EXHIBIT 10.53
AGREEMENT FOR PURCHASE OF ASSETS
THIS AGREEMENT FOR PURCHASE OF ASSETS is made and effective as of the
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"), ACABADOS Y XXXXXX TEXTILES S.A. DE C.V., a corporation organized under
the laws of the Republic of Mexico ("ACABADOS"), and CONSTRUCTOR SOLTICIO S.A.
DE C.V., a corporation organized under the laws of the Republic of Mexico
("SOLTICIO" and together with Acabados, the "PURCHASERS"), with respect to the
following facts:
X. Xxxxxxx Mexico owns certain tangible personal property and
assets, which are used by it in the production of denim fabric and the
manufacturing of apparel products.
X. Xxxxxxx Mexico owns certain real estate, buildings,
improvements and fixtures, which are used by it in the production of denim
fabric.
C. The Purchasers desire to purchase from Tarrant Mexico, and
Tarrant Mexico desires to sell to the Purchasers, all such personal and real
property assets 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 PERSONAL PROPERTY ASSETS
1.1 PURCHASE AND SALE.
(a) Except as provided in SECTION 1.1(b),
Tarrant Mexico shall sell, assign, transfer, convey and deliver to Acabados, and
Acabados shall purchase and take from Tarrant Mexico, on the Closing Date (as
defined below), all right, title and interest that Tarrant Mexico possesses and
has the right to transfer in and to the following personal property and assets
(and none other), which are used by Tarrant Mexico in connection with the
production of denim fabric and the manufacturing of apparel products, as the
same shall exist on the Closing Date (the "ASSETS"):
(1) all furniture, equipment,
instruments, computers, motor vehicles, tooling, spare parts, supplies,
machinery and other tangible personal property and assets which are
used by Tarrant Mexico in connection with the production of denim
fabric or the manufacturing of apparel products, whether or not
reflected on the books and records of Tarrant and wherever located;
(2) All books and records relating to
the Assets described in clause (1) and the operation thereof,
including, but not limited to, operating manuals, purchase agreements
and manufacturers' warranties; and
(3) All licenses, permits,
certificates, approvals, authorizations, variances, consents and any
pending applications for any of the foregoing, to the extent
transferable, issued or granted by governmental and/or
quasi-governmental bodies, officers and authorities with respect to the
ownership, use and operation of Assets described in clause (1), except
to the extent included in the Real Property;
(b) Notwithstanding SECTION 1.1(a) to the
contrary, Tarrant Mexico shall not sell, assign, transfer, convey or deliver to
Acabados hereunder, and shall retain, the personal property and assets of
Tarrant Mexico set forth on SCHEDULE 1.1(B).
1.2 PURCHASE PRICE.
(a) In consideration of the sale of the Assets
to Acabados, Acabados shall pay or deliver to Tarrant Mexico on the Closing Date
the following consideration (the "ASSET PURCHASE PRICE"):
(1) Either (a) an aggregate of
4,724,000 shares (the "PARENT SHARES") of Common Stock, no par value,
of Tarrant Apparel Group, a California corporation (the "PARENT"),
registered in the name of Xxxx Xxxxxxx Xxxxx Xxxxxxxxx (with respect to
3,000,000 shares) and Jamil Textil, S.A. de C.V. (with respect to
1,724,000 shares) (the "PARENT SHAREHOLDERS"), accompanied by duly
executed instruments of transfer and conveyance of the Parent Shares to
Tarrant Mexico, or (b) the total cash or other proceeds from the sale
of the Parent Shares to a third party after the date of this Agreement
and before the Closing on terms (including price and form of
consideration) approved in advance by Tarrant Mexico in its sole
discretion; and
(2) $35,701,152, by delivery to Tarrant
Mexico of ten (10) separate senior secured promissory notes of
Acabados, in form and substance reasonably acceptable to Tarrant
Mexico, each in the principal amount of $3,570,115.20 and with an
interest rate of 4.5% per annum (for an aggregate principal of
$35,701,152), with a maturity date of December 31, 2014 and providing
for 120 equal monthly payments commencing January 31, 2005
(collectively, the "ACABADOS NOTES"), the payment of which will be
secured by all of the assets and real property of Acabados and Solticio
(including the Assets and Real Property) pursuant to a security
agreement in form and substance reasonably acceptable to Tarrant Mexico
(the "SECURITY AGREEMENT").
(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.
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(a) Acabados 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) Tarrant Mexico shall pay or perform, and
shall defend, indemnify and hold harmless Acabados 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 Tarrant Mexico, 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 Tarrant Mexico until such date and time and shall
be borne by Acabados thereafter. On the Closing Date, Tarrant Mexico shall
deliver to Acabados, at any one or more of the locations set forth on SCHEDULE
1.4(A), 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, Tarrant Mexico 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 Acabados, and shall take
such further action and execute and deliver such further documents, at Tarrant
Mexico's sole cost and expense, as Acabados reasonably may request to cause any
such person to deliver any Assets held by it to Acabados at the Plant (as
defined in SECTION 2.1 below).
(b) On the Closing Date, and from time to time
thereafter, at the request of Acabados, Tarrant Mexico shall execute and deliver
to Acabados 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 reasonable opinion
of counsel to Acabados, to vest in or to confirm in Acabados good title in and
to the Assets.
1.5 EMPLOYEES. Notwithstanding anything to the contrary
contained in this Agreement, Acabados will not be considered a "Patron
Substituto" under Mexican Labor Laws as a result of this Agreement and Acabados
shall have no obligation to employ, and shall not assume any liability of
Tarrant Mexico to, any employee, consultant or agent of Tarrant Mexico,
including, but not limited to, any liability for wages, bonuses, accrued
vacation pay, benefits or the promise of future employment. Tarrant Mexico shall
indemnify, defend and hold harmless Acabados and its affiliates from any such
liability.
2. PURCHASE AND SALE OF REAL PROPERTY
2.1 PURCHASE AND SALE. Tarrant Mexico shall sell, assign,
transfer, convey and deliver to Solticio, and Solticio shall purchase and take
from Tarrant Mexico, on the Closing Date (as defined below), the land,
buildings, improvements, and fixtures owned by Tarrant Mexico and related to
that certain denim fabric manufacturing facility located at Xxxx 0, 0, 0, 00
Xxxxx "X" Xxxxxxx 6, Parque Industrial Puebla 2000, Puebla, Puebla, Mexico, C.P.
72220 (the "PLANT"),
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and all easements, rights-of-way, and other appurtenants thereto (such as
appurtenant rights in and to public streets), and all licenses, permits,
certificates, approvals, authorizations, variances, consents and any pending
applications for any of the foregoing, to the extent transferable, issued or
granted by governmental and/or quasi-governmental bodies, officers and
authorities with respect to the ownership, occupancy, use and operation of the
Plant, and all architectural, mechanical, engineering and other plans and
specifications relating to the Plant and in Tarrant Mexico's possession, custody
or control (collectively, the "REAL PROPERTY").
