<PAGE>
EXHIBIT 10.29
YARN SUPPLY AGREEMENT
This YARN SUPPLY AGREEMENT (this
"Agreement") is dated this 5th day of January,
2005 and is made by and between Parkdale
Mills, Inc., a North Carolina
corporation, and Parkdale America, LLC, a
North Carolina limited liability
company (collectively, "Parkdale"), and
Delta Apparel, Inc., a Georgia
corporation ("Delta").
WITNESSETH
WHEREAS,
Parkdale produces yarns and related products for sale and Delta
and its Subsidiaries (as hereafter defined)
consume yarns in connection with the
manufacture of activewear;
WHEREAS,
Parkdale America, LLC and Delta have entered into an Asset
Purchase Agreement, dated as of November
18, 2004 (the "Acquisition Agreement"),
pursuant to which Parkdale America, LLC has
agreed to purchase from Delta
substantially all of the assets and
properties used in the operation of a
yarn-spinning facility located in
Edgefield, South Carolina (the "Facility");
and
WHEREAS,
Parkdale and Delta wish to enter into an agreement for the
supply
of yarn.
NOW,
THEREFORE, in consideration of the promises and of the mutual
covenants and agreements herein contained,
the legal sufficiency and adequacy of
which is hereby expressly acknowledged, the
parties hereto agree as set forth in
this Agreement.
1.
Definitions. The following terms used in this Agreement shall
have
the meanings set forth in this SECTION
1:
"Acquisition Agreement" shall have the meaning set forth in the
Recitals.
"Basis"
shall mean the premium or discount charged by merchants
(suppliers) of cotton over and above the
future market cost of such cotton,
which premium or discount is based on the
quality type, payment terms and
delivery point of such cotton and which
Basis (i) is calculated in points per
pound where one point is equal to $.0001
(or one hundredth of one cent) and (ii)
shall be proposed annually by Parkdale on
the anniversary date of this Agreement
and be acceptable to Delta.
"Cost
Price" shall mean the cotton price per pound based on the
pricing
procedures set forth on EXHIBIT C.
"Disputes"
shall have the meaning set forth in SECTION 15.
"Facility"
shall have the meaning set forth in the Recitals.
"New
Business" shall have the meaning set forth in SECTION 3.
<PAGE>
"Specifications" shall have the meaning set forth in SECTION
4(a).
"Subsidiary" shall mean any corporation, partnership, limited
liability
company or other entity of which shares of
stock or other ownership interests
having ordinary voting power (other than
stock or such other ownership interests
having such power only by reason of the
happening of a contingency) to elect a
majority of the board of directors or other
managers of such corporation,
partnership, limited liability company or
other entity are at the time owned, or
the management of which is otherwise at the
time controlled, directly or
indirectly, through one or more
intermediaries, or both, by Delta.
"Taxes"
shall have the meaning set forth in SECTION 7.
"Term"
shall have the meaning set forth in SECTION 2.
"Territory" shall mean the United States of America, Canada,
Mexico,
Guatemala, Belize, El Salvador, Honduras,
Nicaragua, Costa Rica and Panama.
"Yarn"
shall mean Yarn Counts made from one hundred percent (100%)
cotton
or fifty percent (50%) cotton/fifty percent
(50%) polyester (hereinafter
"50/50") open end spun yarn, ring spun
yarn, or air jet spun yarn, or other
cotton/polyester blends to form heather
yarns ("hereinafter "Blends") to be
delivered pursuant to SECTION 4, excluding,
however, yarns that Parkdale does
not manufacture as of the date of this
Agreement in the ordinary course of its
business.
"Yarn
Counts" means such yarn counts made from 100% cotton or 50/50
open
end spun yarn, ring spun yarn, or air jet
spun yarn, or Blends as are set forth
in the Specifications.
2.
Term. The
term of this Agreement (hereinafter the "Term") shall
commence on January 1, 2005 and shall
continue until and include December 31,
2009 unless written notice of termination
is served by either party upon the
other in accordance with the provisions of
SECTIONS 11 OR 12 below.
3.
