ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("AGREEMENT") is made as of
January 27, 2005, by
and between Delta Mills, Inc., a Delaware corporation ("SELLER"), and Gibbs
International, Inc., a South Carolina
corporation ("BUYER").
RECITALS. Seller desires to sell, and Buyer or its assignee desire to buy,
certain land, improvements, equipment, machinery and related
assets from Seller
on the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the recitals,
the mutual promises in
this
Agreement and other good and valuable
consideration, the receipt and sufficiency
of which the parties acknowledge, the
parties agree as follows:
1. DEFINITIONS. The following terms shall have the
following meanings in this
Agreement:
a. "ASSIGNEE" means any Person that is a
wholly-owned
subsidiary of Buyer or
is wholly-owned
by Jimmy I. Gibbs.
b. "BEATTIE PLANT" means Seller's plant located at 700 North Woods
Drive,
Fountain Inn,
South Carolina 29644.
c. "EASEMENT" means any recorded or unrecorded easement, right of way,
servitude,
encroachment,
covenant
or condition with respect to the
particular real
property.
d. "EFFECTIVE DATE" means
January 12, 2005.
e. "ENCUMBRANCE" means any
charge, claim,
community or other marital property
interest,
equitable interest, lien, option, pledge, security interest,
mortgage,
deed of trust, right
of first option, right
of first refusal or
similar
restriction.
f. "ENVIRONMENT" means soil, land surface or subsurface strata, surface
waters,
groundwaters, drinking water supply, stream sediments, ambient
air,
buildings,
plant and animal life and any other environmental medium or
natural
resource.
g. "ENVIRONMENTAL LAW" means
any federal, state or
local statute, law,
rule,
regulation
or order that relates
to the protection of
human health or the
Environment or
that regulates,
requires remediation of or requires notices
with respect to
any Hazardous Material or the Release or threatened Release
of any Hazardous
Material.
h. "ESCROW AGENT" means the law
firm of Wyche Burgess
Freeman & Parham,
P.A.
that is serving
as the escrow agent in
connection
with the transactions
described in
this Agreement in accordance with the escrow agreement between
the parties
dated January 11, 2005 ("ESCROW AGREEMENT").
i. "HAZARDOUS MATERIAL" means any substance, material or waste which is
regulated
in any way by any
federal, state or local governmental body,
including any
material, substance or
waste that is defined as a "hazardous
<PAGE>
waste,"
"hazardous material," "hazardous substance," "extremely hazardous
waste,"
"restricted
hazardous waste," "contaminant," "toxic waste" or
"toxic
substance" under any
Environmental
Law, and including
petroleum,
petroleum
products, asbestos, presumed asbestos-containing material or
asbestos-containing material, lead based paint, urea formaldehyde,
polychlorinated
biphenyls, mold and any biological agent.
j. "LIABILITY" means any liability or
obligation
of any kind,
character or
description,
whether known or
unknown, absolute or contingent, accrued or
unaccrued,
disputed or undisputed, liquidated or unliquidated,
secured or
unsecured,
joint or several, due or to become due, vested or unvested,
executory,
determined,
determinable or
otherwise, and whether
or not the
same is required
to be accrued on any financial statements.
k. "PERSON" means an
individual,
partnership,
corporation, business
trust,
limited
liability company, limited partnership, joint stock company,
unincorporated
association,
joint venture,
governmental
agency or other
entity.
l. "RELEASE" means any release,
spill, emission,
leaking, pumping,
pouring,
dumping,
emptying, injection, deposit, disposal, discharge, dispersal,
leaching
or migration on or into the Environment or into or out of any
property,
including the presence of any Hazardous Material at any
location.
