit evaluations of its customers and generally does not require
collateral. An allowance for doubtful accounts is maintained at a level
which management believes is sufficient to cover potential credit losses
including potential losses on receivables sold. The Company invests its
excess cash in short-term investments and has not experienced any losses on
those investments.
NOTE B - INVENTORIES
Substantially all inventories are stated at the lower of cost, determined
by the last-in, first-out (LIFO) method, or market. Inventories are
summarized as follows:
March 27, December 26,
1999 1998
_____________ ____________
At current cost:
Raw materials $ 21,690 $ 21,424
Work-in-process 21,393 11,636
Finished goods 43,328 34,796
Supplies, repair parts, and other 2,265 1,631
_____________ ____________
88,676 69,487
LIFO value over current cost 2,548 3,184
_____________ ____________
$ 91,224 $ 72,671
_____________ ____________
_____________ ____________
NOTE C - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
March 27, March 28,
1999 1998
Income from continuing operations (1) $ 2,580 $ 2,246
Income from discontinued operations (1) - 226
Net income $ 2,580 $ 2,472
________ _________
________ _________
Denominator for calculation of
basic earnings per share -
weighted average shares (2) 11,282 11,259
Effect of dilutive securities:
Stock options 200 507
Stock subscriptions 145 249
Denominator for calculation of
diluted earnings per share -
weighted average shares adjusted
for potential dilution (3) 11,627 12,015
Basic Earnings per share:
Income from continuing operations $ 0.23 $ 0.20
Income from discontinued operations - 0.02
Net Earnings $ 0.23 $ 0.22
_____________ ____________
Diluted Earnings per share:
Income from continuing operations $ 0.22 $ 0.19
Income from discontinued operations - 0.02
Net Earnings $ 0.22 $ 0.21
_____________ ____________
Dividends per share:
Common Stock $ -- $ .05
Class B Common Stock $ -- $ .05
(1) No adjustments needed for diluted calculation.
(2) Includes Common and Class B Common shares in thousands.
(3) Because their effects are anti-dilutive, excludes shares issuable
pursuant to certain grants under stock option, stock subscription, and
restricted stock plans whose grant price was greater than the average
market price of common shares outstanding during the periods presented and
the assumed conversion of subordinated debentures into shares of Common
Stock as follows: 2,634 shares in 1999 and 1,737 shares in 1998.
NOTE D - LONG TERM DEBT AND CREDIT ARRANGEMENTS
Long-term debt consists of the following:
March 27, December 26,
1999 1998
Senior indebtedness:
Credit line borrowings $ 50,612 $ 14,000
Term loan 55,500 57,000
Other 954 611
Total senior indebtedness 107,066 71,611
Subordinated notes 50,000 50,000
Convertible subordinated debentures 42,237 42,237
Total long-term debt 199,303 163,848
Less current portion (9,582) (9,645)
Total long-term debt (less current
portion) $189,721 $154,203
On March 31, 1998, the Company entered into a new unsecured revolving
credit and term-loan facility with its principal senior lenders. The new
credit facility provides for revolving credit of up to $100.0 million
through a five-year commitment period and a $60.0 million, seven-year term-
loan. The new agreement contains financial covenants relating to minimum
net worth, the ratio of debt to capitalization, payment of dividends, and
certain other financial ratios. Interest rates available under the
facility may be selected by the Company from a number of options which
effectively allow for borrowing at rates equal to or lower than the greater
of the lender's prime rate, or the federal funds rate plus .5% per annum.
Commitment fees, ranging from .25% to .375% per annum on the revolving
credit line are payable on the average daily unused balance of the
revolving credit facility.
On April 2, 1998, the Company completed an agreement with the Development
Authority of Lafayette, Georgia to obtain up to $7.0 million from the
Authority under a development bond issuance. Amounts received by the
Company are secured by a letter of credit issued by the Company's lead
lender in favor of the Development Authority. The value of the letter of
credit reduces the Company's availability under its revolving credit and
term-loan facility. The proceeds were used to finance the real property
and machinery and equipment needs of the Company's synthetic materials
recycling center under development in Lafayette, Georgia.
The Company's subordinated notes are unsecured, bear interest at 9.96%
payable semiannually, and are due in semiannual installments of $2,381
beginning February 1, 2000.
The Company's convertible subordinated debentures bear interest at 7%
payable semiannually, are due in 2012, and are convertible by the holder
into shares of Common Stock of the Company at an effective conversion price
of $32.30 per share, subject to adjustment under certain circumstances.
Mandatory sinking fund payments, which commenced May 15, 1998, will retire
$2,500 principal amount of the debentures annually and approximately 70% of
the debentures prior to maturity. The convertible debentures are
subordinated in right of payment to all other indebtedness of the Company.
The Company's long-term debt and credit agreements contain financial
covenants relating to minimum net worth, the ratio of debt to
capitalization, payment of dividends and certain other financial ratios.
Restrictions set forth in the Company's subordinated note agreement have
limited the Company's ability to pay dividends due to losses associated
with the disposal of the Company's textile and apparel operations. Absent
a waiver from the lender or an amendment, future dividends can only be paid
to the extent of 50% of the excess of aggregate consolidated net income
subsequent to the end of the fiscal quarter when the Company first meets
the required ratios of interest coverage and debt to earnings before
interest, taxes, depreciation and amortization as defined by the
subordinated note agreement.
As of March 27, 1999, the most restrictive covenants under the revolving
credit and term-loan agreement limit available borrowing capacity to
$11,041.
NOTE E - BUSINESS COMBINATION
In early 1999, the Company acquired the assets and assumed certain
liabilities of Multitex Corporation of America, Inc. ("Multitex"), a
Dalton, Georgia carpet and carpet yarn producer for approximately $30,444
in cash, plus future payments keyed to revenue growth. The acquisition was
accounted for as a purchase effective January 8, 1999, and accordingly, the
results of operations of Multitex subsequent to January 8, 1999 are
included in the Company's consolidated financial statements. The total
purchase price of $30,444 was allocated to the net assets acquired based on
their estimated fair market values.
A summary of the net assets acquired as of the purchase data is as follows:
Current Assets $18,170
Property, Plant and Equipment 20,295
Other Non-Current Assets 470
Current Liabilities (8,491)
Net assets acquired $30,444
The following unaudited pro forma summary presents the consolidated results
of operations as if the acquisition of Multitex had occurred at the
beginning of 1998 after giving effect to certain adjustments, including the
elimination of sales between the Company and Multitex and related profit,
adjustments for interest expense on debt to finance the acquisition,
depreciation expense on adjusted fixed asset values and related income
taxes. The pro forma results are presented for comparative purposes only
and do not purport to be indicative of future results or of the results
that would have occurred had the acquisition taken place at the beginning
of 1998. Pro forma information is not presented for the current year, as
the effects of the pro forma adjustments are not material.
Three months ended
March 28, 1998
Net sales $142,692
Income from continuing operations 2,506
Net income 2,732
Basic earnings per share:
Income from continuing operations 0.22
Net income 0.24
Diluted earnings per share:
Income from continuing operations 0.21
Net income 0.23
In early 1999, the Company acquired Graphictech, Inc. ("Graphictech"), a
carpet yarn producer for approximately $1,750 in cash. The acquisition was
accounted for as a purchase, and accordingly, the results of operations of
Graphictech subsequent to the data of acquisition are included in the
Company's consolidated financial statements. Pro forma information is not
presented, as the effects of the pro forma adjustments are not material.
NOTE F - SEGMENT DATA
The Company has two reportable segments in its continuing operations:
Carpet Manufacturing and Floorcovering Base Materials. Each reportable
segment is organized around product similarities. The Company's Carpet
Manufacturing segment contains three operating businesses that manufacture
and supply carpets and rugs to the manufactured housing and recreational
vehicle markets through Carriage Carpets, to home consumers through major
retailers under the Bretlin/Globaltex name, to higher-end residential and
commercial customers serviced by Masland, and to the specialty carpet yarn
market through Candlewick. The Floorcovering Base Materials segment
manufactures and sells yarn to external customers and transfers a
significant portion of its unit volume to the Company's Carpet
Manufacturing segment.
The following table reflects selected operating data relating to the two
industries served by the Company:
Quarter Ended
March 27, March 28,
1999 1998
SALES TO EXTERNAL CUSTOMERS
Carpet Manufacturing $108,132 $ 93,436
Floorcovering Base Materials 31,806 24,453
Other 1,286 712
Total sales to external customers $141,224 $118,601
Quarter Ended
March 27, March 28,
1999 1998
INTERSEGMENTAL SALES
Carpet Manufacturing $ 2,153 $ 431
Floorcovering Base Materials 20,141 14,171
Other 1,905 2,304
Total intersegmental sales $24,199 $16,906
OPERATING PROFIT (E.B.I.T.)
Carpet Manufacturing $6,390 $5,280
Floorcovering Base Materials 1,216 920
Other 14 20
Total operating profit (E.B.I.T.) 7,620 6,220
Interest expense 3,346 2,579
Consolidated income before income taxes
from continuing operations $4,274 $3,641
Quarter Ended
March 27, December 26,
1999 1998
IDENTIFABLE ASSETS
Carpet Manufacturing $249,694 $229,900
Floorcovering Base Materials 74,568 54,348
Other 23,682 22,890
Net assets held for sale 67,565 67,508
Total consolidated assets $415,509 $374,646
NOTE G - RECENT EVENTS
On April 26, 1999, the Company announced that it would make additional
investments totaling $20.0 million to expand the Company's capability in
filament carpet yarn extrusion over the next 18 months. Additionally, the
Company reported that it has signed an agreement with Mohawk Industries to
sell the Company's Ulmer, South Carolina, carpet yarn spinning facility for
$10.0 million. The yarn spinning facility being sold was recently acquired
as part of the Company's purchase of Multitex.
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
The following is presented to update the discussion of results of
operations and financial condition included in the Company's 1998 Annual
Report. (dollar amounts in thousands, except per share data)
RESULTS OF OPERATIONS
The Company reported net income for the quarter ended March 27, 1999 of
$2,580, or $.22 per diluted share, on sales of $141,224. Results for the
1998 comparable period included net income from continuing operations of
$2,246, or $.19 per diluted share, on sales of $118,601. This is an
increase of $22,623 or 19% in sales and an increase of $334 or 15% in
income from continuing operations from the first quarter of 1998.
Sales increased over 1998 in all of the Company's continuing operations led
by the acquisition of Globaltex Carpets, a division of Multitex, in January
1999. The income growth was caused by improved productivity resulting in
higher operating margins in the Company's existing businesses versus last
year and came despite higher interest expense and other costs associated
with the Company's recent acquisitions.
