EXHIBIT 2.1
AGREEMENT FOR PURCHASE OF ASSETS AND STOCK
THIS AGREEMENT FOR PURCHASE OF ASSETS AND STOCK is made and effective
as of the 31st day of December, 2002, by and among TARRANT MEXICO, S. de X.X. de
C.V., a corporation organized under the laws of the Republic of Mexico ("Tarrant
Mexico"), MACHRIMA LUXEMBOURG INTERNATIONAL, Sarl, a corporation organized under
the laws of Luxembourg ("Tarrant Luxembourg" and together with Tarrant Mexico,
the "Purchasers"), TRANS TEXTIL INTERNATIONAL, S.A. de C.V., a corporation
organized under the laws of the Republic of Mexico ("Textil"), INMOBILIARIA
XXXXXXX, X.X. de C.V., a corporation organized under the laws of the Republic of
Mexico ("Inmobiliaria"), XXXX XXXXXXX XXXXX XXXXXXXXX ("RLNB"), XXXX XXXXX
XXXXX, and XXXXX XXXXXX XXXXXXXXXX XXXXXXX (collectively, the "Shareholders"),
XXXXX XXXXX XXXXX (the "Guarantor"), and TARRANT APPAREL GROUP, a corporation
organized under the laws of the State of California (the "Parent"), with respect
to the following facts:
A. Textil owns certain equipment which is used by it in the manufacturing
of denim and twill fabric.
B. Inmobiliaria owns, and leases to Textil, certain real estate,
buildings, improvements and fixtures which are used by Textil in the
manufacturing of denim and twill fabric.
C. Jorge Xxxxxx Xxxxxxxxxx Xxxxxxx and Xxxx Xxxxxxx Xxxxx Xxxxxxxxx (the
"Inmobiliaria Shareholders") own all the issued and outstanding capital stock of
Inmobiliaria.
D. Xxxx Xxxxx Xxxxx and Xxxx Xxxxxxx Xxxxx Xxxxxxxxx (the "Textil
Shareholders") own all the issued and outstanding capital stock of Textil,
E. The Parent owns, through one or more subsidiaries, all the issued and
outstanding capital stock of Tarrant Mexico and Tarrant Luxembourg.
F. The Purchasers desire to purchase from Textil and the Inmobiliaria
Shareholders, and Textil and the Inmobiliaria Shareholders desire to sell to the
Purchasers, (i) all such equipment and (ii) all the issued and outstanding
capital stock of Inmobiliaria, all upon the terms and conditions contained
herein.
ACCORDINGLY, subject to the terms and conditions of this Agreement,
and on the basis of the premises, representations, warranties and agreements
contained herein, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE.
(a) Except as provided in Section 1.1(b), Textil shall sell,
assign, transfer, convey and deliver to Tarrant Mexico, and Tarrant
Mexico shall purchase and take from Textil, on the Closing Date (as
defined below), all property and assets which are used by Textil in
connection with the manufacturing of denim and twill fabric, as the
same shall exist on the Closing Date (the "Assets"), including, but
not limited to, the property and assets set forth on SCHEDULE 1.1(a).
(b) Notwithstanding Section 1.1(a), Textil shall not sell,
assign, transfer, convey or deliver to Tarrant Mexico hereunder, and
shall retain, the property and assets of Textil set forth on SCHEDULE
1.1(b).
1.2 PURCHASE PRICE.
(a) In consideration of the sale of the Assets to Tarrant
Mexico, Tarrant Mexico shall pay or deliver to Textil U.S. $42,000,000
(the "Asset Purchase Price") (subject to adjustment as provided in
Section 3.2), which Asset Purchase Price shall be paid by cancellation
as of the Closing Date of $42,000,000 of principal amount of that
certain Secured Promissory Note of Textil payable to Tarrant Mexico,
dated October 16, 2000, as amended (the "Note").
(b) The Asset Purchase Price shall be allocated among the Assets
as set forth on SCHEDULE 1.2(b).
1.3 NO ASSUMPTION OF LIABILITIES.
(a) Tarrant Mexico shall purchase and take the Assets free and
clear of all liens, claims, charges, encumbrances, security interests,
equities, restrictions on use, liabilities, obligations, expenses and
debts ("liabilities"), known and unknown, whether absolute,
contingent, accrued or otherwise.
(b) Textil and the Shareholders, jointly and severally, shall
pay or perform, and shall defend, indemnify and hold harmless Tarrant
Mexico from, any and all liabilities which arise or result from or are
related to, directly or indirectly, the Assets or the business or
operations of Textil or the Shareholders, or any of them, whether the
same arise before or after the Closing Date.
1.4 DELIVERY OF ASSETS.
(a) Delivery of possession of the Assets shall be deemed to have
occurred for all purposes at 11:59 p.m. (local time) on the day before
the Closing Date, and all risk of loss, whether or not covered by
insurance, shall be borne by Textil until such date and time and shall
be borne by Tarrant Mexico thereafter.
On the Closing Date, Textil shall deliver to Tarrant Mexico at
the Plant (as defined below) physical possession of the Assets
wherever located. With respect to any Assets which cannot be
physically delivered because they are in the possession of third
parties, or otherwise, Textil shall give irrevocable instructions to
the party in possession thereof that all right, title and interest in
and to the same shall have been vested in Tarrant Mexico, and shall
take such further action and execute and deliver such further
documents, at Textil's sole cost and expense, as Tarrant Mexico
reasonably may request to cause any such person to deliver any Assets
held by it to Tarrant Mexico at the Plant. The term "Plant" shall mean
the real estate, buildings, improvements and fixtures related to that
certain denim and twill fabric manufacturing facility located at Lote
1 A,B,C, S/N, San Diego Xocoyucan, Corredor Industrial, Ixtlacuixtla,
Tlaxcala, Mexico, C.P. 90700, including the real property known as:
"(i) Predio Rustico sin Construccion, Lote Uno "C", ubicado en Sec.
4ta., del Fraccionamiento San Diego Xocoyucan, Ixtacuixtla, Tlax.;
(ii) Predio Rustico sin Construccion, Lote Uno "B", Ubicado en Sec.
4ta., Fraccionamiento San Diego Xocoyucan, Ixtacuixtla, Tlax.; (iii)
Lote Uno "A", del Ex-Rancho San Deigo Xocoyucan, Ixtacuixtla, Tlax.,
(iv) Lote Uno "C", en que se fracciono la Ex-Hacienda de San Diego
Xocoyucan, Ixtacuixtla, Tlax.; (v) Lotes Uno "D" y Uno "E" del predio
rustico conocido como Crustitla, de la Antigua Hacienda de San Diego
Xocoyucan, Xxxxxxxxxx, Tlax.; (vi) Lote de terreno No. 2, Seccion
Cuarta del Xxxx. Xxxxxxxx xx Xxx Xxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxx."
(x) On the Closing Date, and from time to time thereafter, at
the request of Tarrant Mexico, Textil and the Shareholders shall
execute and deliver to Tarrant Mexico all such deeds, bills of sale,
endorsements, assignments, consents and other documents and
instruments of conveyance, transfer, assignment and further assurances
as shall be necessary or desirable, in the
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reasonable opinion of counsel to Tarrant Mexico, to vest in or to
confirm in Tarrant Mexico good title in and to the Assets.
