-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H7GG/Hg/15TlIGI8M0shF5LbAg2h/cTtBGP2g2Uj1KgX5E0h0dyKrtZKjiPfpgo9 3WtmdB/wmio6eNKGlo++ug== 0001157523-07-005609.txt : 20070524 0001157523-07-005609.hdr.sgml : 20070524 20070524170042 ACCESSION NUMBER: 0001157523-07-005609 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070518 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070524 DATE AS OF CHANGE: 20070524 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELTA WOODSIDE INDUSTRIES INC /SC/ CENTRAL INDEX KEY: 0000806624 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 570535180 STATE OF INCORPORATION: SC FISCAL YEAR END: 0628 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10095 FILM NUMBER: 07877577 BUSINESS ADDRESS: STREET 1: P O BOX 6126 CITY: GREENVILLE STATE: SC ZIP: 29606 BUSINESS PHONE: 8642554100 MAIL ADDRESS: STREET 1: P O BOX 6126 CITY: GREENVILLE STATE: SC ZIP: 29606 8-K 1 a5411664.txt DELTA WOODSIDE INDUSTRIES, INC. 8-K UNITED STATES SECURITIES & EXCHANGE COMMISSION WASHINGTON, D.C. 20449 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): May 18, 2007 ------------ Delta Woodside Industries, Inc. ---------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) South Carolina --------------------------- (State of Other Jurisdiction of Incorporation) 1-10095 57-0535180 ---------------------------------- ------------------------------ (Commission File Number) (IRS Employer Identification No.) 700 North Woods Drive, Fountain Inn, South Carolina 29644 --------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (864) 255-4100 -------------- (Registrant's Telephone Number Including Area Code) Not Applicable ----------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2): [] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. As of May 18, 2007, Delta Mills, Inc. ("Delta Mills") entered into an asset purchase agreement (the "APA") for the sale of the real property, including all buildings, structures, facilities, fixtures and other improvements thereto and approximately 98 acres, respecting its Beattie facility in Fountain Inn, South Carolina (collectively, the "Beattie Plant") to Stanley Atkins ("Atkins") for $3,750,000, subject to certain adjustments. All property is to be purchased as is, where is, and the closing of the transaction contemplated in the APA is subject to certain closing conditions. Delta Mills is a wholly-owned subsidiary of Delta Woodside Industries, Inc. (collectively with Delta Mills and Delta Mills' subsidiary Delta Mills Marketing, Inc., the "Debtors"). The U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), pursuant to an Order dated May 18, 2007 (the "Stalking Horse Order"), approved the selection of the APA as a "stalking horse bid" and approved procedures for an auction of the assets subject to the agreement. As described below, the consummation of the sale contemplated by the APA is subject to higher and better bids as may be selected by the Debtors, in consultation with the Official Committee of Unsecured Creditors, at the auction and is further subject to the approval of the Bankruptcy Court at a sale hearing. The Stalking Horse Order provides that the APA constitutes the "Stalking Horse Bid" in an auction for the assets subject to the APA. Any interested qualified bidders must make "Overbids" for these assets by 5:00 p.m. on June 22, 2007, and the auction will take place at 10:00 a.m. on June 27, 2007 or such later time as the Debtors may select. The Bankruptcy Court has scheduled a sale hearing at 2:00 p.m. on June 28, 2007 to approve the sale of the relevant assets. An initial Overbid must exceed the purchase price set forth in the Stalking Horse Bid by 3%, such that the initial Overbid Amount will be $3,862,500 (plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds). Thereafter, successive Overbids must increase by minimum increments of $50,000 (plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds). The Bankruptcy Court has set 4:00 p.m. on June 21, 2007 as the deadline for receiving objections to the sale of the Beattie Plant. There can be no assurance that the Debtors will receive, or the Bankruptcy Court will approve, any Overbids, that the Bankruptcy Court will approve the ultimate asset purchase agreement or that the conditions to closing set forth in the asset purchase agreement will be satisfied. The Debtors intend to continue efforts to sell the Pamplico real property in Florence County, South Carolina. The foregoing is a summary of the Stalking Horse Order and the APA, which summary is qualified in its entirety by the texts of the Stalking Horse Order and the APA, which are attached hereto as Exhibits 99.1 and 99.2. 9.01. Financial Statements and Exhibits. 99.1 Order (A) Approving Delta Mills' Selection of Stanley Atkins as Stalking Horse Bidder for the Beattie Plant; (B) Approving Form and Manner of Notice; (C) Scheduling a Hearing to Consider the Sale of Beattie Plant; and (D) Granting Requested Relief. 99.2 Purchase and Sale Agreement made as of May 18, 2007 by and between Delta Mills, Inc. and Stanley Atkins (excluding certain schedules and exhibits; Debtors will furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DELTA WOODSIDE INDUSTRIES, INC. Date: May 24, 2007 By: /s/ W.H. Hardman, Jr. ------------------------------------------ W.H. Hardman, Jr. Chief Financial Officer Exhibits 99.1 Order (A) Approving Delta Mills' Selection of Stanley Atkins as Stalking Horse Bidder for the Beattie Plant; (B) Approving Form and Manner of Notice; (C) Scheduling a Hearing to Consider the Sale of Beattie Plant; and (D) Granting Requested Relief. 99.2 Purchase and Sale Agreement made as of May 18, 2007 by and between Delta Mills, Inc. and Stanley Atkins (excluding certain schedules and exhibits; Debtors will furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request). EX-99.1 2 a5411664ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ) Chapter 11 ) DELTA MILLS, INC., et al.,(1) ) Case No. 06-11144 (CSS) ) Debtors. ) Jointly Administered ) RE: D.I. 15, 28, 89, 476 ORDER UNDER 11 U.S.C. ss.ss. 105(a) AND 363 AND FEDERAL RULES OF BANKRUPTCY PROCEDURE 2002, 6004 AND 9014 (A) APPROVING DELTA MILLS' SELECTION OF STANLEY ATKINS AS STALKING HORSE BIDDER FOR THE BEATTIE PLANT; (B) APPROVING FORM AND MANNER OF NOTICE; (C) SCHEDULING A HEARING TO CONSIDER THE SALE OF BEATTIE PLANT; AND (D) GRANTING RELATED RELIEF -------------------------------------- This matter came before the Court for hearing on May 18, 2007 (the "Procedures Hearing"), upon the Motion for Order Under 11 U.S.C. ss.ss. 105(a) and 363 and Federal Rules of Bankruptcy Procedure 2002, 6004 and 9014 (A) Approving Delta Mills' Selection of Stanley Atkins as Stalking Horse Bidder for the Beattie Plant; (B) Approving Form and Manner of Notice; (C) Scheduling a Hearing to Consider the Sale of Beattie Plant; and (D) Granting Related Relief (D.I. 476) (the "Motion"),(2) filed on May 16, 2007 by Delta Mills, Inc. ("Delta Mills") with the consent and approval of Delta Woodside Industries, Inc. ("DLWI") and Delta Mills Marketing, Inc. ("Marketing"), debtors and debtors-in-possession in the above-captioned cases (collectively, the "Debtors"); and upon the Declaration of William H. Hardman, Jr. in Support of First Day Relief (D.I. 3) (the "Hardman Declaration"); and upon the First - ----------------- (1) These jointly administered cases are those of the following debtors: Delta Mills, Inc.; Delta Woodside Industries, Inc.; and Delta Mills Marketing, Inc. (2) Capitalized terms used, but not defined, herein shall have the meanings ascribed to them in the Motion. Supplemental Declaration of William H. Hardman, Jr., in Support of First Day Relief (D.I. 79) (the "Hardman Supplemental Declaration"); and upon the Declaration of Joseph M. Brower in Support of Entry of the Order under 11 U.S.C. ss.ss. 105(a), 363 and 365 and Federal Rules of Bankruptcy Procedure 2002, 6004, 6006 and 9014 (I) Approving and Authorizing the Debtors to Proceed with an Orderly Run Out of the Debtors' Business; (II) Approving Procedures for the Sale or Sales of All or Substantially All of the Debtors' Fixed Assets; (III) Establishing Procedures for the Sale of Miscellaneous Assets and (IV) Granting Related Relief (D.I. 80) (the "Brower Declaration"); and upon the Declaration of William F. Garrett in Support of Entry of the Order Under 11 U.S.C. ss.ss. 105(a) and 363 and Federal Rules of Bankruptcy Procedure 2002, 6004 and 9014 (a) Approving Debtors' Selection of Stanley Atkins as Stalking Horse Bidder for the Beattie Plant; (B) Approving Form and Manner of Notice; (C) Scheduling a Hearing to Consider the Sale of the Beattie Plant; and (D) Granting Related Relief (D.I. 478) (the "Garrett Declaration") and the Court having entered the Order Under 11 U.S.C. ss.ss. 105(a), 363, and 365 and Federal Rules of Bankruptcy Procedure 2002, 6004, 6006 and 9014 (I) Approving and Authorizing the Debtors to Proceed With an Orderly Run Out of the Debtors' Business; (II) Approving Procedures for the Sale or Sales of All or Substantially All of the Debtors' Fixed Assets; (III) Establishing Procedures for the Sale of Miscellaneous Assets and (IV) Granting Related Relief (the "Sale Procedures Order") (D.I. 89) on October 31, 2006; and upon the arguments and representations of counsel and the other pleadings and the entire record in these cases, and for good cause shown; and due and sufficient notice of the Motion and the Procedures Hearing having been given and no other or further notice need be provided; it is hereby FOUND, CONCLUDED AND DECLARED THAT:(3) - --------------------- (3) Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as findings of fact when appropriate. See Fed. R. Bankr. P. 7052. 1. Jurisdiction. This Court has jurisdiction over this matter and over the property of the Debtors and their bankruptcy estates pursuant to 28 U.S.C. ss.ss. 157(a) and 1334. 2. This is a core proceeding pursuant to 28 U.S.C. ss. 157(b)(2)(A), (M), (N) and (O). 3. Notice of the Procedures Hearing. Good and sufficient notice of the Motion and the relief sought therein has been given and no other or further notice is required. A reasonable opportunity to object or be heard regarding the relief requested in the Motion has been afforded to parties in interest. No objection has been filed or otherwise received. 4. The Asset Purchase Agreement. Delta Mills, in consultation with the Committee, has selected that certain Purchase and Sale Agreement dated on or about May 16, 2007 by and between Delta Mills, Inc. and Stanley Atkins ("Atkins") (the "APA") attached hereto as Exhibit 1, as the "Stalking Horse Bid" for the Beattie Plant. The Stalking Horse Bid currently represents the best offer received by Delta Mills for the Beattie Plant. 5. Pursuant to the APA, Delta Mills proposes to sell, assign and transfer to Atkins the Beattie Plant free and clear of all liens, claims, interests, and encumbrances other than Permitted Liens (collectively, the "Encumbrances"), with such Encumbrances other than Permitted Liens to attach to the proceeds of the sale. The terms of the Stalking Horse Bid are set forth in the APA and are summarized solely for illustrative purposes as follows: a. Purchase Price. On the Closing Date, the "Purchase Price" shall be $3,750,000.00. b. Assets for Purchase. At the Closing, Delta Mills shall sell, assign, transfer, convey and deliver (or cause to be transferred, sold, assigned, conveyed, and delivered) to Atkins, and Atkins shall purchase and assume from Delta Mills, all of Delta Mills' right, title, and interest in the Beattie Plant. The Beattie Plant is more specifically described in the APA. c. Excluded Assets. Only the Beattie Plant will be purchased by Atkins under the APA. d. Closing. The closing shall occur at 10:00 a.m. (ET) on the fifth (5th) business day following the entry of the Sale Order and satisfaction or waiver of the closing conditions set forth in the APA at the offices of Wyche Burgess Freeman & Parham, P.A., 44 East Camperdown Way, Greenville, South Carolina 29601, or such other place as the parties may mutually agree to in writing. e. Representations and Warranties. Representations are made that are customary in a transaction of this type, as more particularly set forth in the APA. The Debtors expressly disclaim any warranty of merchantability or fitness for a particular purpose and make no warranty, express or implied, as to the nature, quality, value, or condition of any asset. All property shall be taken as is, where is. 6. Solicitation of Initial Bids and Selection of Stalking Horse Bid. The Debtors have been marketing two vacant parcels of land that comprise a portion of the Beattie Plant, through brokers and otherwise, since on or before June 30, 2006. Prior to the Petition Date, they received no acceptable offers from any prospective purchaser. Since the Petition Date, the Debtors have marketed the entire Beattie Plant diligently through the procedures established under the Sale Procedures Order. Without limitation, since the Petition Date, the Debtors have negotiated with interested parties, including, without limitation, Atkins, regarding a possible contract for the purchase of the Beattie Plant. However, since the Petition Date, Atkins's offer to purchase the Beattie Plant is the only acceptable bid received by the Debtors. 7. On or about April 30, 2007 (the "April Board Meeting"), Delta Mills presented the terms of Atkins' proposed contract for the purchase of the Beattie Plant to the Boards of Directors of DLWI, Marketing and Delta Mills (collectively, the "Boards"). At the April Board Meeting, the Board of Directors of Delta Mills, with the approval of the Boards of DLWI and Marketing, determined, in their business judgment, that Atkins' bid represented the highest and best bid received to date for the Beattie Plant and therefore authorized Delta Mills to designate Atkins as the Stalking Horse Bidder for the purchase of the Beattie Plant. 8. While Delta Mills will only transfer certain of its real property assets in a sale pursuant to the APA to Atkins, or pursuant to a Competing APA (as defined in the Overbidding Procedures) to the Successful Bidder, the Debtors continue to intend to sell all or substantially all of their assets. The sale contemplated herein is intended to be one of a series of transactions through which the Debtors will liquidate all or substantially all of their assets as set forth in the Sales Procedures Motion, the Hardman Declaration, the Hardman Supplemental Declaration, and the Brower Declaration. 9. The Debtors have marketed the Beattie Plant and conducted their solicitation of bids in compliance with the Sale Procedures Order in a non-collusive, fair and good faith manner. The execution of the APA was the culmination of a process undertaken by the Debtors and their professionals to negotiate a transaction with a bidder who was prepared to pay the highest or otherwise best purchase price to date for the Beattie Plant in order to maximize the value of the Debtors' estates. 10. The Debtors and the Boards have discharged their duties as debtors-in-possession with respect to seeking a sale of the Beattie Plant by marketing the Beattie Plant diligently, in good faith and in a commercially reasonable manner to secure the highest and best offer or offers therefor by, among other things, (a) complying with the Sale Procedures Order, (b) contacting and inviting potential purchasers to meet with management and the Debtors' professionals, and (c) providing potential purchasers with the opportunity to conduct extensive due diligence. In addition, the Debtors delivered the Sale Procedures Order, the Bidding Procedures, and the Sale Notice (as defined in the Sale Procedures Order) to each of the entities that had expressed an interest in the Debtors' assets either prior to or after the Petition Date. 11. Overbidding Procedures. The Overbidding Procedures, as set forth below, are fair, reasonable, and appropriate and are designed to maximize the recovery on the Beattie Plant. 