2.2 PURCHASE PRICE. In consideration of the sale of the
Real Property to be purchased by Solticio, Solticio shall pay or deliver to
Tarrant Mexico U.S. $4,502,848 (the "REAL PROPERTY PURCHASE PRICE"), which Real
Property Purchase Price shall be paid on the Closing Date by delivery to Tarrant
Mexico of ten (10) separate senior secured promissory notes of Solticio, in form
and substance reasonably acceptable to Tarrant Mexico, each in the principal
amount of $450,284.80 and with an interest rate of 4.5% per annum (for an
aggregate principal of $4,502,848), with a maturity date of December 31, 2014
and providing for 120 equal monthly payments commencing January 31, 2005
(collectively, the "SOLTICIO NOTES"), the payment of which will be secured by
all of the assets and real property of Acabados and Solticio (including the
Assets and Real Property) pursuant to the Security Agreement.
2.3 DELIVERY OF POSSESSION AND TITLE.
(a) Delivery of possession of the Real Property
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 Tarrant Mexico until such date and time and shall
be borne by Solticio thereafter. On the Closing Date, Tarrant Mexico shall
deliver to Solticio, at the Plant, physical possession of all documents
comprising Real Property wherever located.
(b) On the Closing Date, and from time to time
thereafter, at the request of Solticio, Tarrant Mexico shall execute and deliver
to Solticio 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 reasonable opinion
of counsel to Solticio, to vest in or to confirm in Solticio good title in and
to the Real Property.
3. CLOSING
3.1 CLOSING DATE. The purchase and sale of the Assets and
the Real Property contemplated by this Agreement shall take place at 10:00 a.m.
(local time) on the third business day after the conditions set forth in SECTION
8 have been satisfied or waived at the offices of Xxxxxx Xxxxxxxx & Markiles,
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 Real
Property contemplated by this Agreement shall take place is referred to herein
as the "CLOSING DATE." The obligation of any party to consummate the purchase
and sale of the Assets and Real Property, as the case may be, contemplated by
this Agreement may be terminated by such party after December 31, 2004, if such
purchase and sale shall not have occurred by the close of business on
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that date, providing the terminating party is not in default of any of its
obligations hereunder. On the Closing Date, Tarrant Mexico shall deliver to
Acabados the Assets in accordance with SECTION 1.4, and Tarrant Mexico shall
deliver to Solticio the Real Property in accordance with SECTION 2.3, against
receipt of the Asset Purchase Price and the Real Property Purchase Price,
respectively. All deliveries shall be considered to have taken place
simultaneously as a single transaction on the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF TARRANT MEXICO
Except as set forth in the disclosure letter delivered by Tarrant
Mexico to the Purchasers concurrently with the execution and delivery of this
Agreement, which letter shall refer to the relevant Sections of this Agreement
(the "DISCLOSURE LETTER"), Tarrant Mexico hereby represents and warrants to the
Purchasers as follows:
4.1 AUTHORITY TO ENTER AGREEMENT AND ENFORCEABILITY.
Tarrant Mexico 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, including, but not limited to, the sale,
assignment, transfer, conveyance and delivery of the Assets and the Real
Property to the Purchasers without obtaining the approval or consent of any
other party, governmental body or authority, other than as described in SECTION
8.1(e); all proceedings have been taken and all authorizations have been secured
by Tarrant Mexico 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
Tarrant Mexico and is enforceable against Tarrant Mexico in accordance with its
terms.
4.2 ORGANIZATION AND STANDING. Tarrant Mexico 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 TRADEMARKS, PATENTS, ETC. Tarrant Mexico does not use
or own any trade names, trademarks, patents, copyrights or registrations or
applications therefor in connection with, and none is required for, the
production of denim fabric or the manufacturing of apparel products by means of
the Assets or the Real Property as presently conducted. Tarrant Mexico is not
infringing any trade name, trademark, patent, copyright or other right of any
third party in connection with its production of denim or manufacturing of
apparel products by means of the Assets or the Real Property.
4.4 TAX MATTERS. Tarrant Mexico 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, Tarrant Mexico is not 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,
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whether or not assessed. Tarrant Mexico 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.
4.5 INSURANCE. Tarrant Mexico 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 Real Property 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.
4.6 LITIGATION. There is no action, suit or proceeding
pending or, to Tarrant Mexico's knowledge, threatened, against Tarrant Mexico in
any court or by or before any other governmental body or authority which would
materially and adversely affect the ability of Tarrant Mexico to carry out the
transactions contemplated by this Agreement.
4.7 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Tarrant
Mexico's business has been and is being conducted in accordance with all
applicable laws, ordinances, rules and regulations of all authorities. Tarrant
Mexico is not 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 business or the Assets or the Real Property. 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 Tarrant Mexico, or any statute,
order, judgment, writ, injunction, decree, license, permit, approval,
authorization, rule or regulation of any court or any governmental body or
authority, or any agreement, lease, contract, document, instrument, commitment,
obligation or arrangement of any kind or nature to which Tarrant Mexico is a
party or by which it is bound.
4.8 BROKERAGE AND FINDER'S FEES. Tarrant Mexico has 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.
4.9 ENVIRONMENTAL MATTERS.
(a) Tarrant Mexico has not (i) breached or been
notified by any governmental body or 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 Tarrant
Mexico.
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(b) For purposes of this SECTION 4.10, (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 body or
authority or Environmental Law.
4.10 ASSETS. All of the Assets are owned or leased by
Tarrant Mexico free and clear of all liens, claims, charges, encumbrances, or
security interests (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 Tarrant Mexico holds any of the
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, Abacados will receive from Tarrant Mexico, good title in
and to the Assets free and clear of any Liens.
4.11 REAL PROPERTY. The Real Property is sufficient for
the conduct of the denim production business of Tarrant Mexico as now conducted.
Tarrant Mexico owns the Real Property free and clear of any Liens and has the
right to occupy and use the Real Property as it currently is used. Neither the
whole nor any portion of the Real Property has been condemned, requisitioned or
otherwise taken by any governmental body or authority, and Tarrant Mexico has
not 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 Real Property is in satisfactory
condition and has been reasonably maintained, normal wear and tear excepted. The
Real Property has received all required approvals of governmental authorities
(including, without limitation, permits and a certificate of occupancy or other
similar certificate permitting lawful occupancy of the Real Property) required
in connection with the operation thereof and has been operated and maintained in
accordance with all applicable laws, rules and regulations. The Real Property 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
Real Property, including, without limitation, all leasehold improvements, and
all fixtures, equipment
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and other tangible assets owned, leased or used by Tarrant Mexico at the Real
Property 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 production business of Tarrant Mexico as presently conducted and (vi) in
conformity with all applicable laws, ordinances, orders, regulations and other
requirements relating thereto currently in effect. Upon the Closing Date,
Solticio will receive from Tarrant Mexico, good title in and to the Real
Property free and clear of any Liens.