1.5 EMPLOYEES. Notwithstanding anything to the contrary contained in
this Agreement, Tarrant Mexico will not be considered a "Patron Substituto"
under Mexican Labor Laws as a result of this Agreement and Tarrant Mexico
shall have no obligation to employ, and shall not assume any liability of
Textil to, any employee, consultant or agent of Textil, including, but not
limited to, any liability for wages, bonuses, accrued vacation pay,
benefits or the promise of future employment. Textil, the Shareholders and
the Guarantor, jointly and severally, shall indemnify, defend and hold
harmless Tarrant Mexico and its affiliates from any such liability.
2. PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE. The Inmobiliaria Shareholders shall sell,
assign, transfer, convey and deliver to the Purchasers, and the Purchasers
shall purchase and take from the Inmobiliaria Shareholders, on the Closing
Date, all the issued and outstanding shares of the capital stock of
Inmobiliaria (the "Shares"). Each of Tarrant Mexico and Tarrant Luxembourg
shall purchase from the Inmobiliaria Shareholders the number of Shares set
forth opposite its respective name in SCHEDULE 2.1.
2.2 PURCHASE PRICE.
(a) In consideration of the sale of the Shares to be purchased
by Tarrant Mexico, Tarrant Mexico shall pay or deliver to the
Inmobiliaria Shareholders, on the Closing Date, U.S. $499.00.
(b) In consideration of the sale of the Shares to be purchased
by Tarrant Luxembourg, Tarrant Luxembourg shall pay to the
Inmobiliaria Shareholders, on the Closing Date, U.S $1.00.
(c) The consideration to be paid by the Purchasers to the
Inmobiliaria Shareholders pursuant to Sections 2.2(a) and (b) shall be
referred to herein collectively as the "Share Purchase Price."
(d) The Share Purchase Price shall be allocated between the
Inmobiliaria Shareholders as set forth on SCHEDULE 2.2.
3. CLOSING
3.1 CLOSING DATE. The purchase and sale of the Assets and the Shares
contemplated by this Agreement shall take place at 10:00 a.m. (local time)
on December 31, 2002 at the offices of Business & Technology Law Group,
LLP, located at 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx
00000, or at such other time or place as may be mutually agreed upon by the
parties in writing. The date on which the purchase and sale of the Assets
and the Shares contemplated by this Agreement shall take place is referred
to herein as the "Closing Date." On the Closing Date, Textil and the
Shareholders shall deliver to Tarrant Mexico the Purchasers the Assets in
accordance with Section 1.4, and the certificates representing all the
Shares duly endorsed for transfer to Tarrant Mexico and Tarrant Luxembourg
in proportion to their respective interests therein, against receipt of the
Asset Purchase Price and the Share Purchase Price. All deliveries shall be
considered to have taken place simultaneously as a single transaction on
the Closing Date.
3.2 RIGHT OF OFFSET. The Purchasers shall have the right, but not the
obligation, to pay any amount or to perform any obligations of Textil,
Inmobiliaria or the Shareholders if the Purchasers, in their sole and
absolute discretion, determine that the failure to pay such amount or to
perform such obligation could have a material adverse effect on the Assets
or the business of the Purchasers associated therewith, including, but not
limited to, any amount which is payable or obligation which is required to
be
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performed by Textil or the Shareholders under any collective bargain
agreement "Contrato Colectivo de Trabajo", entered by Textil and
Inmobiliaria with any Mexican labor union, including the "Sindicato
Industrial de Obreros Textiles y Similares;" PROVIDED, HOWEVER, that before
the Purchasers shall pay any such amount or perform any such obligation
they first shall notify Textil or the Shareholders in writing of their
intention to do so and shall give Textil or the Shareholders three (3)
business days to cure or contest such failure. The Purchasers shall have
the right to reduce either or both of the Asset Purchase Price or the Share
Purchase Price by any such amount paid by the Purchasers and/or the cost to
the Purchasers of any such obligation performed, regardless of whether the
amount paid or costs incurred arose with respect to the Assets or the
Shares. The Purchasers shall have the right to set off against any portion
of the Asset Purchase Price and/or the Share Purchase Price, or to demand
that Textil and the Shareholders reimburse the Purchasers promptly on
demand for, any such amounts and/or costs or any other obligation of Textil
or the Shareholders under this Agreement (including, but not limited to,
any obligation under Sections 9.2 or 9.3), and Textil and the Shareholders,
jointly and severally, agree to promptly reimburse the Purchasers therefor.
The Purchasers' rights under this Section 3.2 shall be in addition to any
other rights or remedies of the Purchasers under this Agreement or
applicable law.
4. REPRESENTATIONS AND WARRANTIES OF TEXTIL AND THE SHAREHOLDERS
Textil and the Shareholders, jointly and severally, hereby represent
and warrant to the Purchasers that the statements set forth in Sections 4.1
through 4.18 are true and correct.
4.1 AUTHORITY TO ENTER AGREEMENT AND ENFORCEABILITY. Textil and the
Shareholders each has all requisite right, power and authority to execute,
deliver and perform its or his respective obligations under this Agreement
and the other agreements and instruments contemplated hereby, including,
but not limited to, the sale, assignment, transfer, conveyance and delivery
of the Assets and the Shares to the Purchasers without obtaining the
approval or consent of any other party, governmental body or authority; all
proceedings have been taken and all authorizations have been secured by
Textil and the Shareholders which are necessary to authorize the execution,
delivery and performance of this Agreement and the other agreements and
instruments contemplated hereby; and this Agreement and each of the other
agreements and instruments contemplated hereby is a legal, valid and
binding agreement of Textil and the Shareholders and is enforceable against
each of them in accordance with its terms.
4.2 ORGANIZATION AND STANDING. Textil and Inmobiliaria each is a
corporation duly organized, validly existing and in good standing under the
laws of the Republic of Mexico, with all requisite power and authority
(corporate and other) to own, lease and operate its property and assets as
now owned, leased or operated and to carry on its businesses as now
conducted, and is duly qualified to do business and is in good standing in
each jurisdiction in which the conduct of its businesses or the ownership,
lease or use of its properties makes such qualification necessary.
4.3 OWNERSHIP OF SHARES. The Textil Shareholders own all the issued
and outstanding shares of the capital stock of Textil, and the Inmobiliaria
Shareholders own all the issued and outstanding shares of the capital stock
of Inmobiliaria, in each case free and clear of any liens, claims,
encumbrances, security interests, equities, restrictions on transfer,
preemptive rights or other defects in title of any kind or description.
There are no options, warrants, rights or other agreements or commitments
outstanding or in existence which provide for the issuance of capital stock
or other securities of Textil and Inmobiliaria, and there are no securities
outstanding or in existence which are convertible into or exchangeable for
capital stock or other securities of Textil and Inmobiliaria. Upon the
Closing Date, the Purchasers shall receive from the Inmobiliaria
Shareholders good and marketable title to the Shares free and clear of all
liens. The number of shares of each class of the capital stock of
Inmobiliaria owned by each of the Inmobiliaria Shareholders is set forth on
SCHEDULE 4.3.