12. The "Initial Overbid Amount" shall exceed, net of any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant, the Purchase Price by three percent (3%) such that the Initial Overbid Amount will be $3,862,500.00 plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant. Thereafter, Overbids shall increase by a minimum "Overbid Increment" of $50,000.00 plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant. 13. Delta Mills' proposed sale, to either Atkins or another Successful Bidder, of the Beattie Plant under section 363 of the Bankruptcy Code outside the ordinary course of business and prior to the confirmation of a plan of reorganization will best maximize value of the Beattie Plant and is appropriate under the circumstances of these cases as the Debtors have exercised reasonable judgment based on: (a) the Debtors' demonstrated sound business purposes that justify the sale; (b) the accurate and reasonable notice that has been and will be provided to interested persons; (c) the assurance of a fair price being obtained for the Beattie Plant based on the Debtors' extensive marketing efforts prior and subsequent to the Petition Date and the notice being provided to parties in interest; and (d) the Debtors' good faith. 14. The Committee consents to the relief requested in the Motion and granted by this Order. 15. The entry of this Order is in the best interests of the Debtors, their estates, their creditors, and other parties-in-interest; and it is therefore ORDERED, ADJUDGED AND DECREED THAT: A. The relief requested in the Motion is granted. B. All objections to the entry of this Order that have not been withdrawn, waived, resolved, or settled, and all reservations of rights included therein, are hereby denied and overruled on the merits with prejudice. C. Delta Mills' selection of the APA as the "Stalking Horse Bid" for the Beattie Plant is hereby approved. D. The Overbidding Procedures, attached hereto as Exhibit 2 and incorporated by reference herein, are hereby approved and shall apply with respect to the sale of the Beattie Plant. E. The Stalking Horse Notice, in substantially the form attached hereto as Exhibit 3, is approved in all respects. F. Not later than two (2) business days after the entry of this Order, the Debtors will cause the Stalking Horse Notice to be served upon: (a) the Service Parties (as defined below), (b) Atkins and (c) parties, if any, who have filed an objection to the Motion and will be provided to each party having expressed a bona fide interest in acquiring the Beattie Plant. G. A Qualified Bidder that desires to make a bid shall deliver written copies of its bid to: (i) William H. Hardman, Jr., Delta Mills, Inc., at bill.hardman@deltamills.com; (ii) C. Richard Rayburn, Jr., Esq., Rayburn Cooper & Durham, P.A., at rrayburn@rcdlaw.net; (iii) Robert J. Dehney, Esq., Morris, Nichols, Arsht & Tunnell, LLP, at rdehney@mnat.com; (iv) Jonathan N. Helfat, Esq., Otterburg, Steindler, Houston & Rosen, P.C., at jhelfat@oshr.com; (v) Christopher R. Donoho III, Esq., Lovells, LLP, at chris.donoho@lovells.com; (vi) Eric B. Amstutz, Esq., Wyche Burgess Freeman & Parham, P.A., at eamstutz@wyche.com; (vii) William F. Nolan, FTI Consulting, Inc., at william.nolan@fticonsulting.com; and (viii) Leon Szlezinger, Mesirow Financial Consulting, at lszlezinger@mesirowfinancial.com. (the "Service Parties") not later than 5:00 p.m. (ET) on June 22, 2007 (the "Overbid Deadline") and shall comply with the requirements set forth in the Overbidding Procedures for making such bid. H. The "Initial Overbid Amount" shall exceed, net of any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant, the Purchase Price by three percent (3%) such that the Initial Overbid Amount will be $3,862,500.00 plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant. Thereafter, Overbids shall increase by a minimum "Overbid Increment" of $50,000.00 plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant. I. The Debtors shall have the right to reject any and all bids that they believe in their reasonable discretion, and after consultation with the Committee, do not conform with the Overbidding Procedures. Atkins' bid as embodied in the APA is deemed to be a conforming bid. J. Delta Mills may sell the Beattie Plant by conducting an Auction in accordance with the Overbidding Procedures. K. The Auction shall take place at 10:00 a.m. (ET) on June 27, 2007, or such later time as the Debtors shall notify Atkins and all Qualified Bidders who have submitted a Qualified Bid in accordance with the Overbidding Procedures and expressed their intent to participate in the Auction (the "Auction Date"), at the offices of Morris, Nichols, Arsht & Tunnell, LLP, 1201 North Market Street, Wilmington, Delaware 19801, or such other place as the Debtors shall notify Buyer and all Qualified Bidders who have submitted a Qualified Bid and expressed their intent to participate in the Auction. L. On June 28, 2007 at 2:00 p.m. (ET) or as soon thereafter as counsel may be heard, the Sale Hearing will be held before the Honorable Christopher S. Sontchi, United States Bankruptcy Judge, in the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 5th Floor, Courtroom 6, Wilmington, Delaware 19801, to consider the entry of an order, inter alia, approving the sale of the Beattie Plant. M. The Sale Hearing may be adjourned, from time to time, without further notice to creditors or other parties-in-interest other than by announcement of said adjournment before this Court or on this Court's calendar on the date scheduled for said hearing. N. Following the Sale Hearing approving the sale of the Beattie Plant to the Successful Bidder, if any such Successful Bidder fails to consummate an approved sale because of a breach or failure to perform on the part of such Successful Bidder, the Next Highest Bid, if any, as disclosed at the Sale Hearing, will be deemed to be the Successful Bid and Delta Mills will be authorized, but not required, to consummate the sale with the Qualified Bidder submitting the Next Highest Bid without further order of the Court. In such case, the Successful Bidder's Good Faith Deposit shall be forfeited to the Debtors. O. The Objection Deadline shall be June 21, 2007 at 4:00 p.m. (ET). Except to the extent such relief has already been granted by prior order of this Court, all objections to the sale of the Beattie Plant must: (a) be in writing; (b) be signed by counsel or attested to by the objecting party; (c) be filed with the Clerk of the Bankruptcy Court, 824 Market Street, Wilmington, Delaware 19801 on or before the Objection Deadline; and (d) be served so as to be received on or before the Objection Deadline by the above-listed Service Parties. P. As provided by Bankruptcy Rules 6004(g) and 6006(d), this Order shall not be stayed for ten (10) days after the entry thereof and shall be effective and enforceable immediately upon its entry on this Court's docket. Q. This Court shall retain jurisdiction over any matters related to or arising from the implementation of this Order. Dated: Wilmington, Delaware May 18, 2007 /s/ Christopher S. Sontchi ------------------------------------- THE HONORABLE CHRISOPHER S. SONTCHI UNITED STATES BANKRUPTCY JUDGE EXHIBIT 1 PURCHASE AND SALE AGREEMENT --------------------------- [SEE EXHIBIT 99.2 TO DLWI'S FORM 8-K FILED ON MAY 24, 2007] EXHIBIT 2 OVERBIDDING PROCEDURES ---------------------- Within two (2) days after the entry of the Order Granting Motion for Order under 11 U.S.C. ss.ss. 105(a) and 363 and Federal Rules of Bankruptcy Procedure 2002, 6004 and 9014 (A) Approving Debtors' Selection Of Stanley Atkins as Stalking Horse Bidder for the Beattie Plant; (B) Approving Form and Manner of Notice; (C) Scheduling a Hearing to Consider the Sale of Beattie Plant; and (D) Granting Related Relief (the "Beattie Stalking Horse Order"), the Debtors shall distribute a notice of the Auction, along with a copy of the APA (as defined in the Beattie Stalking Horse Order), to all parties who, in the Debtors' discretion, may be interested in participating in the Auction. During the overbidding period, the Debtors will consider any qualifying bids that are higher and better than Stalking Horse Bid (each, an "Overbid"). Ultimate approval of the APA will be subject to the Debtors' consideration of qualified Overbids. Notice of the Beattie Plant sale and the material terms of these Overbidding Procedures shall be published in The State and the Greenville News as soon as practicable, and no less than twenty-five (25) days prior to the Overbid Deadline (as defined below). Moreover, the Debtors and the Committee shall each be authorized to provide the Stalking Horse Notice, the Beattie Stalking Horse Order and other information respecting the Beattie Plant to real estate brokers and listing agencies, and any other parties that they may deem appropriate. Any such broker shall have its brokerage commission in an agreed amount honored if the bid derived from such broker (i) results in a higher and better bid than the Stalking Horse Bid, (ii) is the Successful Bid (as defined below) and (iii) results in a sale of the Beattie Plant pursuant to that Successful Bid. The Debtors propose the following requirements for a Bidder to submit an "Overbid": a. Bid Deadline and Requirements for Overbids An Overbid must be submitted on or before the Overbid Deadline, which is 5:00 p.m. (ET), on June 22, 2007, via electronic mail, to the following: (i) William H. Hardman, Jr., Delta Mills, Inc., at bill.hardman@deltamills.com; (ii) C. Richard Rayburn, Jr., Esq., Rayburn Cooper & Durham, P.A., at rrayburn@rcdlaw.net; (iii) Robert J. Dehney, Esq., Morris, Nichols, Arsht & Tunnell, LLP, at rdehney@mnat.com; (iv) Jonathan N. Helfat, Esq., Otterburg, Steindler, Houston & Rosen, P.C., at jhelfat@oshr.com; (v) Christopher R. Donoho III, Esq., Lovells, LLP, at chris.donoho@lovells.com; (vi) Eric B. Amstutz, Esq., Wyche Burgess Freeman & Parham, P.A., at eamstutz@wyche.com; (vii) William F. Nolan, FTI Consulting, Inc., at william.nolan@fticonsulting.com; and (viii) Leon Szlezinger, Mesirow Financial Consulting, at lszlezinger@mesirowfinancial.com. b. Required Terms An Overbid must, at a minimum, comply with the following requirements: (i) The Overbid must be received by the Overbid Deadline; (ii) The Overbid must clearly state the amount of cash consideration, in U.S. dollars, that the Bidder is prepared to pay for the Beattie Plant. Only cash consideration will be evaluated; the utilization of notes or other instruments to make up a portion of the consideration will be evaluated as providing zero value to the Debtors; (iii) The Initial Overbid Amount shall exceed, net of any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant, the Purchase Price by at least three percent (3%) such that the Initial Overbid Amount will be at least $3,862,500.00 plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant; (iv) Thereafter, Overbids shall increase by a minimum Overbid Increment of $50,000.00 plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant; (v) The Overbid must be in writing and include a copy of the APA as a form, marked-up to show any revisions required by the Qualified Party to consummate the sale (a "Competing APA"), which Competing APA must be acceptable in form and substance to the Debtors, and otherwise be in compliance with the requirements of the Bankruptcy Code and applicable orders of the Bankruptcy Court; (vi) The Overbid must be accompanied by copies of financial statements, letters of credit and/or any other documents or evidence reasonably satisfactory to the Debtors demonstrating the Bidder's ability to consummate the contemplated transaction; (vii) The Overbid must not be conditioned on a Bidder's ability to obtain financing; (viii) The Overbid must not be conditioned on the outcome of the due diligence by such Bidder; (ix) The Overbid must be accompanied by information and assurances satisfactory to the Debtors that the Bidder can obtain all required consents, approvals and licenses to fulfill the terms, conditions and obligations under any and all related agreements; (x) The Overbid must be accompanied by the provision of a certified or bank check, wire transfer, or letter of credit reasonably acceptable to the Debtors in the amount of at least 10% of the amount of the Overbid as a good faith deposit, to be held in escrow and credited to the closing payment if the Bidder is ultimately determined to be the Successful Bidder or to be returned to the bidder otherwise (a "Good Faith Deposit"); (xi) The Overbid must state that it has been approved (subject to stated conditions) by any, and all, governing bodies or investors (e.g., board of directors or minority partners); (xii) The Overbid must state that it is made by the principals of the Bidder, and not by any person acting as agent for another, whether the principals are disclosed or undisclosed; however, a Bidder may appoint a representative to act on its behalf in connection with the Overbid; and (xiii) No Bidder shall be entitled to reimbursement of its costs, expenses or professional fees incurred in connection with the sale and competitive bidding process for the Assets, including formulation and submission of any bid or any due diligence efforts. The Debtors and their advisors, in consultation with the Committee, will evaluate the Overbids submitted and determine whether to deem any such Overbid a "Qualified Bid" and invite the Bidder to participate in the Auction. Overbids will be evaluated on the basis of (i) the indicated purchase price, (ii) the Bidder's financial capacity to consummate a transaction if selected as the Successful Bid, (iii) the extent and type of requested changes to the APA, (iv) the Bidder's ability to expeditiously consummate the transaction if selected as a Successful Bid, and (v) other factors deemed appropriate in the Debtors' discretion, in consultation with the Committee. The Debtors will select those Overbids that they consider to be Qualified Bids on or before the commencement of the Auction, provided, however, that the Debtors, in consultation with the Committee, reserve the right to select such Qualified Bids at an earlier date or to reject any Overbid as insufficient, and provided, further, however, that, if no other Qualified Bid is received (other than that of the Stalking Horse Bidder), the Debtors shall have no obligation to conduct an Auction. In the event Qualified Bids are received, an auction (the "Auction") of the Beattie Plant will be held on June 27, 2007 at 10:00 a.m. (ET) at the offices of Morris Nichols Arsht & Tunnell LLP, 1201 North Market Street, Wilmington, Delaware 19801, or such other location determined by the Debtors, at which Auction the Debtors, in consultation with the Committee, may select the highest and best Qualified Bid for the Beattie Plant as a Successful Bid. ALL SALE(S) SHALL BE SUBJECT TO THE APPROVAL OF THE BANKRUPTCY COURT. Only the Stalking Horse Bidder, parties who submit Qualified Bids prior to the Overbid Deadline, representatives of the Committee, representatives of GMAC, the Debtors, and the professionals of the foregoing shall be entitled to attend and be heard at the Auction. In order to bid