2. PURCHASE AND SALE OF ASSETS.
Subject to the terms
and conditions
of this
Agreement, at
the applicable Closing, Seller will sell and assign to Buyer,
and Buyer or its
Assignee will purchase from Seller, the following assets
(collectively,
the "ASSETS"):
a. REAL PROPERTY. The real property consisting of the following
three
plants free
and clear of all Encumbrances and Easements, except
recorded general utility Easements of non-specific width and location
that do not adversely affect the use or value of the plants
(collectively, the "PLANTS"):
i. The Estes
Plant located at 750 Estes Drive, Piedmont, South
Carolina 29673,
consisting of
approximately 119
acres, and all
associated land, buildings, fixtures, improvements, as-built and
other plans and drawings and maintenance logs ("ESTES PLANT");
ii. The Furman Plant
located at 710 North Woods Drive, Fountain Inn,
South Carolina 29644,
consisting of
approximately 15 acres, and
all associated land, buildings, fixtures, improvements,
as-built
and other plans and drawings and maintenance logs (excluding,
however, Lot B shown
on the Survey for Delta Mills, Inc. dated
September 7, 2004, a copy of which has been provided by Seller
to
Buyer, which shall not
be conveyed by Seller to Buyer) ("FURMAN
PLANT"); and
iii. The Catawba Plant
located at 1007 West Finger Street Extension,
Maiden, North Carolina
28650, consisting of approximately 33
acres, and
all associated land, buildings, fixtures,
improvements,
as-built and
other plans and drawings and
maintenance logs ("CATAWBA PLANT").
2
<PAGE>
b. EQUIPMENT. The machinery,
equipment and parts
described on SCHEDULE 1
attached to this
Agreement and all
associated operations
and other
manuals, layouts,
plans, drawings and
maintenance and operating logs
("EQUIPMENT"). Buyer
shall have the right to abandon in place some or
all of the Equipment
located at the Beattie
Plant and described on
SCHEDULE 3
attached to this Agreement, and all such abandoned
Equipment shall
remain the property of Seller. If Buyer or its
Assignee does not purchase the Estes Plant or the Catawba Plant,
Buyer
shall have the right to abandon in place some or all of the
Equipment
located at such
Plant and described on SCHEDULE 3, and all such
abandoned Equipment shall remain the property of Seller.
c. AS IS SALE. Except as
expressly provided
otherwise in this Agreement,
Seller's sale of the
Assets to Buyer shall
be AS IS, WHERE IS.
WITH
RESPECT TO THE EQUIPMENT, EXCEPT FOR THE WARRANTIES EXPRESSLY
PROVIDED
IN THIS AGREEMENT,
SELLER HEREBY
DISCLAIMS ALL
WARRANTIES,
WHETHER
EXPRESS OR IMPLIED,
WHETHER CREATED BY
CONTRACT OR BY
OPERATION OF
LAW, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS
FOR A PARTICULAR PURPOSE.
3. EXCLUDED ASSETS. Buyer is not purchasing the machinery and equipment
described on
SCHEDULE 2 attached to this Agreement ("EXCLUDED ASSETS").
4. PURCHASE PRICE.
a. Subject to the potential
reductions
described in this
SECTION 4, the
total purchase price for all of the Assets ("PURCHASE PRICE") shall
be
$7,000,000.00. Seller
has already deposited
$700,000.00 with
Escrow
Agent pursuant to the Escrow Agreement.
b. If Buyer gives Seller notice
pursuant to SECTION
5.B. OR SECTION 7.F.
below that Buyer will
not purchase
one or more of the
Plants, the
Purchase Price shall
be reduced by the amount listed below for each
such Plant:
i. Estes Plant,
$1,000,000.00;
ii. Furman Plant,
$1,900,000.00; and
iii. Catawba Plant, $400,000.00.
c. If Buyer gives Seller notice
pursuant to SECTION 7.F. below that Buyer
will not purchase the
Equipment, the
Purchase Price shall be reduced
by
$3,700,000.00.
d. Seller shall pay and be
responsible for all ad valorem property taxes
with respect
to the Assets for all periods before the applicable
Closing; PROVIDED
that Buyer and
Seller shall pro rate the 2005 ad
valorem property taxes
for the Plants Buyer
purchases as of the date
of the applicable
Closing. Seller shall pay its pro rated
amount to
Buyer at the applicable Plant Closing.
e. Buyer shall be entitled to
determine the
allocation
of the Purchase
Price to the Assets,
and Seller and Buyer
shall use that
allocation
for all tax purposes, including the filing of IRS form 8594.