4.4 FINANCIAL STATEMENTS. SCHEDULE 4.4A hereto contains (i) the
audited balance sheet of Inmobiliaria as of December 31, 2001, the audited
statements of income, changes in shareholders' equity and cash flows of
such company for the twelve month period then ended and the notes thereto
and the report of independent auditors (Xxxxxxx Xxxxx & Xxxxx, S.C.)
thereon and (ii) the audited balance sheet of Inmobiliaria as of September
30, 2002 and the audited statements of income, changes in shareholders'
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equity and cash flows of such company for the nine months then ended and
the notes thereto and the report of independent auditors (Xxxxxxx Xxxxx &
Young, S.C.) thereon. Except as set forth on SCHEDULE 4.4B, the foregoing
financial statements (i) were prepared in accordance with accounting
principles generally accepted in the United States consistently applied
throughout the period and (ii) fairly present the financial condition and
results of operations of Inmobiliaria as at the dates and for the periods
therein specified. On the date hereof, Inmobiliaria has no liabilities or
obligations, whether contingent or absolute, direct or indirect, or matured
or unmatured, which are not shown or provided for on the September 30, 2002
balance sheet or set forth on SCHEDULE 4.4B hereto, and the Shareholders do
not know of any basis for the assertion of any such liabilities or
obligations.
4.5 TRADEMARKS, PATENTS, ETC. Neither Textil nor Inmobiliaria uses or
owns any trade names, trademarks, patents, copyrights or registrations or
applications therefor in connection with, and none is required for, the
manufacturing of denim or twill fabric by means of the Assets or the Plant
as presently conducted by them. Neither Textil nor Inmobiliaria is
infringing any trade name, trademark, patent, copyright or other right of
any third party in connection with its manufacturing of denim or twill
fabric by means of the Assets or the Plant.
4.6 TAX MATTERS. Textil and Inmobiliaria each has properly prepared
and filed returns for and paid in full all federal, state, local and
foreign taxes, assessments and penalties to the extent such filings and
payments are required prior to the date hereof, and there is no outstanding
or proposed deficiency by any federal, state, local or foreign government
with respect to any tax period. As of the date hereof, neither Textil nor
Inmobiliaria is the beneficiary of any extension of time to file any tax
return or pay any taxes and have no liability with respect to taxes of any
kind, whether or not assessed. Textil and Inmobiliaria each has properly
registered before all federal, state, local and foreign tax authorities and
the Sistema Unico de Aportaciones ("SUA"), Instituto Mexicano del Seguro
Social ("IMSS"), Instituto del Fondo Nacional Para La Vivienda de Los
Trabajadores ("Infonavit"), Fondo Nacional Para El Consumo de Los
Trabajadores ("Fonacot") and Sistema de Ahorro Para El Retiro ("SAR"). The
term "taxes" shall include, but is not limited to, income taxes, value
added taxes, asset taxes, payroll taxes, import duties, real property
taxes, contributions payments and assessments regarding IMSS, Infonavit,
Fonacot and SAR.
4.7 INSURANCE. Textil and Inmobiliaria each maintains, and will
maintain from the date hereof to the Closing Date, in full force and effect
insurance policies with financially sound and reputable insurers on the
Assets and the Plant of a character usually insured by companies engaged in
the same or similar businesses against loss or damage of the kinds and in
the amounts customarily insured against by such companies.
4.8 LITIGATION. There are no suits, actions or legal, administrative,
arbitration or other proceedings or investigations pending or threatened
by, against or involving Textil or Inmobiliaria or, with respect only to
those suits, actions, proceedings or investigations arising out of Textil's
or Inmobiliaria's business, pending or threatened by, against or involving
the Shareholders or any of Textil's or Inmobiliaria's officers, directors,
shareholders, employees or agents.
4.9 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Textil's and
Inmobiliaria's businesses have been and are being conducted in accordance
with all applicable laws, ordinances, rules and regulations of all
authorities. Neither Textil nor Inmobiliaria is in violation of, or in
default under, any term or provision of its Escritura Constitutiva or
Estatutos Sociales (as amended or revised) or of any lien, indenture,
mortgage, lease, agreement, instrument, commitment or other arrangement, or
subject to any restriction of any kind or character, which could adversely
affect its businesses or the Assets or the Plant. The execution and
delivery of this Agreement and the other agreements and instruments
contemplated hereby, and the consummation of the transactions contemplated
herein and therein, will not conflict with or result in the breach of any
term or provision of, or constitute a default under, the Escritura
Constitutiva or Estatutos Sociales (as amended or revised) of either Textil
or Inmobiliaria, or any statute, order, judgment, writ, injunction, decree,
license, permit, approval, authorization, rule or regulation of any court
or any governmental or regulatory body, or any agreement, lease, contract,
document, instrument, commitment, obligation or arrangement of any kind or
nature to which the Purchaser or the Shareholders is a party or by which it
or he is bound.
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4.10 BROKERAGE AND FINDER'S FEES. Neither Textil, Inmobiliaria nor the
Shareholders has incurred any liability to any broker, finder or agent for
any brokerage fees, finder's fees or commissions with respect to the
transactions contemplated by this Agreement.
4.11 EMPLOYMENT AGREEMENTS. SCHEDULE 4.11 contains a complete and
correct list of all agreements with employees or independent contractors of
Textil or Inmobiliaria not cancelable at will and all employee benefit
plans, including, but not limited to, (i) any collective bargaining
agreement, (ii) any agreement or plan which contains any obligation,
liability or commitment for any vacation pay, severance or termination pay,
sick or disability pay, pension or retirement benefits, bonuses or profit
sharing, deferred or delayed wages of any kind, commissions or incentive
compensation or (iii) any group medical, dental, vision, health,
hospitalization or disability insurance plans, relating to the
manufacturing of denim or twill fabric by means of the Assets or the Plant,
or to any person employed in connection therewith. Textil and Inmobiliaria
each has performed all of its obligations required to be performed under
all such agreements and plans, and is not in default or in arrears under
any of the respective terms thereof. The relationship of Textil and
Inmobiliaria with all employees or independent contractors is satisfactory.
4.12 ENVIRONMENTAL MATTERS.
(a) Neither Textil nor Inmobiliaria has (i) breached or been
notified by any governmental or regulatory authority that it has
breached any Environmental Law (as defined below), (ii) released any
Hazardous Substance (as defined below) or (iii) become aware of the
release or presence of any Hazardous Substance on any property owned,
leased or occupied by it. There are no underground storage tanks on
property owned, leased or occupied by Textil and Inmobiliaria.
(b) For purposes of this Section 4.12, (i) "Environmental Law"
means all laws relating to the protection of the environment, to human
health and safety or to any environmental activity, including, without
limitation, (a) Ley General del Equilibrio Ecologico y La Proteccion
al Ambiente, its related regulations and administrative orders or
provisions, including, but not limited to, those pertaining to
environmental impact, hazardous waste, air pollution, water pollution
or noise pollution, and any other specific laws, regulations or
administrative orders or provisions relating to air, soil, ground or
water pollution or contamination, (b) all other requirements
pertaining to the reporting, licensing, permitting, investigation or
remediation of emissions, discharges, releases or threatened releases
of any Hazardous Substance into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use,
sale, treatment, receipt, storage, disposal, transport or handling of
any Hazardous Substance and (c) all other requirements pertaining to
the protection of the health and safety of employees or the public,
and (ii) "Hazardous Substance" means any substance that (a) is or
contains asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum or petroleum-derived substances or wastes, radon
gas or related materials, (b) requires investigation, removal or
remediation under any Environmental Law, or is defined, listed or
identified as a "hazardous waste" or "hazardous substance" thereunder
or (c) is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous or is
regulated by any governmental authority or Environmental Law.