at the Auction, all Qualified Parties must be physically present at the Auction, unless otherwise agreed in writing by the Debtors. During the Auction, bidding shall (i) begin with the Qualified Bid of the Stalking Horse Bidder; (ii) continue with the first overbid increment set over and above the Purchase Price, and (iii) continue thereafter in minimum increments higher than or equal to the minimum Overbid Amount. Notwithstanding the foregoing, the Debtors, in consultation with the Committee, shall be permitted, in their sole discretion, to conduct the Auction in any manner they deem proper in their business judgment. Unless otherwise agreed to by the Debtors, in their discretion, all participants will be permitted equal time, to be determined by the Debtors in consultation with the Committee, in which to respond to the previous bid at the Auction and, at the expiration of such time (unless extended), the Auction shall conclude. Prior to concluding the Auction, the Debtors shall (i) review each bid, if any, on the basis of its financial and contractual terms and the factors relevant to the sale process and the best interest of the Debtors' stakeholders, including, without limitation, those factors affecting the speed and certainty of consummating a sale transaction and (ii) in consultation with the Committee, determine and identify the highest or best bid (defined as the "Successful Bid") and the next highest or otherwise best offer, if any, after the Successful Bid (the "Next Highest Bid"). Any bid submitted after the conclusion of the Auction shall not be considered for any purpose. Immediately prior to the adjournment of the Auction, the bidder making the Successful Bid (defined as the "Successful Bidder"), shall complete and sign all agreement(s), contract(s), instrument(s) or other document(s) evidencing and containing the terms and conditions upon which such bid was made, if it has not already done so. The Debtors, in consultation with the Committee, reserve the right to reject at any time prior to the entry of an order of the Bankruptcy Court approving a sale of the Beattie Plant, any offer which the Debtors deems to be (i) inadequate or insufficient, (ii) not in conformity with the requirements of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware, or the terms and conditions of the sale set forth herein, or (iii) contrary to the best interests of the Debtors, their estates, and their creditors. The Debtors will have no obligation to accept or submit for Bankruptcy Court approval any offer presented prior to or at the Auction. The Sale Hearing - ---------------- (A) The hearing on the approval of the sale of the Beattie Plant (the "Sale Hearing") to the Successful Bidder shall be conducted by the Bankruptcy Court on June 28, 2007 at 2:00 p.m. (ET) or at such other time as the Bankruptcy Court permits. The Objection Deadline is June 21, 2007 at 4:00 p.m. (ET). (B) Subject to Bankruptcy Court approval following the Auction, the Successful Bidder shall purchase the Beattie Plant, free and clear of all liens, claims and encumbrances, (having purchased the Beattie Plant, the "Purchaser"). (C) Following the Sale Hearing approving the sale of the Beattie Plant to the Successful Bidder, if a Successful Bidder fails to consummate an approved sale because of a breach or failure to perform on the part of such Successful Bidder, the next highest or otherwise best Qualified Bid, as disclosed at the Sale Hearing, will be deemed to be the Successful Bid and Delta Mills will be authorized, but not required, to consummate the sale with the Qualified Bidder submitting such bid without further order of the Bankruptcy Court. In such case, the Successful Bidder's Good Faith Deposit shall be forfeited to the Debtors. (D) Any sale of the Beattie Plant shall be without representation or warranties of any kind, nature or description by the Debtors, their agents or their estates, except as provided in the purchase agreement between the Debtors and the Purchaser. The sale of the Beattie Plant shall be transferred "as is." THE DEBTORS EXPRESSLY DISCLAIM ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE NATURE, QUALITY, VALUE OR CONDITION OF THE BEATTIE PLANT. Procedures Governing Good Faith Deposits - ---------------------------------------- (A) All Good Faith Deposits shall be subject to the jurisdiction of the Bankruptcy Court and, as applicable, shall be credited to the purchase price at the closing of the sale or shall be returned by the Debtors as soon as reasonably practicable after the closing of the sale; provided, however, that if a Successful Bidder fails to consummate an approved sale because of a breach or failure to perform on the part of such Successful Bidder, such Successful Bidder's Good Faith Deposit shall be forfeited to the Debtors. (B) All Good Faith Deposits shall be held, subject to the provisions of the Sale Procedures Order and these Bidding Procedures, by counsel for the Debtors or, in the Debtors' discretion, by a third-party escrow agent (either, a "Custodian") in a segregated non-interest bearing bank account. In the event of a dispute concerning the Debtors' right to retain any Good Faith Deposit, the Custodian shall have no liability to any bidder for the failure to return such Good Faith Deposit to the bidder, and the bidder's sole remedy shall be to seek relief from the Bankruptcy Court to compel the return of the Good Faith Deposit; provided, however, that nothing in the Sale Procedures Order or these Bidding Procedures shall waive, release or restrict any right or remedy of any person arising from the wrongful disbursement or loss of any Good Faith Deposit. Reservation of Rights - --------------------- The Debtors reserve their rights to: (i) impose at or before the Auction such other and additional terms and conditions as may be in the interest of the Debtors, their estates and creditors (so long as such terms are not materially inconsistent with the terms of the Sale Procedures Order or the Beattie Stalking Horse Order); (ii) extend the deadlines set forth in the Sale Procedures Order, the Beattie Stalking Horse Order, and/or these Bidding Procedures; (iii) adjourn the Auction at or before the Auction; (iv) adjourn the Sale Hearing without further notice by making an announcement in open court or by the filing of a hearing agenda pursuant to Bankr. D. Del. L.R. 9029-3; and (v) withdraw from the Auction the Beattie Plant at any time prior to or during the Auction or cancel the Auction. EXHIBIT 3 STALKING HORSE NOTICE --------------------- PLEASE TAKE NOTICE: 1. Chapter 11 Petitions. On October 13, 2006, Delta Mills, Inc. ("Delta Mills"), Delta Woodside Industries, Inc. ("DLWI") and Delta Mills Marketing, Inc. ("Marketing" and, together with Delta Mills, the "Debtors"), debtors and debtors-in-possession, filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (as amended, the "Bankruptcy Code"), in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). 2. The Sale Motion. On October 13, 2006, the Debtors filed the Motion for Order under 11 U.S.C. ss.ss. 105(a), 363, 365, and 1146(c) and Federal Rules of Bankruptcy Procedure 2002, 6004, 6006 and 9014 (A) Approving (I) Initial Bidding Procedures, (II) Overbidding Procedures, (III) Auction Procedures; (B) Approving Notice Procedures for (I) The Solicitation of Bids, (II) an Auction and (III) the Assumption and Assignment of Contracts and Leases; (C) Scheduling Hearings on Approval of (I) Bid Protections for a Stalking Horse Bidder, (II) a Sale or Sale of Substantially All of Debtors' Assets and (III) Miscellaneous Assets Sales, and (C) Granting Related Relief (D.I. 15) (the "Sale Motion"). 3. The Sale Procedures Order. On October 31, 2006, the Bankruptcy Court entered an Order (D.I. 89) (the "Sale Procedures Order") which, inter alia, (a) authorizes the Debtors to continue to run out their businesses (to finish and sell inventory), liquidate their assets in an orderly fashion and continue to solicit bids for the purchase of their assets pursuant to one or more sale transactions and (b) approved certain bidding procedures for conducting a sale or sales by auction of some or all of the assets and miscellaneous asset sale procedures for other sale transactions. 4. The Stalking Horse Motion. On May 16, 2007, the Debtors filed the Motion for Order under 11 U.S.C. ss.ss. 105(a) and 363 and Federal Rules of Bankruptcy Procedure 2002, 6004 and 9014 (A) Approving Delta Mills' Selection of Stanley Atkins as Stalking Horse Bidder for the Beattie Plant; (B) Approving Form and Manner of Notice; (C) Scheduling a Hearing to Consider the Sale of Beattie Plant; and (D) Granting Related Relief (D.I. 476) (the "Stalking Horse Motion"). 5. The Stalking Horse Order. On May 18, 2007, the Bankruptcy Court entered an Order (D.I. 495) (the "Stalking Horse Order") which, inter alia, approved the Debtors' selection of the Stalking Horse Bid(4) and scheduled the Sale Hearing to consider the sale of the Beattie Plant. A copy of the Stalking Horse Order is attached hereto as Exhibit A. 6. The Stalking Horse Bidder and the Stalking Horse APA. The Debtors, in consultation with the Committee, have selected that certain asset purchase agreement (the "APA") between Stanley Atkins and Delta Mills as the Stalking Horse Bid. The terms of the Stalking Horse Bid are set forth in the APA attached to the Stalking Horse Order. 7. Overbidding Procedures. The Bankruptcy Court has approved the following requirements for a Bidder to submit an Overbid: (a) Within two (2) days after the entry of the Stalking Horse Order, the Debtors shall distribute a notice of the Auction, along with a copy of the APA, to all parties who, in the Debtors' discretion, may be interested in participating in the Auction. During the overbidding period, the Debtors will consider any qualifying bids that are higher and better than the Stalking Horse Bid (each, an "Overbid"). Ultimate approval of the APA will be subject to the Debtors' consideration of qualified Overbids. - -------- (1) Capitalized terms used, but not otherwise defined, herein shall have the meanings set forth in the Stalking Horse Motion. Notice of the Beattie Plant sale and the material terms of these Overbidding Procedures shall be published in The State and the Greenville News as soon as practicable, and no less than twenty-five (25) days prior to the Overbid Deadline (as defined below). Moreover, the Debtors and the Committee shall each be authorized to provide the Stalking Horse Notice, the Beattie Stalking Horse Order and other information respecting the Beattie Plant to real estate brokers and listing agencies, and any other parties that they may deem appropriate. Any such broker shall have its brokerage commission in an agreed amount honored if the bid derived from such broker (i) results in a higher and better bid than the Stalking Horse Bid, (ii) is the Successful Bid (as defined below) and (iii) results in a sale of the Beattie Plant pursuant to that Successful Bid. (b) Bid Deadline and Requirements for Overbids. An Overbid must be submitted on or before the Overbid Deadline, which is 5:00 p.m. (ET), on June 22, 2007, via electronic mail, to the following: (i) William H. Hardman, Jr., Delta Mills, Inc., at bill.hardman@deltamills.com; (ii) C. Richard Rayburn, Jr., Esq., Rayburn Cooper & Durham, P.A., at rrayburn@rcdlaw.net; (iii) Robert J. Dehney, Esq., Morris, Nichols, Arsht & Tunnell, LLP, at rdehney@mnat.com; (iv) Jonathan N. Helfat, Esq., Otterburg, Steindler, Houston & Rosen, P.C., at jhelfat@oshr.com; (v) Christopher R. Donoho III, Esq., Lovells, LLP, at chris.donoho@lovells.com; (vi) Eric B. Amstutz, Esq., Wyche Burgess Freeman & Parham, P.A., at eamstutz@wyche.com; (vii) William F. Nolan, FTI Consulting, Inc., at william.nolan@fticonsulting.com; and (viii) Leon Szlezinger, Mesirow Financial Consulting, at lszlezinger@mesirowfinancial.com. (c) Required Terms. An Overbid must, at a minimum, comply with the following requirements: 2 (i) The Overbid must be received by the Overbid Deadline; (ii) The Overbid must clearly state the amount of cash consideration, in U.S. dollars, that the Bidder is prepared to pay for the Beattie Plant. Only cash consideration will be evaluated; the utilization of notes or other instruments to make up a portion of the consideration will be evaluated as providing zero value to the Debtors; (iii) The Initial Overbid Amount shall exceed, net of any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant, the Purchase Price by at least three percent (3%) such that the Initial Overbid Amount will be at least $3,862,500.00 plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant; (iv) Thereafter, Overbids shall increase by a minimum Overbid Increment of $50,000.00 plus any applicable brokers' fees or other similar costs of the sale payable from the proceeds of the Beattie Plant; (v) The Overbid must be in writing and include a copy of the APA as a form, marked-up to show any revisions required by the Qualified Party to consummate the sale (a "Competing APA"), which Competing APA must be acceptable in form and substance to the Debtors, and otherwise be in compliance with the requirements of the Bankruptcy Code and applicable orders of the Bankruptcy Court; (vi) The Overbid must be accompanied by copies of financial statements, letters of credit and/or any other documents or evidence reasonably satisfactory to the Debtors demonstrating the Bidder's ability to consummate the contemplated transaction; (vii) The Overbid must not be conditioned on a Bidder's ability to obtain financing; (viii) The Overbid must not be conditioned on the outcome of the due diligence by such Bidder; (ix) The Overbid must be accompanied by information and assurances satisfactory to the Debtors that the Bidder can obtain all required consents, approvals and licenses to fulfill the terms, conditions and obligations under any and all related agreements; (x) The Overbid must be accompanied by the provision of a certified or bank check, wire transfer, or letter of credit reasonably acceptable to the Debtors in the amount of at least 10% of the amount of the Overbid as a good faith deposit, to be held in escrow and credited to the closing payment if the Bidder is ultimately determined to be the Successful Bidder or to be returned to the bidder otherwise (a "Good Faith Deposit"); 3 (xi) The Overbid must state that it has been approved (subject to stated conditions) by any, and all, governing bodies or investors (e.g., board of directors or minority partners); (xii) The Overbid must state that it is made by the principals of the Bidder, and not by any person acting as agent for another, whether the principals are disclosed or undisclosed; however, a Bidder may appoint a representative to act on its behalf in connection with the Overbid; and (xiii) No Bidder shall be entitled to reimbursement of its costs, expenses or professional fees incurred in connection with the sale and competitive bidding process for the Assets, including formulation and submission of any bid or any due diligence efforts. 7. Overbid Deadline. The deadline by which all Overbids must be submitted is June 22, 2007, at 5:00 p.m. (ET). 8. Auction. An auction for the sale of the assets for purchase set forth in the APA will be held on June 27, 2007, at 10:00 a.m. (ET), at the offices of Wyche Burgess Freeman & Parham, P.A., 44 East Camperdown Way, Greenville, South Carolina 29601. 9. Sale Hearing. The Bankruptcy Court has scheduled the Sale Hearing for June 28, 2007, at 2:00 p.m. (ET) and will be held at the United States Bankruptcy Court for the District of Delaware, 824 Market Street, Fifth Floor, Courtroom 6, Wilmington, Delaware 19801. 