The Company has two reportable segments in its continuing operations:
Carpet Manufacturing and Floorcovering Base Materials. Each reportable
segment is organized around product similarities. The Company's Carpet
Manufacturing segment contains three operating businesses that manufacture
and supply carpets and rugs to the factory-built housing and recreational
vehicle markets through Carriage Carpets, to home consumers through major
retailers under the Bretlin/Globaltex name, to higher-end residential and
commercial customers serviced by Masland, and to the specialty carpet yarn
market through Candlewick. The Floorcovering Base Materials segment
manufactures and sells yarn to external customers and sells a significant
portion of its unit volume to the Company's Carpet Manufacturing segment.
The following table reflects selected operating data relating to the two
industries served by the Company:
Quarter Ended
March 27, March 28,
1999 1998
SALES
Carpet Manufacturing $110,285 $ 93,867
Floorcovering Base Materials 51,947 38,627
Eliminations and Other (21,008) (13,893)
Total sales $141,224 $118,601
Quarter Ended
March 27, March 28,
1999 1998
OPERATING PROFIT (E.B.I.T.)
Carpet Manufacturing $6,390 $5,280
Floorcovering Base Materials 1,216 920
Other 14 20
Total operating profit (E.B.I.T.) $7,620 $6,220
Sales in the Company's Carpet Manufacturing segment for the quarter ended
March 27, 1999 were $110,285, an increase of $16,528 or 17.5% over the
comparable period in 1998. The increase was a result of increased volume
resulting from the Multitex acquisition in January 1999. Operating profits
in the Carpet Manufacturing segment were $6,390 in the first quarter of
1999 compared with $5,280 in the first quarter of 1998. The profitability
increase was a result of the sales volume increase and improved
productivity.
Sales in the Company's Floorcovering Base Materials segment for the quarter
ended March 27, 1999 were $51,947, an increase of $13,320 or 34.5% over the
comparable period in 1998. The increase was a result of increased volume
primarily resulting from the Multitex acquisition in January 1999.
Operating profits in the Floorcovering Base Materials segment were $1,216
in the first quarter of 1999 compared with $920 in the first quarter of
1998. The profitability increase was a result of the sales volume increase
and improved productivity.
Selling and administrative expenses were $20,475, or 14.5% of sales, in the
first quarter of 1999 compared with $16,765, or 14.1% of sales, in the
first quarter of 1998. The increase resulted from higher selling expenses
associated with the sales volume increases and acquisition expenses.
Interest expense was $3,346 which was an increase of $767 or 29.7% over the
comparable period in 1998 due to the increase in debt caused by the
acquisition of Multitex.
LIQUIDITY AND CAPITAL RESOURCES
During the first three months of 1999, the Company's long-term debt
increased $35,463 from the 1998 year-end level. The increase resulted from
expenditures of $5,402 for property, plant and equipment, $8,843 of funds
used by operating activities and $30,444 and $1,750 for the purchases of
Multitex and Graphictech, respectively, net of $9,943 of proceeds from
assets held for sale.
On March 31, 1998, the Company entered into a new unsecured revolving
credit and term-loan facility with its principal senior lenders. The new
credit facility provides for revolving credit of up to $100.0 million
through a five-year commitment period and a $60.0 million, seven-year term-
loan. The new agreement contains financial covenants relating to minimum
net worth, the ratio of debt to capitalization, payment of dividends, and
certain other financial ratios. Interest rates available under the
facility may be selected by the Company from a number of options which
effectively allow for borrowing at rates equal to or lower than the greater
of the lender's prime rate, or the federal funds rate plus .5% per annum.
Commitment fees, ranging from .25% to .375% per annum on the revolving
credit line are payable on the average daily unused balance of the
revolving credit facility.
On April 2, 1998, the Company completed an agreement with the Development
Authority of Lafayette, Georgia to obtain up to $7.0 million from the
Authority under a development bond issuance. Amounts received by the
Company are secured by a letter of credit issued by the Company's lead
lender in favor of the Development Authority. The value of the letter of
credit reduces the Company's availability under its revolving credit and
term-loan facility. The proceeds are to be used for financing real
property and machinery and equipment needs of the Company's recycling
center under development in Lafayette, Georgia.
On April 26, 1999, the Company announced that it would make additional
investments totaling $20.0 million to expand the Company's capability in
filament carpet yarn extrusion over the next 18 months. Additionally, the
Company reported that it has signed an agreement with Mohawk Industries to
sell the Company's Ulmer, South Carolina, carpet yarn spinning facility for
$10.0 million. The yarn spinning facility being sold was recently acquired
as part of the Company's purchase of Multitex. Funds for the additional
investments are anticipated to be provided for by the sale of the Company's
remaining textile/apparel assets and the sale of the Company's Ulmer, South
Carolina facility, cash flow from operations and, if necessary, from
borrowing on the Company's lines of credit.
The new revolving credit and term-loan facility increased the Company's
borrowing capacity by approximately $50.0 million. Available unused
borrowing capacity under the new revolving credit and term-loan agreement
was $11,041 at March 27, 1999. The Company considers its unused debt
availability and operating cash flows to be adequate to fund its
anticipated liquidity needs, which include increased amounts for capital
expenditures to support sales growth and market needs.
YEAR 2000 SYSTEMS ISSUES
The Company believes it has identified all its information technology
systems that were not year 2000 compliant. Incidental to year 2000 issues,
the Company developed a plan for the conversion of its hardware platform
and the acquisition or development of business process software to be
utilized and centrally maintained across each of its operating businesses.
Each of these new systems is designed to be year 2000 compliant. Certain
modules are due for implementation in the second and third quarters of
1999. Those non-compliant applications, which will not be implemented
before year 2000, are in the process of modifications for year 2000
compliance. The majority of the modifications have been completed and the
remainder is expected to be completed and tested by mid-1999.
Each operating business identified those non-information systems that
contain embedded technology that could be impacted by the year 2000 issue.
The Company is substantially complete in its state of readiness related to
those systems.
The Company identified those third parties through written or direct
communications with whom it has a material relationship or whose
relationship is substantially dependant on information technology. The
Company has no known unresolved issues that could have a material impact on
its on-going business.
Incremental costs associated with all aspects of year 2000 assessment and
remediation were less than $200 in 1998 and the Company has spent
approximately $25 in the first quarter of 1999. The Company has not
deferred any information technology projects as a result of personnel or
financial resource allocation toward year 2000 compliance issues.
Based on the overall state of readiness, the Company feels it is reasonably
unlikely that any material impact will result from non-compliant
information technology systems issues that are within the Company's
control. Non-compliance resulting in service interruptions by electrical
power service providers would result in the worse case for the Company due
to its dependency on electrical sourcing for productive output.
The Company has not developed a formal contingency plan due to its state of
readiness. Progress will continue to be monitored by management and plans
altered if deemed appropriate.
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(i) Exhibits Incorporated by Reference
None.
(ii) Exhibits Filed with this Report
(10) Asset Purchase Agreement dated January 8, 1999, by and
between Multitex Corporation of America and The Dixie
Group, Inc.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the registrant during the
three month period ended March 27, 1999.
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.
THE DIXIE GROUP, INC.
__________________________
(Registrant)
May 11, 1999
____________________
(Date)
/s/GLENN A. BERRY
__________________________
Glenn A. Berry
Executive Vice President and
Chief Financial Officer
/s/D. EUGENE LASATER
__________________________
D. Eugene Lasater
Controller
QUARTERLY REPORT ON FORM 10-Q
ITEM 6(a)
EXHIBITS
QUARTER ENDED MARCH 27, 1999
THE DIXIE GROUP, INC.
CHATTANOOGA, TENNESSEE
Exhibit Index
EXHIBIT
NO. EXHIBIT DESCRIPTION INCORPORATION BY REFERENCE
(10) Asset Purchase Agreement Filed herewith.
dated January 8, 1999, by and
between Multitex Corporation
of America and The Dixie Group,
Inc.
EXHIBIT 10
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of January 8,
1999 is made by and between MULTITEX CORPORATION OF AMERICA, a Tennessee
corporation ("Multitex") and THE DIXIE GROUP, INC., a Tennessee corporation
("Buyer").
W I T N E S S E T H:
WHEREAS, Multitex is principally engaged in the business of supplying certain
products and services to the carpet industry and the manufacturing, distributing
and selling of broadloom carpet (the "Business"); and
WHEREAS, in consideration for the payment of the Purchase Price (as defined
herein) and the assumption of the Assumed Liabilities (as defined herein) by
Buyer, Multitex desires to sell, assign, transfer, convey and deliver to Buyer,
and Buyer desires to purchase all of Multitex's right, title and interest in and
to certain assets related to the Business to the extent set forth in and
pursuant to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual promises and
conditions contained herein, and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following capitalized terms used herein and in the
agreements and other documents collateral hereto which incorporate the terms
set forth below by reference shall have the meanings set forth opposite such
term below:
"Accounts Payable" shall mean Multitex's accounts payable reflected on the
October 3, 1998 Balance Sheet, together with any additions thereto through
the Closing Date (except as otherwise provided in Article VI hereof) which
are determined in a manner consistent with prior periods and have been
entered into in the ordinary course of business.
"Accrued Expenses" shall mean Multitex's accrued expenses reflected on the
October 3, 1998 Balance Sheet, together with any additions thereto through
the Closing Date (except as otherwise provided in Article VI hereof) which
are determined in a manner consistent with prior periods and have been
entered into in the ordinary course of business.
"Assignment and Assumption Agreement" shall have the meaning set forth in
Section 2.1(l).
"Assumed Liabilities" shall have the meaning set forth in Section 6.1(a)
hereof.
"Benefit Plans" shall mean any employee benefit plans within the meaning of
Section 3(3) of ERISA or any other employee arrangements and benefits of any
type maintained, established or contributed to by Multitex for the benefit of
Multitex employees.
"Business" shall have the meaning set forth in the prefatory language
hereinabove.
"Business Day" shall mean any day other than (1) a Saturday or Sunday or (2) a
day on which the Federal Reserve Bank of Atlanta is not open.
"Buyer's Third Party Claims" shall have the meaning set forth in Section 13.7.
"Closing Date" shall mean 9:00 a.m. Eastern Time on January 8, 1999 or on such
other date as the parties hereto shall agree in writing.
"Confidential Information" shall have the meaning set forth in Section 14.6.
"Contracts" shall have the meaning set forth in Section 2.1(l).
"Controlled Group" shall have the meaning set forth in Section 8.21(a).
"Customers" shall have the meaning set forth in Section 2.1(h).
"Dixie 401(k) Plan" shall have the meaning set forth in Section 14.2.
"Employee Benefit Plans" shall have the meaning set forth in Section 8.21(c).
"Employees" shall have the meaning set forth in Section 14.1(a).
