Document:

Chroma Transition Agreement

 EXHIBIT 10.1 
  
 CHROMA TRANSITION AGREEMENT 
  
 THIS CHROMA TRANSITION AGREEMENT (this “Agreement”), dated as of the 8th day of November, 2004, among
Collins & Aikman Floorcoverings, Inc., a Delaware corporation (“C&A”), as guarantor of the obligations of Monterey Carpets, Inc., a California corporation and a wholly-owned subsidiary of C&A (“Monterey Carpets”),
Monterey Carpets, Monterey Color Systems, Inc., a California corporation and a wholly-owned subsidiary of Monterey Carpets (“MSCI”), Chroma Technologies, Inc., a California corporation (“CTI”), and a wholly-owned subsidiary of
The Dixie Group, Inc., a Tennessee corporation (“Dixie”), Dixie, as guarantor of the obligations of CTI, and Chroma Systems Partners, a California general partnership (“Chroma”). 
  
 W I T N E S S E
T H : 
  
 WHEREAS, MCSI holds a one-third
general partnership interest in Chroma; and  
  
 WHEREAS, CTI holds a one-third general partnership interest in Chroma; and 
  
 WHEREAS, Chroma Holdings, LLC, a California limited liability company (“Chroma Holdings”) holds a one-third general partnership interest in Chroma; and 
  
 WHEREAS, Chroma holds all of the membership interests in Chroma
Holdings; and 
  
 WHEREAS, CTI, MCSI and Chroma Holdings
are the sole general partners in Chroma; and 
  
 WHEREAS,
Monterey Carpets is a party to that certain “Monterey Dyeing and Finishing Agreement” dated as of February 11, 1993, by and between Monterey Carpets and Chroma (the “Dyeing and Finishing Agreement”); and 
  
 WHEREAS, Monterey Carpets has notified Chroma of its intention to
terminate the Dyeing and Finishing Agreement effective August 9, 2005, and to immediately begin to reduce the amount of dyeing and finishing services of Chroma utilized by Monterey Carpets; and 
  
 WHEREAS, MCSI has offered to sell its general partnership interest in
Chroma to Chroma, in accordance with the terms of the Dyeing and Finishing Agreement and the Chroma Partnership Agreement dated as of December 17, 1992; and 
  
 WHEREAS, the Chroma Partnership Agreement and the Dyeing and Finishing Agreement provide that, on early termination of the Dyeing and Finishing
Agreement, Chroma shall have the right and option to purchase the Partnership Interest for the sum of $1.00; and 
  
 WHEREAS, Monterey Carpets and CTI desire to provide for an orderly termination of the dyeing and finishing services heretofore provided to Monterey
Carpets by Chroma, and to minimize the disruption and expense to Chroma and Dixie caused by such termination; and 
  

 1 

 WHEREAS, Chroma desires to acquire MCSI’s one-third partnership interest in Chroma on the
terms and subject to the conditions set forth herein. 
  
 NOW,
THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements, and upon the terms and subject to the conditions hereinafter set forth, the parties do hereby agree as follows: 
  
 ARTICLE I  
  
 DEFINITIONS 
  
 1.1 Definitions. The following capitalized terms used herein
and in the agreements and other documents collateral hereto which incorporate the terms set forth below by reference shall have the meanings set forth opposite such term below: 
  
 “C&A” has the meaning set forth in the preamble.  
  
 “Chroma” has the meaning set forth in the preamble. 

  
 “Closing” has the meaning set forth in
Section 10.1.  
  
 “Closing Date” has the
meaning set forth in Section 10.1.  
  
 “Chroma
Holdings” has the meaning set forth in the recitals. 
  
 “Chroma Partnership Agreement” means the Partnership Agreement of Chroma currently in effect. 
  
 “CTI” has the meaning set forth in the recitals. 
  

“CTI Obligations” has the meaning set forth in Election 13.2. 
  
 “Discounted Partnership Pricing” has the meaning set forth in Section 7.3. 
  
 “Dixie” has the meaning set forth in the preamble.

  
 “Dyeing and Finishing Agreement” has the
meaning set forth in the recitals. 
  
 “Effective
Time” means 1:00 p.m. Eastern Standard Time on the Closing Date. 
  
 “Enron” has the meaning set forth in Section 6.4, 
  
 “Enron Claim” has the meaning set forth in Section 6.4. 
  

 2 

 “Fabrica” means Fabrica International, Inc., a California corporation and a wholly-owned
subsidiary of Dixie. 
  
 “Losses” has the meaning
set forth in Section 12.1. 
  
 “MCSI” has the
meaning set forth in the recitals. 
  
 “Monterey
Carpets” has the meaning set forth in the preamble. 
  
 “Monterey Carpets Obligations” has the meaning set forth in Section 13.1. 
  
 “Partnership Agreement” has the meaning set forth in the recitals. 
  
 “Partnership Interest” means the one-third interest in Chroma held by MCSI. 
  
 “Pre-Closing Partnership Obligations” has the meaning set
forth in Section 2.2. 
  
 “Skein Dyeing Associates”
has the meaning set forth in Section 7.2. 
  
 “Skein
Dyeing Equipment” has the meaning set forth in Section 7.3. 
  
 “Transition Period” has the meaning set forth in Section 7.8. 
  
 “WARN Act” has the meaning set forth in Secticn 7.3. 
  
 ARTICLE II 
  
 SALE OF PARTNERSHIP INTEREST 
  
 2.1
Purchase by Chroma. Upon the terms and subject to the conditions of this Agreement, Chroma shall purchase the Partnership Interest at Closing. 
  