10. Adjournment of Hearings. The Debtors may adjourn the Sale Hearing one or more times without further notice by making an announcement in open Court or by the filing of a hearing agenda pursuant to Bankr. D. Del. L.R. 9029-3 announcing the adjournment. 11. Objection Deadline. Except to the extent such relief has already been granted by prior order of this Court, all objections to the sale of the Beattie Plant must: (a) be in writing; (b) be signed by counsel or attested to by the objecting party; (c) be filed with the Clerk of the Bankruptcy Court, 824 Market Street, Wilmington, Delaware 19801 on or before June 21, 2007 at 4:00 p.m. (ET) (the "Objection Deadline"); and (d) be served so as to be received on or before the Objection Deadline by the Objection Notice Parties. 12. Documents. Copies of the Sale Motion, the Sale Procedures Order, the Stalking Horse Order, the APA and the Overbidding Procedures may be examined by interested parties between the hours of 8:00 a.m. and 3:00 p.m. (ET) at the office of the Clerk of the Court, 824 Market Street, Wilmington, Delaware 19801, or by appointment during regular business hours at the offices of the Debtor's attorneys: Morris, Nichols, Arsht & Tunnell LLP, 1201 N. Market Street, 18th Floor, Wilmington, Delaware 19801 (Attn: Gregory T. Donilon, Esq., Ph: (302) 658-9200). Additionally, copies of the foregoing may be downloaded from the Court's docket at www.deb.uscourts.gov or the website of the Debtors' noticing agent, Bankruptcy Services, LLC, at www.bsillc.com. Dated: May 22, 2007 Wilmington, Delaware MORRIS, NICHOLS, ARSHT & TUNNELL -------------------------------- Robert J. Dehney (No. 3578) Gregory T. Donilon, Esq. (No. 4244) 1201 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 4 - and - RAYBURN COOPER & DURHAM, P.A. C. Richard Rayburn John R. Miller, Jr. Shelley K. Abel Suite 1200, The Carillon 227 West Trade Street Charlotte, NC 28202 (704) 334-0891 Counsel for Delta Mills, Inc., et al., Debtors and Debtors-in-Possession 5 EX-99.2 3 a5411664ex99_2.txt EXHIBIT 99.2 Exhibit 99.2 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT is made as of May 18, 2007 by and among Delta Mills, Inc., a Delaware corporation ("Seller"), and Stanley Atkins ("Purchaser"). RECITALS 1. Seller is a debtor and debtor-in-possession under chapter 11 of title 11 of the United States Code, 11 U.S.C. ss.ss. 101-1330 (as amended, the "Bankruptcy Code"), having commenced a voluntary case (No. 06-11144 (CSS) (Jointly Administered)) (the "Bankruptcy Cases")(1) on October 13, 2006 (the "Petition Date") in the United States Bankruptcy Court for the District of Delaware (the "U.S. Bankruptcy Court"); 2. Pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code, Seller continues to manage its properties and is administering its estate created by Section 541 of the Bankruptcy Code on the Petition Date (the "Estate"); 3. The board of directors of Seller has determined that, subject to (i) the conduct of a full, fair and open Auction, (ii) notice to all creditors of Seller and (iii) approval of the transactions contemplated by this Agreement by the U.S. Bankruptcy Court pursuant to Section 363 of the Bankruptcy Code, it is in the best interest of such Estate and the beneficiaries of the Estate to consummate the transactions contemplated by this Agreement, upon the terms and conditions set forth herein; 4. The board of directors or other managing authority of Purchaser has determined that it is advisable and in the best interests of its stockholders, members or other equityholders, as applicable, to consummate, and has approved, the transactions contemplated by this Agreement, upon the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants, agreements and conditions herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: - --------------------------- (1) The jointly administered cases are those of Seller, Delta Mills Marketing, Inc., a Delaware corporation and a wholly-owned subsidiary of Seller ("Delta Marketing"), and Delta Woodside Industries, Inc., a South Carolina corporation and the parent of Seller (collectively with Seller and Delta Marketing, the "Debtors"). ARTICLE I SALE OF ASSETS; CLOSING ----------------------- 1.1 Transferred Assets; Excluded Assets. (a) Transferred Assets. Upon the terms and conditions set forth in this Agreement, Seller will sell, transfer, convey, assign and deliver to Purchaser, free and clear of all Liens other than Permitted Liens, and Purchaser will purchase and pay for, at the Closing, all of Seller's right, title and interest in, to and under the owned real property listed in Section 1.1(a) of Seller's Disclosure Schedule (the "Property"), and all of the rights arising out of the ownership thereof or appurtenant thereto, together with all buildings, structures, facilities, fixtures and other improvements thereto, as the same shall exist on the Closing Date (collectively, the "Transferred Assets"). (b) Excluded Assets. Notwithstanding anything in this Agreement to the contrary, the Assets and Properties of Seller other than the Transferred Assets shall be excluded from the transfer to Purchaser under Section 1.1(a) (collectively, the "Excluded Assets"). 1.2 Rights and Obligations to Michael Fox International, Inc. Purchaser agrees and acknowledges that from the Closing until July 31, 2007 (the "Fox Termination Date"), the Purchaser (a) authorizes Michael Fox International, Inc. ("Fox) to enter and use the Property for the purposes of - (i) storing the machinery, equipment, spare parts and other tangible personal property (excluding heating, ventilating, air conditioning and other fixtures) that are located on the Property (the "Fox Assets"), (ii) preparing for and conducting one or more public auction(s) and/or private sale(s) of the Fox Assets thereupon (collectively, the "Resale"), and (iii) otherwise exhibiting the Fox Assets. The Purchaser agrees to provide at Purchaser's sole expense (i) adequate utilties to the Property to allow Fox to demonstrate and exhibit the Fox Assets to prospective purchasers thereof and to conduct the Resale, and (ii) the same level of security that is being provided for the Fox Assets prior to Closing. 1.3 Fox Rental Stream; Removal of Fox Assets. From June 13, 2007 until July 31, 2007 (the "Rental Period"), Fox has agreed to pay rent computed at Two Dollars ($2.00) per annum (i.e. $0.0385 per week) per square foot for each week of Fox's occupancy as described in Section 1.2. Following the Rental Period, the Purchaser, in its sole discretion, may permit Fox to continue to occupy such portion of the Property, upon such terms and conditions as shall be mutually agreed between Fox and Purchaser. Upon the Fox Termination Date, or any extension thereof, if any Fox Assets remain on the Property, then the Purchaser shall provide the Seller reasonable access to enter and remove, within thirty (30) days, such remaining Fox Assets from the Property. 1.4 Purchase Price; Adjustment. (a) Purchase Price. Purchaser hereby agrees to purchase the Transferred Assets from Seller and to pay to Seller the Total Purchase Price. The "Total Purchase Price" shall mean (i) an amount equal to Three Million Seven Hundred and Fifty Thousand Dollars ($3,750,000.00) (the "Initial Purchase Price"), (ii) plus or minus, as appropriate, any prorated charges payable at the Closing pursuant to Section 1.4(b). At the Closing, Purchaser will pay the Total Purchase Price (with a deduction for the amount of the Deposit) by wire transfer of immediately available United States funds to the Estate on behalf of Seller. 2 (b) Proration of Charges. The Initial Purchase Price shall be increased or decreased, as the case may be, by the net amount calculated as being for the account of Purchaser or Seller, as appropriate, in connection with the the Transferred Assets after netting of the following adjustments: (i) the pro-rata share accrued as of the Effective Time of bills for utility charges (electricity, water, sewer and natural gas), (ii) real property Taxes, (iii) garbage collection, (iv) rent and (v) other customarily proratable items. The Security Deposits and any other deposits made by or on behalf of Seller in connection with utilities or telephone service or like services or Taxes associated with such Transferred Assets shall be an adjustment in favor of Seller. The adjustments referred to in this Section 1.4(b) shall reflect, in accordance with GAAP, the principle that all expenses and income attributable to the period at or after the Effective Time are for the account of Purchaser and all expenses and income attributable to the period before the Effective Time are for the account of Seller. (c) Deposit. Simultaneously with the execution of this Agreement, Purchaser shall pay or cause to be paid the Deposit to the Deposit Agent, which Deposit will be held in escrow in accordance with the provisions of the Deposit Agreement. At Closing, the Deposit Agent shall pay the Deposit to Seller (or to the closing attorney for the benefit of Seller), and the Deposit shall be credited against the Total Purchase Price. 1.5 The Closing. (a) Closing. Unless this Agreement shall have been terminated pursuant to Section 8.1, and subject to the satisfaction or waiver (where applicable) of the conditions set forth in Articles VI and VII, the closing of the transactions contemplated by this Agreement (the "Closing") will take place at the offices of Wyche Burgess Freeman & Parham, P.A., 44 East Camperdown Way, Greenville, South Carolina 29601, at 10:00 a.m., local time, on the fifth Business Day following satisfaction of the conditions set forth in Sections 6.5, 6.6, 7.5, and 7.6 unless another date, time or place is mutually agreed to in writing by the parties hereto (the "Closing Date"). The Closing shall be effective as of 12:01 a.m. on the Closing Date (the "Effective Time"). (b) Closing Deliveries. Simultaneously with Purchaser's delivery of the Initial Purchase Price, as adjusted, at the Closing in accordance with Section 1.4(a), Seller will convey to Purchaser all of its right, title and interest in, to, and under the Transferred Assets, free and clear of all Liens other than Permitted Liens, by delivery to Purchaser of (A) a limited warranty deed sufficient for recording and otherwise conveying title to the Transferred Assets and (B) such other instruments of conveyance, assignment and transfer sufficient to vest in Purchaser Seller's title to the Transferred Assets transferred under Section 1.1 (c) At the Closing, there shall also be delivered to Seller and Purchaser the certificates and other documents required to be delivered under Articles VI and VII. 3 1.6 Post-Closing Access to Books and Records. (a) Following the Closing, each party will afford the other party and its Representatives, during normal business hours, reasonable access to its Assets and Properties, Books and Records and other data relating to the Transferred Assets in its possession, custody or control and the right to make copies and extracts therefrom, to the extent that such access may be reasonably required by the requesting party in connection with (i) the preparation of Tax Returns, (ii) compliance with the requirements of any Governmental or Regulatory Authority, (iii) the determination or enforcement of the rights and obligations of any party to this Agreement or any of the Operative Agreements, (iv) the completion of the Bankruptcy Cases, (v) any reports, filings, responses, claims, adversary proceedings or other matters before the U.S. Bankruptcy Court or (v) any actual or threatened Action or Proceeding. (b) If, in order for a party to prepare properly, or to fulfill its obligations under, its financial statements, its Tax Returns or other documents or reports required to be filed with Governmental or Regulatory Authorities, it is necessary that such party be furnished with additional information, documents or records relating to the Transferred Assets not referred to in Section 1.6(a) above, and such additional information, documents or records are in the possession, custody or control of another party hereto, the parties hereby agree that, upon request and, in each case, at the requesting party's cost and expense, such other party shall use commercially reasonable efforts to furnish or make available to the requesting party such additional information, documents or records (or copies thereof); provided that any information obtained by Purchaser in accordance with this Section 1.6(b) shall be held in confidence by Purchaser in accordance with the provisions of Section 5.4 as if Section 5.4 survived the Closing. (c) Notwithstanding anything to the contrary contained in this Section 1.6(c), if the parties are in an adversarial relationship in litigation or arbitration concerning a specific matter, the furnishing of information, documents or records concerning such litigation or arbitration in accordance with Sections 1.6(a) and (b) shall be subject to applicable rules relating to discovery. 1.7 Insurance Proceeds. If any of the Transferred Assets that otherwise would have been transferred to Purchaser pursuant to this Agreement are destroyed or damaged or taken in condemnation after the date hereof and prior to the Closing, Seller shall promptly give notice of the same to Purchaser. Purchaser shall have the right, exercisable by giving notice of such decision to Seller within five (5) days after receipt of such notice of damages, destruction or condemnation proceedings to terminate this Agreement. If Purchaser does not elect to terminate this Agreement, then Seller shall cause all necessary repairs or restoration to such Transferred Assets to be made promptly, but only to the extent of any insurance proceeds that have been received by Seller with respect to such Transferred Assets, to the extent that such repairs or restoration can be performed prior to Closing. If any such insurance proceeds or condemnation award is received by Seller after the Closing, Seller shall forthwith pay to Purchaser the amount of such insurance proceeds or condemnation award so received less, in the case of insurance proceeds, the amount actually expended by Seller to perform any repair or restoration of the Transferred Assets in connection with any such destruction, damage or taking thereof prior to the Closing. 4 1.8 1031 Exchange. The Purchaser at his election may, prior to the Closing, assign his rights under this Agreement in order to effectuate a like-kind exchange of property under Section 1031 of the Internal Revenue Code 1986 as amended. Seller agrees to execute any documents as are reasonably necessary, and requested by Purchaser, in connection with such exchange. No such assignment shall, however, relieve Purchaser of any of his obligations under this Agreement, all of which obligations shall remain in full force and effect notwithstanding such assignment. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER Except as set forth in Seller's Disclosure Schedule delivered by Seller to Purchaser concurrently with the execution and delivery of this Agreement ("Seller's Disclosure Schedule"), Seller represents and warrants to Purchaser that as of the date hereof: 2.1 Corporate Existence. Subject to the effect of the commencement and continuance of the Bankruptcy Cases, Seller is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware, and has all requisite corporate power and authority to own, use and lease its Assets and Properties. 