"Environmental Laws" means and includes all applicable federal, state and local
statutes, regulations, ordinances, rules, and orders which pertain to (i) the
protection of the environment; (ii) the release, threatened release, spill,
leak, discharge or emission of any Hazardous Material to the air, surface water,
groundwater or soil; (iii) the storage, treatment, disposal or handling of any
Hazardous Materials or (iv) the construction, operation, maintenance, repair or
closing of aboveground or underground storage tanks or impoundments containing
or which previously contained Hazardous Materials.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Financial Statements" shall mean (i) the audited balance sheets of the Company
as of January 3, 1998 and December 28, 1996 and the related statements of
operations, shareholders' equity and cash flows for the years then ended, (ii)
the unaudited October 3, 1998 and November 28, 1998 Balance Sheets, (iii) the
unaudited consolidated interim financial statements for the fiscal month and the
nine and eleven month periods ending October 3, 1998 and November 28, 1998,
respectively, all of which are attached hereto as Exhibit A.
"Fixed Assets" shall have the meaning set forth in Section 2.1(g).
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Hazardous Materials" means and includes any hazardous or toxic substance or
waste or any contaminant or pollutant identified by any Environmental Laws,
including, but not limited to, "hazardous substances" as defined by the
Comprehensive Environmental Response Compensation and Liability Act, as amended
("CERCLA"), a "hazardous waste" as defined by the Resource Conservation and
Recovery Act ("RCRA"), as amended, PCBs, petroleum products, solvents, waste
oil, grease, lead based paint, asbestos or any other material which is known to
cause injury to the health of humans.
"Health and Safety Laws" means and includes all applicable federal, state and
local statutes, regulations, ordinances, rules and orders which pertain to the
protection of human health or safety, including but not limited to, the
Occupational Health and Safety Act, as amended ("OSHA"), its implementing
regulations, and any similar state laws and regulations.
"Improvements" shall have the meaning set forth in Section 2.1(a).
"Inventory" shall mean product inventory of Multitex, wherever located,
comprised of (a) all first quality raw materials, in process and finished
inventories ("First Inventory") and (b) off quality raw materials, in process
and finished inventories ("Other Inventory") wherever located.
"Land" shall have the meaning set forth in Section 2.1(a).
"Leased Property" shall mean the parcels of land and all improvements, fixtures
and attachments thereon under tenancy as set forth in the Leases.
"Leases" shall have the meaning set forth in Section 2.1(b).
"Losses" shall have the meaning set forth in Section 13.2.
"Material Adverse Change" shall mean a material adverse change to Multitex's
financial condition, results of operations or Business taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on Multitex's
financial condition, results of operations or Business, taken as a whole.
"Motor Vehicles" shall have the meaning set forth in Section 2.1(f).
"Multitex's Third Party Claims" shall have the meaning set forth in Section
13.8.
"Net Sales" shall mean gross sales less claims, commissions, returns,
discounts, allowances, freight, advertising and rebates.
"October 3, 1998 Balance Sheet" shall mean the unaudited balance sheet of
Multitex dated as of October 3, 1998 attached hereto as Exhibit B.
"Other Materials" means asbestos-containing materials and lead-based paint or
any other material which is known to cause injury to the health of humans.
"Permitted Liens" shall have the meaning set forth in Section 2.3.
"Purchase Price" shall have the meaning set forth in Section 3.1.
"Purchased Assets" shall have the meaning set forth in Section 2.1.
"Real Estate Instruments" shall have the meaning set forth in Section 10.3.
"Real Property" shall have the meaning set forth in Section 2.1(a).
"Related Documents" shall have the meaning set forth in Section 8.1.
"Tax" or "Taxes" shall mean all income, gross receipt, gains, sales, use,
payroll, employment, franchise, license, school, profits, property, ad valorem,
excise or other taxes, estimated taxes, import duties, fees, stamp, taxes and
assessments or charges of any kind whatsoever (whether payable directly or by
withholding), together with any additional charges, interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority with
respect thereto, or any charges, interest or penalties imposed by any taxing
authority as the result of the failure to file any return.
"Tax Reserves" shall have the meaning set forth in Section 2.1(m).
1.2 Plurals, Etc. As used herein or in any document which incorporates the
terms hereof:
(a) the plural form of the noun shall include the singular and the singular
shall include the plural, unless the context requires otherwise;
(b) each of the masculine, neuter and feminine forms of any pronoun shall
include all forms unless the context otherwise requires; and
(c) words of inclusion shall not be construed as terms of limitation, so that
references to included matters shall be regarded as non-exclusive,
non-characterizing illustrations.
1.3 Headings. The table of contents and article and section headings contained
herein and in any document which incorporates the terms hereof are for
convenience only and shall not control or affect the meaning or construction of
any provisions of this Agreement or such document.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Purchase of Assets. At the Closing and upon the terms and conditions
contained herein, Multitex shall sell, assign, convey and transfer to Buyer, and
Buyer shall purchase and acquire from Multitex, all of Multitex's right, title
and interest in and to all of the assets of Multitex on the Closing Date which
shall include all the assets of Multitex used or usable in the Business,
wherever located, whether tangible, intangible, real, personal, mixed, booked or
unbooked, other than the Excluded Assets (hereinafter collectively referred to
as the "Purchased Assets"). The Purchased Assets include, without limitation,
all of Multitex's right, title and interest in the following property used in
the Business:
(a) all of Multitex's right, title and interest in the parcels of land
described in Schedule 2.1(a) (including land lying in the bed or right of way of
any street, road, avenue or railroad right of way opened, closed or proposed,
public or private, in front of or adjoining the land; any strips or gores in
front of or adjacent to the land; any waterways, courses, streams or ditches in
front of or adjoining the land; and any reversionary rights which Multitex may
have in any easement or license granted with respect to the foregoing) (the
"Land"), together with all of Multitex's right, title and interest in (i)
improvements, fixtures, equipment (including without limitation all plumbing,
electrical, heating and air conditioning systems) and each and every type of
other physical improvement located at, on, under or affixed to the Land to the
full extent such items constitute, or are or may be construed as, realty or
fixtures under the laws of the jurisdiction in which the land is located (the
"Improvements"); (ii) all oil, gas, water, and mineral rights; (iii) all
easements, rights of way and any and all other rights appurtenant thereto; (iv)
all transferable licenses, permits, appurtenances, drawings, plans,
specifications, development rights, certificates of occupancy, records and all
other items used in the ownership and/or operation of the Real Property (as
hereinafter defined). The Land and Improvements, and such other rights,
easements, rights of way and other items as described above are hereinafter
collectively referred to as the "Real Property";
(b) all of Multitex's right, title and interest in and to the real property
leases set forth in Schedule 2.1(b) (the "Leases");
(c) all cash and cash equivalents, accounts receivable, prepaid expenses and
miscellaneous investments (including capital stock of others);
(d) Inventory;
(e) all supplies, repair parts and miscellaneous items used or usable in
connection with the Business, including but not limited to all repair,
instruction, safety and maintenance manuals which are necessary or convenient to
the operation and utilization of the Purchased Assets;
(f) all of Multitex's owned motor vehicles and trailers, including those listed
on Schedule 2.1(f) attached hereto (the "Motor Vehicles");
(g) all of (i) Multitex's tangible assets located on the Real Property or the
Leased Property and (ii) all of Multitex's other tangible assets, including but
not limited to all assets located on the Real Property or the Leased Property
including all machinery and equipment, furniture and furnishings and other
assets set forth in the list attached hereto as Schedule 2.1(g) (all such assets
are hereinafter collectively referred to as the "Fixed Assets");
(h) all of Multitex's customer lists;
(i) all of Multitex's owned or licensed intangible assets, including but not
limited to (i) the rights under computer software license agreements permitted
to be assigned (with or without consent) under the terms of such agreements,
(ii) all agreements not to compete with Multitex which are transferable (with or
without consent) by the terms thereof, (iii) all nondisclosure agreements with
Multitex which are transferable (with or without consent) by the terms thereof,
(iv) to the extent transferable (with or without consent), all product
warranties that relate to the Purchased Assets and (v) any and all claims or
causes of action which Multitex has or may have relating to the Purchased Assets
against any party including, but not limited to, claims or causes of action
arising out of or resulting from the release, threatened release, discharge,
disposal, spill, leak or emission of any Hazardous Materials or Other Materials;
excluding, however, any and all claims and causes of action relating to
liabilities retained by Multitex;
(j) whether or not reflected on Multitex's books and records (i) all of
Multitex's rights in the names "Multitex," "Multitex Corporation of America,"
"Globaltex" and all variations thereof which Multitex will cease using as of the
Closing; and all of Multitex's rights in any corporate names, trademarks,
tradenames, copyrights, or service marks currently or historically used in
connection with the Business, of which the current items are listed on Schedule
2.1(j)(i) attached hereto, and the goodwill of the Business in connection
therewith, (ii) the going concern value of the Business and (iii) all of
Multitex's rights in the patents, patent registrations and applications,
inventions, trade secrets, secret processes, formulae, know-how and other
proprietary data and information, intellectual property and licenses thereof
relating solely to the Business, of which the material items are listed on
Schedule 2.1(j)(iii) attached hereto;
(k) all of Multitex's financial, business and other records relating to the
Purchased Assets (or copies of those portions of other records containing such
information), including, but not limited to, all customer records, personnel
files and records with respect to the Employees (as hereinafter defined)
employed by Buyer, supplier lists and files, sales listings, advertising and
promotional materials, files and records, inventory records and reports to any
governmental or regulatory agency excluding Multitex's minute books and other
documents and records relating to the organization of Multitex; provided,
however, that Multitex may retain a copy (or, if required by law, may retain the
original and provide a copy to Buyer) of such documents as needed for legal or
business purposes;
(l) all of Multitex's rights under all material contracts, personal property
leases, licenses and other agreements (as listed on Schedule 2.1(l)) pertaining
to the Business, which are set forth in and expressly assumed pursuant to the
terms of that certain Assignment and Assumption Agreement, which agreement shall
be in substantially the form attached hereto as Exhibit C (the "Assignment and
Assumption Agreement") (the "Contracts");
(m) all of Multitex's unemployment tax reserves held by any applicable state
and ratings relating to the Business to the extent assignment thereof to Buyer
is permitted by applicable law and Buyer requests that they be assigned (the
"Tax Reserves");
(n) all of Multitex's federal, state and local licenses required for the conduct
of the Business (including, but not limited to, environmental discharge permits
but excluding Multitex's corporate charter, qualifications to do business and
other licenses relating solely to the organization of Multitex) to the extent
assignment thereof to Buyer is permitted by applicable law;
(o) all of the Multitex's rights to all of telephone numbers, facsimile numbers
and post office boxes;
(p) all assets, other than the Excluded Assets, used or usable by Multitex in
the Business and reflected on the October 3, 1998 Balance Sheet together with
all additions thereto and less all deletions therefrom occurring in the ordinary
course of business from the date thereof until the Closing.
(q) all other assets of Multitex other than the Excluded Assets, used or useful
in the Business and whether or not reflected on Multitex's books and records;
2.2 Excluded Assets. Notwithstanding anything contained herein to the
contrary, the parties acknowledge and agree that the Purchased Assets expressly
exclude those certain assets listed on Schedule 2.2 hereto (the
"Excluded Assets").
All Excluded Assets shall be removed from the Real Property as soon as
practicable following the Closing Date.