5. REPRESENTATION AND WARRANTIES OF THE PURCHASERS
The Purchasers represent and warrant to Tarrant Mexico as follows:
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 8.2(d); 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 body or authority, 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.
5.4 LITIGATION. There is no action, suit or proceeding
pending or, to either of the Purchasers' knowledge, threatened, against either
of the Purchasers in any court or by or before any other governmental body or
authority which would materially and adversely affect the ability of either of
the Purchasers to carry out the transactions contemplated by this Agreement.
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6. ASSETS AND REAL PROPERTY "AS IS"
6.1 NO SIDE AGREEMENTS OR REPRESENTATIONS. No person
acting on behalf of Tarrant Mexico is authorized to make any representation,
warranty, agreement, statement, guarantee or promise regarding the Assets or the
Real Property or the transactions contemplated herein or the zoning,
construction, physical condition or other status of the Assets or Real Property
except as may be expressly set forth in this Agreement and, by executing this
Agreement, the Purchasers acknowledge that no person has made any such
statement, agreement warranty, guarantee or promise. No representation,
warranty, agreement, statement, guarantee or promise, if any made by any person
acting on behalf of Tarrant Mexico which is not specifically contained in this
Agreement will be valid or binding on Tarrant Mexico.
6.2 AS-IS CONDITION. EACH OF THE PURCHASERS ACKNOWLEDGES
AND AGREES THAT, EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 4 HEREIN, TARRANT
MEXICO HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY
REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF
ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN,
PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO ANY MATTER.
EACH OF THE PURCHASERS FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS MAY
OTHERWISE BE EXPRESSLY STATED IN SECTION 4, TO THE MAXIMUM EXTENT PERMITTED BY
LAW, THE SALE OF THE ASSETS AND REAL PROPERTY AS PROVIDED FOR HEREIN IS MADE ON
AN "AS IS" CONDITION AND BASIS WITH ALL FAULTS, AND THAT TARRANT MEXICO HAS NO
OBLIGATIONS TO MAKE REPAIRS, REPLACEMENTS OR IMPROVEMENTS THEREON OR THERETO.
EACH OF THE PURCHASERS REPRESENTS, WARRANTS AND COVENANTS TO TARRANT MEXICO
THAT, EXCEPT FOR TARRANT MEXICO'S EXPRESS REPRESENTATIONS AND WARRANTIES
SPECIFIED IN SECTION 4 OF THIS AGREEMENT, EACH OF THE PURCHASERS IS RELYING
SOLELY UPON EACH OF THE PURCHASERS'S OWN INVESTIGATION OF THE ASSETS AND REAL
PROPERTY.
7. ADDITIONAL AGREEMENTS OF THE PARTIES
7.1 GENERAL. During the period from the date of this
Agreement to the Closing Date, each of Tarrant Mexico and the Purchasers shall
use its best efforts to take all actions and do all things necessary, proper, or
advisable to consummate, make effective, and comply with all of the terms of
this Agreement and the transactions applicable to it (including satisfaction,
but not waiver, of the Closing conditions for which it is responsible or
otherwise in control).
7.2 OPERATION OF THE ASSETS AND PLANT. During the period
from the date of this Agreement to the Closing Date, Tarrant Mexico 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 Tarrant Mexico set forth in this Agreement
will be true and correct as of the Closing Date. By way of illustration only and
not limitation, Tarrant Mexico shall take each such action as is set forth in
SCHEDULE 7.2 hereto.
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7.3 ACCESS TO INFORMATION. Tarrant Mexico 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 Real Property as the Purchasers may request. 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 Tarrant
Mexico under this Agreement.
7.4 ENVIRONMENTAL MATTERS. On or before the Closing Date,
Tarrant Mexico, shall, at its sole cost and expense, remedy any breach of any
Environmental Law arising before the Closing Date in connection with or related
to the Assets or the Real Property, and obtain the release of any liability
therefor from the appropriate governmental body or authority, in each case
without any material condition or restriction on the operation of the Assets or
the Plant, which remedy or release shall be acceptable to the Purchasers in all
material respects.
7.5 TERMINATION AGREEMENT. Contemporaneously with the
execution and delivery of this Agreement, Tarrant Mexico shall, and shall cause
Inmobiliaria Xxxxxxx, X.X. de C.V. ("INMOBILIARIA") to, execute and deliver to
Acabados, and Acabados shall execute and deliver to Tarrant Mexico and
Inmobiliaria, that certain Termination Agreement in the form attached hereto as
EXHIBIT 7.5 (the "TERMINATION AGREEMENT").
7.6 NOTICES AND CONSENTS.
(a) Tarrant Mexico will give any notices to
third parties, and will use its best efforts to obtain any third party consents,
if any, required or reasonably deemed advisable by the Purchasers to consummate
the transactions contemplated by this Agreement. Tarrant Mexico will give any
notices to, make any filings with, and use its best efforts to obtain any
consents, approvals or authorizations of any governmental body or authority, if
any, required or reasonably deemed advisable by the Purchasers pursuant to any
applicable statute, order, judgment, writ, injunction, decree, license, permit,
approval, authorization, rule or regulation of any court or any governmental
body or authority, including any required approvals from the Mexico Federal
Competition Commission pursuant to Article 20, I, Ley Federal de Competencia
Economica.
(b) Each of the Purchasers will give any notices
to third parties, and will use their respective best efforts to obtain any third
party consents, if any, required or reasonably deemed advisable by Tarrant
Mexico to consummate the transactions contemplated by this Agreement. Each of
the Purchasers will give any notices to, make any filings with, and use its best
efforts to obtain any consents, approvals or authorizations of any governmental
body or authority, if any, required or reasonably deemed advisable by the
Purchasers pursuant to any applicable statute, order, judgment, writ,
injunction, decree, license, permit, approval, authorization, rule or regulation
of any court or any governmental body or authority, including any required
approvals from the Federal Competition Commission pursuant to Article 20, I, Ley
Federal de Competencia Economica.
10
(c) Each of Tarrant Mexico and the Purchasers
will cooperate and use their respective best efforts to agree jointly on a
method to overcome any objections by any governmental body or authority to the
transactions contemplated by this Agreement. Without limiting the foregoing,
each party (i) will file any notification and report forms and related material
that such party may be required to file with (A) the Mexico Federal Competition
Commission pursuant to Article 20, I, Ley Federal de Competencia Economica, and
(B) the United States Federal Trade Commission and the Antitrust Division of the
Department of Justice under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX XXX"), and (ii) will make any further filings pursuant thereto
that may be necessary, proper, or advisable in connection therewith. The
Purchasers on the one hand, and Tarrant Mexico, on the other, will bear the cost
of any filing fees equally.