2.2 Authority. Subject to the approval of the U.S. Bankruptcy Court, Seller has the requisite corporate power and authority to execute and deliver this Agreement, the Deposit Agreement and each of the Operative Agreements to which it shall be a party, to perform its obligations hereunder and thereunder and, upon the approval of the U.S. Bankruptcy Court, to consummate the transactions contemplated hereby and thereby. Subject to the approval of the U.S. Bankruptcy Court, the execution and delivery by Seller of this Agreement, the Deposit Agreement and the Operative Agreements and the performance by Seller of its obligations hereunder and thereunder, have been duly and validly authorized by Seller, and, upon the approval of the U.S. Bankruptcy Court, no other corporate action on the part of Seller or its stockholders shall be necessary. Subject to the entry of the Final Procedures Order of the U.S. Bankruptcy Court approving the Bidding Procedures (as to the provisions of this Agreement covered thereby) or other Order of the U.S. Bankruptcy Court (as to the other provisions of this Agreement), this Agreement and the Deposit Agreement have been duly and validly executed and delivered by Seller and constitute, and upon the execution and delivery by Seller of the Operative Agreements, the Operative Agreements will constitute, the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law). 2.3 No Conflicts. The execution and delivery by Seller of this Agreement and the Deposit Agreement do not, and the execution and delivery by Seller of each of the Operative Agreements to which Seller shall be a party, the performance by Seller of its obligations hereunder and thereunder, and the consummation of the transaction contemplated hereby and thereby, will not: 5 (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the Charter Documents of Seller; (b) assuming that all consents, approvals and notices contemplated by Section 2.4 have been obtained and all filings described in such section have been made, result in a violation or breach of any term or provision of any Law or Order applicable to Seller, or any of the Transferred Assets, other than violations or breaches (i) that would not materially and adversely affect the validity or enforceability of this Agreement or (ii) that would occur solely as a result of the identity or the legal or regulatory status of Purchaser or any of its Affiliates; or (c) assuming that all consents, approvals and notices contemplated by Section 2.4 have been obtained and all filings described in such section have been made, except as would not materially and adversely affect the ability of Seller to consummate the transactions contemplated by this Agreement, the Deposit Agreement or any of the Operative Agreements to which Seller is a party, or to perform its obligations hereunder or thereunder, (i) result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require Seller to obtain any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, (iv) result in or give to any Person any right of termination, cancellation, acceleration or modification in or with respect to, or (v) result in the creation or imposition of any Lien other than Permitted Liens upon any Transferred Asset under, any Contract or License to which Seller, or by which any Transferred Asset, is bound. 2.4 No Consents. No consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority or any other Person is required to be obtained by Seller in connection with the execution, delivery and performance of this Agreement, the Deposit Agreement or any of the Operative Agreements, or the consummation of the transactions contemplated hereby or thereby, except (a) consents, approvals or actions of and filings with or notice to the U.S. Bankruptcy Court, (b) consents, approvals, actions or filings as would be required solely as a result of the identity or the legal or regulatory status of Purchaser or any of its Affiliates, (c) consents, approvals or notices set forth Section 2.4 of Seller's Disclosure Schedule and (d) where the failure to obtain any such consent, approval or action, to make any such filing or to give any such notice would not (A) materially and adversely affect the ability of Seller to consummate the transactions contemplated by this Agreement, the Deposit Agreement or any of the Operative Agreements, or to perform its obligations hereunder or thereunder or (B) materially and adversely affect the Transferred Assets. 2.5 Legal Proceedings. Except as set forth in Schedule 2.5 of Seller's Disclosure Schedule and for Claims, other than the Bankruptcy Cases, which will be liquidated and treated pursuant to an Order of the U.S. Bankruptcy Court, there are no Actions or Proceedings pending or, to the Knowledge of Seller, threatened against, relating to or affecting, Seller with respect to the Transferred Assets that would reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement, the Deposit Agreement or any of the Operative Agreements. 6 2.6 Compliance with Laws and Orders. No Seller is in violation of, or in default under, any Law or Order applicable to the Transferred Assets the effect of which would materially and adversely affect the ability of Seller to consummate the transactions contemplated by this Agreement. Seller has complied in all material respects with all applicable Laws and Orders applicable to the Bankruptcy Cases. 2.7 Taxes. To the Knowledge of Seller, Purchaser will not be required to deduct or withhold any amount in connection with the transactions contemplated by this Agreement by reason of the domicile of Seller, including pursuant to Section 1445(a) of the Code. 2.8 Title to Transferred Assets. Except as set forth in Section 2.9 of Seller's Disclosure Schedule, Seller has good and marketable title to its Assets and Properties that comprise the Transferred Assets, free and clear of any Liens other than Permitted Liens or Liens that will be released and transferred to the proceeds of the Transferred Assets pursuant to an Order of the U.S. Bankruptcy Court at or prior to the Closing. 2.9 Insurance. All material insurance policies owned by or issued to Seller with respect to the Transferred Assets, including policies for title, fire, property damage or other casualties, are in full force and effect. 2.10 Brokers' Fees. Seller has no liability or obligation to pay any fees or commissions to any broker or finder with respect to the transactions contemplated by this Agreement for which Purchaser could become liable or obligated. 2.11 Disclaimer of other Representations and Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE II, SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF THE TRANSFERRED ASSETS, ITS OTHER ASSETS OR ITS LIABILITIES OR OPERATIONS, INCLUDING WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. Purchaser hereby acknowledges and agrees that, except to the extent specifically set forth in this Article II, Purchaser is purchasing the Transferred Assets on an "AS-IS, WHERE-IS" basis and is relying on its own investigation and analysis in entering into this Agreement and consummating the transactions contemplated hereby. Without limiting the generality of the foregoing, Seller makes no representation or warranty, and none shall be implied at law or in equity, regarding any assets other than the Transferred Assets, any information or documents made available to Purchaser or its Representatives with respect to Seller or any of the Transferred Assets or the value of any of the Transferred Assets. 7 ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER Except as set forth in the Disclosure Schedule delivered by Purchaser to Seller concurrently with the execution and delivery of this Agreement (the "Purchaser's Disclosure Schedule"), Purchaser represents and warrants to Seller that as of the date hereof: 3.1 Authority. Purchaser has the power and authority, as applicable, to execute and deliver this Agreement, the Deposit Agreement and each of the Operative Agreements to which he shall be a party, and to perform his obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Purchaser of this Agreement, the Deposit Agreement and the Operative Agreements to which he shall be a party, and the performance by Purchaser of his obligations hereunder and thereunder, have been duly and validly authorized by Purchaser. This Agreement and the Deposit Agreement have been duly executed and delivered by Purchaser and constitute, and upon the execution and delivery by Purchaser of the Operative Agreements to which he is a party, such Operative Agreements will constitute, legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors' rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law). 3.2 No Conflicts. The execution and delivery by Purchaser of this Agreement and the Deposit Agreement do not, and the execution and delivery by Purchaser of the Operative Agreements to which he shall be a party, the performance by Purchaser of his obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby will not: (a) assuming that all consents, approvals and notices contemplated by Section 3.3 have been obtained and all filings described in such section have been made, result in a violation or breach of any term or provision of any Law or Order applicable to Purchaser or any of his Assets and Properties, other than such violations or breaches as would occur solely as a result of the legal or regulatory status of Seller or any of its Affiliates; or (b) assuming that all consents, approvals and notices contemplated by Section 3.3 have been obtained and all filings described in such section have been made, except as would not adversely affect the ability of Purchaser to consummate the transactions contemplated by this Agreement, the Deposit Agreement or any of the Operative Agreements to which he shall be a party, or to perform his obligations hereunder or thereunder, (i) result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require Purchaser to obtain any consent, approval or action of, make any filing with, or give any notice to, any Person as a result or under the terms of, (iv) result in, or give to any Person, any right of termination, cancellation, acceleration or modification in or with respect to or (v) result in the creation or imposition of any Lien other than Permitted Liens upon Purchaser or any of his Assets and Properties under, any Contract or License to which Purchaser or any of his Assets and Properties is bound. 8 3.3 No Consents. No consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority or any other Person is required to be obtained by Purchaser in connection with the execution, delivery and performance of this Agreement, the Deposit Agreement or any of the Operative Agreements or the consummation of the transactions contemplated hereby or thereby, except (a) consents, approvals or actions of, and filings with or notices to the U.S. Bankruptcy Court, (b) consents, approvals, actions or filings as would be required solely as a result of the legal or regulatory status of Seller or any of his Affiliates, (c) consents, approvals or notices set forth Section 3.3 of Purchaser's Disclosure Schedule and (d) where the failure to obtain any such consent, approval or action, to make any such filing or to give any such notice would not adversely affect Purchaser in any material respect or the ability of Purchaser to consummate the transactions contemplated by this Agreement, the Deposit Agreement or any of the Operative Agreements or to perform his obligations hereunder or thereunder. 3.4 Legal Proceedings. Except for the Bankruptcy Cases, there are no Actions or Proceedings pending or, to the Knowledge of Purchaser, threatened against, relating to or affecting, Purchaser or any of his Assets and Properties that would reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement, the Deposit Agreement or any of the Operative Agreements. 3.5 Financing. Purchaser has, and at the Closing will have, sufficient cash to pay the Total Purchase Price and to make all other necessary payments of fees and expenses in connection with the transaction contemplated by this Agreement, the Deposit Agreement and the Operative Agreements. Section 3.5 of Purchaser's Disclosure Schedule accurately sets forth the source of Purchaser's funds to pay the Total Purchase Price and make such payments at the Closing. Purchaser understands that evidence of adequate funds to consummate the Closing contemplated herein may be submitted to the U.S. Bankruptcy Court as part of the submittal process seeking such court's approval of the transaction contemplated by this Agreement. 3.6 Brokers' Fees. Purchaser has no liability or obligation to pay any fees or commissions to any broker or finder with respect to the transactions contemplated by this Agreement for which Seller could become liable or obligated. ARTICLE IV COVENANTS OF SELLER Seller covenants and agrees with Purchaser that, at all times from and after the date hereof until the Closing (and after the Closing to the extent expressly contemplated herein), Seller will comply with all covenants and provisions of this Article IV, except to the extent Purchaser may otherwise consent in writing. 4.1 Regulatory and Other Approvals. (a) Following entry of the Final Procedures Order of the U.S. Bankruptcy Court approving the Bidding Procedures, Seller will, as promptly as practicable, (i) use commercially reasonable efforts to obtain all consents, approvals or actions of, make all filings with and give all notices to, any Governmental or Regulatory Authority or any other Person required of Seller for Seller to consummate the transactions contemplated by this Agreement, the Deposit Agreement and the Operative Agreements, including those described in Section 2.4 of Seller's Disclosure Schedule, provided, however, that Seller shall be under no obligation to provide any financial incentive to any Person for its grant of any consent or approval required to consummate the transactions contemplated by this Agreement, the Deposit Agreement or the Operative Agreements, (ii) provide such other information and communications to such Governmental or Regulatory Authorities or other Persons as such Governmental or Regulatory Authorities or other Persons may reasonably request in connection therewith and (iii) provide reasonable cooperation to Purchaser in connection with the performance of its obligations under Section 5.1. 9 (b) In furtherance and not in limitation of the covenant of Seller in Section 4.1(a), following the issuance by the U.S. Bankruptcy Court of the Final Procedures Order, Seller shall use commercially reasonable efforts to resolve such objections, if any, as may be asserted by any Governmental or Regulatory Authority with respect to the transaction contemplated hereby. If any action or proceeding in any court or other tribunal is instituted, or threatened to be instituted, by any Governmental or Regulatory Authority challenging the transaction contemplated hereby as violative of any Law, Seller shall use commercially reasonable efforts to take such action as will (i) resolve any objections which any such Governmental or Regulatory Authority may have to such transaction, (ii) avoid the entry of, or effect the dissolution of, any injunction, temporary restraining Order or other Order which has, or will have, the effect of preventing or interfering with the consummation of the transaction contemplated hereby and (iii) result in obtaining approval of the transactions contemplated hereby by any Governmental or Regulatory Authority. 