2.3 Absence of Liens; Instruments of Conveyance and Transfer. All of the
Purchased Assets will be conveyed to Buyer free and clear of all liens,
encumbrances, security interests, charges and liabilities except (i) for liens
for taxes and assessments not yet due and payable or for taxes that Multitex is
contesting in good faith through appropriate proceedings; (ii) for unfiled
materialmen's, mechanics and similar liens incurred in connection with the
ordinary course of operating, repairing and maintaining the Purchased Assets;
(iii) for other defects and encumbrances, which do not materially affect the
fair market value or usefulness of the Purchased Assets including those listed
as exceptions in the title insurance policy (excluding any exception for
encroachments) obtained by Buyer with respect to the Real Property and which are
in all respects reasonably acceptable to Buyer ("Permitted Liens"). On the
Closing Date, Multitex shall deliver to Buyer such certificates, bills of sale,
documents of title and other instruments of conveyance and transfer, in a form
reasonably satisfactory to Buyer, as shall be reasonably necessary and effective
to vest in Buyer good and marketable title in and to any property sold,
transferred, conveyed or delivered under this Agreement subject to the foregoing
exceptions.
ARTICLE III
PURCHASE PRICE OF PURCHASED ASSETS
3.1 Purchase Price. The purchase price for the Purchased Assets, as adjusted
in accordance with Article IV hereinafter (the "Purchase Price"), shall be the
following:
(a) Ten Million Dollars ($10,000,000) payable by wire transfer in immediately
available funds at Closing;
(b) An amount equal to the then-outstanding balance of the long term and short
term debt of Multitex as set forth on Schedule 3.1, (which shall be paid
directly to the holders thereof at Closing); and
(c) An additional amount determined and payable annually during the five year
period following the Closing Date based upon Home Depot Net Sales (as
hereinafter defined) as set forth in Article IV.
3.2 Insurance Policy Value Adjustment. In the event that the values at Closing
of the life insurance policy or policies reflected on the October 3, 1998
Balance Sheet as an "Other Asset" is less than $422,000, then the Purchase Price
shall be reduced by such difference (the "Insurance Policy Value Adjustment").
Such adjustment shall be withheld from any payment otherwise due to Multitex
from Buyer.
3.3 Allocation of Purchase Price. An allocation of the Purchase Price shall
be proposed by Buyer and shall be delivered to Multitex within sixty (60) days
following the Closing Date. Multitex and Buyer agree that the Purchase Price
shall be allocated among the Purchased Assets as agreed upon between Multitex
and Buyer within thirty (30) days following delivery by Buyer. Multitex and
Buyer agree to use such allocation for all federal income tax purposes,
including without limitation on Internal Revenue Service Form 8954 (Asset
Acquisition Statement under Internal Revenue Code Section 1060) which form each
of Multitex and Dixie is required to file in connection with the transactions
contemplated hereby and which form each of Multitex and Buyer hereby covenant
and agree to timely and properly file with its federal income tax return.
ARTICLE IV
ADDITIONAL PURCHASE PRICE
4.1 Home Depot Sales Adjustment. An additional payment shall be payable to
Multitex based on annual Net Sales of Buyer to The Home Depot during the five
(5) year period following the Closing Date, such payment to be determined as
follows: Following the end of each fiscal year of Buyer for the first five
fiscal years subsequent to the Closing Date commencing in fiscal 1999, Multitex
shall be entitled to a payment equal to four percent (4%) (the "Payment
Percentage") of the portion of Buyer's Net Sales to The Home Depot (the "Home
Depot Net Sales") which exceeds forty seven million dollars ($47,000,000) during
such fiscal year (such sales being the aggregate post-Closing sales of Buyer and
the Business during such fiscal year; provided, however, that Net Sales for
fiscal 1999 shall be deemed to include Net Sales for both Multitex and Buyer
from and after January 1, 1999). The amount of such payment shall be determined
annually and shall be paid, subject to Buyer's right of offset described in
Section 13.9 as soon as practicable after such determination is concluded but in
no event later than ninety (90) days after the end of the relevant fiscal year.
The payments provided for in this Article IV shall terminate at such time as
Martin Greenwood is not employed by Buyer or ceases to serve as Buyer's
principal representative with respect to The Home Depot as a result of Mr.
Greenwood's termination of employment by Buyer for "Cause" or by Mr. Greenwood
for other than "Good Reason" pursuant to the terms of his Employment Agreement,
the form of which is attached hereto as Exhibit D (the "Greenwood Employment
Agreement"). In the event of Mr. Greenwood's death or disability, the Payment
Percentage shall be 4% in respect of the fiscal year in which death or
disability occurs and shall be reduced to 3% and 2% for the first and second
fiscal years thereafter, respectively, and no payments shall be owing in respect
of Home Depot Sales thereafter and, in any event, for any year occurring after
the expiration of the five year period following the Closing Date. The aggregate
of all payments made under this Article IV shall be referred to herein as the
"Home Depot Sales Adjustment."
4.2 Adjustment Calculation. As promptly as practicable following the end of
each fiscal year for the first five fiscal years commencing in 1999 but in no
event later than sixty (60) days after the end of such fiscal year, Buyer shall
determine the Home Depot Net Sales for such fiscal year and prepare its
calculation of the Home Depot Sales Adjustment ("Adjustment Calculation"). Home
Depot Net Sales shall be determined in a manner consistent with Buyer's
historical accounting methods.
4.3 Review by Multitex. During the preparation of the Adjustment Calculation,
Multitex shall be permitted to review the details of the Home Depot Net Sales
determination and the Adjustment Calculation. Pursuant to such review, Multitex
or its accountants shall be entitled to examine the working papers of Buyer
prepared in connection therewith and discuss with Buyer the Adjustment
Calculation. Such discussions shall be held by telephone or at places mutually
agreeable to Multitex and Buyer.
4.4 Final Determination. After receipt of the Adjustment Calculation, Multitex
shall have thirty (30) days in which to review the basis of and working papers
relating to the Adjustment Calculation. The determination of the Home Depot Net
Sales as set forth in the Adjustment Calculation shall be deemed final and be
binding on Buyer and Multitex, and the additional Purchase Price shall be paid
in accordance therewith unless Multitex delivers written notice of objection to
Buyer to the Adjustment Calculation ("Audit Notice") within thirty (30) days
following receipt of the Adjustment Calculation. The Audit Notice shall set
forth in detail the items and calculations objected to and the factual and
technical bases for each such objection, and Buyer and Multitex will seek in
good faith, for a period of fifteen (15) days following receipt of the Audit
Notice to resolve the matters set forth therein. In the event such differences
are not resolved during such period, Buyer and Multitex shall promptly deliver
the matters in dispute concerning the Adjustment Calculation to a nationally
recognized independent accounting firm mutually selected by Buyer and Multitex
(the "Reviewing Firm") which firm shall be engaged for the purposes of
conducting a review of the matter or matters in dispute regarding the Adjustment
Calculation (the fees and expenses of the Reviewing Firm to be shared equally
between Buyer and Multitex). The Reviewing Firm shall issue a report as
promptly as possible, setting forth in reasonable detail its determination
regarding the disputed items. The determination of the Reviewing Firm as to the
disputed matters concerning the Adjustment Calculation and the Home Depot Net
Sales shall be deemed final and binding on the parties on the date said written
report is delivered to Buyer and Multitex and payment shall be made immediately
in accordance therewith.
ARTICLE V
CLOSING
The Closing shall take place at the offices of Witt, Gaither & Whitaker, P.C.,
1100 SunTrust Bank Building, Chattanooga, Tennessee at 9:00 A.M. Eastern Time on
the Closing Date.
ARTICLE VI
LIABILITIES NOT ASSUMED
6.1 Liabilities Not Assumed.
(a) Buyer expressly assumes no liabilities or obligations of Multitex
whatsoever, whether known or unknown, contingent or otherwise except:
(i) Accounts Payable and Accrued Expenses;
(ii) as otherwise expressly provided in this Agreement or the
Assignment and Assumption Agreement; and
(iii) third party open sales and supply orders of Multitex pending as of
the Closing and incurred in the ordinary course of business ((i) (ii) and (iii)
are herein collectively referred to as the "Assumed Liabilities").
Without limiting the foregoing, Buyer specifically does not assume any liability
of Multitex relating to periods prior to the Closing with respect to (i)
obligations for any Taxes and (ii) obligations for pension, profit-sharing or
other employee benefit programs or termination or unemployment benefits, whether
funded or unfunded.
(b) Multitex shall indemnify and hold Buyer harmless with respect to any
liabilities not assumed by Buyer hereunder subject to the provisions of Article
XIII hereof. Buyer shall defend indemnify and hold Multitex harmless with
respect to, and Buyer agrees that it will fully pay, perform, observe the terms,
satisfy, and/or discharge, each, every and all Assumed Liabilities.
(c) Multitex and Buyer will pay their own expenses, including legal and
accounting expenses in connection herewith. Notwithstanding anything contained
herein to the contrary, all legal and accounting expenses payable by Multitex
hereunder shall not be paid from pre-Closing Multitex assets.
6.2 Waiver of Bulk Sales Compliance. In consideration of the indemnification
provided in Article XIII, Buyer waives compliance with the Bulk Sales Act of the
State of Georgia and any other state, if and to the extent such acts are
applicable. Nothing contained in this Section, however, shall be construed to
be a determination by any of the parties hereto that any of such acts are
applicable to the transactions contemplated by this Agreement.
ARTICLE VII
SALES AND TRANSFER TAXES, PROPERTY TAXES,
RECORDING FEES, AND PROFESSIONAL FEES
7.1 Sales and Transfer Taxes. Multitex shall be responsible for payment to the
appropriate state or local governmental authorities of all transfer taxes,
whether for personal property or real property, with respect to the sale
contemplated herein. Buyer shall be responsible for all sales taxes with
respect to the sale contemplated herein.
7.2 Recording or Filing Fees. The party receiving a conveyance by deed, lease,
assignment or otherwise shall pay any applicable recording or filing fees
thereon.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF MULTITEX
As a material inducement to Buyer entering into this Agreement and consummating
the transactions contemplated hereby, Multitex hereby makes the following
representations and warranties to Buyer, each of which shall be continuing and
shall survive the Closing and the sale of the Purchased Assets and other
transactions contemplated hereby:
8.1 Corporate Existence and Authority. Multitex is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Tennessee and is in good standing as a foreign corporation in each jurisdiction
in which such qualification or authorization is necessary for the conduct of the
business in which Multitex is now engaged and in which the failure to qualify
would have a material adverse effect on the operations and financial condition
of Multitex. Multitex has full power and authority to own its properties and
conduct the Business as now being conducted. Multitex has full corporate power
and authority to execute this Agreement and consummate the transactions
contemplated hereby, and Multitex's Board of Directors and Shareholders have
properly approved the transactions contemplated by this Agreement. Upon
execution and delivery, this Agreement, and the Assignment and Assumption
Agreement, the Real Property Instruments (as hereinafter defined), and all other
instruments or documents delivered in connection herewith or therewith
(collectively, the "Related Documents") shall be valid and legally binding
documents with respect to Multitex, enforceable in accordance with their terms,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditor's rights, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought forth.