(d) Nothing in this SECTION 7.6 will require
that (i) the Purchasers or their respective affiliates divest, sell, or hold
separately any of their assets or properties, or (ii) the Purchasers, Tarrant
Mexico or any of their respective affiliates take any actions that could affect
the normal and regular operations of such party.
7.7 CONFIDENTIALITY; PUBLICITY. Except as may be required
by law or stock exchange rules or as otherwise expressly contemplated herein, no
party or their respective Affiliates, employees, agents, and representatives
will disclose to any third party the existence of this Agreement, the subject
matter or terms hereof or any Confidential Information concerning the business
or affairs of any other Party that it may have acquired from such party in the
course of pursuing the transactions contemplated hereby without the prior
written consent of Tarrant Mexico or the Purchasers, as the case may be;
provided, however, any party may disclose any such Confidential Information as
follows: (a) to such party's affiliates and its or its affiliates' employees,
lenders, counsel, or accountants, the actions for which the applicable party
will be responsible; (b) to comply with any applicable law or order or any
governmental body or authority, provided that prior to making any such
disclosure the party making the disclosure notifies the other party in advance
of providing such Confidential Information; (c) to the extent that the
Confidential Information is or becomes generally available to the public through
no fault of the party or its affiliates making such disclosure; (d) to the
extent that the same information is in the possession (on a non-confidential
basis) of the party making such disclosure prior to receipt of such Confidential
Information; (e) to the extent that the party that received the Confidential
Information independently develops the same information without in any way
relying on any Confidential Information; or (f) to the extent that the same
information becomes available to the party making such disclosure on a
nonconfidential basis from a source other than a party or its affiliates, which
source, to the disclosing party's knowledge, is not prohibited from disclosing
such information by a legal, contractual, or fiduciary obligation to the other
party. Notwithstanding the foregoing, Tarrant Mexico and its affiliates,
including Parent, may make such public disclosure of the existence of this
Agreement, the principal economic terms hereof, and the status with respect to
achieving the Closing as it desires. Neither of the Purchasers or any of their
Affiliates will issue any press release or other public announcement related to
this Agreement or the transactions contemplated hereby without Tarrant Mexico's
prior written approval.
7.8 TAXES. The Purchasers shall be responsible for and
shall pay timely any and all income, value-added, customs, transfer, sales or
other taxes or duties payable to any
11
Mexican governmental body or authority which may become due or payable by virtue
of the transactions contemplated by this Agreement ("TRANSACTION TAXES"),
including any Transaction Taxes imposed on Tarrant Mexico or its affiliates or
on their respective income or property. Tarrant Mexico shall cooperate with the
Purchasers in connection with their payment of any such Transaction Taxes. Each
of the Purchasers shall defend, indemnify and hold harmless Tarrant Mexico from
any and all Transaction Taxes, whether the same arise before or after the
Closing Date.
7.9 PURCHASE COMMITMENT AGREEMENT. On the Closing Date,
Tarrant Mexico and Acabados shall enter into the Purchase Commitment Agreement
attached hereto as EXHIBIT 7.9.
8. CONDITIONS PRECEDENT
8.1 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
Tarrant Mexico contained in this Agreement shall be true and correct in all
material respects on the date hereof and as of the Closing Date as if made at
and as of such date.
(b) Tarrant Mexico shall have performed and
satisfied in all material respects all covenants and conditions required by this
Agreement to be performed or satisfied by it 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 materially adversely affect the Purchasers' use of the Assets or the
Real Property after the Closing.
(d) There shall not have occurred any material
adverse change in the Assets or the Real Property.
(e) Tarrant Mexico and the Purchasers shall have
obtained any required prior approval of the transactions contemplated hereby
from (i) the Federal Competition Commission pursuant to Article 20, I, Ley
Federal de Competencia Economica, (ii) the United States Federal Trade
Commission and the Antitrust Division of the Department of Justice under the HSR
Act, and (iii) any other governmental body or authority under applicable law.
(f) The Termination Agreement shall be in full
force and effect, and Tarrant Mexico shall have performed its obligations to
Acabados required by the Termination Agreement to be performed or satisfied by
Tarrant Mexico on or prior to the Closing Date.
12
(g) The reorganization of, and other
transactions involving, Inmobiliaria and Tarrant Mexico described in EXHIBIT
8.1(G) to this Agreement (the "REORGANIZATION") shall have been consummated.
8.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TARRANT
MEXICO. The obligation of Tarrant Mexico 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 Tarrant Mexico in writing):
(a) All representations and warranties of the
Purchasers contained in this Agreement shall be true and correct in all material
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 in all material respects 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 Tarrant Mexico, 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) Tarrant Mexico and the Purchasers shall have
obtained any required prior approval of the transactions contemplated hereby
from (i) the Federal Competition Commission pursuant to Article 20, I, Ley
Federal de Competencia Economica, (ii) the United States Federal Trade
Commission and the Antitrust Division of the Department of Justice under the HSR
Act, and (iii) any other governmental body or authority under applicable law.
(e) The Termination Agreement shall be in full
force and effect, and Acabados shall have performed its obligations to Tarrant
Mexico required by the Termination Agreement to be performed or satisfied by
Acabados on or prior to the Closing Date.
(f) The Reorganization shall have been
consummated.
(g) The Parent shall have received the opinion
of Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital ("HLHZ") on or before the date on which
the Parent's Board of Directors voted to approve this Agreement, 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.
(h) Inmobiliaria and Xxxxx Xxxxx (collectively,
the "GUARANTORS") shall have executed and delivered to Tarrant Mexico, a
guaranty in form and substance reasonably acceptable to Tarrant Mexico (the
"GUARANTY"), pursuant to which the Guarantors will guaranty the Purchasers
obligations under the Acabados Notes and the Solticio Notes and this Agreement.
Inmobiliaria's obligations under the Guaranty will be secured by all of
Inmobiliaria's assets and real property as set forth in the Security Agreement.
13
(i) The Purchasers and Inmobiliaria shall have
executed and delivered to Tarrant Mexico the Security Agreement, and each of the
other deeds of trust, security instruments, and other agreements, instruments
and other documents required to evidence and perfect Tarrant Mexico's security
interest in the collateral described in the Security Agreement.
(j) The form and substance of the Acabados
Notes, Solticio Notes, Security Agreement and Guaranty to be entered into on the
Closing Date shall be reasonably acceptable to Tarrant Mexico.
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.
(a) Tarrant Mexico 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
Tarrant Mexico of any of its representations, warranties, covenants or
commitments under this Agreement. Tarrant Mexico 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. Tarrant Mexico's
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.