4.2 Bankruptcy Court Approval. (a) Bidding Procedures. Seller acknowledges that this Agreement is part of an extensive process undertaken by Seller to identify and negotiate a transaction with a bidder who is prepared to pay the highest and best purchase price for the Transferred Assets. Attached as Exhibit E hereto are the Bidding Procedures to be employed, subject only to U.S. Bankruptcy Court approval, with respect to the sale of the Transferred Assets. Following the execution of this Agreement, Seller will work in good faith to obtain from the U.S. Bankruptcy Court final approval of the Bidding Procedures and approval of Purchaser's designation as the Stalking Horse Bidder with respect to the Transferred Assets together with the provisions of this Agreement to be performed by Seller before the Closing (including Sections 4.2, 4.3 and 4.4), and Sections 8.1, 8.2 and 8.3 of this Agreement (the "Final Procedures Order"). The hearing with respect to the Final Procedures Order shall be held after the date of this Agreement and the parties shall work in good faith to obtain a hearing date as early as possible. The sale of the Assets and Properties of Seller is subject to competitive bidding as will be set forth in the Finacal Procedures Order and approval of the U.S. Bankruptcy Court pursuant to the Final Procedures Order. The overbid provisions in the Final Procedures Order will be designed to facilitate a full and fair process designed to maximize the value of the Transferred Assets for the benefit of Seller's stakeholders. 10 (b) Sale Order. If Purchaser is the Successful Bidder with respect to the Transferred Assets, Seller will work in good faith to obtain Bankruptcy Court approval of an Order that, among other things, (A) determines that this Agreement was proposed by Purchaser in good faith and represents the highest and best offer for the Transferred Assets and that this Agreement and the transaction contemplated hereby should be approved, (B) determines that Purchaser is a good faith purchaser under Section 363(m) of the Bankruptcy Code, (C) authorizes and directs Seller to sell the Transferred Assets to Purchaser pursuant to this Agreement and Section 363 of the Bankruptcy Code, free and clear of all Liens, Claims, interests and Liabilities (including any and all "Interests" in the Transferred Assets within the meaning of Section 363(f) of the Bankruptcy Code), (D) authorizes and directs Seller to execute, deliver and perform this Agreement together with all additional instruments and documents that may be reasonably necessary or desirable to implement the foregoing and (E) determines that Purchaser is not a successor to Seller or otherwise liable for any Excluded Liablity and permanently enjoins each and every holder of an Excluded Liability from commencing, continuing or otherwise pursuing or enforcing any remedy, Claim, cause of action or Lien against Purchaser related to such Excluded Liability (the "Sale Order"). 4.3 Certain Restrictions. Except as provided for in this Agreement or the Operative Agreements or approved by Purchaser, Seller will refrain from acquiring or disposing of or incurring any Lien (other than a Permitted Lien) on the Transferred Assets, other than (i) any disposals pursuant to an Order of the U.S. Bankruptcy Court and (ii) any disposals or Liens consented to in writing by Purchaser. 4.4 Successful Bidder Covenants. The provisions of this Section 4.4 shall terminate in the event that Purchaser is not the Successful Bidder with respect to the Transferred Assets pursuant to the Bidding Procedures: (a) Consistent with the Final Procedures Order, Seller shall work in good faith to obtain the entry of the Sale Order from the U.S. Bankruptcy Court to effect, among other things, the transaction contemplated by this Agreement upon the terms and conditions set forth herein, following the issuance by the U.S. Bankruptcy Court of the Final Procedures Order. (b) If an Order of the U.S. Bankruptcy Court relating to this Agreement or the transaction contemplated hereby shall be appealed by any party (or a petition for certiorari or motion for rehearing or reargument shall be filed with respect thereto), Seller agrees to take such steps, if any, as may be reasonable and appropriate to prosecute such appeal, petition or motion or defend against such appeal, petition or motion and to use commercially reasonable efforts to obtain an expedited resolution of any such appeal, petition or motion, with the objective of effecting the transaction contemplated by this Agreement. 4.5 Tax Matters. Subject to Section 1146 of the Bankruptcy Code, Seller shall cooperate with Purchaser in the preparation, execution and filing of all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added, share transfer and stamp duty or taxes, any transfer, recording, registration and other fees, and any similar Taxes (together, the "Conveyance Taxes") which become payable in connection with the transactions contemplated by this Agreement. To the extent any of the transactions contemplated by this Agreement are not exempted from any such Conveyance Tax under Section 1146 of the Bankruptcy Code, Purchaser shall be liable for and shall hold Seller and the Estate harmless against such Conveyance Taxes. 11 ARTICLE V COVENANTS OF PURCHASER Purchaser covenants and agrees with Seller that, at all times from and after the date hereof until the Closing (and after the Closing to the extent expressly contemplated herein), Purchaser will comply with all covenants and provisions of this Article V, except to the extent Seller may otherwise consent in writing. 5.1 Regulatory and Other Approvals. (a) Following entry of the Final Procedures Order of the U.S. Bankruptcy Court, Purchaser will, as promptly as practicable, (i) use commercially reasonable efforts to obtain all consents, approvals or actions of, make all filings with and give all notices to Governmental or Regulatory Authorities or any other Person required of Purchaser to consummate the transactions contemplated hereby, by the Deposit Agreement and by the Operative Agreements, including those described in Section 3.4 of Purchaser's Disclosure Schedule, provided, however, that Purchaser shall be under no obligation to provide any financial incentive to any Person for its grant of any consent or approval required to consummate the transactions contemplated hereby, by the Deposit Agreement and by the Operative Agreements, (ii) provide such other information and communications to such Governmental or Regulatory Authorities or other Persons as such Governmental or Regulatory Authorities or other Persons may reasonably request in connection therewith and (iii) provide reasonable cooperation to Seller in connection with the performance of its obligations under Section 4.1. Purchaser will provide prompt notification to Seller when any such consent, approval, action, filing or notice referred to in clause (i) above is obtained, taken, made or given, as applicable. (b) In furtherance and not in limitation of the covenants of Purchaser in Section 5.1(a) above, following entry of the Final Procedures Order of the U.S. Bankruptcy Court, Purchaser shall not knowingly take or cause to be taken any action, including the acquisition of any business, voting securities (or other ownership interests) or assets, which would reasonably be expected to materially delay or prevent any consents, approvals and actions of any Governmental or Regulatory Authority with respect to the transactions contemplated by this Agreement. (c) In furtherance and not in limitation of the covenants of Purchaser as set forth in Sections 5.1(a) and (b) above, following entry of the Final Procedures Order of the U.S. Bankruptcy Court, Purchaser shall use commercially reasonable efforts to resolve such objections, if any, as may be asserted with respect to the transactions contemplated hereby made by any Governmental or Regulatory Authority. If any action or proceeding in any domestic or foreign court or other tribunal is instituted or threatened to be instituted by any Governmental or Regulatory Authority challenging any of the transactions contemplated hereby as violative of any Law, Purchaser shall use commercially reasonable efforts to take such action (but not including holding separate or divesting, or agreeing to hold separate or to divest, any of the businesses, product lines or assets of Purchaser or any of its Affiliates or Seller) as will (i) resolve any objections which any such Governmental or Regulatory Authority may have to such transactions, (ii) avoid the entry of, or effect the dissolution of, any injunction, temporary restraining order or other order which has, or will have, the effect of preventing or interfering with the consummation of any of the transactions contemplated hereby and (iii) result in obtaining approval of the transactions contemplated hereby by any Governmental or Regulatory Authority. 12 5.2 Bankruptcy Court Approvals. (a) Purchaser shall assist and cooperate with Seller in its efforts to obtain the approval of the U.S. Bankruptcy Court with respect to this Agreement and the transaction contemplated hereby. Purchaser shall cooperate with Seller with respect to any description of Purchaser in any filing with the U.S. Bankruptcy Court. Neither Purchaser nor any of its Affiliates shall, or shall cause any other Person to, file any pleading or take other action in the U.S. Bankruptcy Court with respect to this Agreement or the consummation of the transactions contemplated hereby or thereby without first obtaining the written consent of Seller. (b) Purchaser agrees to assist and cooperate with Seller to ensure that any filings with the U.S. Bankruptcy Court contain adequate information. Purchaser shall from time to time furnish to Seller all such information about Purchaser to be disclosed to the U.S. Bankruptcy Court. (c) If an Order of the U.S. Bankruptcy Court relating to this Agreement shall be appealed by any party (or a petition for certiorari or motion for rehearing or reargument shall be filed with respect thereto), Purchaser agrees to take such steps, if any, as may be reasonable and appropriate to prosecute such appeal, petition or motion or defend against such appeal, petition or motion and to use commercially reasonable efforts to obtain an expedited resolution of any such appeal, petition or motion, with the objective of effecting the transactions contemplated by this Agreement. 5.3 Agreements Relating to the Auction. From the date on which the U.S. Bankruptcy Court enters the Final Procedures Order until the date on which the Auction is concluded, Purchaser shall not, and shall cause its Affiliates not to, (a) have any discussions or communication regarding the Auction with any potential bidders in the Auction or their Representatives, investors, lenders or sponsors, (b) disclose any information to any such Person regarding Seller, the Transferred Assets or the transaction contemplated by this Agreement or (c) interfere with any efforts by Seller to obtain capital or financing for or otherwise to effectuate any alternatives to the transactions contemplated by this Agreement. 5.4 Confidentiality. Unless and until the transaction contemplated herein has been consummated, Purchaser and its Affiliates shall hold in confidence, and shall cause all of their Representatives and agents involved in this transaction (the "Purchaser Representatives") to hold in confidence, all information regarding Seller or the Transferred Assets that is furnished or made available by Seller (other than information in the public domain not as a result of a breach of this Section 5.4, and other than information required to be disclosed by Law or stock exchange rule in connection with the transactions contemplated hereby). Purchaser shall be responsible for any breach of this Section 5.4 by any Affiliate or Purchaser Representative. If the transactions contemplated hereby are not consummated, Purchaser shall return to Seller all such documents received and shall destroy all copies of such documents and all documents or materials containing information derived from such documents and shall continue to hold all such information in confidence. 13 5.5 Use of Transferred Assets. During the period commencing on the Closing Date, Purchaser will permit Seller to occupy limited portions of office space on the owned real estate comprising the Transferred Assets as Seller may require for Seller's ongoing activities on the owned real estate comprising the Transferred Assets. Seller shall pay rent to Purchaser computed at Two Dollar per annum (i.e. $.167 per month) per square foot of space so occupied for each month of such occupancy. Seller or Purchaser may terminate such occupancy upon no less than 30 days notice. ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER The obligation of Purchaser hereunder to consummate the transactions contemplated hereby is subject to the fulfillment, at or before the Closing, of each of the following conditions by Seller (all or any of which may be waived in whole or in part by Purchaser in its sole discretion): 6.1 Representations and Warranties. The representations and warranties made by Seller in this Agreement shall be true and correct in all material respects (except for representations and warranties that are qualified by their terms by reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) on and as of the Closing Date as though made on and as of the Closing Date. 6.2 Performance. Seller shall have performed and complied with, in all material respects, the agreements, covenants and obligations required by this Agreement to be so performed or complied with by Seller at or before the Closing. 6.3 Officer's Certificates. Seller shall have delivered to Purchaser a certificate, dated the Closing Date and executed in the name and on behalf of Seller by a duly authorized officer of Seller, in substantially the form and to the effect of Exhibit A attached hereto, and a certificate, dated the Closing Date and executed by the Secretary or any Assistant Secretary of Seller, in substantially the form and to the effect of Exhibit B attached hereto. 6.4 Orders and Laws. There shall not be in effect on the Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement, the Deposit Agreement or any of the Operative Agreements to which Seller shall be a party. 6.5 Regulatory Consents and Approvals. All consents, approvals and actions of, filings with and notices to, any Governmental or Regulatory Authority or any other Person necessary to permit each of Purchaser and Seller to perform its obligations under this Agreement, the Deposit Agreement and the Operative Agreements and to consummate the transactions contemplated hereby and thereby, in each case, as applicable, shall have been duly obtained, made or given and shall be in full force and effect, and all terminations or expirations of waiting periods imposed by any Governmental or Regulatory Authority necessary for the consummation of the transactions contemplated by this Agreement and the Operative Agreements shall have occurred, in each case without any limitation, condition, or restriction that would materially adversely affect the ability of Purchaser to own, control or operate the Transferred Assets as owned, controlled, and operated by Seller prior to the Closing. 14 6.6 Order of the U.S. Bankruptcy Court. The Sale Order of the U.S. Bankruptcy Court (in a form providing for the effectuation of all the transactions contemplated by this Agreement and the Operative Agreements in accordance with the terms and provisions hereof and thereof) shall have been entered, at least ten (10) days shall have passed since the entry of the Sale Order and the Sale Order shall not be subject to any stay, appeal or motion for rehearing, reconsideration or revocation. 