3
<PAGE>
f. Seller shall pay and shall
be responsible for all recording fees, deed
stamps and
other transfer taxes with respect to the sale of the
Plants.
g. Buyer is not assuming any
Liabilities.
5. REVIEW PERIOD.
a. Buyer shall have a period of 90 days ("REVIEW PERIOD") after the
Effective Date to
conduct its
investigation and due
diligence with
respect to the Plants and to close in accordance with SECTION 5.B.
below. During the Review Period, Seller shall provide to Buyer and
its
contractors and agents
at no charge
reasonable access to
all of the
Plants, including all
buildings and other
improvements, in order
to
allow them to conduct,
at Buyer's
expense, surveys, environmental
studies and tests
(including Phase I,
and possible
subsequent Phase
II, borings, reviews and reports) and other due diligence with
respect
to the Plants. Promptly after the date hereof, Seller shall deliver
to
Buyer all (i) surveys
(to the extent in the
possession of Seller
or
its agents),
(ii) environmental reports and other documents and
records evidencing,
mentioning
or relating to any environmental
condition,
investigation,
proceeding or any non-compliance with any
applicable Environmental Law, (iii) title commitments and policies
(to
the extent in the
possession of Seller or its agents), deeds vesting
title to the Plants in
Seller (to the
extent in the
possession
of
Seller or its agents),
and ad valorem property tax notices with
respect to any of the Assets, and (iv) building plans and drawings
relating to the Plants
(collectively,
"DUE DILIGENCE DOCUMENTS");
PROVIDED that Buyer shall return to Seller all such documents
relating
to any Plant Buyer does not purchase. Additionally, promptly after
the
date hereof,
Seller
shall
disclose
to Buyer in writing all
environmental conditions,
investigations, proceedings
and
non-compliance with
any applicable
Environmental Law relating to the
Assets and not expressly disclosed in the Due Diligence Documents,
to
the best of the knowledge of Seller's Director of Engineering, John
Hall ("SELLER'S CERTIFICATION").
b. Notwithstanding any other
provision of this Agreement, Buyer may give
written notice to
Seller during the
Review Period
that it will not
purchase one or more of the Plants based on an environmental
matter, a
title matter or a
survey-related matter
that Buyer determines in its
reasonable judgment adversely affects the particular Plant,
including
(i) any failure of a
Plant to comply with
applicable
Environmental
Laws, (ii) any
failure of Seller to remove in compliance with
applicable
Environmental Law any
barrel or other
container of any
Hazardous Material, (iii) the existence of any Easement that
adversely
affects the
value or use of the particular Plant, and (iv) the
commencement of any
condemnation
proceedings,
or the giving of
any
notice of proposed condemnation proceedings, with respect to a Plant
or part of a Plant; PROVIDED that the existence of asbestos within
the
buildings at a Plant
shall not constitute
a basis for Buyer to
give
that notice;
PROVIDED further that the absence of a "no further
action" letter from the applicable government agency with respect to
the remediation
in connection with the oil tank leak at the
Furman
Plant shall be a failure of the Furman Plant to comply with
applicable
environmental law
under SUBPART
B.I. above and shall constitute a
basis for Buyer to give that notice. No such exclusion shall apply
to
4
<PAGE>
any Equipment
located at such Plant.
If Buyer gives Seller such a
notice, the parties shall negotiate in good faith for at least 14
days
regarding a mutually satisfactory resolution of the matters set
forth
in that notice.
c. Seller discloses to Buyer that the Estes Plant and
the Furman Plant
are currently
subject to fee-in
lieu of property taxes ("FILOT")
transactions and that
legal title to each of
the Estes Plant and the
Furman Plant is currently held in the name of the county in which
such
Plant is located.