8.2 Financial Statements. Prior to the date hereof, Multitex has delivered to
Buyer the Financial Statements, all of which have been prepared in accordance
with GAAP consistently applied in each of the periods indicated (except as set
forth on Schedule 8.2) and respectively present fairly the financial position of
Multitex as of the respective dates and the results of operations for the
respective periods of the statements.
8.3 Liens and Good Title. Multitex owns, of record, all legal title and
beneficial and equitable interest in and to all of the Purchased Assets. Except
as set forth on Schedule 8.3, Multitex has good and marketable title to all of
the Purchased Assets, free and clear of any and all mortgages, deeds of trust,
liens, security interests, pledges, encumbrances, easements, leases, agreements,
covenants, charges, restrictions, options, joint ownership or adverse claims or
rights whatsoever except for Permitted Liens.
8.4 Authority. Except as otherwise set forth in Schedule 8.4, neither the
execution and delivery of this Agreement and the Related Documents, nor the
consummation by Multitex of the transactions contemplated hereby and thereby and
the fulfillment and compliance with the terms and provisions hereof and thereof
by Multitex, will violate, conflict with or constitute a breach of or default
under any of the terms, conditions or provisions of or require any consent
pursuant to any law or regulation presently applicable to Multitex, its articles
of incorporation or bylaws, or any order of any court, regulatory body or
tribunal or any loan, note, bond, mortgage, lease, indenture, license,
agreement, or other instrument or obligation to which Multitex is a party or by
which any of Multitex's properties or assets are bound.
8.5 Inventory. The finished Inventory is in good and merchantable condition,
currently salable to Multitex's customers and in a condition such that it could
be sold in the ordinary course of business and is at customary and reasonable
levels. The in process Inventory has been properly processed in the ordinary
course of business. All raw material and in process Inventory identified is in a
condition that it can be processed in the ordinary course of business into
finished First Inventory. The value of the Inventory as of Closing is not
materially less than the value set forth in the October 3, 1998 Balance Sheet
after adjusting for customary Inventory fluctuations for the subsequent period
pursuant to Multitex's normal practices.
8.6 No Consents. All consents necessary to consummate the transactions
contemplated herein have been obtained and no consent or approval of, or
declaration, filing or registration with, any non-governmental third party or
any governmental authority is required to be obtained by Multitex (i) in
connection with the execution of this Agreement, (ii) for the consummation of
the transactions contemplated hereby or (iii) for the operation of the Business.
8.7 Absence of Change. Except as otherwise set forth on Schedule 8.7, from
October 3, 1998 and through the Closing Date and except as otherwise requested
by Buyer:
(a) Multitex has operated the Business diligently and only in the usual,
ordinary and customary manner as a going business consistent with past
practices.
(b) There has been no Material Adverse Change in the Business or the Purchased
Assets or the intended use thereof
8.8 Contracts and Commitments. Schedule 8.8 contains a complete and accurate
list of all contracts, agreements, commitments or understandings, whether oral
or written, to which the Business or the Purchased Assets are subject and which
are not terminable without penalty on thirty (30) days' prior written notice to
the other party or which exceeds $25,000, including but not limited to any:
(a) agreement guaranteeing, indemnifying, or otherwise causing the Purchased
Assets to be subject to or liable for the obligations or liabilities of another;
(b) partnership or joint venture agreement;
(c) license or royalty agreement;
(d) indenture, mortgage, note or credit agreement or other contract or
obligation pertaining to the borrowing of money by Multitex which relates to the
Business;
(e) leases of property, personal or real, whether as Lessor or Lessee;
(f) agreement to purchase goods or services from any supplier in any quantity
or through any specified period of time which could impose a liability on
Buyer;
(g) contract or commitment relating to the Business outside the scope of the
ordinary course of the Business;
(h) agreements for the purchase of goods, materials, supplies, machinery, or
capital assets;
(i) agreement with any sales agent or representative;
(j) franchise agreement or agreement with any manufacturer or supplier with
respect to discounts, allowances or extended payment terms, or warranty
agreement with any customer;
(k) agreement giving any party the right to negotiate or require a reduction in
prices or the repayment of any amount previously paid;
(l) contract or commitment requiring payment based in any manner upon
revenues, expenses, or net or gross income of Multitex; and
(m) other contract, agreement or lease commitment material to the Purchased
Assets.
Each of the Contracts is valid, in full force and effect, and enforceable in
accordance with its terms, except to the extent that the same may be limited by
laws concerning insolvency, bankruptcy, or similar laws or equitable principles
affecting the enforcement of creditors' rights generally. Multitex is not in
default nor has Multitex received any notice of default under any of the
Contracts. Except as noted on Schedule 8.8 , all Contracts which are to be
assumed by Buyer are assignable to Buyer without the consent of the third party.
8.9 Real Property.
(a) General. Except for the Real Property and the Leased Property there is no
real property owned or continuously occupied by Multitex and used in or
connected with the Business.
(b) Codes, Ordinances, Use and Notice of Condemnation. There are no existing,
pending, or proposed violations of any fire or health codes, building
ordinances, zoning ordinances or rules of the Board of Fire Underwriters (or
organization exercising functions similar thereto), with respect to the Real
Property or Leased Property, nor, except for the Environmental Matters, is there
any defect in the Real Property or Leased Property which would render all or any
material part thereof unsuitable for the purposes for which it is presently
used, and no alteration, repair, improvement or other work has been performed
in respect of the Improvements within the last 120 days other than those set
forth on Schedule 8.9. Multitex has received no notice of any condemnation
proceeding in process or proposed that would affect the Real Property or Leased
Property. Multitex shall advise Buyer forthwith of any notice concerning
violations, condemnation proceeding, and tax or utility rate increases that may
affect the Real Property or Leased Property.
(c) Licenses and Permits. Multitex holds all licenses, certificates, permits,
franchises and rights from all appropriate federal, state, local and other
public authorities necessary for the conduct of its current operations at the
Real Property and Leased Property, which licenses, certificates, permits,
franchises and rights are specified on Schedule 8.9 (c).
(d) No Notice of Violations. Multitex's Business is in compliance with all
applicable laws, rules and regulations which are essential to Multitex's
business. Except as otherwise set forth in Schedule 8.9(d), since 1985,
Multitex has not received any notice of violations of any federal, state or
local laws, ordinances, rules, regulations or orders relating to the Business or
the Purchased Assets.
(e) Utility Connections. All public utility connections located on the Real
Property and Leased Property have been completed, installed, activated, paid for
and are in operational condition and, to Multitex's knowledge, are in compliance
in all material respects with all appropriate codes, rules and regulations.
Multitex has available to it on the Real Property and Leased Property sufficient
power, fuel oil, natural gas, and water supplies and adequate sewage and waste
disposal systems for the operation of the Business as presently conducted and
all such supplies and systems will be available to Buyer after Closing.
(f) Taxes and Utilities. Multitex is not aware of, nor has Multitex received,
any notice or information of any condition which would result in an increase in
the assessments covering the Real Property or Leased Property or utility rates
affecting the Real Property, Leased Property or the Business.
(g) Access. As shown on the surveys previously delivered to Buyer, Multitex
presently has the unencumbered right to use (and to transfer to Buyer) all
accesses from the Real Property and Leased Property to and from public
thoroughfares, as such accesses are presently configured and utilized.
8.10 Employee Benefit Plans.
(a) The only employee pension benefit plans as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974 ("ERISA") and including all
trusts executed in connection therewith, adopted or sponsored or maintained or
contributed to by Multitex with respect to which or as the result of which
Multitex has or may have had or may have any liability is the Multitex Employee
Retirement Savings Plan (the "Retirement Plan"). The term "Multitex"
specifically includes for the purposes of this Section 8.10(a) any member of a
controlled group with Multitex under Section 414(b),(c),(m) or (o) of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (the "Code") or any organization to which Multitex is a successor or
parent corporation within the meaning of Section 4069(b) of ERISA (all of the
foregoing collectively referred to as the "Controlled Group"). The Retirement
Plan has never been a Multiemployer Plan. as defined in Sections 3(37) or 4001
(a)(3) of ERISA and has never been subject to Title IV of ERISA. All participant
contributions have been transferred to the Retirement Plan on or before the
earliest date described in Department of Labor Regulations Section
2510.3-102(a).
(b) The Retirement Plan is a qualified plan under Section 401(a) of the Code,
the trust with respect to such plan is exempt from taxation under Section 501(a)
of the Code and, in either case, is subject to a favorable determination letter
which will be in effect at the Closing Date; and, other than any amendment which
may be required on account of the actions described in Section 14.2, all
amendments made to the Retirement Plan prior to the Closing Date have been
considered in the determination letter. No action has been taken (or failure to
take action has occurred) which would cause such determination letter to be
revoked. The determination letter is effective for those provisions required by
Tax Reform Act of 1986 at the time such letter was requested. The Retirement
Plan has been administered and operated in accordance with its terms and in a
manner so as to preserve such qualification, including those provisions required
by all subsequent laws (including the Uniformed Services Employment and
Re-employment Rights Act of 1994) whose effective date is prior to the Closing
Date.
(c) Schedule 8.10(c) lists any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA maintained or contributed to by Multitex during
the last five (5) years. With respect to any group health plan subject to
COBRA, Multitex includes any member of the Controlled Group. "COBRA" means the
provisions for the continuation of health care enacted by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended as set forth in Section
4980B of the Code (and any amendments or predecessor or successor provisions)
and Sections 601 through 608 of ERISA (and any amendments or predecessor or
successor provisions), including any regulations promulgated under the
applicable provisions of the Code and ERISA. As of the Closing Date, each of
the employee benefit plans set forth in Schedule 8.10(c) and the Retirement
Plan (collectively, the "Employee Benefit Plans") are in material compliance
with, and have been administered in material compliance with, the provisions of
ERISA and the Code.
(d) In connection with each Employee Benefit Plan:
(i) Multitex has provided to Buyer true, complete and correct copies of (A)
each Employee Benefit Plan (or, in the case of any unwritten Employee Benefit
Plan, a description thereof), (B) each trust agreement, group annuity contract,
and any other contract relating to any Employee Benefit Plan, (C) the three (3)
most recent Annual Reports (Form 5500) filed for each Employee Benefit Plan for
which such a filing is required; and there has been no material change or
amendment to any of such documents or filings relating to the Employee Benefit
Plans as of the Closing Date other than the amendment described in Section 14.2;
(D) the most recent Summary Plan Descriptions and all Summary of Material
Modifications prepared subsequent to such Summary Plan Descriptions, (E) the
three (3) most recent Summary Annual Reports prepared and distributed for each
Employee Benefit Plan for which such document is required; (F) with respect to
the Retirement Plan, a copy (or if not formally published, a description) of the
established policies and procedures reasonably designed to promote and
facilitate overall compliance with the requirements of Section 401(a) of the
Code and all corrections made since January 7, 1997, as a result of such
policies and procedures, and (G) a copy of all Forms 5330.