6.7 Bankruptcy Proceedings. The Sale Order shall contain provisions that are satisfactory to Purchaser in its reasonable judgment for the effectuation of the transactions contemplated by this Agreement and the Operative Agreements in accordance with the terms hereof and thereof. Notwithstanding the foregoing, Purchaser's obligations to consummate the transactions contemplated hereby shall not be relieved by the failure of any of the foregoing conditions if such failure is the result, directly or indirectly, of any breach by Purchaser of its obligations under this Agreement with respect to the transactions contemplated hereby. ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER The obligation of Seller hereunder to consummate the transactions contemplated hereby is subject to the fulfillment, at or before the Closing, of each of the following conditions by Purchaser (all or any of which may be waived in whole or in part by Seller in its sole discretion): 7.1 Representations and Warranties. The representations and warranties made by Purchaser in this Agreement shall be true and correct in all material respects (except for such representations and warranties that are qualified by their terms by reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) on and as of the Closing Date as though made on and as of the Closing Date. 7.2 Performance. Purchaser shall have performed and complied with, in all material respects, the agreements, covenants and obligations required by this Agreement to be so performed or complied with by Purchaser at or before the Closing. 7.3 Purchaser's Certificate. Purchaser shall have delivered to Seller a certificate, dated the Closing Date and executed in the name of Purchaser, in substantially the form and to the effect of Exhibit C attached hereto. 7.4 Orders and Laws. There shall not be in effect on the Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement, the Deposit Agreement or any of the Operative Agreements to which Purchaser is a party. 15 7.5 Regulatory Consents and Approvals. All consents, approvals and actions of, filings with and notices to, any Governmental or Regulatory Authority or any other Person necessary to permit each of Purchaser and Seller to perform its obligations under this Agreement and the Operative Agreements, and to consummate the transactions contemplated hereby and thereby, in each case, as applicable, shall have been duly obtained, made or given and shall be in full force and effect, and all terminations or expirations of waiting periods imposed by any Governmental or Regulatory Authority necessary to permit each of Purchaser and Seller to perform its obligations under this Agreement and the Operative Agreements and to consummate the transactions contemplated hereby and thereby, in each case, as applicable, shall have occurred, in each case without limitation, condition or restriction that would materially adversely affect (a) the ability of Purchaser to perform its obligations under this Agreement or any Operative Agreement or (b) any material aspect of the transactions contemplated by this Agreement and the Operative Agreements. 7.6 Order of the U.S. Bankruptcy Court. The Sale Order of the U.S. Bankruptcy Court (in a form providing for effectuation of all the transactions contemplated by this Agreement and the Operative Agreements in accordance with the terms and provisions hereof and thereof) shall have been entered, at least ten (10) days shall have passed since the entry of the Sale Order and the Sale Order shall not be subject to any stay, appeal or motion for rehearing, reconsideration or revocation. Notwithstanding the foregoing, Seller's obligations to consummate the transactions contemplated hereby shall not be relieved by the failure of any of the foregoing conditions if such failure is the result, directly or indirectly, of any breach by Seller of its respective obligations under this Agreement or under an Order of the U.S. Bankruptcy Court with respect to the transactions contemplated hereby. ARTICLE VIII TERMINATION 8.1 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, at any time prior to the Closing Date: (a) By mutual written agreement of Seller and Purchaser; (b) By Seller or Purchaser upon notification to the non-terminating party by the terminating party: (i) at any time after August 31, 2007 (the "Termination Date"), if the Closing shall not have been consummated on or prior to such date and such failure is not caused by a breach of this Agreement by the terminating party, provided, however, that in the circumstances described in Section 8.1(b)(vii) the Termination Date shall be extended the same number of days as the extension pursuant to Section 8.1(b)(vii); (ii) if at or prior to the Closing any material condition set forth herein for the benefit of the terminating party shall not have been timely met and cannot be met prior to the Termination Date (as such date may be extended pursuant to Section 8.1(b)(i)) and has not been waived by the terminating party; provided that the terminating party shall not be responsible for the failure of such condition to be satisfied; 16 (iii) if there has been a material breach of any representation, warranty, covenant, agreement or obligation (or any breach of any representation or warranty that is qualified by its terms by reference to materiality) on the part of the non-terminating party set forth in this Agreement, which breach is not curable or, if curable, has not been cured within thirty (30) days following receipt by the non-terminating party of notice of such breach from the terminating party; (iv) if (A) any court of competent jurisdiction (other than the U.S. Bankruptcy Court) or other competent Governmental or Regulatory Authority (other than the U.S. Bankruptcy Court) shall have issued an Order which has become final and non-appealable or (B) any Law (other than the Bankruptcy Code) shall be in effect, in either case making illegal or otherwise prohibiting the effectuation of any material part of the transactions contemplated by this Agreement; (v) if the U.S. Bankruptcy Court shall have issued an Order which has become final and nonappealable restricting or restraining in a material manner or enjoining or otherwise prohibiting or making illegal the effectuation of any material part of the transactions contemplated by this Agreement; (vi) if the U.S. Bankruptcy Court has not issued the Final Procedures Order by June 15, 2007; (vii) if the U.S. Bankruptcy Court has not entered the Sale Order (in a form providing for the effectuation of all the transactions contemplated by this Agreement in accordance with the terms and provisions hereof), on or before July 20, 2007, provided, however, that if on such date Seller is using commercially reasonable efforts to obtain entry of a Sale Order in such form, then such date shall be extended for so long as Seller is using commercially reasonable efforts to obtain entry of a Sale Order in such form, but in no event shall such date be extended beyond August 15 2007; (viii) if the U.S. Bankruptcy Court confirms a plan of reorganization or liquidation for Seller that precludes the transactions contemplated by this Agreement; or (ix) if the U.S. Bankruptcy Court approves (a) a Person other than Purchaser as the Successful Bidder with respect to the Transferred Assets or (b) an Alternative Transaction; or (c) By Seller upon notification to Purchaser if Seller determines in its sole discretion to terminate this Agreement. 8.2 Effect of Termination. (a) If this Agreement is terminated pursuant to Section 8.1, this Agreement will forthwith become null and void, and there will be no Liability on the part of any party hereto (or any of their respective Representatives or Affiliates) except (i) the provisions with respect to expenses in Section 10.5 and confidentiality in Section 5.4 and the provisions of this Article VIII will continue to apply following any such termination, and (ii) as provided in Sections 8.2(b) and (c). Notwithstanding anything to the contrary herein, if this Agreement is terminated pursuant to Section 8.1, Purchaser shall not have any rights or claims against Seller or the Estate with respect to such termination and shall only be entitled to the relief, if any, provided in Sections 8.2(b) and (c), as applicable under the circumstances of such termination. 17 (b) If this Agreement is terminated as a result of a breach or default by Purchaser of any of its representations, warranties, covenants, agreements or obligations, or any failure, delay or inaction on the part of Purchaser to perform its obligations hereunder, the Deposit shall be transferred to Seller as liquidated damages and not as a penalty, within (3) Business Days following such termination. Upon any other termination of this Agreement, the Deposit shall be returned to Purchaser within (3) Business Days after termination. (c) Notwithstanding anything to the contrary contained in this Article VIII, the parties agree that if Purchaser attempts to terminate this Agreement pursuant to Section 8.1(b)(ii) or Section 8.1(b)(iii) for any reason(s) which can be remedied monetarily by Seller, then Seller shall have the right to delay the effective date of the attempted termination for thirty (30) days upon notice to Purchaser within twenty-four (24) hours of Seller's receipt of the termination notice. During such delay period, the parties agree to negotiate in good faith a reasonable monetary remedy to cure Purchaser's reason(s) for seeking to terminate this Agreement. 8.3 Reinstatement. If this Agreement is terminated pursuant Section 8.1(b)(ix) because the U.S. Bankruptcy Court approves a Person other than Purchaser as the Successful Bidder with respect to the Transferred Assets and this Agreement constitutes the next most favorable qualified bid and the bid by the Successful Bidder with respect to the Transferred Assets is terminated on or prior to August 31, 2007, then this Agreement shall be reinstated as if never terminated and the terms and conditions of this Agreement shall once again be in full force and effect and Purchaser shall be required to return all amounts paid pursuant to Section 8.2(b); provided, that this Agreement will be deemed amended to provide that (i) the Closing Date will be thirty (30) days after the date the bid of the Successful Bidder with respect to the Transferred Assets is terminated and (ii) the dates in Section 8.1(b)(i) and Section 8.1(b)(vii) will be amended to be thirty (30) days after the date that the bid of the Successful Bidder with respect to the Transferred Assets is terminated. ARTICLE IX DEFINITIONS 9.1 Definitions. (a) Defined Terms. As used in this Agreement, the following defined terms have the meanings indicated below: "Actions or Proceedings" means any action, suit, proceeding, arbitration or investigation filed with or conducted by any Governmental or Regulatory Authority. 18 "Affiliate" of any Person means any Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, "control" of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by voting power, contract or otherwise. "Agreement" means this Purchase and Sale Agreement and the Exhibits hereto, Seller's Disclosure Schedule, Purchaser's Disclosure Schedule and the certificates delivered in accordance with Sections 6.3 and 7.3, as the same shall be amended from time to time. "Alternative Transaction" means, other than the transactions contemplated by this Agreement, any acquisition or similar transaction (including a tender or exchange offer) involving the purchase of all or a substantial part of the Transferred Assets. "Assets and Properties" of any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible (including contract rights), wherever situated and by whomever possessed and including the goodwill related thereto), operated, owned or leased by such Person. "Auction" has the meaning ascribed to it in the Final Procedures Order. "Bankruptcy Cases" has the meaning ascribed to it in the recitals to this Agreement. "Bankruptcy Code" has the meaning ascribed to it in the recitals to this Agreement. "Bidding Procedures" means the bidding procedures to be employed with respect to the sale of the Property as set forth in the Final Procedures Order. "Books and Records" means books of account, minute books, stock record books, and other similar business records. "Business Day" means a day other than Saturday, Sunday or any other day on which banking institutions in New York, New York are required or authorized to close by law or executive order. "Charter Documents" means a Person's certificate or articles of incorporation or formation, by-laws, partnership agreement, limited partnership agreement, limited liability company agreement or other comparable constituent, charter or organizational documents, as applicable. "Claim" means (i) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (ii) a right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. 19 "Closing" has the meaning ascribed to it in Section 1.5(a). "Closing Date" has the meaning ascribed to it in Section 1.5(a). "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the Official Committee of Unsecured Creditors in the Bankruptcy Cases, as appointed by the U.S. Trustee and reconstituted from time to time. "Contract" means any agreement, lease, license, evidence of Indebtedness, mortgage, indenture, security agreement or other contract. "Conveyance Taxes" has the meaning ascribed to it in Section 4.5. "Debtors" has the meaning ascribed to it in the recitals to this Agreement. "Delta Marketing" has the meaning ascribed to it in the recitals to this Agreement. "Deposit" shall mean an amount equal to ten percent (10%) of the amount of the Initial Purchase Price deposited with the Deposit Agent pursuant to the Deposit Agreement, plus any interest paid thereon. "Deposit Agent" has the meaning ascribed to it in the Deposit Agreement. "Deposit Agreement" means the agreement dated as of the date hereof pursuant to which Purchaser has deposited the Deposit with the Deposit Agent, substantially in the form of Exhibit D, attached hereto. "Effective Time" has the meaning ascribed to it in Section 1.5(a). "Estate" has the meaning ascribed to it in the recitals to this Agreement. "Excluded Assets" has the meaning ascribed to it in Section 1.1(b). "Executive Employees" shall mean William Garrett, William H. Hardman, Jr. and Donald Walker. "Final Procedures Order" has the meaning ascribed to it in Section 4.2(a). "GAAP" means United States generally accepted accounting principles, consistently applied throughout the specified period and in the immediately prior comparable period. "Governmental or Regulatory Authority" means any court, tribunal, arbitrator, authority, agency, commission, board, bureau, department, legislature, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision. 