Product;
Quantity. Subject to the terms and conditions of this
Agreement, during the Term, Delta shall
purchase exclusively from Parkdale, and
Parkdale shall supply to Delta, all Yarn
required by Delta and its Subsidiaries
for use in manufacturing operations
conducted by Delta and its Subsidiaries in
the Territory. Parkdale's obligation under
this Agreement to supply to Delta,
and Delta's obligation to purchase from
Parkdale, Yarn required by Delta and its
Subsidiaries shall include Yarn required by
any new business operated or
acquired (whether acquired by means of an
asset purchase, stock purchase,
merger, consolidation, or otherwise) by
Delta or any of its Subsidiaries during
the Term (each, a "New Business"), as long
as such Yarn is required for use in
manufacturing operations conducted by such
New Business in the Territory.
Notwithstanding the foregoing, Delta shall
not be required to purchase
exclusively from Parkdale, and Parkdale
shall not be required to supply to
Delta, any Yarn required by any New
Business acquired by Delta or any of its
Subsidiaries during the Term to the extent
that an obligation exists for such
New Business to acquire Yarn from a
supplier other than Parkdale under a supply
agreement or other binding arrangement in
effect prior to Delta's or its
Subsidiary's acquisition of such New
Business.
<PAGE>
4.
Duties and
Obligations of Parkdale.
(a)
Compliance with Standards. Parkdale shall supply Yarn in full
compliance with the product specifications
(the "Specifications") set forth in
EXHIBIT A attached hereto. Any
modifications to the Specifications may only be
made by agreement in writing by both
parties.
(b)
Delivery. Parkdale shall ship and regularly fulfill the weekly
supply
of Yarn (as set forth in purchase orders
provided by Delta to Parkdale) to Delta
or to such destination(s) as Delta shall
designate in writing on an F.O.B.
(Parkdale's facility) basis with carriers
designated by Delta so that Delta
shall assume all freight, transportation,
and insurance from the time of
delivery. If Parkdale determines that it
will be unable to meet Delta's delivery
requirements, as set forth in any purchase
order provided by Delta to Parkdale,
it shall so notify Delta no later than ten
(10) days after receipt of Delta's
order and propose an alternative delivery
schedule. If such alternative delivery
schedule is not acceptable to Delta, Delta
shall have the right to reject the
alternative delivery schedule by written
notice to Parkdale and to utilize an
alternative supply source with respect to
such order. In addition, in the event
that Parkdale fails to deliver Yarn on any
required delivery date, Delta may
utilize an alternative supply source with
respect to such Yarn. Claims by Delta
for inadequate delivery of Yarn shall be
void unless Delta gives Parkdale
written notice of the claim within thirty
(30) calendar days of receipt of the
Yarn at the destination designated by
Delta.
(c)
Records. All original records, in whatever form, relating to
the
manufacturing, production, quality control
assurance, proof of origin records
and shipment of Yarn shall be retained by
Parkdale for a period of not less than
two (2) years from the date of delivery of
each lot of Yarn to which said
records pertain. Parkdale shall provide
Delta or its representatives with
access, upon reasonable notice to Parkdale,
to inspect Parkdale's quality
control and other records relating to the
Yarn and all other records relating to
obligations of Parkdale pursuant to this
Agreement.
(d)
Shipping Pallets. Parkdale shall, at its expense, (i) provide
all
shipping pallets for the transportation of
Yarn, and (ii) pick up on a regular
basis and return to its premises all
shipping pallets which have been emptied by
Delta.
(e) Time
of the Essense. Parkdale acknowledges that time is of the
essence
under this Agreement.
(f)
Location of Manufacturing Operations. Parkdale agrees that all
Yarn
delivered hereunder shall be manufactured
by it in North Carolina, South
Carolina, or Virginia, or at such other
location as Delta may approve in
writing.
5.
Warranty.
Parkdale warrants that the Yarn delivered hereunder shall
conform in all respects to the
Specifications and shall be manufactured,
produced and shipped in accordance with the
Specifications and warrants that the
Yarn shall be free from defects in
materials and workmanship and that, at the
time of delivery, Parkdale shall have good
title and right to transfer and sell
the same and that the same shall be
delivered free of encumbrances. If Parkdale
fails to deliver any Yarn hereunder free of
encumbrances, Delta may reject such
Yarn pursuant to SECTION 6 or Delta may,
upon written notice to Parkdale,
require that Parkdale, at its expense,
defend the title thereto and promptly
cause any security interest, claim, demand,
lien, or other encumbrance to be
removed. EXCEPT FOR THE WARRANTIES SET
FORTH IN THIS SECTION 5, PARKDALE MAKES
NO OTHER WARRANTIES OF QUALITY, AND
PARKDALE
<PAGE>
HEREBY DISCLAIMS ALL OTHER WARRANTIES OF
QUALITY, WHETHER EXPRESS OR IMPLIED,
WHETHER CREATED BY CONTRACT OR BY OPERATION
OF LAW, INCLUDING BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
6.