4.13 EMPLOYEES. Textil and Inmobiliaria each has fully complied with
its obligations under the Ley Federal de Trabajo, including, but not
limited to, the timely payment in full of all wages, salaries, overtime
payments, vacation and vacation bonus payments, seventh day payments,
severance payments, holiday payments, Sunday work bonuses, seniority
bonuses and annual bonuses ("xxxxxxxxx") and the timely performance in full
of all obligations relating to health and safety, training, internal
regulations, working conditions and any other legally or contractually
mandated fringe benefits or obligations.
4.14 ASSETS. SCHEDULE 4.14 contains a complete and correct list of all
assets (including, but not limited to, all real property, buildings,
leasehold improvements, machinery, furniture, fixtures, equipment,
instruments, computers, motor vehicles, tooling, spare parts, supplies and
other
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tangible personal property and assets, other than inventory and assets set
forth on SCHEDULE 1.1(b) (i) used in, or necessary for the conduct of, the
denim and twill fabric manufacturing business as presently conducted by
Textil, or (ii) used in, necessary for the operation of or located at the
Plant, other than any item the original cost of which was less than U.S.
$500. All such assets are owned or leased by Textil or Inmobiliaria free
and clear of all liens, claims, charges, encumbrances, security interests,
equities or restrictions on use of any kind or nature (other than liens in
favor of the Purchasers and their affiliates) (collectively, "Liens") and
are in good working condition and repair (subject to normal wear and tear)
and are adequate for their intended uses. Each of the leases pursuant to
which Textil or Inmobiliaria holds any such assets is in full force and
effect and is a legal, valid and binding agreement of each party thereto
and is enforceable against each party thereto in accordance with its terms;
each party to any such lease is in compliance thereunder; and no event has
occurred which through the giving of notice or the lapse of time could
cause or constitute a default or the acceleration of any obligation of any
party thereto or the creation of a Lien upon any such asset. Upon the
Closing Date, Tarrant Mexico will receive from Textil, or Inmobiliaria will
possess, good and marketable title to such assets free and clear of any
Liens.
4.15 AGREEMENTS. SCHEDULE 4.15 contains a complete and correct list of
all leases, contracts, agreements and commitments, whether written or oral,
to which Textil or Inmobiliaria is a party or by which it is bound. Each
such agreement is in full force and effect and is a legal, valid and
binding agreement of each party thereto and is enforceable against each
party thereto in accordance with its terms; each party thereto is in
compliance thereunder; and no event has occurred which through the giving
of notice or the lapse of time could cause or constitute a default or the
acceleration of any obligation of any party thereto or the creation of a
lien or encumbrance upon the Assets or the Plant.
4.16 ABSENCE OF CERTAIN CHANGES. Since September 30, 2002, (i) there
has not been any material adverse change in the condition (financial or
other), net worth, property, assets, earnings, liabilities, capitalization,
business, results of operations or prospects of Textil, Inmobiliaria, the
Assets or the Plant and (ii) Textil and Inmobiliaria have operated their
respective businesses related to the Assets and the Plant as now operated
and only in the ordinary course.
4.17 FACILITIES. The Plant is sufficient for the conduct of the denim
and twill manufacturing businesses of Textil and Inmobiliaria as now
conducted. On the Closing Date, Inmobiliaria will own the Plant free and
clear of any Liens and will have the right to occupy and use the Plant as
it currently is used. Neither the whole nor any portion of the Plant has
been condemned, requisitioned or otherwise taken by any governmental
authority, and neither Textil, Inmobiliaria nor the Shareholders shall have
received any notice that any such condemnation, requisition or taking is
threatened, which condemnation, requisition or taking could preclude or
materially impair the current use thereof. The Plant is in satisfactory
condition and has been reasonably maintained, normal wear and tear
excepted. The Plant has received all required approval of governmental
authorities (including, without limitation, permits and a certificate of
occupancy or other similar certificate permitting lawful occupancy of the
Plant) required in connection with the operation thereof and has been
operated and maintained in accordance with all applicable laws, rules and
regulations. The Plant is supplied with utilities (including, without
limitation, water, sewage, disposal, electricity, gas and telephone) and
other services necessary for the operation of such facilities as currently
operated. The improvements constructed on the Plant, including, without
limitation, all leasehold improvements, and all fixtures, equipment and
other tangible assets owned, leased or used by Textil or Inmobiliaria at
the Plant are (i) insured to the extent and in a manner customary in the
industry, (ii) structurally sound with no known defects, (iii) in good
operation, condition and repair, subject to ordinary wear and tear, (iv)
not in need of maintenance or repair except for ordinary routine
maintenance and repair the cost of which would not be material, (v)
sufficient for the operation of the denim and twill manufacturing
businesses of Textil or Inmobiliaria as presently conducted and (vi) in
conformity with all applicable laws, ordinances, orders, regulations and
other requirements relating thereto currently in effect.
4.18 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations,
warranties or information furnished by Textil, Inmobiliaria or the
Shareholders to the Purchasers or any of their employees or agents,
including, but not limited to, Manatt, Xxxxxx & Xxxxxxxx S.C., Xxxxxxx
Xxxxx & Young, S.C. or Ernst & Young LLP, in connection with the
transactions contemplated hereby contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements and
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facts contained therein not misleading. The English translation of any
document provided by Textil, Inmobiliaria or the Shareholders to the
Purchasers or any of their employees or agents is true and complete.
5. REPRESENTATION AND WARRANTIES OF THE PURCHASERS
The Purchasers represent and warrant to Textil and the Shareholders
that the statements set forth in Sections 5.1 through 5.3 hereof are true and
correct.
5.1 AUTHORITY TO ENTER AGREEMENT AND ENFORCEABILITY. Each of the
Purchasers has all requisite right, power and authority to execute, deliver
and perform its obligations under this Agreement and the other agreements
and instruments contemplated hereby without obtaining the approval or
consent of any other party, governmental body or authority, other than as
described in Section 7.1(g); all proceedings have been taken and all
authorizations have been secured by the Purchasers which are necessary to
authorize the execution, delivery and performance of this Agreement and the
other agreements and instruments contemplated hereby; and this Agreement
and each of the other agreements and instruments contemplated hereby is a
legal, valid and binding agreement of the Purchasers and is enforceable
against them in accordance with its terms.
5.2 COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS. The execution and
delivery of this Agreement and the other agreements and instruments
contemplated hereby, and the consummation of the transactions contemplated
herein and therein will not conflict with or result in the breach of any
term or provision of, or constitute a default under any statute, order,
judgment, writ, injunction, decree, license, permit, approval,
authorization, rule or regulation of any court or any governmental or
regulatory body, or any agreement, lease, contract, document, instrument,
commitment, obligation or arrangement of any kind or nature to which either
of the Purchasers is a party or by which it is bound, unless such breach
will not have a material adverse effect on the business or operations of
the Purchasers.