 2.2 Effect of Purchase. Upon purchase of the Partnership Interest by Chroma pursuant to Section 2.1,
any and all obligations thereafter arising under the Chroma Partnership Agreement shall be the sole obligation of the holders of the partnership interests in Chroma, and MCSI shall have no liability therefor, except as otherwise expressly provided
in this Agreement. Notwithstanding the foregoing, MCSI shall remain obligated to perform and satisfy all the terms and conditions of this Agreement following such purchase and sale, (including, but not limited to, the obligation to indemnify Chroma
for 50% of any amount paid to satisfy the Enron Claim as provided by Section 6.4) and, notwithstanding anything to the contrary that may be contained in the Partnership Agreement or the Uniform Partnership Act, as in effect in California, MCSI shall
not be released from any liability or responsibility with respect to partnership obligations to third parties other than CTI, Fabrica, Dixie and their affiliates relating to any period prior to the Closing Date (the “Pre-Closing Partnership
Obligations”). For purposes of this Agreement, Pre-Closing Partnership Obligations shall include contingent as well as fixed obligations and unknown as well as known obligations related to Chroma, but Pre-Closing Partnership 

  

 3 

 
Obligations shall be limited solely to obligations to third parties unaffiliated with Chroma, CTI, Fabrica and Dixie (such as the Enron Claim) that are
asserted after Closing but that arise from events or circumstances that existed or occurred prior to Closing with respect to such Pre-Closing Partnership Obligations. MCSI shall be liable for a share of the Pre-Closing Partnership Obligations equal
to 50% thereof, its pre-Closing beneficial interest. Chroma, CTI, and Dixie represent and warrant to Monterey Carpets and MCSI that, to their knowledge, there are no pending or threatened claims against Chroma, CTI, Fabrica or Dixie arising under
the Partnership Agreement, other than the Enron Claim. Notwithstanding the foregoing, Monterey Carpets and MCSI acknowledge that Chroma’s representation and warranty expressly does not cover any matter of which Monterey Carpets or MCSI has or
would reasonably be deemed to have any knowledge Monterey Carpets and MCSI represent and warrant to Chroma, CTI and Dixie that, to their knowledge, there are no pending or threatened claims against Monterey Carpets or MCSI arising under the
Partnership Agreement, other than the Enron Claim. 
  
 ARTICLE
III 
  
 PURCHASE PRICE 
  
 3.1 Purchase Price for the Partnership Interest. The purchase
price for the Partnership Interest shall be One Dollar ($1.00), as provided in the Partnership Agreement and the Dyeing and Finishing Agreement, and shall be payable at Closing. 
  
 ARTICLE IV 
  
 REPRESENTATIONS AND WARRANTIES OF MONTEREY CARPETS AND MCSI 
  
 4.1 Representations and Warranties Concerning Monterey Carpets. As a material inducement to Chroma, CTI and
Dixie to enter into this Agreement and consummate the transactions contemplated hereby, Monterey Carpets makes the following representations and warranties to Chroma, CTI and Dixie as of the date hereof: 
  
 4.1.1 Organization of Monterey Carpets. Monterey Carpets is duly
organized, validly existing and in good standing under the laws of its state of organization, the State of California. 
  
 4.1.2 Authorization of Transaction. Monterey Carpets has full power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Monterey Carpets, enforceable in accordance with its terms and conditions. Monterey Carpets is not required to give any notice to, make any filing with or
obtain any authorization, consent or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. 
  

4.1.3 Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency or court to which Monterey Carpets is subject or any provision of the
charter or bylaws of Monterey Carpets or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to 

  

 4 

 
accelerate, terminate, modify or cancel or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which
Monterey Carpets is a party or by which it is bound or to which any of its assets is subject. 
  
 4.1.4 No Brokers’ or Finders’ Fees. Monterey Carpets has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this
Agreement for which Dixie, Fabrica, Chroma or CTI could become liable or obligated. 
  
 4.2 Representations and Warranties Concerning MCSI. As a material inducement to Chroma, CTI and Dixie to enter into this Agreement and consummate the transactions contemplated hereby, Monterey
Carpets makes the following representations and warranties to Chroma, CTI and Dixie as of the date hereof: 
  
 4.2.1 Organization of MCSI. 
  
 (a) MCSI is a corporation duly organized, validly existing and in good standing under the laws of California. 
  
 (b) MCSI has no subsidiaries. 
  
 4.2.2 No Conflict. The execution and delivery of this Agreement, the
consummation of the transactions contemplated herein, and the performance of the covenants and agreements contained herein will not, with or without the giving of notice or the lapse of time, or both, (i) violate or conflict with any of the
provisions of any charter document or bylaw of MCSI, (ii) violate, conflict with or result in a breach or default under or cause the termination or acceleration of any term or condition of any mortgage, indenture, contract, license, permit,
instrument, trust document, or other agreement, document or instrument to which MCSI is a party or by which MCSI or its properties may be bound, (iii) violate any material provision of law, statute, rule or regulation by which MCSI is a party or by
which it or its properties may be bound, (iv) violate or conflict with any material order, judgment, decree or ruling of any governmental authority applicable to MCSI or its assets, or (v) result in the creation or imposition of any lien, claim,
charge, restriction, security interest or encumbrance of any kind whatsoever upon any asset of MCSI. 
  
 4.2.3 No Required Consents and Approvals. Other than consents and approvals which have been obtained, no consent or approval is required by virtue
of the execution hereof or the consummation of any of the transactions contemplated herein to avoid the violation or breach of, or the default under, or the creation of a lien on assets of MCSI pursuant to the terms of, any regulation, order, decree
or award of any court or governmental agency or any lease, contract, mortgage, note, license to manufacture and distribute products, or any other instrument to which MCSI is a party or to which its property or any of the Shares is subject.

  
 4.2.4 No Brokers’ and Finders’ Fees. MCSI has
no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which Dixie, Fabrica, Chroma or CTI could become liable or obligated. 
  