Rejection of Yarn.
(a)
Delta may reject
any Yarn that does not conform in any respect to
the warranties provided by Parkdale in
SECTION 5 of this Agreement provided that
Delta gives notice to Parkdale of such
rejection within thirty (30) days after
Delta discovers the nonconformity.
(b)
Upon rejection
of Yarn by Delta, Parkdale shall promptly replace the
nonconforming Yarn with Yarn conforming to
the warranties in SECTION 5 of this
Agreement. Parkdale shall bear all costs in
fulfilling its obligation to replace
nonconforming Yarn, including all freight
costs associated with return of
nonconforming Yarn to Parkdale and all
freights costs associated with the
shipment of replacement Yarn to Delta.
7.
Purchase
Price, Payment; Rebates. The purchase price for each pound
of Yarn delivered by Parkdale pursuant to
this Agreement shall be calculated in
accordance with the formula set forth on
EXHIBIT B attached hereto. Parkdale
shall invoice Delta weekly for all Yarn
delivered during the preceding week
pursuant to Delta's purchase orders. Such
invoices shall be payable by Delta on
a net forty-five (45) day basis following
actual receipt of the invoice. All
payments shall be remitted to Parkdale at
the address specified in or given
pursuant to SECTION 18 hereof. Delta is
solely responsible for, and will pay,
any and all applicable sales, use, value
added, or excise taxes, and any and all
imposts, customs, duties or consular fees
or charges related to importation or
exportation of goods, imposed by any
governmental authority in the Territory in
connection with the sale of Yarn by
Parkdale to Delta (collectively "Taxes"),
excluding, however, any Taxes measured upon
Parkdale's income. Each party agrees
to take all actions reasonably required to
obtain exemptions from or reductions
of Taxes (other than income Taxes) required
to be paid or withheld that may be
applicable to any payment due hereunder.
Parkdale agrees to pay to Delta all
rebate amounts actually received by
Parkdale under any rebate program(s)
administered by the USDA for the benefit of
cotton consumers to the extent such
rebates are attributable to bales of cotton
opened by Parkdale to fulfill its
obligations under this Agreement. Such
rebate payments shall be made by Parkdale
within seven (7) days of the end of each
month.
8.
Purchase
Orders. All sales of Yarn produced for Delta in accordance
with this Agreement will be made pursuant
to purchase orders submitted by Delta
from time to time, the terms of which shall
be controlled by the terms of this
Agreement, regardless of whether such
purchase orders reference this Agreement.
To the extent the terms of a purchase order
conflict with the terms of this
Agreement, the terms of this Agreement
shall control. Except as provided in
SECTION 4(b) with respect to delivery
schedules, each purchase order for Yarn
submitted by Delta in accordance with the
provisions of this Agreement shall be
deemed automatically accepted by Parkdale,
subject to the provisions of Section
4(b) with respect to delivery
requirements.
9.
Limitation
of Liability. Subject to compliance with the
Specifications and without limiting SECTION
5, the determination of the
suitability of the Yarn furnished hereunder
for the uses contemplated by Delta
is the sole responsibility of Delta and
Parkdale shall have no responsibility in
connection therewith. Except in the case of
gross negligence or gross
misconduct, Parkdale's sole
<PAGE>
liability and Delta's sole remedy for the
non-delivery or delivery of inadequate
quantities of Yarn, or for the delivery of
Yarn not conforming to
Specifications, shall be for Delta's direct
damages, if such failure is not
excused pursuant to SECTION 11 of this
Agreement. Neither party shall, under any
circumstances, be liable for loss of
profits or any other indirect or
consequential damages except in the case of
gross negligence or gross
misconduct.
10.
Confidentiality.
(a)
This Agreement,
the terms herof, and all information furnished or to
be furnished by Delta to Parkdale or by
Parkdale to Delta in connection with and
during the Term of this Agreement shall be
kept confidential by the party
receiving said information, except for
purposes authorized by this Agreement,
and neither party shall disclose such
information to any person or firm unless
previously authorized in writing by the
other party to do so; provided, however,
that the party r