(ii) Neither Multitex nor any member of the Controlled Group nor any
fiduciary as defined in Section 3(21) of ERISA has taken any action or failed
to take any action which would result in any liability to Buyer after the
Closing Date with respect to any Employee Benefit Plan.
(iii) There is no contract, plan or commitment, that would require Buyer to
create any additional employee benefit plan to provide or designed to provide
benefits for any employees of Multitex or their dependents or beneficiaries.
(iv) There is no action, suit, grievance, arbitration or other manner of
litigation, or claim with respect to the assets of any Employee Benefit Plan
(other than routine claims for benefits made in the ordinary course of Employee
Benefit Plan administration of which Employee Benefit Plan administrative review
procedures have not been exhausted) pending, threatened or imminent against or
with respect to the Employee Benefit Plan, Multitex or any other fiduciary (as
defined in Section 3(21) of ERISA) of the Employee Benefit Plan (including any
action, suit, grievance, arbitration or other manner of litigation, or claim
regarding conduct which allegedly interferes with the attainment of rights under
the Employee Benefit Plan); and
(v) Neither Multitex nor any other fiduciary (as defined in Section 3(21) of
ERISA) has any knowledge of any facts which would give rise to or could give
rise to any action, suit, grievance, arbitration or other manner of litigation,
or claim with respect to the Employee Benefit Plans.
8.11 No Broker or Finder. Multitex has not had discussions with, negotiated
with, been represented by or employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees to any individual
or entity in connection with this Agreement or any of the transactions
contemplated hereby.
8.12 Tax Returns and Reports.
(a) Multitex has filed all federal, state, local and foreign tax returns and
reports required under the laws of the United States or any foreign country or
any state or municipal or political subdivision of any of the foregoing ("Tax
Returns") to be filed by the Multitex in respect of any Tax or Taxes relating to
periods prior to the Closing Date and due prior to the Closing Date, the failure
to file of which would result in a Material Adverse Effect on the Business of
Multitex.
(b) Multitex has paid or provided for all Taxes shown on the Tax Returns, and
all deficiencies and assessments of Tax, interest or penalties.
(c) To the knowledge of Multitex, Multitex has no penalties or other charges
which are, or will become, due with respect to late filing of any Tax Returns.
All of the Tax Returns as filed were accurate and correct in all material
respects.
8.13 Environmental and Health and Safety Status.
(a) There has been no release, threatened release, application, spill, leak,
discharge or emission of any Hazardous Material or Other Material (as such terms
are hereinbefore defined) to the air, surface water, groundwater or soil of the
Real Property or the Leased Property requiring corrective action and which is a
violation of, any of the Environmental Laws or Health and Safety Laws (as such
terms are hereinbefore defined).
(b) Multitex and the owners of the Leased Property have duly complied in all
respects with, and the Real Property and Leased Property are in compliance with,
the Environmental Laws and Health and Safety Laws.
(c) Multitex has no documents or information relating to or disclosing any
release, threatened release, application, spill, leak, discharge or emission of
any Hazardous Material or Other Material to the air, surface water, groundwater
or soil of the Real Property or Leased Property requiring corrective action and
which is a violation of any Environmental Law or any Health and Safety Law at
the Real Property or Leased Property.
(d) The information pertaining to the environmental history of the Real
Property and Leased Property Multitex has provided Buyer is true and accurate.
(e) Multitex and the owners of the Leased Property have been issued or have
applied for all Permits, a complete list of which is set forth on Schedule 8.13.
To the extent permissible, Multitex shall maintain such Permits for the Real
Property, even after the Closing, until Buyer can secure similar Permits in its
name, provided that Buyer acts with diligence to secure such Permits promptly
and reimburse Multitex for any costs or expenses in connection therewith.
(f) There are no facts which, as of the Closing, would constitute a violation of
the Environmental Laws or any violation of Health and Safety Laws with respect
to the Real Property or Leased Property.
(g) Multitex has received no complaint, order, directive, claim, citation,
notice, information request or investigation by any governmental authority or
any other person or entity with respect to any release, threatened release,
application, spill, leak, discharge or emission of any Hazardous Material or
Other Material to the air, surface water, groundwater or soil of the Real
Property or Leased Property requiring corrective action and which is a violation
or alleged violation of any Environmental Laws or Health and Safety Laws at the
Real Property or Leased Property.
(h) Non-hazardous solid waste materials have not been disposed of or buried
at the Real Property or, to Multitex's best knowledge, the Leased Property.
(i) Multitex has previously delivered to Buyer all reports, filings and other
correspondence made or filed by Multitex pursuant to all applicable occupational
safety and health legislation, regulations and orders since January 1, 1994.
8.14 Absence of Undisclosed Liabilities. Except as disclosed on Schedule 8.14,
there are no liabilities of any nature, whether accrued, unaccrued, absolute,
contingent or otherwise, which exist presently or which may arise in the future
as a result of activities of Multitex or the Business on or prior to the Closing
Date which would impose any transferee liability on Buyer.
8.15 No Material Omission. No representation or warranty contained in this
Agreement, and no Exhibit, certificate, Schedule, list or other information
furnished by or on behalf of Multitex to Buyer in connection herewith, contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to Multitex,
each of which shall be continuing and shall survive the Closing and the sale of
Purchased Assets and other transactions contemplated hereby.
9.1 Incorporation, Good Standing and Power. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Tennessee, with full power and authority to execute this Agreement and
consummate the transactions contemplated hereby. Buyer's Board of Directors (or
authorized Executive Committee thereof) has properly approved the execution of
this Agreement and the consummation of the transactions contemplated hereby.
Upon execution, this Agreement, the Related Documents and all other instruments
and documents delivered by Buyer to Multitex shall be valid, legal and binding,
enforceable in accordance with their terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditor's rights, and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought forth.
9.2 No Consents. All consents necessary to consummate the transactions
contemplated herein shall be obtained prior to or at the Closing and, except as
set forth on Schedule 9.2, no consent or approval of, or declaration, filing or
registration with, any non-governmental third party or any governmental
authority is required to be obtained by Buyer (i) in connection with the
execution of this Agreement or (ii) for the consummation of the transactions
contemplated hereby.
9.3 Authority. Neither the execution and delivery of this Agreement and the
Related Documents, nor the consummation by Buyer of the transactions
contemplated hereby and thereby and the fulfillment and compliance with the
terms and provisions hereof and thereof by Buyer, will violate, conflict with or
constitute a breach of or default under any of the terms, conditions or
provisions of or require any consent pursuant to any law or regulation presently
applicable to Buyer, its articles of incorporation or bylaws, any order of any
court, regulatory body or tribunal or any loan, note, bond, mortgage, lease,
indenture, license, agreement, or other instrument or obligation to which Buyer
is a party or by which Buyer's properties or assets are bound.
9.4 No Broker or Finder. Buyer has not had discussions with, negotiated with,
been represented by, employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finder's fees to any individual or entity in
connection with this Agreement or any of the transactions contemplated hereby.
9.5 No Material Omission. To the best knowledge of Buyer after due inquiry, no
representation or warranty contained in this Agreement, and no Exhibit,
certificate, Schedule, list or other information furnished by or on behalf of
Buyer to Multitex in connection herewith, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE X
REAL PROPERTY AND LEASED PROPERTY
10.1 Real Estate Instruments. At the Closing, Multitex shall deliver or cause
to be delivered to Buyer the following items (all documents will be duly
executed and acknowledged as required) (collectively, "Real Estate
Instruments"):
(a) Warranty Deed. A limited warranty deed for each parcel of the Real
Property executed by Multitex conveying to Buyer good and marketable fee simple
title to each parcel of the Real Property, free and clear of all liens,
restrictions and encumbrances other than Permitted Liens.
(b) Owner's Affidavit. An affidavit in the form acceptable to the title insurer
certifying that each parcel of the Real Property is free from claims for
mechanics', materialmen's and laborers' liens.
(c) Non-Foreign Affidavit. An affidavit, in the form and substance
satisfactory to Buyer, stating Multitex's U.S. Taxpayer's Identification Number,
that Multitex and all persons holding beneficial interest in the Real Property
are "United States Persons" as defined by Section 1445(f)(3) and Section 7701(g)
of the Internal Revenue Code of 1986, as amended.
(d) Closing Affidavit. An affidavit, in form acceptable to Buyer, stating that
there are no other parties entitled to possession of any parcel of the Real
Property other than Buyer as of the Closing Date.
(e) Other Documents. Any and all documents and papers solely in conformity
with the terms of this Agreement which may be reasonably necessary to Buyer in
connection with the consummation of the transactions contemplated by this
Agreement, including evidence of authority to execute each deed.
10.2 Closing Costs For Real Property. Multitex shall pay for all state, county,
city or other transfer taxes and for the cost of preparation of each deed for
each parcel of the Real Property. Buyer shall pay the premiums for the issuance
of the owner's title insurance policies, the cost of recording each deed for
each parcel of the Real Property and any other instruments under the terms of
this Agreement with respect to the Real Property and all costs to obtain the
surveys of each parcel of the Real Property.
ARTICLE XI
COVENANTS OF MULTITEX
Multitex covenants and agrees with Buyer as follows:
11.1 Bulk Sales. Multitex acknowledges noncompliance with any applicable bulk
sales or transfer act and agrees to pay all of its creditors as Multitex's
liabilities thereto accrue and become due and payable to the extent that such
liabilities are not expressly assumed by Buyer as provided herein.
11.2 Termination of Employees. On or prior to the Closing Date, Multitex shall
terminate the employment of all employees of the Business, to whom Buyer will
offer employment pursuant to Section 14.1. Subject to the provisions of Article
XIII, Multitex shall indemnify and hold Buyer harmless from any and all
liabilities costs or expenses (including court costs and reasonable attorneys
fees) relating to the termination of Multitex's employees.
11.3 Name Change of Multitex. Within ten (10) Business Days following the
Closing Date, Multitex shall file with the Tennessee Secretary of State an
amendment to its Certificate of Incorporation and with the Georgia and South
Carolina Secretaries of State an amendment to its Certificate of Authority
changing its name to one dissimilar to any of the names constituting part of
the Purchased Assets under Section 2.1(j).
ARTICLE XII
COVENANTS OF BUYER
Buyer hereby covenants and agrees as follows:
12.1 Nondisclosure of Proprietary Information. Other than in connection with
the transactions contemplated by this Agreement, Buyer and its agents shall not
reproduce, use, or disclose to others any proprietary information of Multitex or
the Business without the prior written consent of Multitex, which shall not be
unreasonably withheld. Nevertheless, Buyer may make such proprietary
information available to its Board of Directors, officers, counsel, accountants
and other advisors who may use such information as necessary in the performance
of their functions in this transaction.