 5 

 4.3 Representations and Warranties Concerning the Partnership Interest. As a material
inducement to Chroma, CTI and Dixie to enter into this Agreement and consummate the transactions contemplated hereby, Monterey Carpets and MCSI make the following representations and warranties to Chroma, CTI and Dixie as of the date hereof:

  
 4.3.1 Ownership. MCSI owns good and marketable record
and beneficial title to the Partnership Interest; the Partnership Interest is free and clear of any lien, restriction, claim, equity, charge, option, right of first refusal, or encumbrance, with no defects of title whatsoever. Neither Monterey
Carpets nor MCSI owns, directly or indirectly, any other interest in Chroma or Chroma Holdings, other than the Partnership Interest, nor does either of them have any right of any kind to have any such interest issued to them in Chroma or Chroma
Holdings. MCSI is the sole beneficial and record owner of the Partnership interest. Except for the sale to Chroma as contemplated herein, neither Monterey Carpets nor MCSI has sold, transferred or otherwise disposed of the Partnership Interest or
any right or interest therein, nor are Monterey Carpets or MCSI a party to any agreement obligating any of them to do so, other than the Partnership Agreement and this Agreement. Neither Monterey Carpets nor MCSI has granted, and no person or entity
has any right or option to purchase the Partnership Interest or any right therein, except for the rights of Chroma under the Chroma Partnership Agreement and this Agreement. 
  
 ARTICLE V 
  
 REPRESENTATIONS, WARRANTIES AND COVENANTS OF CTI, CHROMA AND DIXIE 
  
 As a material inducement to Monterey Carpets, MCSI and C&A to enter into this Agreement and consummate the transactions
contemplated hereby, CTI hereby makes the following representations and warranties to Monterey Carpets and C&A as of the date hereof: 
  
 5.1 Authorization. This Agreement has been duly executed and delivered by CTI, Chroma and Dixie and constitutes the legal, valid and
binding agreement of CTI, Chroma and Dixie enforceable in accordance with its terms. 
  
 5.2 No Conflict. Neither the execution and delivery of this Agreement nor the performance of the transactions contemplated herein by CTI, Chroma and Dixie will violate or conflict with or
constitute a default under any mortgage, indenture, contract, agreement, license, permit, instrument or trust or any order or ruling of any governmental authority to which CTI, Chroma and Dixie is a party or by which CTI is bound, or violate any
provision of law, statute, rule or regulation to which CTI is subject. 
  
 5.3 No Brokers’ and Finders’ Fees. Neither CTI, Chroma and Dixie nor anyone acting on behalf of CTI has done anything to cause or incur any liability to any party for any brokers’ or
finders’ fees or the like in connection with this Agreement or any transaction contemplated hereby. 
  

 6 

 5.4 No Conflict. The execution and delivery of this Agreement, the consummation of
the transactions contemplated herein, and the performance of the covenants and agreements contained herein will not, with or without the giving of notice or the lapse of time, or both, (i) violate or conflict with any of the provisions of any
charter document or bylaw of CTI, Chroma and Dixie (ii) violate, conflict with or result in a breach or default under or cause the termination or acceleration of any term or condition of any mortgage, indenture, contract, license, permit,
instrument, trust document, or other agreement, document or instrument to which CTI, Chroma or Dixie is a party or by which CTI, Chroma or Dixie or its or their properties may be bound, (iii) violate any material provision of law, statute, rule or
regulation by which CTI, Chroma and Dixie is a party or by which it or its or their properties may be bound, (iv) violate or conflict with any material order, judgment, decree or ruling of any governmental authority applicable to CTI, Chroma and
Dixie or its or their assets, or (v) result in the creation or imposition of any lien, claim, charge, restriction, security interest or encumbrance of any kind whatsoever upon any asset of CTI, Chroma or Dixie. 
  
 5.5 No Required Consents and Approvals. No consent or approval
is required by virtue of the execution hereof or the consummation of any of the transactions contemplated herein. 
  
 5.6 Approvals of Third Parties; Satisfaction of Conditions to Closing. CTI will use its reasonable, good faith efforts, and will cooperate
with Monterey Carpets, to secure all necessary consents, approvals, authorizations and exemptions from governmental agencies and other third parties. CTI will use its reasonable, good faith efforts, to obtain the satisfaction of the conditions
specified in Articles VIII, as shall be required in order to enable Monterey Carpets to cause the Closing to occur on the Closing Date. 
  
 Notwithstanding the foregoing, Chroma’s representations and warranties shall not be deemed to be breached by any matter with respect to which Monterey Carpets and
MCSI have knowledge or reasonably would be deemed to have knowledge. 
  
 ARTICLE VI 
  
 COVENANTS OF MONTEREY CARPETS

  
 6.1 Pre-Closing Operations.
Monterey Carpets hereby covenants and agrees, except as contemplated hereunder, or as consented to in writing by CTI, pending the Closing, that it shall cause the business of MCSI to be operated and conducted in the ordinary course in accordance
with prior practices and cause the business of MCSI to be carried on diligently and substantially in the manner as heretofore conducted in the ordinary course of business. Notwithstanding the foregoing, the parties acknowledge that Chroma shall not
be obligated to, and shall not, make any distribution of partnership profits whatsoever. 
  
 6.2 Access. From the date of this Agreement to the Closing Date, Monterey Carpets shall cause MCSI to (i) provide CTI and its designees with
such information as CTI may from time to time reasonably request with respect to MCSI and the transactions contemplated by this 

  

 7 

 
Agreement, (ii) provide CTI and its designees, officers, counsel, accountants, actuaries and other authorized representatives access during regular business
hours and upon reasonable notice to the books, records, offices, personnel, counsel, accountants and actuaries of MCSI as CTI or its designees may from time to time reasonably request, and (iii) permit CTI and its designees to make such inspections
thereof as CTI may reasonably request. 
  
 6.3 Approvals of
Third Parties; Satisfaction of Conditions to Closing. Monterey Carpets will use its reasonable, good faith efforts, and will cooperate with CTI, to secure all necessary consents, approvals, authorizations and exemptions from governmental
agencies and other third parties. Monterey Carpets will use its reasonable, good faith efforts to obtain the satisfaction of the conditions specified in Articles IX, as shall be required in order to enable CTI to cause the Closing to occur on the
Closing Date. 
  
