Exhibit 10.24.1

 

AMENDMENT AND RESTATEMENT OF

YARN PURCHASE AGREEMENT

 

This Yarn Purchase Agreement entered into as of January 1, 1999, and as amended
December 31, 2001, between Parkdale America, LLC, Parkdale Mills, Incorporated,
and Magnolia Manufacturing Co. Inc., hereinafter referred to as “Parkdale” and
Cone Mills Corporation, hereinafter referred to as “Cone” is, effective as of
February 15, 2002 hereby amended and restated as follows:

 

Parkdale agrees to sell and Cone agrees to purchase yarns meeting the
specifications spelled out in attached Schedule A beginning April 1, 1999 and
continuing through December 31, 2007.

 

IT IS AGREED:

 

1.   Quantities.

 

Cone’s projected weekly requirements for each of the yarn counts are stated in
Schedule A for karded cotton ringspun. Parkdale agrees to supply up to these
quantities at the conversion prices set forth in Schedule A plus any additional
requirements at those prices. Actual weekly shipments will be coordinated by the
schedulers for the parties. Cone agrees to purchase from Parkdale all
requirements for these yarns in excess of internal production. Cone is not
required to order any minimum amount of yarn while this agreement remains in
effect.

 

Should Cone’s requirements increase significantly over projections stated in
Schedule A or should Cone desire additional denim yarns in excess of its
internal production at the expiration of its other outside denim yarn contracts,
Parkdale shall have a right of first refusal for all such additional denim yarns
that it is willing to supply at competitive prices and quality in the quantity
desired. Notwithstanding the above, the parties agree that nothing contained
herein prevents Cone from entering into a joint venture outside the United
States which manufactures these yarns. However, should Cone invest in such a
joint venture it will not use its production of these yarns in the manufacture
of denim in the United States unless Cone own 50% or more of the joint venture
so as to make the joint venture the equivalent of internal capacity. Moreover,
the parties agree that nothing contained herein prevents Cone from otherwise
increasing its internal yarn capacity for these yarns. Should Cone decide to
build a new plant to increase such capacity, it will give Parkdale written
notice of a least one year prior to the expected completion date. In addition,
the parties agree that nothing contained herein prevents Cone from contracting
with third parties for the purchase of fabric containing karded cotton ringspun
yarn without regard to the yarn source or from contracting with third parties to
weave fabric containing karded cotton ringspun yarn supplied to Cone or assigned
by Cone pursuant to this agreement.

 

Cone will provide Parkdale with a rolling three months projection of yarn
requirements covered by this agreement. The parties agree that such projections
are good faith estimates only and actual requirements may vary significantly
from the projections. Therefore, nothing in this agreement constitutes a “take
or pay” obligation on the part of Cone.

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2.   Prices.

 

Yarn prices per pound shall be determined as follows:

 

  •   Cost of cotton content is based upon cotton price as fixed by Cone plus no
basis points times waste factor as stated in Schedule A.

 

  •   Conversion costs as listed in Schedule A.

 

3.   Cotton Price Fixations and Reimbursement Payments.

 

Parkdale is responsible for purchasing the cotton. Cone is responsible for
fixing the cotton price.

 

3.A    All fixations orders and executions of orders must be confirmed in
writing. Cone will provide fixation orders by contract months that are currently
being traded and in multiples of 100 bales as outlined in Schedule B.

 

3.B    In the event that the cotton content of the yarn deliveries are less than
the number of bales fixed for the quarter, the excess cotton fixation can be
rolled forward for one month. If the excess is not consumed after one month,
Cone agrees to pay carrying charges at the market rate until the excess
fixations are consumed. If the cotton content of the yarn deliveries is greater
than the bales fixed for the quarter, cotton fixation can be rolled back from
the upcoming quarter, or cotton can be purchased at market to cover the shortage
at Cone’s option.

 

3.C.    Should Cone fail to exercise its right to fix the price as contemplated
by paragraph 3.A above, Parkdale has the right to fix the cotton price for the
coming quarter’s yarn requirements.

 

3.D    The individual responsible for price fixation orders and executions shall
be Marvin Woolen or as otherwise designated in writing by Cone.

 

3.E    Parkdale agrees to provide a status report each week of yarn deliveries
against cotton price fixations.

 

3.F    With respect to any cotton rebate or reimbursement program, such as the
Step 2 program, which may be or become in effect during this agreement, the
parties agree as follows; Cone shall receive the benefit based on the pounds of
cotton opened necessary to supply the yarn purchased by Cone pursuant to this
agreement. Each month Parkdale will send Cone a report detailing the net pounds
of cotton eligible for payment reimbursement. Net pounds will be calculated by
subtracting returned pounds from shipped pounds. The net pounds will then be
multiplied by the reimbursement payment to determine the total amount payable to
Cone each week. Within ten (10) days of the end of each quarter, Parkdale will
write Cone a check reimbursing the total payment reimbursement for the quarter.
Should any cotton rebate or reimbursement program be in effect for which this
calculation and reimbursement to Cone is not workable, then the parties agree
that a procedure will be developed to assure that Cone shall receive an economic
benefit as close to what would be realized under this paragraph as possible.