(b) The Indemnified Party shall promptly notify
Tarrant Mexico of the existence of any claim, demand or other matter involving
liabilities to third parties to which Tarrant Mexico's indemnification
obligations could apply and shall give Tarrant Mexico
14
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 Tarrant Mexico, Tarrant
Mexico shall not have the right to assume such defense on behalf of such
Indemnified Party and (iii) the failure to so notify Tarrant Mexico shall not
relieve Tarrant Mexico from any liabilities that it may have hereunder or
otherwise, except to the extent that such failure so to notify Tarrant Mexico
materially prejudices its rights. If Tarrant Mexico 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 Tarrant Mexico. Tarrant Mexico 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
Tarrant Mexico, the Indemnified Parties shall make available all information and
assistance that Tarrant Mexico may reasonably request; PROVIDED, HOWEVER, that
any associated expenses shall be paid by the Tarrant Mexico as incurred.
9.3 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.
9.4 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.
9.5 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.
9.6 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.
15
9.7 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.
9.8 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.
9.9 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.
9.10 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.
9.11 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.
9.12 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 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.
9.13 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.
9.14 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
16
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.
9.15 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.
9.16 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.
9.17 CURRENCY. For purposes of this Agreement and each of
the schedules, exhibits and other documents delivered in connection herewith,
unless otherwise stated herein or therein, all references to "Dollar" and the
sign "$" shall mean lawful money of the United States of America.
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first set forth above.
Tarrant Mexico: 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
Acabados: ACABADOS Y XXXXXX TEXTILES, S.A. DE C.V.
By: /s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx
Authorized Representative
Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx, D.F.
Telecopier: (000) 000-0000
Solticio: CONSTRUCTOR SOLTICIO, S.A. DE C.V.
By: /s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx
Authorized Representative
Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx, D.F.
Telecopier: (000) 000-0000
18
SCHEDULE 1.1(B)
RETAINED ASSETS
1. All cash and securities, including all securities and other ownership
interests of Tarrant Mexico's subsidiaries;
2. All accounts and notes receivable;
3. All customer deposits;
4. All right, title and interest of Tarrant Mexico in, to and under
customer orders existing on the Closing Date or purchase orders of
Tarrant Mexico to purchase goods or services from third parties
existing on the Closing Date;
5. All of Tarrant Mexico's right, title and interest in, to and under all
leases, contracts, agreements and commitments to which Tarrant Mexico
is a party or by which it is bound;
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;
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 Tarrant
Mexico who are not employed by Acabados after the Closing Date, and (D)
all customer lists;
10. All claims, causes of action, chooses in action, rights of recovery,
rights of set off, and rights of recoupment (including any such item
relating to the payment of taxes); and
11. All rights, licenses, and other claims of Tarrant Mexico in any to any
trademarks, service marks, patents, copyrights, trade secretes or other
intellectual property, and all goodwill associated therewith.
SCHEDULE 1.4(A)
ASSET LOCATIONS
1. Xxxxxxxxx Xxxxxxxx - Xxxxxxxxx Xx 0 X/X, Xxxxxxx, Xxxxxx, Xxxxxx,
including the real property identified as "Parcelas 168 X-0 X0, 000 X-0
X0/0, y 176 Z-1 P2/2, Municipio de Ajalpan, Puebla, Mexico.
2. 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 Frac. Hacienda de San Diego Xocoyucan, Ixtacuixtla, Tlax.";
(vii) Xxxxxxxx xx xxxx xx Xxxxxxx Xx. 0, de la Seccion Cuarta del Frac.
Hacienda de San Diego Xocoyucan, Ixtlacuixtla, Talx".
3. Xxxx 0, 0, 0, 00 Xxxxx "X" Xxxxxxx 6, Parque Industrial Puebla 2000,
Puebla, Puebla, Mexico, C.P. 72220.
SCHEDULE 7.2
OPERATIONS
1. Refrain from suffering or refrain from creating any security interest,
encumbrance or restriction on the Assets or the Real Property;
2. Refrain from disposing of any of the Assets or the Real Property,
except in the ordinary course of business;
3. Maintain its books, accounts and records in the usual, regular and
ordinary manner and in compliance with all applicable laws;
4. Meet its obligations under all contracts and not become in default
thereunder;
5. Maintain all of the Assets and the Plant in customary repair, order and
condition, reasonable wear and tear excepted, and maintain insurance
upon the Assets and the Plant comparable in amount and kind to that in
effect on the date hereof;
6. Operate in the ordinary course of business; and
7. Operate in such manner as to assure that the representations and
warranties of Tarrant Mexico set forth in this Agreement will be true
and correct on and as of the Closing Date.
EXHIBIT 7.5
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, 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
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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.
(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.
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(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.
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:
-----------------------------------
Its:
-----------------------------------
INMOBILIARIA XXXXXXX, X.X. DE C.V.
By:
-----------------------------------
Its:
-----------------------------------
ACABADOS Y XXXXXX TEXTILES S.A. DE C.V.,
By:
-----------------------------------
Its:
-----------------------------------
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EXHIBIT 7.9
PURCHASE COMMITMENT AGREEMENT
THIS PURCHASE COMMITMENT AGREEMENT is made and effective as of the ___
day of ____________, 2004, by and between Tarrant Mexico S. de X.X. de C.V., a
corporation formed under the laws of the Republic of Mexico (the "PURCHASER"),
and Acabados y Xxxxxx Textiles S.A. de C.V., a corporation formed under the laws
of the Republic of Mexico (the "PRODUCER"), with respect to the following facts:
RECITALS
A. The Producer is engaged in the production of twill and denim fabric at
the facility located at Lote 1 A,B,C, S/N, San Diego Xocoyucan, Corredor
Industrial, Ixtlacuixtla, Tlaxcala, Mexico, C.P. 90700 (the "FACILITY").
B. The Purchaser desires to purchase from the Producer, and the Producer
desires to manufacture for the Purchaser, denim and twill fabric on the terms
and conditions contained herein.
NOW, THEREFORE, 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 COMMITMENT.
1.1 Subject to the terms and conditions set forth herein,
commencing with January 2005 and continuing thereafter for each calendar month
during the Term, the Purchaser agrees to submit to the Producer from time to
time Purchaser Orders for twill or denim fabric ("FABRIC") to be produced at the
Facility which, in the aggregate, are for an amount of Fabric with a purchase
price at least equal to the Minimum Commitment for such calendar month, and to
purchase from Producer all Fabric identified in Purchase Orders accepted by
Producer and delivered in accordance with the terms of such Purchase Order and
this Agreement.