 6.4 Enron Claim. Monterey
Carpets agrees to indemnify Chroma for 50% of any final judgment against Chroma arising out of the Enron Claim (as defined below), or 50% of any payment made in any final settlement of the Enron Claim plus 50% of any expense or cost associated with
defense of the Enron Claim. As of the date hereof, Enron Energy Services, Inc. (“Enron”) has asserted a claim for amounts asserted to be due under that certain Master Firm Natural Gas Sales Agreement dated September 1, 1999, including
Transaction Agreement No. 2, by and between Enron and Chroma but no litigation has been filed asserting such claim (the “Enron Claim”); such claim has been asserted in a letter dated March 21, 2003, addressed to Mr. James Harley, President
of Chroma. CTI and Monterey Carpets agree to jointly determine how to proceed in response to the claim, including whether and when to settle the claim, if the parties should agree to do so. During the pendency of the claim, Monterey Carpets agrees
to pay to Chroma, monthly, one-half of all fees and expenses of counsel incurred by Chroma. 
  
 ARTICLE VII 
  
 COVENANTS OF THE PARTIES – TRANSITION OF BUSINESS 
  
 Monterey Carpets, MCSI and CTI, respectively, hereby covenant to and agree with one another as follows: 
  
 7.1 Pre-Closing Operations of Chroma. MCSI and CTI each hereby covenant and agree, except as contemplated hereunder, or as consented to in
writing by the other, pending the Closing, that they shall operate and conduct Chroma’s business only in the ordinary course in accordance with prior practices and carry on Chroma’s business diligently and substantially in the manner as
heretofore conducted and not make or institute any methods of sale, lease, management, accounting or operation except in the ordinary course of business consistent with past practice. Notwithstanding the foregoing, the parties acknowledge that
Chroma shall not be obligated to, and shall not, make any distribution of partnership profits whatsoever. 
  
 7.2 Employment of Skein Dyeing Associates. As of the Effective Time, Monterey Carpets will offer at-will, full-time employment to all
associates of Chroma set forth on Schedule 7.2, attached hereto (the “Skein Dyeing Associates”). Such employment shall be offered to each such associate on the same terms and conditions, including (but not limited to) 

  

 8 

 
hourly wage-rates and employee benefits, as such associates are currently employed by Chroma. Furthermore, Monterey Carpets shall be responsible for any
worker’s compensation benefits to which the Skein Dyeing Associates shall be entitled. Such employment, if accepted, shall commence immediately upon the Effective Time. Monterey Carpets will give those employees the notice required by the
Worker Adjustment and Retraining Notification Act (the “WARN Act”) as a consequence of any act of the parties contemplated by this Agreement, or otherwise. Monterey Carpets shall indemnify and hold harmless CTI, Dixie, Chroma and Fabrica
from any expense, claim or liability resulting from giving the WARN Act Notice or from a failure to give any such notice and any failure to employ any such Skein Dyeing Associate as required by this Agreement. Additionally, Monterey Carpets shall be
responsible for any severance cost resulting from Chroma’s termination of the Skein Dyeing Associates pursuant to this Agreement, and any such severance cost resulting from the termination of any such Skein Dyeing Associate by Monterey Carpets
subsequent to the employment of such associates by Monterey Carpets, pursuant to this Agreement. 
  
 7.3 Lease of Skein Dyeing Equipment. As of the Effective Time, Monterey Carpets shall ease all skein dyeing equipment owned by Chroma and
used in its skein dyeing operations (the “Skein Dyeing Equipment”) from Chroma. A list of such Skein Dyeing Equipment is set forth on Schedule 7.3.1. In consideration of such lease, Monterey Carpets shall pay to Chroma an
amount per pound equal to the Discounted Partnership Pricing (as defined below) for each pound of yarn skein dyed by Monterey Carpets utilizing such Skein Dyeing Equipment. Calculation of the per pound Discounted Partnership Pricing shall be
completed monthly and paid by Monterey Carpets to Chroma as soon as reasonably practicable following such calculation. The term of such lease shall be for a period of six (6) months from the Effective Time. At the end of such term, or at any time
during the term, at the election of Monterey Carpets, Monterey Carpets may purchase the Skein Dyeing Equipment at a price to be mutually agreed upon by Chroma and Monterey Carpets. Monterey Carpets may purchase some or all of the Skein Dyeing
Equipment pursuant to this election, but upon electing to purchase such equipment Monterey Carpets shall be obligated to remove it at its sole cost and expense as soon as reasonably practicable. For the purposes of this Agreement, “Discounted
Partnership Pricing” shall mean an amount equal to the customary per pound Chroma partnership pricing as set forth on Schedule 7.3.2 less a discount equal to the total per pound labor charge for such skein dyed yarn as set
forth on Schedule 7.3.2. Chroma, at its expense, shall continue to supply dyes, chemicals and other materials used in the yarn conversion process, consistent with past practices. All yarn that is skein dyed by Monterey Carpets
utilizing the Skein Dyed Equipment shall be the sole responsibility of Monterey Carpets, and none of Dixie, Chroma, CTI or Fabrica makes, shall make or shall be deemed to have made any representation or warranty with respect thereto, nor shall any
of Dixie, Chroma, CTI, or Fabrica have any liability to Monterey Carpets for the condition, quality or merchantability of such skein dyed yarn to Monterey Carpets or to any purchaser or user of product incorporating such skein dyed yarn. Monterey
Carpets agrees to indemnify and hold harmless Dixie, Chroma, CTI, and Fabrica from any cost, damage, expense, liability or claim whatsoever resulting from any claim asserted or based upon the condition, quality, merchantability or use of such skein
dyed yam. Upon termination of Chroma’s skein dyeing services, Monterey Carpets will purchase all remaining supplies, dyes, chemicals and other such materials supplied by Chroma pursuant to this Agreement, at their fair market value. 

 

 9 

 7.4 Agreement. The parties hereto agree to cooperate with one another to the extent
necessary to move or relocate equipment, including sample racks, cutting tables and other equipment, in order to facilitate the orderly transition of business contemplated by this Agreement. The parties hereto agree that Royce Renfroe and Ralph
Grogan shall be responsible for negotiating the details of all such matters. Each party shall be responsible for the expense of moving or relocating its own equipment to the extent any such movement or relocation is necessitated by the parties’
agreement. 
  