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4.   Term.

 

Unless terminated sooner upon the mutual agreement of the parties, this
agreement shall remain in effect until December 31, 2007, and shall continue for
successive renewal terms of one calendar year each thereafter, unless at least
one year in advance of the commencement of the renewal term a party gives notice
to the other party of its election to terminate the agreement.

 

5.   Assignment.

 

None of the rights or obligations under this agreement shall be assigned or
deleted without the express written consent of each party, which consent shall
not be unreasonably withheld. Notwithstanding this, Cone shall have the right to
assign all or a portion of the entitlements under this agreement to a third
party greige weaver who will produce fabric for the account of Cone. Any such
third party would be required to agree to abide by the confidentiality
provisions of paragraph 15 below, and Cone and Parkdale will otherwise develop a
mutually agreeable procedure to protect the confidential nature of this
transaction.

 

6.   Specifications.

 

Any changes in specifications of the yarn counts covered in Schedule A that
result in an increase or decrease in Parkdale’s manufacturing costs must be
mutually agreed to in writing upon before commencement of manufacture. These
changes will also be reflected in the yarn prices.

 

7.   Payment.

 

All invoices are payable net cash thirty (30) days in U.S. dollars. Terms are
F.O.B. Parkdale’s Hillsville, Virginia plant unless otherwise mutually agreed to
by the parties.

 

8.   Cover Option.

 

Should Parkdale for any reason be unable to fulfill the conditions of this
contract, Parkdale will be responsible for purchasing yarn from a reliable
supplier and delivering such yarn to Cone under the terms and conditions of this
contract. Parkdale shall notify Cone thirty (30) days in advance should this
become necessary.

 

9.   Warranty.

 

Parkdale warrants that the yarn supplied hereunder shall conform to the
specifications set forth in Schedule A. These specifications may be changed from
time to time upon agreement in writing between the parties. In addition, yarn
supplied hereunder will meet the requirements of Levi Strauss. Parkdale further
represents and warrants that it shall pass good title to the yarn, free and
clear of any liens, security interests, claims or other encumbrances, to Cone
and the yarn shall be free from defects of material and workmanship. With
respect to any defects in the yarn used by Cone, Cone shall be entitled to
damages in an amount necessary to make Cone whole limited to Cone’s cost
excluding profits. Parkdale further represents and warrants that the use or

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sale of the yarn delivered hereunder will not infringe the claims of any United
States patent covering the yarn. Parkdale further represents and warrants that
all yarn delivered hereunder is or will be produced in compliance with
requirements of the Fair Labor Standards Act of 1938 as amended.

 

10.   Inspection and Rejection.

 

Cone will notify Parkdale as soon as possible if yarn deliveries vary from the
specifications contained herein. All non-conforming yarns will be returned to
Parkdale.

 

11.   Inventory Availability.

 

Parkdale agrees to maintain an inventory of each of the yarns covered by this
contract equal to three (3) days requirements.

 

12.   Packaging.

 

Yarn shall be delivered on pallets. All packaging materials will be returned to
Parkdale at their expense. Yarn performance data will accompany each shipment.

 

13.   Additions or Deletions of Yarn Counts.

 

Cone may elect to discontinue a given yarn count or to add a yarn count to this
contract. However, negotiations on waste factors and conversion costs must be
mutually agreed upon prior to adding a yarn count. All such changes will be
reflected on a revised Schedule A.

 

14.   Governing Law.

 

This agreement has been executed in the State of North Carolina and the parties
agree that the rights and obligations of the parties shall be governed by North
Carolina law.

 

15.   Confidentiality.

 

Neither Parkdale nor Cone shall use or disclose to any third party (other than
any assignee by Cone permitted under paragraph 5 above) any information related
to this agreement or the transactions contemplated hereby, except as is required
to be disclosed by applicable law or becomes generally available to the public
other than through a breach of this agreement, or for transactions specifically
contemplated by this agreement.

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Each of the parties hereto has caused this Agreement to be executed by its
appropriate officer as of the day and year first above written.

 

PARKDALE AMERICA LLC

     

CONE MILLS CORPORATION

By:

 

/s/    Daniel E. Nation        

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By:

 

/s/    Michael J. Whisenant         

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                                  Daniel E. Nation

                                  Parkdale Mills, Inc.

                                  Magnolia Manufacturing Company, Inc.

     

Michael J. Whisenant