1.2 For purposes hereof, "MINIMUM COMMITMENT" for an applicable
calendar month shall mean Purchase Orders for the following minimum purchase
price of Fabric:
JANUARY FEBRUARY MARCH APRIL MAY JUNE
JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER
1.3 The Producer shall have the right to accept or reject any
Purchase Order submitted by Purchaser. Any bona fide Purchase Order submitted by
Purchaser in the ordinary course of its business, and rejected by Producer for
any reason, shall be counted towards Purchaser's Minimum Commitment for the
calendar month in which such order is submitted (at the purchase price
prevailing at the time) notwithstanding Purchaser's failure to purchase the
Fabric identified in such Purchase Order. Additionally, if Producer accepts a
Purchase Order submitted by Purchaser, and fails to deliver the Fabric specified
therein in accordance with SECTION 2.4 of this Agreement, then such Purchase
Order shall be counted towards Purchaser's Minimum Commitment for the calendar
month in which such order is submitted (at the purchase price specified in such
order) notwithstanding Purchaser's failure to purchase the Fabric identified in
such Purchase Order.
1.4 For purposes of this SECTION 1, any excess orders of Fabric
above the Minimum Commitment for an applicable calendar month shall be applied
towards, and reduce, the Minimum Commitment for the next succeeding calendar
months until the excess amount has been applied in full.
2. PURCHASE ORDERS; DELIVERY.
2.1 The Purchaser shall order products from the Producer by
delivery to the Producer of a written purchase order (a "PURCHASE ORDER") in the
Purchaser's standard form, as the same may be amended by the Purchaser from time
to time, which purchase order shall set forth the amount of Fabric to be
manufactured, the specifications therefor, the date on which such Fabric shall
be delivered, the place to which such Fabric shall be delivered, the methods of
packaging and shipping such Fabric and such other matters pertaining to the
manufacture of the Fabric by the Producer and the purchase thereof by the
Purchaser as the Purchaser shall deem to be necessary or appropriate. In the
event of any conflict between a Purchase Order and any document provided by the
Purchaser in connection therewith (including, but not limited to, any
confirmation or invoice), the terms of the Purchase Order shall prevail.
2.2 A Purchase Order shall be deemed to have been accepted by the
Producer unless expressly rejected by the Producer within five (5) business days
after the receipt thereof. Any such rejection shall be in writing and shall
specify in reasonable detail the grounds therefor.
2.3 The Purchaser shall have the right to cancel or amend all or
any portion of a Purchase Order at any time prior to the date that the Producer
shall have commenced weaving fabric in connection with such portion of the
Purchase Order. There shall be no cost or expense incurred by the Purchaser in
connection with any such cancellation or amendment. Any such amendment shall be
deemed to have been accepted by the Producer unless expressly rejected by the
Producer within forty-eight (48) hours after receipt thereof in the manner set
forth in SECTION 2.2.
2.4 Producer shall make delivery of Fabric specified in a Purchase
Order accepted or deemed accepted by Producer within sixty (60) days of such
acceptance.
3. QUALITY CONTROL.
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3.1 The Producer shall manufacture all products in a good, uniform
and workmanlike manner and strictly in accordance with the specifications set
forth in each Purchase Order and any samples provided by the Purchaser.
3.2 The Producer shall inspect each unit of product before
delivery. Such inspection shall be made in accordance with such inspection
standards as may be designated by the Purchaser from time to time and written
reports of the results of such inspection, in such form as may be designated by
the Purchaser from time to time, shall be delivered to the Purchaser on or
before the delivery of such products.
3.3 The Purchaser shall have the right, but not the obligation, to
have one or more quality assurance or other representatives present at the
Producer's manufacturing facilities from time to time during the Term on a
full-time or part-time basis to observe the production of products and the
Producer's compliance with the terms of this Agreement. Such inspections shall
not be deemed to constitute or evidence the acceptance by the Purchaser of such
products.
3.4 The Purchaser shall have the right, but not the obligation, to
inspect each unit of product before delivery. Purchaser shall inform Producer of
Purchaser's desire to inspect products in advance of the scheduled delivery date
for the products; Producer shall inform Purchaser of the first date the products
will be available for inspection; and any such inspection shall be made as soon
as practicable following the date Producer first makes such products available
for inspection.
4. MANUFACTURE OF PRODUCTS.
4.1 The rights granted to the Producer in this Agreement are
personal to the Producer and the Producer shall not sell, assign, sublicense,
transfer, convey, create any interest in or otherwise dispose of, or
hypothecate, mortgage, use as collateral, pledge or otherwise borrower against,
any such rights, or assign or subcontract any portion of the manufacture of any
products to any other person, without the prior written consent of the Purchaser
in each instance, which consent may be withheld by the Purchaser in its sole and
absolute discretion. Any attempt by the Producer to do so shall be null and void
and (in addition to all other remedies available to the Producer at law or
equity or under this Agreement) shall entitle the Purchaser (i) to terminate the
Producer's rights under SECTION 1 or (ii) to reject any or all products
manufactured, in whole or in part, by any such person. A Change in Control of
the Producer or any permitted subcontractor shall be deemed to be an attempt to
transfer the rights granted to the Producer in SECTION 1 in violation of this
SECTION 4.1. Approval by the Producer of any action otherwise prohibited by this
SECTION 4.1 shall not release the Producer of any of its obligations under this
Agreement.
4.2 All products manufactured by the Producer shall comply
strictly with all applicable laws, rules, regulations, permits, orders and
safety standards of all federal, state, local and foreign governmental
authorities.
4.3 The Producer shall obtain, at its sole cost and expense, any
certification, approval or permit required in connection with the manufacture of
the products and the performance of its obligations hereunder.
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4.4 The term "CHANGE IN CONTROL" shall mean the occurrence of any
of the following events: (i) any person, together with all affiliates and
associates of such person (other than the shareholders of the Producer on the
date hereof), shall become the beneficial owner of fifty percent (50%) or more
of the voting power of the Producer or (ii) any person, together with all
affiliates and associates of such person (other than the shareholders of the
Producer on the date hereof), shall obtain the power, directly or indirectly, to
direct or cause the direction of the management and policies of the Producer,
whether through the ownership of voting securities or by contract or otherwise,
or (iii) the sale by the Producer of all or any substantial portion of its
assets to a single person.
5. PURCHASE PRICE.
5.1 From time to time during the Term, the Purchaser and the
Producer shall use their best efforts in good faith to mutually establish
purchase prices for each type of Fabric subject to this Agreement.
Notwithstanding the foregoing, the Producer agrees that the price for each type
of Fabric sold to the Purchaser hereunder shall be no greater than the lowest
price at which substantially similar volumes of the same type of Fabric (or
substantially similar type of Fabric in terms of costs to produce) is sold to
third parties. All invoices issued by the Producer under this Agreement shall be
paid by the Purchaser within thirty (30) days after delivery of the products
relating thereto, and Producer shall not have any offset rights under SECTION
7.3 with respect to any such amounts until such amounts are due and payable upon
expiration of such thirty (30) day period.
5.2 The Producer shall comply with all applicable laws in
performing its obligations hereunder, including, but not limited to, any
applicable federal, state, local or foreign laws, rules or regulations relating
to invoicing the purchase of fabric or to the payment or withholding of taxes.