5.3 BROKERAGE AND FINDER'S FEES. The Purchasers have not incurred any
liability to any broker, finder or agent for any brokerage fees, finder's
fees or commissions with respect to the transactions contemplated by this
Agreement.
6. COVENANTS; ADDITIONAL REPRESENTATIONS
6.1 OPERATION OF THE ASSETS AND PLANT. During the period from the
date of this Agreement to the Closing Date, Textil and Inmobiliaria shall
operate its businesses, the Assets and the Plant as now operated and only
in the ordinary course and shall take such actions as may be necessary to
ensure that the representations and warranties of Textil and the
Shareholders set forth in this Agreement will be true and correct as of the
Closing Date, and the Shareholders shall cause Textil and Inmobiliaria to
do so. By way of illustration only and not limitation, Textil and
Inmobiliaria shall take each such action as is set forth in SCHEDULE 6.1
hereto, and the Shareholders shall cause Textil and Inmobiliaria to do so.
6.2 ACCESS TO INFORMATION. Textil, Inmobiliaria and the Shareholders
shall give to the Purchasers and their counsel, accountants and other
representatives full access during normal business hours throughout the
period from the date of this Agreement to the Closing Date to all of its
property, assets, books and records and all employees, independent
contractors and agents, and shall furnish the Purchasers during such period
with all such information concerning its businesses, the Assets or the
Plant as the Purchasers may request, and the Shareholders shall cause
Textil and Inmobiliaria to do so. No investigation or inquiry made by or on
behalf of the Purchasers hereunder shall in any way affect or lessen the
representations and warranties made by Textil, Inmobiliaria or the
Shareholders under this Agreement.
6.3 ENVIRONMENTAL MATTERS. On or before the Closing Date, Textil and
the Shareholders, shall, at their sole cost and expense, (i) remedy any
breach of any Environmental Law arising before the Closing Date in
connection with or related to the Assets, the Plant or the denim and twill
fabric manufacturing business of Textil and Inmobiliaria or (ii) obtain the
release of any liability therefor from the appropriate governmental or
regulatory authority, in each case without any material condition or
restriction
8
on the operation of the Assets or the Plant, which remedy or release shall
be acceptable to the Purchasers in all material respects.
6.4 CONTRIBUTIONS TO INMOBILIARIA. Effective immediately following
the acquisition by the Purchasers of the Shares on the Closing Date,
Tarrant Mexico shall contribute, assign and transfer to Inmobiliaria, as
additional capital, and Inmobiliaria shall accept, the following assets
(the "Contributed Assets"):
6.4.1 [intentionally omitted]
6.4.2 the Note, including all remaining principal and accrued
interest thereon, after giving effect to the cancellation of
$42,000,000 of principal amount of the Note in payment of the Asset
Purchase Price;
6.4.3 100,000 shares of Series A Preferred Stock of Parent (the
"Tarrant Shares"), which Tarrant Shares initially shall be convertible
into 3,000,000 shares of Common Stock in accordance with the
Certificate of Determination for the Tarrant Shares;
6.4.4 indebtedness of Guarantor in the amount of U.S.
$7,547,510.46, as described in more detail on SCHEDULE 6.4.4 to this
Agreement (the "Guarantor Indebtedness"); and
6.4.5 shares representing a 25% interest in the capital of
Tarrant Mexico (the "Tarrant Mexico Shares").
6.5 PAYMENTS TO GUARANTOR. Guarantor represents and warrants to the
Purchasers and Parent and, immediately following the Closing, to
Inmobiliaria, that immediately following the Closing Date (a) Inmobiliaria
will be indebted to those parties listed on SCHEDULE 6.5 to this Agreement,
including to Guarantor and RLNB (the "Inmobiliaria Creditors"), in the
amounts set forth on SCHEDULE 6.5 (the "Inmobiliaria Indebtedness"), which
Inmobiliaria Indebtedness will be the only liabilities of Inmobiliaria
immediately following the Closing, and (b) after giving effect to the
transfer of the Contributed Assets to Inmobiliaria as described in Section
6.4, Guarantor will be indebted to Inmobiliaria in the amount of
$7,547,510.46, as evidenced by the Guarantor Indebtedness.
As full payment and satisfaction of the Inmobiliaria Indebtedness,
immediately following the contribution by Tarrant Mexico of the Contributed
Assets to Inmobiliaria, Inmobiliaria will sell, transfer, and assign to (i)
RLNB the Tarrant Shares, and (ii) the remaining Contributed Assets to the
other Inmobiliaria Creditors, and RLNB and Guarantor will accept, and
Guarantor will cause the other Inmobiliaria Creditors to accept, from
Inmobiliaria, such Contributed Assets.
6.6 REPRESENTATIONS RELATING TO TARRANT SHARES. In connection with
the purchase of the Tarrant Shares from Inmobiliaria, RLNB represents and
warrants to Inmobiliaria and to Parent that:
6.6.1 RLNB will hold the Tarrant Shares and the shares of Common
Stock issuable upon conversion thereof for investment and not with a
view to, or for resale in connection with, any distribution thereof in
violation of the Securities Act of 1933, as amended (the "Securities
Act"). RLNB does not have any present intention of selling, offering
to sell or otherwise disposing of or distributing the Tarrant Shares
or the shares of Common Stock issuable upon conversion thereof.
6.6.2 RLNB acknowledges that neither the Tarrant Shares nor the
shares of Common Stock issuable upon conversion thereof have been
registered under the Securities Act and, therefore, cannot be resold
unless they are registered under the Securities Act or unless an
exemption from registration is available.
6.6.3 RLNB is sophisticated in financial matters and is able to
evaluate the risks and benefits of the investment in the Tarrant
Shares.
9
6.6.4 RLNB has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the acquisition of the
Tarrant Shares and has had full access to such other information
concerning the Parent as RLNB has requested.
6.6.5 RLNB is able to bear the economic risk of the investment
in the Tarrant Shares for an indefinite period of time, recognizing
that neither the Tarrant Shares nor the shares of Common Stock
issuable upon conversion thereof have been or will be registered under
the Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available.
6.6.6 RLNB acknowledges that until such time as the Tarrant
Shares or the shares of Common Stock issuable upon conversion thereof
have been registered, or are otherwise eligible, for resale in
accordance with the Securities Act, each certificate representing the
Tarrant Shares and the shares of Common Stock issuable upon conversion
thereof shall be endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE
FIRST BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE AND THE CORPORATION SHALL HAVE RECEIVED, AT THE EXPENSE
OF THE HOLDER, EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY
TO THE CORPORATION (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION).
6.7 TIMING OF TRANSACTIONS; NO LIABILITY.
6.7.1 Tarrant Mexico, Inmobiliaria, Guarantor, RLNB, and Parent
acknowledge and agree that (a) the contribution by Tarrant Mexico to
Inmobiliaria of the Contributed Assets, and (b) the transfer of the
Contributed Assets to the Inmobiliaria Creditors as payment of the
Inmobiliaria Indebtedness, all as provided in Sections 6.4 and 6.5
above, are a series of related transactions intended, and shall be
deemed, to occur in the sequence set forth in such Sections on the
Closing Date immediately following the acquisition by the Purchasers
of the Shares.
