EXHIBIT 10.54
TERMINATION AGREEMENT
This Termination Agreement (this "AGREEMENT") is made and entered into
this 13th day of August, 2004, 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"), Inmobiliaria Xxxxxxx, X.X., de C.V., a corporation organized under the
laws of the Republic of Mexico ("INMOBILIARIA") and Acabados y Xxxxxx Textiles
S.A. de C.V., a corporation organized under the laws of the Republic of Mexico
("ACABADOS").
RECITALS
WHEREAS, Tarrant Mexico, Acabados, and Constructor Solticio S.A. de
C.V., a corporation organized under the laws of the Republic of Mexico, are
parties to that certain Agreement for Purchase of Assets (the "ASSET PURCHASE
AGREEMENT") executed concurrently herewith;
WHEREAS, Tarrant Mexico and Acabados are parties to (i) that certain
Purchase Commitment Agreement, dated October, 2003 (the "PURCHASE COMMITMENT
AGREEMENT"), (ii) that certain Lease Agreement, dated August 29, 2003, related
to the lease of the premises located in Ixtlacuiztla, Tlaxcala, Mexico (the
"TLAXCALA LEASE AGREEMENT"), and (iii) that certain Lease Agreement, dated
August 29, 2003, related to the lease of the premises located in Municipia de
Ajalpan, Puebla, Mexico (the "AJALPAN LEASE AGREEMENT");
WHEREAS, Tarrant Mexico, Inmobiliaria and Acabados are parties to that
certain Facilities Management Agreement, dated August 29, 2003 (the "FACILITIES
MANAGEMENT AGREEMENT");
WHEREAS, Tarrant Mexico and Inmobiliaria are parties to that certain
lease agreement with respect to the premises that are the subjects of the
Tlaxcala Lease Agreement and Ajalpan Lease Agreement, which lease agreement is
referred to in the recitals to the Tlaxcala Lease Agreement and Ajalpan Lease
Agreement (the "MASTER LEASE AGREEMENT," and together with the Production
Commitment Agreement, the Facilities Management Agreement, the Tlaxcala Lease
Agreement, and the Aljalpan Lease Agreement, the "OPERATIVE AGREEMENTS"); and
WHEREAS, pursuant to the terms of the Asset Purchase Agreement, the
parties have agreed to suspend the performance of certain provisions of, and to
terminate, the Operative Agreements as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration the receipt and sufficiency of which hereby are
acknowledged, the parties agree as follows:
1. CAPITALIZED TERMS. Capitalized terms not otherwise defined in
this Agreement shall have the meanings provided in the Asset Purchase Agreement.
2. TERMINATION. Effective as of and conditional upon the
occurrence of the purchase and sale of the Assets and Real Property under the
Asset Purchase Agreement on the Closing Date, Tarrant Mexico, Inmobiliaria and
Acabados hereby terminate the Operative Agreements to which each is a party, and
agree that, except with respect to those obligations which, by the express terms
of the applicable Operative Agreement, survive termination thereof (the
"CONTINUING OBLIGATIONS"), none of Tarrant Mexico, Inmobiliaria or Acabados
shall have any obligation to any other party pursuant to any of the Operative
Agreements ("OPERATIVE AGREEMENT TERMINATION").
3. PRE-CLOSING DATE SUSPENSION OF OBLIGATIONS.
(a) For the period (the "SUSPENSION PERIOD") commencing
on July 1, 2004 and continuing until the earlier of (i) the Operative Agreement
Termination and (ii) the date the Asset Purchase Agreement is terminated
pursuant to its terms (the "APA TERMINATION DATE"), Tarrant Mexico hereby agrees
that Acabados' obligation to pay the Base Monthly Rent and VAT (as each such
term is defined in the applicable lease agreement) under each of the Tlaxcala
Lease Agreement and the Ajalpan Lease Agreement shall be suspended, and Tarrant
Mexico hereby waives its right to receive any such suspended payments during the
Suspension Period. If the Asset Purchase Agreement is terminated prior to the
Closing Date, then on the APA Termination Date all Base Monthly Rent and VAT
under each of the Tlaxcala Lease Agreement and the Ajalpan Lease Agreement that
has accrued during the Suspension Period shall be immediately due and payable to
Tarrant Mexico. If the Operative Agreement Termination occurs, then Acabados'
obligation to pay all amounts of Base Monthly Rent and VAT that have accrued
during the Suspension Period shall terminate.