6. TERM.
6.1 Unless sooner terminated in accordance with SECTION 6.2, the
term (the "TERM") of this Agreement shall commence on the date hereof and shall
end on December 31, 2014.
6.2 The Term shall terminate prior to the expiration of its stated
term upon the happening of any of the following events:
6.2.1 at the option of either party, if the other party
shall fail to perform in any material respect any material term, condition or
obligation to be performed by it under this Agreement and either (A) such
failure is not cured within ten (10) days after written notice of such failure
is given by the terminating party to the defaulting party or (B) the defaulting
party shall have commenced during such ten (10) day period, and shall diligently
pursue thereafter, all actions reasonably necessary to cure such failure; or
6.2.2 at the option of either party, if the other party
shall fail to pay when due any amounts hereunder, which failure is not cured
within ten (10) days of written demand therefor; or
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6.2.3 at the option of either party, immediately upon
written notice, if the other party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official for it or any substantial part
of its property, or shall consent to any such relief or to the appointment of or
taking possession by such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing; or
6.2.4 at the option of either party, immediately upon
written notice, if an involuntary case or other proceeding shall be commenced
against the other party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case remains unstayed and in effect for more
than sixty (60) days; or
6.2.5 at the option of the Purchaser, immediately upon
written notice, upon the occurrence of any event set forth in SECTION 4.1; or
6.2.6 at the option of the Purchaser, immediately upon
written notice, upon the occurrence of a Change in Control of the Producer.
6.3 Upon the termination of the Term for any reason, neither party
shall have any remaining rights, duties or obligations hereunder, except that
(i) any Purchase Order accepted by the Producer before such termination shall be
governed by the terms and conditions herein provided, (ii) each party shall
continue to pay to the other all amounts due hereunder, (iii) the Producer shall
continue to be bound by SECTION 8 hereof and (iv) each party shall use its
commercially reasonable efforts to effect the orderly termination of the
relationship contemplated by this Agreement.
7. OFFSET AGAINST ACABADOS NOTES.
7.1 Reference is made to (a) ten (10) separate senior secured
promissory notes of Producer, dated ________, 2004, each in the principal amount
of $______ (for an aggregate principal of $____________), with a maturity date
of December 1, 2014 (collectively, the "ACABADOS NOTES"), and (b) ten (10)
separate senior secured promissory notes of Constructor Solticio S.A. de C.V., a
corporation organized under the laws of the Republic of Mexico ("SOLTICIO"),
dated ________, 2004, each in the principal amount of $______ (for an aggregate
principal of $____________), with a maturity date of December 1, 2014
(collectively, the "SOLTICIO NOTES" and together with the Acabados Notes, the
"PROMISSORY NOTES"). The Acabados Notes provide for the payment by Producer to
Purchaser of monthly payments of an aggregate of $________, and the Solticio
Notes provide for the payment by Solticio to Purchaser of monthly payments of an
aggregate $________, for total monthly payments of $_______ under the Promissory
Notes.
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7.2 Purchaser shall have the right to offset the amount it owes
Producer for Fabric purchased under this Agreement against the principal amount
of and any accrued interest on the Promissory Notes, whether or not such
principal and interest is then due and payable by Producer and/or Solticio, as
applicable, under the terms of the Promissory Notes (in which case the amount of
such offset shall constitute a prepayment by Producer and/or Solticio, as the
case may be). Any offset by Purchaser pursuant to this SECTION 7.2 shall be
applied PRO RATA against the Promissory Notes, based on the then outstanding
principal amounts of the Promissory Notes.
7.3 Producer and Solticio, collectively, shall have the right to
offset the amount of principal and accrued interest such persons owe Purchaser
under the Promissory Notes against the amount Purchaser owes Producer
(determined as provided in SECTION 5.1) for Fabric purchased under this
Agreement. Producer acknowledges and agrees that any offset under this SECTION
7.3 shall be made by Producer and Solticio, collectively, and not by Producer
individually, and shall be applied PRO RATA against the Promissory Notes, based
on the then outstanding principal amounts of the Promissory Notes.
7.4 If during any calendar month, Purchaser fails to satisfy the
Minimum Commitment by ordering less then the required amount of Fabric (the cash
amount of such deficiency is referred to herein as the "SHORTFALL"), then, as
Producer's sole remedy hereunder for Purchaser's failure to satisfy the Minimum
Commitment, Producer may withhold payment of the amount of the Shortfall from
the next installment or installments of principal and interest payable by
Producer on the Acabados Notes. Producer may continue to withhold payment of the
amount of the Shortfall until such time as Purchaser has satisfied the Minimum
Commitment that originally gave rise to the Shortfall, whereupon the amount
withheld from payment on the Acabados Notes shall be immediately due and payable
(subject to Producers rights of offset as provided herein).
8. CONFIDENTIAL INFORMATION.
8.1 The Producer acknowledges that (i) it will obtain knowledge of
confidential information of the Purchaser during the Term, including, but not
limited to, designs and other data and information of a proprietary nature which
is not generally known to the public ("CONFIDENTIAL INFORMATION"), and that (ii)
maintenance of the proprietary character of the Confidential Information is
important to the Purchaser and its business operations. The Producer shall keep
secret all Confidential Information, shall not use Confidential Information for
any purpose other than as expressly authorized hereunder and shall not disclose
Confidential Information to anyone except to the extent required in performing
services hereunder or the Confidential Information becomes publicly available
through no fault of the Producer. The Confidential Information shall constitute
"trade secrets" within the meaning of the Uniform Trade Secrets Act contained in
California Civil Code Sections 3426 et seq. and Articles 82 to 86 of the Ley de
la Propiedad Industrial, and the Purchaser shall receive all of the protections
and be afforded all of the remedies available under such laws.
8.2 The Producer hereby acknowledges and agrees that it would be
difficult to fully compensate the Purchaser for damages resulting from the
breach or threatened breach of SECTION 8.1 of this Agreement and, accordingly,
the Purchaser shall be entitled to temporary and injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions,
6
to enforce such provisions without the necessity of proving actual damages or
being required to post any bond or undertaking in connection with any such
action. This provision with respect to injunctive relief shall not diminish,
however, the right of the Purchaser to any other relief or to claim and recover
damages.
9. FORCE MAJEURE. Except for obligations of payment, neither party hereto
shall be liable for non-performance caused by any circumstances beyond its
reasonable control, including, but not limited to, lightning, earthquake, storm,
acts of enemies, sabotage, war, blockade, insurrection, riot, epidemic,
landslide, flood, fire, washout or the order of any court or authority, which
circumstance by the exercise of due diligence the party invoking this SECTION 8
is unable to prevent or overcome; PROVIDED, that in the event of a delay in the
delivery of any products pursuant to this SECTION 9 for more than sixty (60)
days, the Purchaser shall have the right to cancel that portion of the Purchase
Order with respect to which delivery has been so delayed, in which case the
Fabric that is the subject of the cancelled Purchase Order shall nevertheless be
counted towards the Purchaser's Minimum Commitment for the month during which
such order was placed; and PROVIDED, FURTHER, that during any period in which
the Producer is unable to supply Fabric for the reasons set forth in this
SECTION 9, then the Purchaser's Minimum Commitment for the contract month (or
contract months) during which such cessation in supply occurs shall be reduced
PRO RATA in relation to the number of days in the applicable contract month in
which the Producer is unable to produce Fabric.