6.7.2 Each of Guarantor and RLNB acknowledges and agrees that
(a) none of the Purchasers or Parent shall be liable to Guarantor,
RLNB or any other Inmobiliaria Creditor for any indebtedness included
in the Contributed Assets that any such party is unable to collect
from the obligor, (b) none of the Purchasers or Parent make any
representation or warrant with respect to an Inmobiliaria Creditor's
ability to collect any indebtedness included in the Contributed
Assets, and (c) the Inmobiliaria Creditors assume all collection risk
with respect to such indebtedness.
7. CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS. The
obligation of the Purchasers to consummate the transactions contemplated by
this Agreement is expressly subject to the following conditions (compliance
with which or the occurrence of which may be waived in whole or in part by
the Purchasers in writing):
(a) All representations and warranties of Textil and the
Shareholders contained in this Agreement shall be true and correct in
all respects on the date hereof and as of the Closing Date as if made
at and as of such date.
10
(b) Textil, Inmobiliaria and the Shareholders each shall have
performed and satisfied all covenants and conditions required by this
Agreement to be performed or satisfied by it or him on or prior to the
Closing Date.
(c) No action or proceeding shall have been instituted or
threatened prior to or at the Closing Date or, in the reasonable
opinion of counsel to the Purchasers, is likely to be instituted
before any court or governmental body or authority the result of which
could prevent or make illegal the consummation of the transactions
contemplated hereunder, or which could adversely affect the
Purchasers' use of the Assets or the Plant.
(d) There shall not have occurred any adverse change in the
business, property, assets, operations, condition (financial or other)
or prospects of the businesses of Textil or Inmobiliaria or the Assets
or the Plant.
(e) The Board of Directors of each of the Purchasers, in its
good faith judgment, after consultation with legal counsel, shall not
have withdrawn or modified its approval or recommendation of this
Agreement and the transactions contemplated hereby (having determined
that it is necessary to do so to comply with its fiduciary duties to
the shareholders of such Purchaser under applicable law).
(f) The Parent shall have received the opinion of Xxxx Capital
Partners, LLC ("Xxxx Capital") on the date on which the Parent's Board
of Directors voted to approve this Agreement and the written opinion
of Xxxx Capital, dated on the Closing Date, that the terms of the
transactions contemplated by this Agreement are fair to the Parent and
its shareholders from a financial point of view, and such opinion
shall not have been withdrawn or modified in any respect.
(g) Textil, Inmobiliaria, the Shareholders and the Purchasers
each shall have obtained any required prior approval of the
transactions contemplated hereby from the Federal Competition
Commission pursuant to Article 20, I, Ley Federal de Competencia
Economica.
7.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TEXTIL AND THE
SHAREHOLDERS. The obligation of Textil and the Shareholders to consummate
the transactions contemplated by this Agreement is expressly subject to the
following conditions (compliance with which or the occurrence of which may
be waived in whole or in part by Textil or the Shareholders, as the case
may be, in writing):
(a) All representations and warranties of the Purchasers
contained in this Agreement shall be true and correct in all respects
on the date hereof and as of the Closing Date as if made at and as of
such date.
(b) The Purchasers shall have performed and satisfied all
covenants and conditions required by this Agreement to be performed or
satisfied by them on or prior to the Closing Date.
(c) No action or proceeding shall have been instituted or
threatened prior to or at the Closing Date or, in the reasonable
opinion of counsel to Textil or the Shareholders, is likely to be
instituted before any court or governmental body or authority the
result of which could prevent or make illegal the consummation of the
transactions contemplated hereunder.
(d) Textil, Inmobiliaria, the Shareholders and the Purchasers
each shall have obtained any required prior approval of the
transactions contemplated hereby from the Federal Competition
Commission pursuant to Article 12, I, Ley Federal de Competencia
Economica.
11
8. REGISTRATION RIGHTS
8.1 PIGGY-BACK REGISTRATION RIGHTS.
(a) In the event that after December 30, 2004, the Parent
proposes to register any of its securities under the Securities Act,
and the registration form to be used therefor may be used for the
registration of the Common Stock of the Parent (other than Forms S-8
or S-4 or any successor thereto), the Parent shall give prompt written
notice to all holders of the Tarrant Shares of its intention to effect
such a registration and, subject to the terms and conditions contained
in this Section 8, shall include in such registration all shares of
Common Stock into which such Tarrant Shares may be converted if
(hereinafter referred to in this Section 8 as Tarrant Shares) with
respect to which the Parent has received written requests for
inclusion therein within fifteen (15) days after the giving of the
Parent's notice.
(b) If a registration subject to subparagraph (a) above is an
underwritten registration, and the managing underwriters advise the
Parent in writing that in their opinion the number of securities to be
included in such registration exceeds the number which can be sold in
such offering, the Parent shall include in such registration (i)
first, the securities the Parent proposes to sell and (ii) second,
such number of the Tarrant Shares and other securities requested to be
included in such registration as the managing underwriters believe can
be sold in such offering, pro rata among the holders of such Tarrant
Shares and other securities on the basis of the number of shares of
the Common Stock of the Parent owned by each such holder, and those
Tarrant Shares which are excluded from the registration shall be
withheld from the market by the holders thereof for such period, not
to exceed 180 days, which the managing underwriters reasonably
determine to be necessary in order to effect the registration.
8.2 GENERAL.
(a) If any registration subject to this Section 8 is an
underwritten offering, the selection of the investment bankers and
managers for the offering shall be made by the Parent in its sole and
absolute discretion.
(b) The holders of any Tarrant Shares included in any
registration statement pursuant to this Section 8 shall enter into
such customary agreements (including an underwriting agreement in
customary form) and use their best efforts to take all such other
actions as the Parent or the underwriters, if any, reasonably request
in order to expedite or facilitate the disposition of such Tarrant
Shares.
(c) Each holder of Tarrant Shares included in any registration
statement pursuant to this Section 8 shall indemnify, to the extent
permitted by law, the Parent, its officers and directors and each
person who controls the Parent (within the meaning of the Securities
Act) against all losses, claims damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary
prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent the same are caused
by or contained in any information furnished in writing to the Parent
by such holder expressly for use therein or by such holder's failure
to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Parent has furnished such
holder with a sufficient number of copies of the same. In connection
with an underwritten offering, such holder shall indemnify the
underwriters, their officers and directors and each person who
controls such underwriters (within the meaning of the Securities Act)
to the same extent as provided above with respect to the
indemnification of the Parent.
(d) With respect to each inclusion of Tarrant Shares in a
registration statement pursuant to this Section 8, all fees, costs and
expenses of and incidental to such registration and public offering in
connection therewith shall be borne by the Parent; PROVIDED,
12
HOWEVER, that the holders of Tarrant Shares included in any such
registration statement shall bear their pro rata share of the
underwriting discount and commissions and shall bear their own legal
and accounting expenses incurred in reviewing independently of the
Parent the registration statement or prospectus.
(e) Any Tarrant Shares which are included in an underwritten
registration pursuant to this Section 8 shall be sold by the holder
thereof pursuant to the terms of the underwriting agreement among the
Parent, the managing underwriters and the holders of the securities
included in such registration.
9. MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements made by the parties in this
Agreement (including, but not limited to, statements contained in any
exhibit, schedule or certificate or other instrument delivered by or on
behalf of any party hereto or in connection with the transactions
contemplated hereby) shall survive the Closing Date notwithstanding any
investigations, inspections, examinations or audits made by or on behalf of
any party.