 7.5 Intentionally Omitted.

  
 7.6 Participation of Harley in Benefit Plans.
Chroma agrees to permit Jim Harley to participate in all benefit plans maintained and continued by Chroma until December 31, 2004, so long as Mr. Harley is employed by Chroma. In addition, Chroma agrees to be responsible for the determination
and payment of any bonus to Mr. Harley for the fiscal year ending in 2004. 
  
 7.7 Adherence to Chroma Safety Standards. The Skein Dyeing Associates and any other associates employed by Monterey Carpets will be working in close proximity to Chroma employees. Accordingly, to provide
a safe working environment with consistent safety rules, Monterey Carpets agrees that all associates employed by Monterey Carpets and working in the Chroma facilities shall adhere to and follow all safety standards established by Chroma. Monterey
Carpets agrees to enforce these safety standards in the same manner and to the same degree as Chroma enforces such standards with its associates. 
  
 7.8 Administrative Services and IT Equipment. Monterey Carpets agrees to leave all phone, voicemail, networking and server based equipment
in place for a period of one year from the Effective Time (the “Transition Period”); provided, however, Monterey Carpets and CTI may jointly agree to the earlier or phased-out removal of such equipment to the extent practicable. During the
Transition Period, IT personnel of CTI, Fabrica and Monterey Carpets shall work jointly to move data and e-mail services for the Chroma business to IT Systems maintained by Dixie. Monterey Carpets agrees to provide personnel and payroll services,
shipping services and other miscellaneous services and supplies to Chroma during the Transition Period, in addition to IT services, as such services have heretofore been provided, until Monterey Carpets terminates such functions. Monterey Carpets
shall continue to charge Chroma for such services at the rates set forth on Schedule 7.8, and, to the extent such services are phased-out by agreement of the parties, the charge for such services shall be proportionately reduced. At
Closing, CTI or its designee may hire Gene Farnell. Thereafter, for so long as Mr. Farnell is employed by CTI or its designee, and, in addition to any other pro-rated cost provided for hereunder, Monterey Carpets agrees that it shall reimburse CTI
or its designee monthly in an amount to be determined by multiplying Mr. Farnell’s salary cost plus benefits ($8,442/month) times a percentage equal to the percentage of time Mr. Farnell devotes attention to the skein dyeing and other services
continued by Monterey Carpets. CTI may agree with Monterey Carpets to purchase some of the IT equipment (including phone, voicemail, servers and other data processing and communications equipment) utilized during the Transition Period, such
agreement to include pricing and other terms of purchase. At the election of CTI, Monterey Carpets shall assign to CTI any contracts to which it is a party (to the extent such contracts are assignable) which CTI deems necessary to the continued
provision of the services to be provided by it hereunder. 
  

 10 

 7.9 Payment to CTI. At the Effective Time, Monterey Carpets will pay CTI Two Hundred
Thousand Dollars ($200,000) to assist it in meeting the expenses and costs resulting from the termination of the Dyeing and Finishing Agreement. It is acknowledged and agreed by the parties that Monterey Carpets shall be continually reducing the
amount of dyeing and finishing business with Chroma during the Transition Period, and that it is estimated that all of Monterey Carpets’ dyeing and finishing volume will be moved from Chroma by early 2005. It is agreed that the Dyeing and
Finishing Agreement shall be terminated effective as of the date hereof and that all of Monterey Carpets’ obligations under the Dyeing and Finishing Agreement shall be superseded and satisfied by fulfillment of the terms and conditions of this
Agreement. 
  
 7.10 Pricing for Monterey
Carpets. From the date hereof and until January 31, 2005, Chroma will offer partner pricing to Monterey for all dyeing and finishing services performed by Chroma for Monterey Carpets, in accordance with the pricing schedule attached hereto
as Schedule 710. After January 31, 2005, Chroma shall provide dyeing and finishing services to Monterey Carpets until completion of the Transition Period, at commercially reasonable prices mutually agreed to by and between the parties.
All such dyeing and finishing services, other than the skein dyeing services shall be provided by Chroma to Monterey Carpets on the terms and subject to the conditions set forth in Sections 1.2, 3.1, 4, 5, 7 and 8 of the Dyeing and Finishing
Agreement, although the Dyeing and Finishing Agreement is deemed fulfilled and superseded by this Agreement. 
  
 ARTICLE VIII 
  
 CONDITIONS TO MONTEREY CARPETS’ OBLIGATIONS 
  
 Each of the obligations of Monterey Carpets to be performed hereunder shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions: 
  
 8.1 Purchase Price. Chroma shall have tendered payment of the purchase price in accordance with Section
3.1 at the Closing. 
  
 8.2 Accuracy of
Representations and Warranties. The representations and warranties of Dixie, CTI and Chroma set forth in Article V shall have been true and correct in all material respects on the date made, and shall be true and correct on the Closing
Date. 
  
 8.3 Performance of Covenants. CTI
shall have performed and complied with all covenants, obligations, and conditions required to be performed or complied with by CTI on or before the Closing Date pursuant to this Agreement. 
  
 8.4 Opinion of Counsel to CTI. Monterey Carpets shall
have received from counsel for CTI an opinion, dated the Closing Date, in the form of Exhibit A. 
  
 8.5 Documents Satisfactory in Form and Substance. All agreements, certificates, opinions and other documents delivered by CTI to
Monterey Carpets hereunder shall be in form 

  

 11 

 
and substance reasonably satisfactory to counsel for Monterey Carpets, in the exercise of such counsel’s reasonable judgment. 
  
 ARTICLE IX 
  
 CONDITIONS TO CTI’S OBLIGATIONS 
  
 The obligations of CTI be performed hereunder shall be subject to the
satisfaction on or before the Closing Date of each of the following conditions: 
  
 9.1 Accuracy of Representations and Warranties. The representations and warranties of Monterey Carpets and MCSI set forth in Article IV shall have been true and correct in all material respects on the
date made and shall be true and correct on the Closing Date. 
  