12.2 Employment of Certain Parties. Buyer agrees to employ William C. Anderson
and for a term of three years following the Closing Date pursuant to the terms
contained in an employment agreement substantially in the form attached hereto
as Exhibit E. Buyer agrees to employ Martin Greenwood for a term of five years
from the Closing Date in accordance with the Greenwood Employment Agreement.
Buyer agrees to enter into an employment agreement with Charles D. Miller
substantially in the form attached hereto as Exhibit F.
ARTICLE XIII
INDEMNIFICATION
13.1 Bulk Transfer Indemnity. Buyer has waived Multitex's compliance with the
bulk transfer statutes in force in the jurisdictions in which the Purchased
Assets are located. As a result, Multitex hereby agrees to indemnify and hold
harmless Buyer against any and all claims, loss, costs or expenses, including
reasonable attorneys' fees, which Buyer may sustain as a result of any payment
which may be required to be made or any liability of any kind which may be
imposed upon Buyer as a result of any claim, loss, cost or expense or reasonable
attorneys' fees which may be required of or incurred by Buyer whatsoever arising
out of noncompliance with any bulk transfer laws.
13.2 Mutual Indemnification Obligation. Multitex hereby agrees to indemnify and
hold harmless Buyer, and Buyer hereby agrees to indemnify and hold harmless
Multitex, against any and all liability, claims, damages, losses, costs or
expenses, including reasonable attorneys' fees ("Losses"), relating to (i) any
claims by any person for any commissions, broker's or finder's fee relating to
this Agreement or the purchase and sale of Purchased Assets contemplated herein;
and (ii) any breach of, noncompliance with or misrepresentation contained in any
representation, warranty or covenant made by such party herein or in the Related
Documents.
13.3 Multitex's Indemnification Obligations. Multitex hereby agrees to defend,
indemnify and hold harmless Buyer from and against any and all Losses, which
Buyer may sustain as a result of any claims, actions or damages of any nature
whatsoever relating to (i) Multitex's operation of the Business or use of the
Purchased Assets prior to the Closing Date which would impose successor
liability upon Buyer as a matter of law (including, but not limited to, product
liability claims and contested Taxes, (ii) the existence of any lien,
encumbrance or security interest at the Closing Date in the Purchased Assets or
(iii) the termination of any employees by Multitex.
13.4 Buyer's Indemnification Obligations. Buyer hereby agrees to defend,
indemnify, and hold Multitex harmless from and against any and all Losses which
Multitex may sustain as a result of any claims, actions or damages of any nature
whatsoever relating to (i) Buyer's operation of the Business or use of the
Purchased Assets on and after the Closing Date including, but not limited to,
any Losses relating to products manufactured, sold, or distributed by Buyer
subsequent to the Closing Date (except for and only to the extent of any
violation of Section 8.6 by Multitex) and all general liability claims arising
out of or relating to occurrences of any nature relating to Buyer's business
subsequent to the Closing Date; and (ii) the failure of Buyer to pay, perform,
and discharge when due and owing any of the Assumed Liabilities.
13.5 Inventory, Product Warranty and Customer Claims Indemnity.
(a) Multitex hereby agrees to defend, indemnify and hold harmless Buyer
from and against any and all Losses (including, but not limited to out-of-pocket
shipping costs, handling and labor costs incurred in the removal and replacement
or reinstallation of products subject to product warranty claims excluding Buyer
employee inspection costs and any other costs for Buyer personnel), which Buyer
may sustain as a result of any claims, actions or damages of any nature
whatsoever relating to (i) product warranty claims in respect of goods
manufactured and sold by Multitex, (ii) product warranty claims in respect of
goods sold by Buyer which are made up of Inventory which has been classified as
of Closing as First Inventory to the extent such claim results from a defect in
the First Inventory or because such items should have been classified as Other
Inventory and (iii) any and all other customer claims relating to the products,
rebates, discounts or other allowances in respect of sales made prior to the
Closing.
(b) Buyer shall provide Multitex with monthly reports which shall outline with
reasonable particularity the nature and amount of all product warranty claims
involving products comprised of First Inventory which Buyer has decided to honor
in accordance with the standard procedures used by Buyer in regard to product
warranty claims against Buyer. Multitex shall have thirty (30) days from
receipt of the such report to notify Buyer of Multitex objection to the nature
or amount of any particular item in such report, specifying the grounds for such
objection. If no such notice of objection is given by Multitex within thirty
(30) days as set forth above, Buyer shall be entitled to immediate
indemnification hereunder. If objection is given within thirty (30) days as set
forth above, any claims included in such report which are not disputed shall,
subject to the provisions of Section 13.6 hereof be paid over within five (5)
Business Days.
13.6 Limitation . Notwithstanding anything contained herein to the contrary,
Multitex shall not be required to indemnify Buyer pursuant to this Article XIII
for: (a) any claim relating to a breach of Section 8.5 (except in respect of any
product claims by third parties, which shall be covered by (b) herein) or (b)
any breach of or noncompliance with any representation, warranty or covenant
made herein or for any goods sold or manufactured by Multitex prior to Closing
(i) until the aggregate amount of all Losses exceeds $1,100,000 in which event
all amounts in excess thereof shall be paid by Multitex, or (ii) in an amount in
excess of the Purchase Price.
13.7 Buyer's Third Party Claims; Notice of Claims.
(a) Immediately upon receipt by Buyer of any claim against it (other than by
Multitex) as described in Sections 13.1, 13.2, 13.3 or 13.5 above (the "Buyer's
Third Party Claims"), it shall advise Multitex in writing of such claim and
provide a copy of the complaint or other document or documents asserting the
claim, and within thirty (30) days of receipt of such notice, Multitex shall (i)
pay the same or (ii) notify Buyer in a writing executed by Multitex that it
disputes such claim and intends to defend against it, and thereafter so defend
and pay, any adverse final judgment or award of settlement amount in regard
thereto. During such thirty (30) day period, Buyer, after consultation with
Multitex, may take any reasonable action with respect to said claim which is
necessary to protect against further damage or default. The cost of such
defense shall be borne by Multitex. If Multitex fails to take action within
thirty (30) days as set forth above, then Buyer shall have the right to pay,
compromise or defend any such Buyer's Third Party Claims; provided that Buyer
has delivered a notice to Multitex of its intention to take such action at least
five (5) days prior to taking such action, in which event Multitex shall
promptly pay or reimburse Buyer in respect of any amount of payment plus costs
of defense incurred by Buyer hereunder. Buyer and Multitex shall cooperate with
each other in the defense of any Buyer's Third Party Claims brought hereunder.
(b) With respect to any matter under Sections 13.1, 13.2, 13.3 or 13.5 above
other than Buyer's Third Party Claims, Buyer shall give written notice to
Multitex outlining with reasonable particularity the nature and amount of such
claim. Multitex shall have thirty (30) days from receipt of Buyer's notice of
such claim to notify Buyer of Multitex's objection to the nature or amount of
the proposed claim for indemnification, specifying the grounds for such
objection. If no such notice of objection is given by Multitex within thirty
(30) days as set forth above, Buyer shall be entitled to immediate
indemnification hereunder. If objection is given within thirty (30) days as set
forth above, the dispute may be resolved by agreement between the parties.
13.8 Multitex's Third Party Claims; Notice of Claims.
(a) Immediately upon receipt by Multitex of any claim against it (other than
by Buyer) as described in Sections 13.2 and 13.4 above (the "Multitex's Third
Party Claims"), Multitex shall advise Buyer in writing of such claim, and
provide a copy of the complaint or other document or documents asserting the
claim and within thirty (30) days of receipt of such notice Buyer shall (i) pay
the same or (ii) notify Multitex in a writing executed by Buyer that it disputes
such claim and intends to defend against it, and thereafter so defend and pay,
any adverse final judgment or award of settlement amount in regard thereto.
During such thirty (30) day period, Multitex, after consultation with Buyer, may
take any action with respect to said claim which is necessary to protect against
further damage or default. The cost of such defense shall be borne by Buyer.
If Buyer fails to take action within thirty (30) days as set forth above, then
Multitex shall have the right to pay, compromise or defend Multitex's Third
Party Claims; provided that Multitex has delivered a notice to Buyer of its
intention to take such action at least five (5) days prior to taking such
action. Buyer shall promptly pay or reimburse Multitex in respect of any amount
of payment plus costs of defense incurred by Multitex hereunder. Buyer and
Multitex shall cooperate with each other in the defense of any Multitex's Third
Party Claims brought hereunder.
(b) With respect to any matter under Sections 13.2 and 13.4 above other than
Multitex's Third Party Claims, Multitex shall give written notice to Buyer
outlining with reasonable particularity the nature and amount of such claim.
Buyer shall have thirty (30) days from receipt of Multitex's notice of such
claim to notify Multitex of Buyer's objection to the nature or amount of the
proposed claim for indemnification, specifying the ground for such objection.
If no such notice of objection is given by Buyer within thirty (30) days as set
forth above, Multitex shall be entitled to immediate indemnification hereunder.
If objection is given within thirty (30) days as set forth above, the dispute
may be resolved by agreement between the parties.
13.9 Sources of Recovery. Claims for Losses by Buyer to be indemnified by
Multitex hereunder shall be paid directly by Multitex or any successor in
interest thereto or, at the election of Buyer, may be offset against amounts
payable to Multitex or its shareholders pursuant to the Home Depot Sales
Adjustment or otherwise. Multitex shareholders and/or other distributees of the
Purchase Price shall be deemed to be successors in interest for purposes of this
Agreement.
ARTICLE XIV
OTHER POST-CLOSING COVENANTS
14.1 Multitex's Employees.
(a) After the Closing, with respect to the employment by Buyer of any
employees no longer on Multitex's payroll (the "Employees"), Buyer agrees to
offer employment to all active Multitex employees as of the Closing.
(b) Subject to the provisions of Article XIII, Multitex shall be responsible
for and shall hold Buyer harmless with respect to all claims (including the
costs of defense thereof) asserted against Buyer pursuant to the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. Section 2101-09 or
similar state, local or foreign country laws or regulations (collectively,
"WARN Laws") by Employees of Multitex for periods prior to Closing who do not
accept employment with Buyer immediately following the Closing; provided,
however, that Buyer shall indemnify Multitex for any Loss it may incur under
WARN Laws solely as a result of Buyer's breach of Section 14.1(a).
(c) In addition to any liability which Multitex may have under WARN Laws,
Multitex shall be responsible for all other obligations and severance costs, if
any, required or committed by Multitex to be paid to Employees arising out of
their employment by Multitex or the termination thereof. Buyer shall be
responsible for all obligations and costs, if any, required to be paid to
Employees arising out of their employment by Buyer or an affiliate of Buyer or
the termination thereof or the hiring practices of Buyer or any affiliate
thereof.