9.2 INDEMNIFICATION. Textil, the Shareholders and Guarantor (the
"Indemnifying Parties"), jointly and severally, shall indemnify, defend and
hold harmless each of the Purchasers and their respective officers,
directors, shareholders, employees, attorneys, accountants, affiliates,
agents, successors and assigns, and any person who controls or is deemed to
control any of them (the "Indemnified Parties"), from, against and in
respect of any and all payments, damages, claims, demands, losses,
expenses, costs, obligations and liabilities (including, but not limited
to, reasonable attorneys' fees and costs, and the costs of investigation
and preparation) (a "Loss") which, directly or indirectly, arise or result
from or are related to any breach by any of the Indemnifying Parties of any
of its or his representations, warranties, covenants or commitments under
this Agreement. The Indemnifying Parties, jointly and severally, shall
reimburse each Indemnified Party on demand for any payment made or loss
suffered by it at any time after the date hereof, based upon the judgment
of any court of competent jurisdiction or pursuant to a bona fide
compromise or settlement of claims, demands or actions in respect of any
damages to which the foregoing indemnity relates. Consummation of the
transactions contemplated hereunder shall not be deemed or construed to be
a waiver of any right or remedy of any Indemnified Party, nor shall this
section or any other provision of this Agreement be deemed or construed to
be a waiver of any ground of defense by it. The obligation to advance or
pay promptly on demand all amounts as they are incurred shall exist
irrespective of the ultimate final judicial determination, and in the event
of a dispute about amounts owed, such amounts shall be advanced as they are
incurred pending resolution and final judicial determination. The
Indemnifying Parties' obligations hereunder shall be in addition to any
liability that they or any other person otherwise may have to the
Indemnified Parties, and shall be binding upon, and inure to the benefit
of, their heirs, representatives, successors and assigns, and shall inure
to the benefit of the heirs, representatives, successors and assigns of
each Indemnified Party.
9.3 THIRD-PARTY CLAIMS. The Indemnified Party shall promptly notify
the Indemnifying Parties of the existence of any claim, demand or other
matter involving liabilities to third parties to which the Indemnifying
Parties' indemnification obligations could apply and shall give the
Indemnifying Parties a reasonable opportunity to defend the same at their
expense and with counsel of their own selection (who shall be approved by
the Indemnified Party, which approval shall not be withheld unreasonably);
provided, HOWEVER, that (i) the Indemnified Party shall at all times also
have the right to fully participate in the defense at its own expense, (ii)
if, in the reasonable judgment of the Indemnified Party, based upon the
written advice of counsel, a conflict of interest may exist between the
Indemnified Party and any of the Indemnifying Parties, the Indemnifying
Parties shall not have the right to assume such defense on behalf of such
Indemnified Party and (iii) the failure to so notify the Indemnifying
Parties shall not relieve the Indemnifying Parties from any liabilities
that they may have hereunder or otherwise, except to the extent that such
failure so to notify the Indemnifying Parties materially prejudices the
rights of the Indemnifying Parties. If the Indemnifying Parties shall,
within a reasonable time after said notice, fail to defend, the Indemnified
Party shall have the right, but not the obligation, to undertake the
defense of, and to compromise or settle the claim or other matter on
behalf, for the account and at the risk and expense of the
13
Indemnifying Parties. The Indemnifying Parties shall not compromise or
settle the claim or other matter without the prior written consent of the
Indemnified Parties. If the claim is one that cannot by its nature be
defended solely by the Indemnifying Parties, the Indemnified Parties shall
make available all information and assistance that the Indemnifying Parties
may reasonably request; PROVIDED, HOWEVER, that any associated expenses
shall be paid by the Indemnifying Parties as incurred.
9.4 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing in the English language and shall be deemed
to have been given (i) if personally delivered, when so delivered, (ii) if
mailed, one (1) week after being placed in the United States mail,
registered or certified, postage prepaid, addressed to the party to whom it
is directed at the address set forth on the signature page hereof or (iii)
if given by telecopier, when such notice or communication is transmitted to
the telecopier number set forth on the signature page hereof and written
confirmation of receipt is received. Each of the parties shall be entitled
to specify a different address by giving the other parties notice as
aforesaid.
9.5 ENTIRE AGREEMENT. This Agreement and the schedules and exhibits
hereto (which are incorporated herein by reference) constitute the entire
agreement between the parties hereto pertaining to the subject matter
hereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, relating to the subject matter of
this Agreement. No supplement, modification, waiver or termination of this
Agreement shall be valid unless executed by the party to be bound thereby.
No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver, unless
otherwise expressly provided.
9.6 HEADINGS. Section and subsection headings are not to be
considered part of this Agreement and are included solely for convenience
and reference and in no way define, limit or describe the scope of this
Agreement or the intent of any provisions hereof.
9.7 SUCCESSORS AND ASSIGNS. All of the terms, provisions and
obligations of this Agreement shall inure to the benefit of and shall be
binding upon the parties hereto and their respective heirs,
representatives, successors and assigns.
9.8 GOVERNING LAW. The validity, construction and interpretation of
this Agreement shall be governed in all respects by the laws of the State
of California applicable to contracts made and to be performed wholly
within that State.
9.9 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each one of which shall be deemed an original,
but all of which shall constitute one and the same instrument.
9.10 THIRD PARTIES. Nothing in this Agreement, expressed or implied,
is intended to confer upon any person other than the parties hereto and
their respective heirs, representatives, successors and assigns any rights
or remedies under or by reason of this Agreement.
9.11 ATTORNEYS' FEES. In the event any party takes legal action to
enforce any of the terms of this Agreement, the unsuccessful party to such
action shall pay the successful party's expenses (including, but not
limited to, reasonable attorneys' fees and costs) incurred in such action.
9.12 FURTHER ASSURANCES. Each party hereto shall, from time to time at
and after the date hereof, execute and deliver such instruments, documents
and assurances and take such further actions as the other parties
reasonably may request to carry out the purpose and intent of this
Agreement.
9.13 ARBITRATION. Any controversy arising out of or relating to this
Agreement or the transactions contemplated hereby shall be referred to
arbitration before the American Arbitration Association strictly in
accordance with the terms of this Agreement and the substantive law of the
State of
14
California. The board of arbitrators shall convene at a place mutually
acceptable to the parties in the State of California and, if the place of
arbitration cannot be agreed upon, arbitration shall be conducted in Los
Angeles. The parties hereto agree to accept the decision of the board of
arbitrators, and judgment upon any award rendered hereunder may be entered
in any court having jurisdiction thereof. Neither party shall institute a
proceeding hereunder until that party has furnished to the other party, by
registered mail, at least thirty (30) days prior written notice of its
intent to do so.
9.14 CONSTRUCTION. This Agreement was reviewed by legal counsel for
each party hereto and is the product of informed negotiations between the
parties hereto. If any part of this Agreement is deemed to be unclear or
ambiguous, it shall be construed as if it were drafted jointly by the
parties. Each party hereto acknowledges that no party was in a superior
bargaining position regarding the substantive terms of this Agreement.