(b) During the Suspension Period, Acabados hereby agrees
that Tarrant Mexico's obligations under the Purchase Commitment Agreement to
purchase the Minimum Commitment of Fabric (as such terms are defined in the
Purchase Commitment Agreement), and to pay any cash amount under Section 1.5 of
such agreement for failing to satisfy such Minimum Commitment, shall be
suspended, and Acabados hereby waives its right to enforce such provisions
during the Suspension Period. If the Asset Purchase Agreement is terminated
prior to the Closing Date, then on the APA Termination Date, Tarrant Mexico
shall immediately satisfy it Purchase Commitment obligation for each monthly
period included in the Suspension Period. If the Operative Agreement Termination
occurs, then Tarrant Mexico's obligation to satisfy the Purchase Commitment for
all monthly periods included in the Suspension Period shall terminate.
4. RELEASES.
(a) RELEASE. Effective as of and conditional upon the
occurrence of the purchase and sale of the Assets and Real Property under the
Asset Purchase Agreement on the Closing Date, each party hereto, and its
respective shareholders, directors, officers, employees, representatives,
successors and assigns release and forever discharge each of the other parties
and its respective shareholders, directors, officers, employees,
representatives,
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successors and assigns from any and all disputes, claims, liabilities, actions,
demands, damages, causes of actions (in law or in equity), claims for relief,
promises, suits, debts, liens, contracts, costs and expenses (including
attorneys' fees and costs), whether or not known or suspected to exist, arising
out of or in any manner relating to the negotiation, entry into, performance
under or termination of the Operative Agreements, other than performance by any
party of any Continuing Obligation.
(b) UNKNOWN FACTS. Except for the obligations arising
under this Agreement and the Asset Purchase Agreement, the parties expressly
waive and relinquish all rights and benefits afforded by Section 1542 of the
California Civil Code, and do so understanding and acknowledging the
significance of such specific waiver of Section 1542, which provides:
"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 by him must have
materially affected his settlement with the debtor."
Notwithstanding the provisions of Section 1542, and for the purposes of
implementing a full and complete release, the parties expressly acknowledge that
this Agreement is intended to include in its effect, without limitation, all
claims not known or suspected to exist at the time of execution hereof, and that
this Agreement contemplates the extinguishment of any such claim or claims.]
5. MISCELLANEOUS.
(a) CONSULTATION WITH COUNSEL. This Agreement has been
voluntarily and knowingly executed by each party hereto, after having had an
opportunity to consult with legal counsel.
(b) SEVERABILITY. The provisions of this Agreement will
be deemed severable and the invalidity or unenforceability of any provision
hereof will not affect the validity or enforceability of the other provisions
hereof; provided that if any provision of this Agreement, as applied to any
party or to any circumstance, is adjudged by a court, governmental body,
arbitrator or mediator not to be enforceable in accordance with its terms, the
parties agree that the court , governmental body, arbitrator or mediator making
such determination will have the power to modify the provision in a manner
consistent with its objectives such that it is enforceable, and/or to delete
specific words or phrases, and in its reduced form, such provision will then be
enforceable and will be enforced.
(c) TITLES AND SUBTITLES. The section and paragraph
headings contained in this Agreement are inserted for convenience only, and will
not affect in any way the meaning or interpretation of this Agreement.
(d) GOVERNING LAW. This Agreement and the performance of
the transactions and obligations of the parties hereunder will be governed by
and construed in accordance with the laws of the State of California, without
giving effect to any choice of law principles.
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(e) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and understanding of the parties in respect of its subject
matter and supercedes all prior understandings, agreements or representations by
or among the parties, written or oral, to the extent they relate in any way to
the subject matter hereof or the transactions contemplated hereby.
(f) AMENDMENTS AND WAIVERS. This Agreement may not be
amended or modified, and no provision hereof may be waived, without the written
consent of the parties to be bound thereby. The waiver by any party of a breach
of any provision of this Agreement will not operate or be construed as a further
or continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder will operate as a waiver
thereof, nor will any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
(h) SUCCESSORS AND ASSIGNS. This Agreement and the rights
and obligations of the parties hereunder will inure to the benefit of, and be
binding upon, their respective representatives, successors and assigns.
(i) ATTORNEYS' FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement or any other
agreement or document to be executed or delivered pursuant hereto, the
prevailing party will be entitled to reasonable attorneys' fees, costs and
disbursements in addition to any other relief to which such party may be
entitled.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TARRANT MEXICO, S. DE X.X. DE C.V.
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Its: Authorized Representative
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INMOBILIARIA XXXXXXX, X.X. DE C.V.
By: /s/ Xxxxx Xxxxx
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Its: Authorized Representative
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ACABADOS Y XXXXXX TEXTILES S.A. DE C.V.,
By: /s/ Xxxxx Xxxxx
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Its: Authorized Representative
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