14.2 Employee Benefit Plans. Any Employee, other than a Disqualified Employee,
who is offered employment by Buyer at Closing, and who accepts such offer will
receive employee welfare and retirement benefits similar to those currently
provided to similarly situated employees of Buyer and will be given credit for
all service with Multitex for the purpose of determining eligibility and vesting
with respect to The Dixie Group, Inc. 401(k) Retirement Savings Plan (the "Dixie
401(k) Plan"). Eligibility to participate in any plan will be based on the
rules of Buyer's plan and the parties recognize that in individual cases,
Employees who were eligible to participate in Multitex's Benefit Plans will not
have immediate eligibility for Buyer's plans or may be subject to a pre-existing
condition waiting period, notwithstanding the service credit provided in the
preceding sentence. Multitex and the Buyer agree that Buyer is not acquiring or
succeeding to any obligations with respect to the Benefit Plans and that the
Buyer is not intended to be a successor employer to Multitex for any purposes,
including with respect to COBRA, and that no benefit plan sponsored or
maintained by the Buyer is intended to be a successor plan to any of Multitex's
Benefit Plans. Multitex agrees that it will comply with COBRA after the Closing
with respect to all employees who are not continued in the employment of
Multitex after the Closing, qualified beneficiaries who had a qualifying event
as of or prior to the Closing, and former employees of Multitex who had a
qualifying event as of or prior to the Closing but with respect to whom the
period for electing COBRA has not ended. Multitex will provide the
certification described in Sections 9801 et seq. of the Code to the extent
required by law for all Employees or former Employees on the Closing Date.
Actions with respect to Retirement Plans. Multitex and the Buyer will take
such actions as may be desirable to effect a transfer of the accounts (all of
which shall be fully vested) of those Employees of Multitex hired by the Buyer
as of the Closing Date from the Multitex Employee Retirement Savings Plan (the
"Multitex 401(k) Plan") to the Dixie 401(k) Plan, with such transfer to occur as
soon as practicable after March 31, 1999; and prior to such transfer, the Buyer
(or Multitex if the payroll for the Employees is under its control) will
transmit and Multitex will apply payroll deduction amounts collected for loans
outstanding in the Multitex 401(k) Plan as of the Closing Date. Those Employees
who are offered employment by Buyer at Closing and who are eligible to
participate in the Dixie 401(k) Plan shall receive the same contributions from
the Buyer based upon their actual contributions to the Dixie 401(k) Plan and
their compensation earned while employed by Buyer as other participants of the
Dixie 401(k) Plan.
14.3 Delivery of Mail, Etc. Multitex will deliver promptly to Buyer any mail,
documents or instruments received by a Multitex after the Closing Date
pertaining to the post-Closing Date operations of Buyer and Buyer will promptly
deliver to Multitex any mail, documents or instruments received by it after the
Closing Date pertaining to the pre-Closing Date operations of Multitex.
14.4 Access to Records. The parties agree to maintain all records relating to
the Business in accordance with their existing records retention policies and
procedures (including, in the case of Multitex, retention of such records as if
the Business were an on-going operation of Multitex) and to make such records
available for inspection or copying by the other parties hereto (or their
attorneys, accountants, consultants or agents) on reasonable notice and during
normal business hours. In any event, Buyer shall maintain personnel records for
at least three (3) years following the Closing Date.
14.5 Certain Employee Matters. Multitex and Buyer shall cooperate with one
another following the Closing in order to achieve a smooth transition with
respect to employment and payroll matters.
14.6 Confidentiality. Multitex agrees that the confidentiality obligations
imposed upon it pursuant to the letter agreement dated November 24, 1998 between
it and Buyer shall survive the Closing and remain in full force and effect
thereafter. In addition, Multitex agrees that all nonpublic or proprietary
information, and all information that constitutes trade secrets pertaining to
the Business, the Purchased Assets and the terms and conditions of this
Agreement unless the information sought to be disclosed or used (i) is publicly
known as of the date hereof or becomes publicly known through no fault of
Multitex or its or Multitex's employees or former employees or (ii) is lawfully
received by any party from a third party not bound in a confidential
relationship to any party whose confidential information is to be protected
hereunder (the "Confidential Information") shall be deemed confidential and
shall be kept by them in strict confidence. Multitex will not, without the prior
written consent of Buyer, except as required by law, release or disclose any
Confidential Information. In the event that Multitex receives a request to
disclose all or part of the Confidential Information (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand, any information or formal investigation by any government
or governmental agency or authority or otherwise) Multitex will (a) immediately
notify Buyer of the existence, terms and circumstances surrounding such request,
(b) consult with Buyer on the advisability of taking legally available steps to
resist or narrow such request and (c) if disclosure of such information is
required, furnish only that portion of the Confidential Information which, in
the written opinion of Multitex's counsel, Multitex is legally compelled to
disclose, and to cooperate with any action by Buyer to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded to such portion of the disclosed Confidential Information which Buyer
so designates. The foregoing notwithstanding, Multitex may disclose the
existence of this Agreement, the Purchase Price for the Assets and the terms and
conditions of this Agreement to its attorneys, advisors and consultants or as
required to be disclosed pursuant to applicable federal and state securities and
tax laws.
14.7 Audited Financial Statements. Multitex shall provide to Buyer within
sixty (60) days following the Closing Date, audited financial statements for the
fiscal year ending January 2, 1999 (at Buyer's expense).
ARTICLE XV
MISCELLANEOUS
15.1 Simultaneous Closing. All transactions at Closing including execution of
Related Documents shall be deemed to take place simultaneously and none shall be
deemed to take place until all shall have taken place.
15.2 Survival of Representations and Warranties. The representations and
warranties in this Agreement, in any Related Document or in any exhibit, list,
instrument or document delivered in connection herewith or therewith shall
survive the Closing for a period of twelve (12) months thereafter; provided,
however, that (a) representations, warranties and covenants with respect to tort
product liability matters shall survive the Closing for the applicable statutory
period of limitations and (b) representations and warranties with respect to
title to the Assets and with respect to Environmental Matters shall survive the
Closing for five (5) years. Notwithstanding anything contained herein to the
contrary, any covenant, agreement, representation or warranty in respect of
which indemnity may be sought pursuant to this Agreement, shall survive the time
at which it would otherwise terminate pursuant to the preceding sentence, if,
prior to such time, written notice of a good faith claim, breach or inaccuracy
thereof giving rise to such indemnity shall have been given to the other party
specifying in reasonable detail the factual basis thereof and referencing the
provision of this Agreement pursuant to which the claim is being asserted.
15.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
15.4 Notices. Any and all notices, certificates, demands or other
communications permitted or required to be made under this Agreement shall be in
writing signed by the party giving such notice or demand, and 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 supplied in writing
pursuant to the terms of this section. 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 on a Business Day (or if not a Business Day then the next Business
Day), (ii) on the Business Day after dispatch 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, notices shall be addressed
as follows:
If to Buyer at:
The Dixie Group, Inc.
1100 South Watkins Street
Chattanooga, Tennessee 37404
Attention: William N. Fry, IV
Facsimile No.: (423) 493-7442
with a required copy to:
Witt, Gaither & Whitaker, P.C.
1100 SunTrust Bank Bldg.
Chattanooga, Tennessee 37402
Attention: Ralph M. Killebrew, Jr., Esq.
Facsimile No: (423) 266-4138
If to Multitex at:
807 East Morton Drive
Dalton, Georgia 30720
Attention: William S. Anderson
with a required copy to:
Miller & Martin, LLP
832 Georgia Avenue, Suite 1000
Chattanooga, Tennessee 37402
Attention: Howard I. Levine, Esq.
Facsimile No.: (423) 785-8480
15.5 Entire Agreement, Modification. 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. The parties acknowledge and agree that neither of them has made
any representation with respect to the subject matter of this Agreement or any
representations inducing the execution and delivery hereof except as
specifically set forth herein. Each of the parties hereto acknowledges that it
has relied on its own judgment in entering into this Agreement. This Agreement
may not be changed, amended, or modified including specifically the 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.
15.6 Assignment. This Agreement and the rights, obligations and duties of the
parties hereto shall not be assignable or otherwise transferable to any party
other than to a related party of Buyer, provided such assignment shall not
relieve Buyer of its obligations hereunder.
15.8 Binding Effect and Benefit. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties, their heirs, executors and
administrators, successors and permitted assigns.
15.9 Further Assurances. Multitex shall on the Closing Date, and from time to
time thereafter promptly at Buyer's request and without further consideration,
execute and deliver to Buyer such instruments of transfer, conveyance and
assignment as Buyer shall reasonably request to transfer, convey and assign more
effectively the Purchased Assets to Buyer.
15.10 Partial Invalidation. If any portion of this Agreement is held invalid,
illegal or unenforceable, such determination shall not impair the enforceability
of the remaining terms and provisions contained herein. In such event, this
Agreement shall be construed and interpreted as if such invalid, illegal or
unenforceable terms were limited to the minimum extent whereby such terms would
be valid, legal and enforceable. If such limitation is not possible, this
Agreement shall be construed and interpreted as if such invalid, illegal or
unenforceable terms were severed and not included herein.
15.11 Waiver. No waiver of a breach or violation of any provision of this
Agreement shall operate or be construed as a waiver of any subsequent breach.
15.12 Exhibits and Schedules. All Exhibits, Schedules and documents referred
to in this Agreement shall be deemed to be incorporated herein by any reference
thereto as if fully set out, yet no matter disclosed in one Schedule or Exhibit
shall be deemed disclosed in another Schedule or Exhibit in the absence of an
express cross-reference.
15.13 No Third Party Beneficiaries. This Agreement shall not create any
rights for the benefit of any third party.
15.14 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Tennessee.
[rest of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
aforesaid.
MULTITEX:
MULTITEX CORPORATION OF AMERICA
/s/ Martin Greenwood
By:___________________________
Title: Chairman & CEO
BUYER:
THE DIXIE GROUP, INC.
/s/ William N. Fry, IV
By:______________________________
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF THE DIXIE GROUP, INC. AT
AND FOR THE THREE MONTHS ENDED MARCH 27, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-25-1999
<PERIOD-END> MAR-27-1999
<CASH> 1,782
<SECURITIES> 0
<RECEIVABLES> 20,917
<ALLOWANCES> 1,843
<INVENTORY> 91,224
<CURRENT-ASSETS> 194,900
<PP&E> 281,814
<DEPRECIATION> 124,463
<TOTAL-ASSETS> 415,509
<CURRENT-LIABILITIES> 88,176
<BONDS> 189,721
<COMMON> 44,428
0
0
<OTHER-SE> 58,150
<TOTAL-LIABILITY-AND-EQUITY> 415,509
<SALES> 141,224
<TOTAL-REVENUES> 141,224
<CGS> 112,014
<TOTAL-COSTS> 112,014
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,346
<INCOME-PRETAX> 4,274
<INCOME-TAX> 1,694
<INCOME-CONTINUING> 2,580
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,580
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.22
</TABLE>