 9.2 Performance of Covenants. Monterey Carpets and MCSI shall have performed and complied with all covenants, obligations, and conditions required to be performed or complied with by Monterey Carpets and MCSI on or
before the Closing Date pursuant to this Agreement. 
  
 9.3
Opinion of Counsel to Monterey Carpets. CTI shall have received from Womble Carlyle Sandridge & Rice, PLLC, counsel to Monterey Carpets, an opinion, dated the Closing Date, in the form of Exhibit B. 
  
 9.4 Documents Satisfactory in Form and Substance. All
agreements, certificates, opinions and other documents delivered by Monterey Carpets and MCSI to CTI hereunder shall be in form and substance reasonably satisfactory to counsel for CTI, in the exercise of such counsel’s reasonable judgment.

  

 12 

 ARTICLE X  
  
 CLOSING 
  
 10.1 Closing Date. Subject to the satisfaction or waiver of the conditions set forth herein, the closing of the purchase and sale of
the Shares (the “Closing”) shall take place at 1:00 p.m. Eastern Standard Time on November 8, 2004, at the offices of Shumacker Witt Gaither & Whitaker, P.C., 1100 SunTrust Bank Building, 736 Market Street, Chattanooga, Tennessee
34702, or at such other date, time and place as the parties shall agree. The date of the Closing is referred to herein as the “Closing Date.” 
  

10.2 Closing Requirements. At the Closing the following shall occur: 
  
 (a) The parties hereto shall exchange and deliver the
certificates and other evidence as to the accuracy of the representations and warranties contained herein, and the compliance with the covenants and agreements contained herein, which are required to be delivered by such party as herein provided.

  
 (b) MCSI shall have delivered the Assignment
of Partnership Interest in the form attached hereto as Exhibit C. 
  
 (c) Counsel for Monterey Carpets shall deliver to CTI the opinions specified in Section 9.3 and counsel for CTI shall deliver to Monterey
Carpets the opinion specified in Section 8.4. 
  
 (d) All other documents, instruments; and writings required to be delivered by a party at or prior to the Closing Date pursuant to this Agreement will be delivered to the party entitled thereto. 
  
 ARTICLE XI 
  
 TERMINATION PRIOR TO CLOSING 
  
 11.1 Termination of Agreement. This Agreement may be terminated
at any time prior to the Closing: 
  
 (a) At the
election of CTI, at or prior to Closing, if any of the conditions precedent set forth in Article IX have not been fulfilled on or before the Closing Date; or 
  

(b) At the election of Monterey Carpets, at or prior to Closing, if any of the conditions precedent set forth in Article VIII have not
been fulfilled on the Closing Date; or 
  
 (c) By
the mutual written consent of CTI and Monterey Carpets. 
  
 11.2 Termination of Obligations. Termination of this Agreement pursuant to this Article XI shall terminate all obligations of the parties hereunder. 
  

 13 

 ARTICLE XII 
  
 INDEMNIFICATION 
  
 12.1 Mutual Indemnification Obligation. In addition to any other specific requirement for indemnification set forth herein, Monterey Carpets
and MCSI hereby agree to indemnify and hold harmless Chroma and CTI, and Chroma and CTI hereby agree to indemnify and hold harmless Monterey Carpets, against any and all liability, claims, damages, losses, costs or expenses, including reasonable
attorneys’ fees (“Losses”), relating to any breach of, noncompliance with or misrepresentation by such indemnifying party contained in any representation, warranty or covenant contained herein. 
  
 ARTICLE XIII 
  
 GUARANTIES 
  
 13.1 C&A Guaranty. C&A hereby irrevocably and
unconditionally guarantees to Chroria and CTI all obligations and agreements to be performed by Monterey Carpets or MCSI hereunder, including, but not limited to, any obligation of indemnification (the “Monterey Carpets Obligations”). The
guaranty provided by C&A pursuant to this Section 13.1 is a guaranty of payment and performance, not merely of collection. If Monterey Carpets or MCSI shall fail timely to perform or to pay any Monterey Carpets Obligation hereunder, C&A
shall pay or perform such obligation as and when due. C&A hereby waives (i) promptness, diligence, notice, disclosure, demand for payment, presentment, protest and dishonor, and (ii) any right to force CTI to proceed first, concurrently or
jointly against Monterey Carpets, MCSI, any other guarantor, surety or other co-obligor. 
  
 13.2 Dixie Guaranty. Dixie hereby irrevocably and unconditionally guarantees to Monterey Carpets all obligations and agreements to be
performed by CTI hereunder, including, but not limited to, any obligation of indemnification (the “CTI Obligations”). The guaranty provided by Dixie pursuant to this Section 13.2 is a guaranty of payment and performance, not merely of
collection. If CTI shall fail timely to perform or to pay any CTI Obligation hereunder, Dixie shall pay or perform such obligation as and when due. Dixie hereby waives (i) promptness, diligence, notice, disclosure, demand for payment, presentment,
protest and dishonor, and (ii) any right to force Monterey Carpets to proceed first, concurrently or jointly against CTI, any other guarantor, surety or other co-obligor. 
  
 ARTICLE XIV  
  
 MISCELLANEOUS 
  
 14.1 Survival of Representations and Warranties. The representations and warranties in this Agreement, or in any exhibit, list, instrument
or document delivered in connection herewith or therewith shall survive the Closing. 
  

 14 

 14.2 Entire Agreement. This Agreement (including the Schedules and Exhibits and
their underlying executed agreements), constitutes the sole understanding of the parties with respect to the subject matter hereof. No amendment, modification or alteration of the terms or provisions of this Agreement shall be binding unless the
same shall be in writing and duly executed by the parties hereto. 
  
 14.3 Parties Bound by Agreement; Successors and Assigns. The terms, conditions and obligations of this Agreement shall inure to the benefit of and be binding upon the parties hereto and the
respective successors and assigns thereof. 
  
 14.4
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument. 
  
 14.5 Modification and Waiver. Any of the terms or
conditions of this Agreement may be waived in writing at any time by the party which is entitled to the benefits thereof. No waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provision
hereof (whether or not similar). 
  