20 "Indebtedness" of any Person means all obligations of such Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii) for the deferred purchase price of goods or services and (iv) in the nature of guarantees of the obligations described in clauses (i) through (iii) above of any other Person. "Initial Purchase Price" has the meaning ascribed to it in Section 1.4(a). "Knowledge of Purchaser" means the actual knowledge of Stanley Atkins. "Knowledge of Seller" means the actual knowledge of any of the Executive Employees. "Laws" means all laws, statutes, rules, regulations, codes, ordinances and other pronouncements having the effect of law of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental or Regulatory Authority. "Liabilities" means all Indebtedness, obligations, judgments, damages, charges, costs and other liabilities of a Person (whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due). "Licenses" means all licenses, permits, certificates of authority, authorizations, approvals, registrations, franchises and similar consents granted or issued by any Governmental or Regulatory Authority. "Lien" means any mortgage, pledge, assessment, security interest, lien, adverse claim, levy, charge or other encumbrance of any kind, or any conditional sale Contract, title retention Contract or other Contract to give any of the foregoing. "Operative Agreements" means, collectively, any agreements to be entered into in connection with the transaction contemplated by this Agreement, other than this Agreement and the Deposit Agreement. "Order" means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority (in each such case whether preliminary or final). "Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising by operation of Law with respect to a Liability that is not yet due or delinquent, and (iii) easements, leases, reservations, licenses or other rights of others in, or minor defects and irregularities in title to, property or assets of Seller, provided that such easements, leases, reservations, licenses, rights, defects or irregularities do not materially detract from the value of or impair the use of such property or assets for the purposes for which they are held; and (iv) any Liens or privileges vested in any lessor, licensor or permittor for rent or other obligations with respect to Assets and Properties of Seller or its Subsidiaries so long as the payment of such rent or the performance of such obligations is not delinquent. 21 "Person" means any natural person, corporation, limited liability company, general partnership, limited partnership, proprietorship, other business organization, trust, union, association or Governmental or Regulatory Authority. "Petition Date" has the meaning ascribed to it in the recitals to this Agreement. "Purchaser" has the meaning ascribed to it in the preamble to this Agreement. "Purchaser Representatives" has the meaning ascribed to it in Section 5.4. "Purchaser's Disclosure Schedule" has the meaning ascribed to it in the preamble to Article III. "Regulation" means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations are amended from time to time. "Representatives" with respect to any Person means such Person and its officers, employees, counsel, accountants, financial advisors, consultants and other representatives. "Sale Order" has the meaning ascribed to it in Section 4.2(b). "Security Deposits" means all security deposits made with respect to any of the Transferred Assets, whether made by or on behalf of, or held by or on behalf of, Seller. "Seller" has the meaning ascribed to it in the preamble to this Agreement. "Seller's Disclosure Schedule" has the meaning ascribed to it in the preamble to Article II. "Stalking Horse Bidder" means Purchaser. "Subsidiary" with respect to an entity means any Person in which such entity, directly or indirectly through Subsidiaries or otherwise, beneficially owns more than fifty percent (50%) of either the equity interests in, or the voting control of, such Person. "Successful Bidder" has the meaning ascribed to it in the Final Procedures Order. "Tax Returns" means all returns, reports and forms required to be filed with a Governmental or Regulatory Authority with respect to Taxes. "Taxes" means any and all taxes, fees, levies, duties, tariffs, import and other similar charges, imposed by any taxing authority, together with any related interest, penalties, or other additions to tax, or additional amounts imposed by any taxing authority, and without limiting the generality of the foregoing, shall include net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, franchise, profits, license, transfer, recording, escheat, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profit, environmental, custom duty, or other tax, governmental fee or other like assessment or charge of any kind whatsoever. 22 "Termination Date" has the meaning ascribed to it in Section 8.1(b)(i). "Total Purchase Price" has the meaning ascribed to it in Section 1.4(a). "Transferred Assets" has the meaning ascribed to it in Section 1.1(a). "U.S. Bankruptcy Court" has the meaning ascribed to it in the recitals to this Agreement. "U.S. Trustee means the Office of the United States Trustee for the District of Delaware. (b) Construction of Certain Terms and Phrases. Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms "hereof," "herein," "hereby" and derivative or similar words refer to this entire Agreement; (iv) the terms "Article" or "Section" refer to the specified Article or Section of this Agreement; and (v) the terms "include," "includes," and "including" shall be deemed to be followed by the words "without limitation." Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP. ARTICLE X MISCELLANEOUS 10.1 Non-Survival of Representations and Warranties. The representations and warranties contained in this Agreement or in any instrument delivered pursuant to this Agreement shall not survive the Closing and thereafter there shall be no Liability in respect thereof, whether such Liability has accrued prior to the Effective Time or after the Effective Time, on the part of any party hereto or its directors, officers, shareholders, partners, managers, members, agents or Representatives or Affiliates. The covenants and agreements of the parties hereto contained in this Agreement shall only survive the Closing as and to the extent that such covenants and agreements are expressly to be performed, in whole or in part, following the Closing. Whenever "Seller" is used in this Agreement with reference to a period after the Closing, the term means Seller, if in existence, and the successor or successors to Seller, if any. 10.2 Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally, by facsimile transmission, mailed (first class postage prepaid) or sent by internationally recognized courier, to the parties at the following addresses or facsimile numbers: 23 If to Seller, to: ----------------- Delta Mills, Inc. 700 North Woods Drive Fountain Inn, SC 29644 Facsimile: (864) 255-4165 Attn: William H. Hardman, Jr. with a copy to: Morris, Nichols, Arsht & Tunnell LLP 1201 N. Market Street Wilmington, DE 19801 Facsimile: (302) 658-3989 Attn: Robert J. Dehney, Esq. and Rayburn Cooper & Durham, P.A. 227 West Trade Street, Suite 1200 Charlotte, NC 28202-1675 Facsimile: (704) 377-1897 Attn: C. Richard Rayburn, Jr., Esq. and Wyche, Burgess, Freeman & Parham, P.A. P.O. Box 728 (29602) 44 East Camperdown Way (29601) Greenville, SC Facsimile: (864) 235-8900 Attn: Megan O'Neill, Esq. If to Purchaser, to: -------------------- Stanley Atkins 81 Cobb Street Jefferson, GA 30549 Facsimile: (___) _____________ Attn: Stanley Atkins All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section 10.2, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section 10.2, be deemed given upon electronic confirmation of receipt, (iii) if delivered by mail in the manner described above to the address as provided in this Section 10.2, be deemed given upon receipt and (iv) if delivered by internationally recognized courier to the address as provided in this Section 10.2, be deemed given upon delivery as indicated in the records of such courier (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section 10.2). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other parties hereto. 24 10.3 Bulk Sales Act. To the extent applicable, the parties hereby waive compliance with the bulk sales act or comparable statutory provisions of each applicable jurisdiction. 10.4 Entire Agreement. This Agreement, the Operative Agreements, and the Deposit Agreement supersede all prior discussions and agreements prior to the date hereof between the parties with respect to the subject matter hereof and thereof, and contain the sole and entire agreement between the parties hereto with respect to the subject matter hereof and thereof. 10.5 Expenses. Except as otherwise expressly provided in this Agreement, whether or not the transactions contemplated hereby are consummated, each party will pay its own costs and expenses incurred in connection with the negotiation, execution and closing of this Agreement, the Deposit Agreement and the Operative Agreements and the transactions contemplated hereby and thereby. 10.6 Public Announcements. At all times at or before the Closing, the parties hereto will not issue or make any reports, statements or releases to the public with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other, which consent shall not be unreasonably withheld, except to the extent that such disclosure is, in the opinion of counsel, required by Law or by stock exchange rule, provided that any such required disclosure shall only be made, to the extent consistent with Law, after consultation with the other parties hereto; provided, however, further that this Section 10.6 shall not apply to any reports, statements or releases by Seller to the public as required under the Bankruptcy Code or by the U.S. Bankruptcy Court in connection with the Bankruptcy Cases. 10.7 Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative. 10.8 Amendment. (a) Except as provided in Section 10.9(b), this Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each party hereto. (b) Seller or Purchaser may at any time and from time to time prior to the Closing Date, by written notice to the other party, supplement or amend Seller's Disclosure Schedule or Purchaser's Disclosure Schedule, respectively, to correct any inaccuracy contained therein or herein; provided, that if prior to such supplementation or amendment such inaccuracy would have constituted a failure of a closing condition of the non-disclosing party as set forth in Article VI or Article VII, as applicable, and such inaccuracy is not cured by the Closing (it being specifically understood that such supplementation or amendment shall not constitute a cure for failure of such closing condition), the non-disclosing party may terminate this Agreement on the basis of the disclosed matter(s) by written notice given to the disclosing party (which termination shall be deemed to be made pursuant to Section 8.1(b)(iii)); provided, further, that Section 1.1 of Seller's Disclosure Schedule may not be amended without the written consent of Seller and Purchaser. If the non-disclosing party does not give the disclosing party such written notice of termination, or gives written consent to the amendment thereof, prior to the Closing, the non-disclosing party shall be deemed to have waived any breach of the representations, warranties or covenants contained in this Agreement resulting from the inaccuracy corrected by the supplement or amendment. 25 10.9 No Third Party Beneficiary. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon any other Person. 10.10 No Assignment; Binding Effect. Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any party hereto without the prior written consent of the other parties hereto and any attempt to do so will be void. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and their respective successors and assigns. 10.11 Headings. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. 10.12 Retention of U.S. Bankruptcy Court Jurisdiction. Subject to the proviso of the immediately succeeding sentence, and except as otherwise provided herein, the U.S. Bankruptcy Court shall retain jurisdiction of the proceedings, including for purposes of determining any and all controversies and disputes arising under or in connection with, or for purposes of interpreting the provisions of, this Agreement, the Deposit Agreement and the Operative Agreements. Without limiting the generality of the foregoing, such jurisdiction shall include any determination as to the fulfillment or non-fulfillment of any condition to consummation of the transactions contemplated hereby set forth in Articles VI and VII and any such determination shall be final and binding on the parties and not subject to any appeal, the right to which is hereby waived by the parties; provided, however, that nothing contained herein shall limit the rights of the parties to appeal any determination of the U.S. Bankruptcy Court relating to the amount of any monetary damages, fees, costs and expenses awarded with respect to any such determination as aforesaid. 10.13 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware applicable to a contract executed and performed in such State, without giving effect to the conflicts of laws principles thereof, and, to the extent applicable, the federal Laws of the United States of America. 26 10.14 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) the parties hereto shall negotiate in good faith to replace such provision with a legal, valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the illegal, invalid or unenforceable provision. 10.15 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 27 IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first above written. SELLER: ------- DELTA MILLS, INC. By: /s/ William F. Garrett ------------------------------- Name: William F. Garrett Title: Chief Executive Officer PURCHASER: ---------- /s/Stanley Atkins -------------------------------- Stanley Atkins 28 SELLER'S DISCLOSURE SCHEDULE ---------------------------- SECTION 1.1 (a)(i) ------------------ LEGAL DECRIPTION ---------------- BEATTIE PLANT, GREENVILLE COUNTY, SOUTH CAROLINA: - ------------------------------------------------- ALL those certain pieces, parcels or tracts of land containing in the aggregate 98.0 acres, more or less, situate, lying and being on the eastern and western sides of North Woods Drive (I-385 frontage road) and the western side of Shopping Center Highway (S-444), in the County of Greenville, State of South Carolina, being shown and designated as three (3) tracts containing 95.3 acres, 1.25 and 1.354 acres and on a plat of survey entitled "SURVEY FOR DELTA MILLS, INC.", prepared by AC&S Engineering and Surveying, Inc., dated 11-15-05, revised 12-09-05, recorded in Plat Book 1021, Page 54, in the Register of Deeds Office for Greenville County, reference to which is hereby craved for a more complete metes and bounds description thereof. Tax Map Nos.: 0334.00-01-004.06, 0334.00-01-004.08 and 0331.00-01-005.00 SELLER'S DISCLOSURE SCHEDULE ---------------------------- SECTION 2.4 ----------- CONSENTS -------- GMAC Commercial Finance LLC (Seller shall obtain this consent at or prior to the CLOSING) SELLER'S DISCLOSURE SCHEDULE ---------------------------- SECTION 2.5 ----------- LEGAL PROCEEDINGS ----------------- None SELLER'S DISCLOSURE SCHEDULE ---------------------------- SECTION 2.9 ----------- TITLE TO TRANSFERRED ASSETS --------------------------- Leasehold Mortgage in favor of GMAC Commercial Finance LLC (Seller shall cause this to be satisfied or released at or prior to the Closing) on 96.64 acres of Tax Map Nos.: 0334.00-01-004.06 and 0334.00-01-004.08. Mortgage in favor of GMAC Commercial Finance LLC (Seller shall cause this to be satisfied or released at or prior to the Closing) on 1.354 acres (Tax Map No.: 0331.00-01-005.00) PURCHASER'S DISCLOSURE SCHEDULE ------------------------------- SECTION 3.3 ----------- CONSENTS -------- None PURCHASER'S DISCLOSURE SCHEDULE ------------------------------- SECTION 3.5 ----------- OMITTED Table of Contents Page EXHIBITS A, B, C, D, E ---------------------- OMITTED 35 -----END PRIVACY-ENHANCED MESSAGE-----