Notwithstanding
anything to the contrary set forth
in this Agreement,
Seller's obligations under this Agreement are
contingent upon
Seller's obtaining the approval of the applicable
county to release the applicable Plant from the existing FILOT
arrangements by quitclaiming the Plant to Seller. Seller shall use
its
reasonable efforts
to obtain those quitclaim deeds. If, despite
Seller's reasonable
efforts, Seller is unable to obtain any such
quitclaim deed,
Seller
shall not be required to transfer the
particular Plant to
Buyer, and Seller
shall have no liability under
this Agreement with respect to that failure.
d. If Buyer gives Seller
written notice under SECTION 5.B. above that
Buyer will not
purchase one or more
of the Plants
based on a title
matter or a survey
related matter
(and that title
matter or survey
related matter is "material" as defined below), or if Seller does not
obtain a quitclaim
deed from the
applicable
county for one or
more
Plants as provided
in SECTION
5.C. above, Seller shall promptly
reimburse Buyer
for all of Buyer's reasonable, documented,
out-of-pocket due
diligence expenses with respect to the Plant or
Plants described in
the notice, including
the costs of environmental
tests and reports, title searches and surveys, up to a total of
$17,000.00 with respect to the Estes Plant, $10,000.00 with respect
to
the Catawba Plant, and
$10,000.00
with respect to the
Furman Plant.
Notwithstanding the
foregoing,
if (i) Buyer's
notice under
SECTION
5.B. is based solely on Seller's failure to obtain one or both of
the
quitclaim deeds,
(ii) Seller delivers
to Buyer a written request for
an extension
of time to obtain
one or both of the
quitclaim deeds
within five days after Buyer gives the written notice under SECTION
5.B., and (iii)
Buyer does not agree to delay the effectiveness of its
written notice under
SECTION 5.B. for 90 days while Seller continues
to seek to obtain one or both of the quitclaim deeds, Seller shall
not
be required to reimburse Buyer for any due diligence expenses with
respect to the Estes Plant or the Furman Plant. If Seller reimburses
Buyer for expenses
under this SECTION
5.D., if requested by
Seller,
Buyer shall deliver to Seller all environmental reports, title search
results and surveys covered by that reimbursement.
e. For purposes of SECTION
5.D., a title matter or survey related matter
shall be deemed to be "MATERIAL" if (i) it materially adversely
affects the use or value of the applicable Plant, (ii) it is Seller's
not having or not being able to transfer to Buyer in accordance with
this Agreement exclusive, good and marketable fee simple
title to the
Plant, (iii) it is the
existence of a condemnation or eminent domain
proceeding, (iv) it is
the existence of any Encumbrance, or (v) it is
the existence of any
Easement other than
recorded general utility
Easements of
non-specific width and
location that do not
adversely
affect the use or value of the Plant.
6. ACCESS.
a. During the period between
the Effective Date and the applicable Plant
Closing with respect to the Estes, Furman and Catawba Plants,
Seller
shall provide to Buyer and its potential customers, contractors and
agents at no charge
reasonable access to the Plants and the Equipment
5
<PAGE>
in those
Plants and adequate
lighting and
electricity to allow Buyer
to evaluate, show,
market, disassemble
and remove that Equipment and
to evaluate,
show and market the
Plants. With
respect to any
Plant
that Buyer does not purchase, at Buyer's request, Seller shall extend
the period described
in the preceding sentence for up to 240 days
after the Equipment
Closing Date,
as determined by
Buyer; PROVIDED
that as long as Seller
continues to own one or more Plants, starting
180 days after the Equipment Closing Date, Buyer shall pay Seller in
advance each week an
amount equal to the product of $1.00 and the
number of square feet in each such Plant that the Equipment
continues
to occupy;
PROVIDED further that if Buyer agrees to delay the
effectiveness of its
written notice
pursuant to SECTION 5.D. above,
Buyer's obligation
to pay Seller the amounts specified in this
sentence shall not
start until 270 days after the Equipment Closing
Date. Buyer shall not disassemble or remove any of the Equipment
until
the Equipment Closing occurs.
b. From and after the Effective
Date up to a period of 180 days after the
Equipment Closing
Date, Seller shall provide to Buyer and its
potential customers,
contractors and agents
at no charge
reasonable
access to the Equipment at the Beattie Plant and adequate lighting
and
electricity to allow Buyer to evaluate, show, market, disassemble and
remove that Equipment.
At Buyer's request,
Seller shall extend
that
180-day period
for up to another
6