 14.6
Expenses. Except as otherwise provided herein, Monterey Carpets and CTI shall each pay all costs and expenses incurred by them or it or on their or its behalf in connection with this Agreement and the transactions contemplated hereby,
including fees and expenses of their or its own financial consultants, accountants and counsel. 
  
 14.7 Notices. Any notice, request, instruction or other document to be given hereunder by any party hereto to any other party hereto shall
be in writing and delivered by telecopy transmission or personally by any overnight delivery service, fees prepaid, 
  
 if to Monterey Carpets to : 
  
 Leonard F. Ferro 
 Chief Financial Officer 
 311 Smith Industrial Boulevard 
 Dalton, Georgia 30722 
 Fax: 706-259-2125 
  
 with a copy to: 
  
 G. Donald Johnson Esq. 
 Womble Carlyle Sandrige & Rice, PLLC 
 One Atlantic Center, Suite 3500 
 1201 W. Peachtree St. 
 Atlanta, GA 30309 
 Telecopy Number: 404.870-4878 
  

 15 

 if to CTI to: 
  

CTI 
 c/o The Dixie Group, Inc. 

2208 South Hamilton Street 
 Dalton, GA
30721-4974 
 Attn: Mr. Gary A. Harmon 
 Telecopy Number: 706-876-5896 
  
 with a copy to:

  
 John F. Henry, Jr., Esq. 
 Shumacker Witt Gaither & Whitaker, P.C. 
 1100 SunTrust Bank Building 
 736 Market Street 
 Chattanooga, TN 37402 
 Telecopy Number: 423-266-4138  
  
 or at such other address or number for a party as shall be specified by like notice. Any
notice which is delivered personally or by telecopy transmission in the manner provided herein shall be deemed to have been duly given to the party to whom it is directed upon the business day following the date delivery is made. 
  
 14.8 Further Cooperation. From and after the Closing
Date, the parties will each take all such action and deliver all such documents as shall be reasonably necessary or appropriate to confirm and vest title to the Shares in CTI. 
  
 14.9 Governing Law; Construction. This Agreement is executed by the parties in, and shall be construed
in accordance with and governed by the laws, of the State of Georgia without giving effect to the principles of conflicts of law thereof. No provision of this Agreement or any related document shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party’s having or being deemed to have structured or drafted such provision. 
  
 14.10 Submission to Jurisdiction. For purposes of
disputes arising under this Agreement, the parties hereto submit themselves to the jurisdiction of the state and federal courts located in the Northern District of Georgia, provided however, that nothing contained herein shall be deemed a waiver by
either party of any right it may have to remove a cause of action brought in state court to a federal court Each of the parties hereby consents to the service of process by registered mail at its address set forth above and agrees that its
submission to jurisdiction and its consent to service of process by mail is made for the express benefit of the other party. 
  
 14.11 Public Announcements. Except as otherwise required by law, no public announcement shall be made with regard to the transactions
contemplated by this Agreement without the prior written consent (as to form and content and timing) of Monterey Carpets, MCSI and CTI, which consent shall not be unreasonably withheld. 
  

 16 

 14.12 No Third-Party Beneficiaries. With the exception of the parties to this
Agreement, there shall exist no right of any person to claim a beneficial interest in this Agreement or any rights occurring by virtue of this Agreement. 
  

14.13 References. Whenever reference is made in this Agreement to any Article, Section, Schedule or Exhibit, such reference shall
be deemed to apply to the specified Article or Section of this Agreement or the specified Schedule or Exhibit to this Agreement. 
  
 [The remainder of this page was intentionally left blank.] 
  

 17 

 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed on its
behalf on the date indicated. 
  

			
	DIXIE:
	
	 THE DIXIE GROUP, INC.

		
	By:	 	/s/ Gary A. Harmon
	 	 	 Gary A. Harmon, Chief Financial Officer and Vice President

  

			
	MONTEREY CARPETS:
	
	 MONTEREY CARPETS, INC.

		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 

  

			
	MCSI:
	
	MONTEREY COLOR SYSTEMS, INC.
		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 

  

			
	C&A:
	
	 COLLINS & AIKMAN FLOORCOVERINGS, INC.

		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 

  

 18 

 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed on its
behalf on the date indicated. 
  

			
	DIXIE:
	
	 THE DIXIE GROUP, INC.

		
	By: 	 	 
	 	 	 Gary A. Harmon
 Chief Financial Officer and Vice President

  

			
	MONTEREY CARPETS:
	
	 MONTEREY CARPETS, INC.

		
	By:	 	 /s/ Leonard F. Ferro

	 Name:
	 	 Leonard F. Ferro

	 Title:
	 	 Vice President and Chief Financial Officer

  

			
	MCSI:
	
	 MONTEREY COLOR SYSTEMS, INC.

		
	By:	 	 /s/ Leonard F. Ferro

	 Name:
	 	 Leonard F. Ferro

	 Title:
	 	 Vice President and Chief Financial Officer

  

			
	C&A:
	
	 COLLINS & AIKMAN FLOORCOVERINGS, INC.

		
	By:	 	 /s/ Leonard F. Ferro

	 Name:
	 	 Leonard F. Ferro

	 Title:
	 	 Vice President and Chief Financial Officer

  

 19 

			
	CHROMA:
	
	 CHROMA SYSTEMS PARTNERS

		
	 By:
	 	 /s/ Jim Harley

	 Name:
	 	 Jim Harley

	 Title:
	 	 President

  

			
	CTI:
	
	 CHROMA TECHNOLOGIES, INC.

		
	By:	 	 
	 Name:
	 	 
	 Title:
	 	 

  

 20 

			
	CHROMA:
	
	 CHROMA SYSTEMS PARTNERS

		
	By:	 	 
	 Name:
	 	 
	 Title:
	 	 

  

			
	CTI:
	
	 CHROMA TECHNOLOGIES, INC.