10. RELATIONSHIP OF THE PARTIES. The relationship between the parties
hereto under this Agreement is solely that of purchaser and vendor, and neither
party is or shall be construed to be a partner, joint venturer, employee, agent,
representative, franchisee or participant of or with the other party for any
purpose whatsoever. Neither party shall have any right or authority whatsoever
to assume or to create any obligation or responsibility, express or implied, on
behalf of or in the name of the other party or to bind the other party in any
capacity.
11. WAIVER. No failure to exercise, and no delay in exercising, any right,
power or remedy hereunder shall impair any right, power or remedy which any
party may have, nor shall any such delay be construed as a waiver of any such
rights, powers or remedies or an acquiescence in any breach or default under
this Agreement. The rights and remedies herein specified are cumulative and not
exhaustive of any rights or remedies which any party would have. 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.
12. INSURANCE. The Producer shall maintain at its sole expense policies of
insurance in forms and with coverages that are customary for persons and
entities participating in the manufacture and delivery of fabric, which policies
shall be reasonably acceptable to the Purchaser. The Producer shall provide the
Purchaser with a certificate of insurance or other written evidence of the
coverage described herein as of the commencement of the Term and as of the
annual renewal of such insurance policies. The policies shall provide that
insurance coverage may not be canceled or be subject to a reduction of coverage
or other material modification unless at least thirty (30) days' prior written
notice is given to the Purchaser by the insurance carrier.
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13. 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
consummation of the transaction contemplated hereby notwithstanding any
investigations, inspections, examinations or audits made by or on behalf of any
party.
14. INDEMNIFICATION.
14.1 Each party shall indemnify, defend and hold harmless the other
party and its officers, directors, shareholders, employees, affiliates, agents,
successors and assigns, and any person who controls or is deemed to control any
of them, 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,
result from or are related to any breach by the Indemnifying party of any of its
representations, warranties, covenants or commitments under this Agreement or
any agreement or instrument delivered pursuant hereto.
14.2 The Producer shall be solely responsible for all costs
incurred by it in its business or operations or the performance of its
obligations under this Agreement, including, but not limited to, any tax,
environmental, labor, social security, civil, mercantile or other cost or
liability, and shall indemnify, defend and hold harmless the Purchaser and its
officers, directors, shareholders, employees, affiliates, agents, successors and
assigns, and any person who controls or is deemed to control any of them, from,
against and in respect of any Loss which, directly or indirectly, arises,
results from or is related to the Purchaser's performance or failure to perform
any of its obligations under this Agreement.
14.3 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 indemnifying party's obligations hereunder shall be in addition to any
liability that it or any other person otherwise may have to the indemnified
parties, and shall be binding upon, and inure to the benefit of its successors
and assigns, and shall inure to the benefit of the heirs, representatives,
successors and assigns of each indemnified party. 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.
15. THIRD-PARTY CLAIMS. The indemnified party shall promptly notify the
indemnifying party of the existence of any claim, demand or other matter
involving liabilities to third parties to which the indemnifying party's
indemnification obligations could apply and shall give the indemnifying party a
reasonable opportunity to defend the same at its expense and with counsel of its
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
8
conflict of interest may exist between the indemnified party and the
indemnifying party, the indemnifying party shall not have the right to assume
such defense on behalf of such indemnified party, and (iii) the failure to so
notify the indemnifying party shall not relieve the indemnifying party from any
liabilities that it may have hereunder or otherwise, except to the extent that
such failure so to notify the indemnifying party materially prejudices the
rights of the indemnifying party. If the indemnifying party shall, within a
reasonable time after such 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 indemnifying party. The indemnifying party shall not
compromise or settle the claim or other matter for any consideration other than
the payment of money without the prior written consent of the indemnified party.
The indemnified party shall make available all information and assistance that
the indemnifying party may reasonably request; provided, however, that any
associated expenses shall be paid by the indemnifying party as incurred.
16. 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 certified, return
receipt requested, 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.
17. 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, including, without
limitation, that certain Purchase Commitment Agreement, dated October 2003,
between Producer and Purchaser. 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.
18. 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.
19. SUCCESSORS AND ASSIGNS. The rights and duties of the Producer under
this Agreement are personal, and the Producer shall not assign or otherwise
transfer any of its rights or delegate any of its duties hereunder (whether
voluntarily or involuntarily) without the prior written consent of the Purchaser
in each instance. Subject to the foregoing, 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 permitted successors and assigns.
9
20. 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.
21. 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.
22. 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.
23. 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.
24. 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.
25. 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
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.
26. 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.
27. CONSENT TO JURISDICTION. Subject to SECTION 25, 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
10
has been brought in an inconvenient forum, (iii) agrees that a final 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 in the manner set forth in SECTION 16. 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.
28. 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.
29. 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first set forth above.
Tarrant Mexico, S. de X.X. de C.V.
------------------------------------------
Name:
Authorized Representative
Address: _________________________________
_________________________________
_________________________________
_________________________________
Acabados y Xxxxxx Textiles, S.A. de C.V.
------------------------------------------
Name:
Authorized Representative
Address: Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx D.F.
Telecopier: (000) 000-0000
ACKNOWLEDGED AND AGREED
WITH RESPECT TO SECTION 7 ONLY:
11
Constructor Solticio S.A. de C.V.
------------------------------------------
Name:
Authorized Representative
Address: Xxxxx Xxxxx Xxx #231
Col. Xxxxxxx, X.X. 00000
Xxxxxx D.F.
Telecopier: (000) 000-0000
12
EXHIBIT 8.1(G)
REORGANIZATION
1. Xxxx Xxxxxxx Xxxxx Xxxxxxxxx acquires an ownership interest in
Inmobiliaria by increasing its paid in capital by $2,634,000.
2. Inmobiliaria's redeems Tarrant Mexico's entire ownership interest in
Inmobiliaria in consideration of the issuance to Tarrant Mexico of a
promissory note, in form and substance reasonably acceptable to Tarrant
Mexico, in the principal amount of $11,000,000 (the "INMOBILIARIA
NOTE").
3. Tarrant Mexico then redeems Xxxx Xxxxxxx Xxxxx Xxxxxxxxx' entire
ownership interest in Tarrant Mexico in consideration of the transfer
and assignment to Xx. Xxxxxxxxx of the Inmobiliaria Note.