9.15 CONSENT TO JURISDICTION. Subject to Section 9.13, each party
hereto, to the fullest extent it may effectively do so under applicable
law, irrevocably (i) submits to the exclusive jurisdiction of any court of
the State of California or the United States of America sitting in the City
of Los Angeles over any suit, action or proceeding arising out of or
relating to this Agreement, (ii) waives and agrees not to assert, by way of
motion, as a defense or otherwise, any claim that it is not subject to the
jurisdiction of any such court, any objection that it may now or hereafter
have to the establishment of the venue of any such suit, action or
proceeding brought in any such court and any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum, (iii) agrees that a judgment in any such suit, action
or proceeding brought in any such court shall be conclusive and binding
upon such party and may be enforced in the courts of the United States of
America, the State of California or the Republic of Mexico (or any other
courts to the jurisdiction of which such party is or may be subject) by a
suit upon such judgment and (iv) consents to process being served in any
such suit, action or proceeding by mailing a copy thereof by United States
mail, registered or certified, postage prepaid, return receipt requested,
to CT Corporation at 000 Xxxx Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000
(and each party hereby irrevocably appoints CT Corporation as its lawful
agent to accept such service of process on behalf of such party). Each
party agrees that such service (i) shall be deemed in every respect
effective service of process upon such party in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by law, be taken
and held to be valid personal service upon and personal delivery to such
party.
9.16 EXPENSES. Each party shall bear the expenses incurred by it in
connection with the negotiation, execution and delivery of this Agreement
and the other agreements and instruments contemplated hereby and the
consummation of the transactions contemplated hereby and thereby.
9.17 SEVERABLE PROVISIONS. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be
illegal or otherwise unenforceable, in whole or in part, the remaining
provisions, and any partially unenforceable provisions to the extent
enforceable, shall nevertheless be binding and enforceable.
9.18 TAXES. Textil and the Shareholders shall pay timely any transfer,
sales or other taxes which may become due or payable by virtue of the
transactions contemplated by this Agreement.
9.19 OBLIGATION OF THE GUARANTOR. The Guarantor (i) shall cause
Textil, Inmobiliaria and each of the Shareholders to timely perform in full
each of its or his obligations under this Agreement and (ii) hereby
irrevocably guarantees the timely performance in full of each obligation of
Textil, Inmobiliaria and each of the Shareholders under this Agreement,
including, but not limited to, the obligations of Textil and the
Shareholders under Sections 9.2 and 9.3 and RLNB under Section 6.6.
15
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first set forth above.
Purchaser: TARRANT MEXICO, S. de X.X. de C.V.
By /S/ XXXXXXX XXXXX
-------------------
Xxxxxxx Xxxxx
Authorized Representative
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Textil: TRANS TEXTIL INTERNATIONAL, S.A. de C.V.
By /S/ XXXXX XXXXX XXXXX
-----------------------
Xxxxx Xxxxx Xxxxx
Authorized Representative
Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx, D.F.
Telecopier: (000) 000-0000
Inmobiliaria: INMOBILIARIA XXXXXXX, X.X. de C.V.
By /S/ XXXXX XXXXX XXXXX
-----------------------
Xxxxx Xxxxx Xxxxx
Authorized Representative
Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx, D.F.
Telecopier: (000) 000-0000
Shareholders:
/S/ XXXX XXXXXXX XXXXX XXXXXXXXX
----------------------------------
XXXX XXXXXXX XXXXX XXXXXXXXX
Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx, D.F.
Telecopier: (000) 000-0000
/S/ XXXXX XXXXXX XXXXXXXXXX XXXXXXX
-------------------------------------
XXXXX XXXXXX XXXXXXXXXX XXXXXXX
Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx, D.F.
Telecopier: (000) 000-0000
/S/ XXXX XXXXX XXXXX
----------------------
XXXX XXXXX XXXXX
Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx, D.F.
Telecopier: (000) 000-0000
S-1
Guarantor:
/S/ XXXXX XXXXX XXXXX
-----------------------
XXXXX XXXXX XXXXX
Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx, D.F.
Telecopier: (000) 000-0000
Parent: TARRANT APPAREL GROUP
By: /S/ XXXXXXX XXXXX
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Xxxxxxx Xxxxx
Authorized Representative
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
S-2
SCHEDULE 1.1(a)
PURCHASED ASSETS
1. Except as expressly set forth in SCHEDULE 1.1(b), all furniture,
fixtures, equipment, instruments, computers, motor vehicles, tooling, spare
parts, supplies, real property, buildings, leasehold improvements, machinery and
other tangible personal property and assets which are used by Textil in
connection with the manufacturing of denim or twill fabric, whether or not
reflected on the books and records of Textil and wherever located, including,
but not limited to those assets listed on SCHEDULE 4.14 (other than such assets
as are owned by Inmobiliaria)
2. All of Textil's right, title and interest in, to and under the
lease of the Plant by Inmobiliaria to Textil, which lease has not been reduced
to writing.
3. All deposits and prepaid taxes and expenses attributable to the
Assets;
4. All books and records relating to the Assets and the operation
thereof, including, but not limited to, operating manuals, purchase agreements
and manufacturers' warranties;
5. All personnel records of employees of Textil who are employed by
the Purchaser after the Closing Date; and
6. All insurance proceeds arising in connection with damage to the
Assets occurring from the date hereof to the Closing Date.
SCHEDULE 1.1(b)
RETAINED ASSETS
1. All cash and securities;
2. All accounts and notes receivable;
3. All customer deposits;
4. All right, title and interest of Textil in, to and under customer
orders existing on the Closing Date or purchase orders of Textil to purchase
goods or services from third parties existing on the Closing Date;
5. All of Textil's right, title and interest in, to and under all
leases, contracts, agreements and commitments to which Textil is a party or by
which it is bound, including, but not limited to, those which are listed on
SCHEDULE 4.15;
6. All refunds and credits;
7. All deposits and prepaid taxes and expenses to the extent not
attributable to the Assets;
8. All raw materials, work-in-process and finished goods; and
9. All books and records not related to the Assets or the operation
thereof, including, but not limited to, (A) the minute books, stock record
books, corporate seal and other records of Textil relating exclusively to its
organization, existence or capitalization, (B) all records relating to the
purchase of raw material or the sale of finished goods, (C) all personnel
records of employees of Textil who are not employed by the Purchaser after the
Closing Date and (D) all customer lists.
OMITTED SCHEDULES TO AGREEMENT FOR PURCHASE OF ASSETS AND STOCK
The following Schedules to the Agreement for Purchase of Assets and
Stock have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The
Company hereby agrees to furnish supplementally a copy of any omitted attachment
to the Securities and Exchange Commission upon request.
SCHEDULE 1.2(b): Allocation of Asset Purchase Price
SCHEDULE 2.1: Allocation of Shares
SCHEDULE 2.2: Allocation of Share Purchase Price
SCHEDULE 4.3: Ownership of Shares of Inmobiliaria
SCHEDULE 4.4A: Financial Statements
SCHEDULE 4.4B: Liabilities
SCHEDULE 4.11: Employment Agreements
SCHEDULE 4.14: Assets
SCHEDULE 4.15: Agreements
SCHEDULE 6.1: Operations
SCHEDULE 6.4.2: TCL Receivables
SCHEDULE 6.4.3: Guarantor Liabilities
SCHEDULE 6.5: Inmobiliaria Liabilities