		
	By:	 	 /s/ Gary A. Harmon

	 Name:
	 	 Gary A. Harmon

	 Title:
	 	 President

  

 21Severance Agreement

 Exhibit 10.1 
  

			
	

	 	 

  
 December 7, 2004
  
 Lisa Sutrick
 W303N8728 Woodland Dr
 Hartland, WI 53029-8480
  
 Lisa,
  
 Pursuant to our conversation, your employment with Document Sciences Corporation (“the Company”) will be terminated as of December 7, 2004. The purpose of this
letter is to explain the basic severance program and set forth the terms and conditions for receiving an enhanced severance package.
  
 Your basic severance package will consist of (a) a lump-sum payment representing your normal salary through December 7, 2004 and (b) continuation of health insurance
through December 31, 2004. If you decide not to accept the remaining terms of this letter, then the pay and benefits outlined above will be the only severance you will receive from the Company. In this event, your COBRA eligibility date under the
Company’s health plan will be January 1, 2005.
  
 If you are willing to agree
to the terms and conditions set forth below, in place of the basic severance package you will also receive the following enhanced severance package:
  
 1.      Salary Continuation. Beginning December 8, 2004, you will receive salary
continuation of your regular base salary, on the normal payroll cycle, for a period of six (6) months that will end May 24, 2005. Contingent upon your advising us in writing (on or before May 24, 2005) that you have not found full-time employment
(either as an employee, contractor or consultant) by the end of the continuation period, you will receive continuing salary on a month-by-month basis, not to exceed an additional three (3) months. Under no circumstances will the salary continuation
period extend beyond nine (9) months.
  
 2.      Benefits. During the salary continuation period, you will be permitted to continue your participation in the Company’s group health benefits at the regular employee premium rate based on
your benefit elections in force on the date of this letter. As a non-active employee effective December 7, 2004, you are not eligible to participate in any other benefit programs available to the Company’s employees, including but not limited
to the 401(k) Plan, the Employee Stock Purchase Plan and paid time off. If you choose to elect to receive the benefits as outlined in this enhanced severance package, your COBRA eligibility date will occur at the completion of your salary
continuation period, or May 31, 2005, whichever is later.
  
 3.      Vacation and 401(k). You will receive vacation pay as accrued per the current vacation policy, less any days you have already taken this year. Relating to the 401(k) Plan,
if your vested account balance exceeds $5,000 you are welcome to leave your account assets in the Document Sciences 401(k) Plan for as long as your assets remain over $5,000. However, if your vested account balance is below $5,000 you will be
required to roll your money out of the Document Sciences 401(k) plan within 30 days of your termination date.
  
 In order to receive the enhanced severance package, you agree to release Document Sciences Corporation, its stockholders, subsidiaries, affiliated companies and all successors, assigns, predecessors, and their agents,
officers, attorneys, directors, employees and representatives from any and all claims or lawsuits including, for example, claims for unpaid compensation, claims arising under state or federal equal employment laws, the Age Discrimination in
Employment Act, the Americans With Disabilities Act, wrongful discharge claims, tort claims and contract claims arising from or attributable to the Company’s employment of you, your termination or any other matter or event occurring prior to
the date of termination. By agreeing to this release, you do not waive any rights you may have to pursue unemployment benefits. You should realize that this release waives

			
	

	 	 

  
 any and all rights under California Civil Code
Section 1542 or any analogous state or federal law and therefore extends to all claims of every nature, known or unknown, suspected or unsuspected, that you may have against the Company as of the date of this Agreement, and that by signing this
Agreement you will be precluded from filing a claim or lawsuit against the Company for these reasons. Section 1542 of the California Civil Code reads as follows:
  
 “Certain claims not affected by general release. A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the release which if known to him must have materially affected his settlement with the debtor.”
  
 Further, in order to receive the enhanced severance package, you also agree that you will not, for a period of nine (9) months beginning
December 7, 2004, either as a paid or unpaid employee, consultant, advisor, contractor or in any other capacity direct or indirect: carry on, be associated with, be engaged or interested in, or provide help or assistance of any kind to the following
competitors and their affiliates – Exstream Software, Docucorp, Group 1 Software, InSystems, Thunderhead, GMC Software, Cincom, Metavante and ISIS.
  
 In addition to the aforementioned items, you and the Company further agree to comply with the Company’s policy regarding confidentiality and proprietary information.
You hereby agree that you will not at any time disclose directly or indirectly, to any person or entity or use for your own direct or indirect benefit any proprietary information or other confidential information of the Company known, learned, or
acquired by you during the period of employment with the Company.
  
 It would be
difficult to measure the damage to the Company from any breach of the obligations set forth in this agreement, that injury to the Company from any such breach would be impossible to calculate, and that money damages would therefore be an inadequate
remedy for any such breach. Therefore, you acknowledge through acceptance of this letter agreement that the Company shall be entitled to injunctive and other equitable relief in the event of such breach in addition to any other rights or remedies
which the company may possess.
  
 By this letter, we are advising you to consult
with an attorney prior to executing this Agreement and entering into a release. You should discuss all aspects of this Agreement with an attorney, if you so desire, and you should carefully read and understand all of the provisions of this Agreement
before signing it.
  
 This letter is hereby provided to you on December 7, 2004.
You will have until December 9, 2004 to consider this letter agreement and, 7 days after you sign it to revoke it in writing. This agreement will not be effective or enforceable until the expiration of the 7-day revocation period. If it is your
decision to sign this agreement, please do so where indicated below and fax it to Tawnya Arteaga via the Human Resources confidential fax at (760) 602-1470 so that it is received no later than December 9, 2004.
  
 Best Regards,
  
 John L. McGannon
 President and
CEO

					
	

	 	 

  
 ACCEPTANCE OF LETTER
AGREEMENT
  
 I have read the above letter agreement and have
decided to accept the enhanced severance packaged outlined therein. I understand that in exchange for receiving the enhanced severance package, I will be bound by the release on Page Two of this letter agreement and will be waiving any rights I may
have to bring any legal action against Document Sciences Corporation and others.

	 	  

	  	  

	 	Signature	  	Date
	 	  
  

	  	 
	 	Lisa Sutrick (Print Name)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]