EXHIBIT 2.1
May 9, 2001
AGREEMENT
Scope of Transaction
Cygne Designs, Inc. or its designee (together or individually referred to
hereafter as "Purchaser") wishes to acquire from Best Knits L.L.C. ("Seller"),
all of the rights and obligations of all the customer purchase orders held by
Seller at the Closing Date (the "Customer Purchase Orders"). In addition,
Purchaser wishes to hire the employees of Seller's 6600 square meter factory
located in the Jordache Building, Madinat Xx-Xxxxxx Estate, Q1Z, Jordan, and
lease the premises, machinery, equipment, computers, computer hardware,
furniture and fixtures, and vehicles currently owned by, used by, or available
to Seller (together, except the premises, the "Equipment," and with the
premises, the "Factory"). Purchaser also wishes to acquire the trade name and
domain name "Best Knits".
Terms and Conditions
1 Companies
Seller shall change or otherwise relinquish the corporate name "Best Knits" so
that Purchaser can form a Jordanian company using the name "Best Knits";
provided, however, that such change is permissible under the laws of the Kingdom
of Jordan.
2 Customer Purchase Orders
Seller shall assign and transfer to Purchaser all the Customer Purchase Orders,
together with all rights and obligations attached thereto, and use its best
efforts to obtain customers' consents to such assignment and transfer. In those
special cases where such consent is not obtained prior to the Closing Date,
Seller shall cooperate with Purchaser to establish arrangements that will
provide for the transfer of the economic rights and obligations of such
Customer Purchase Orders to Purchaser as of the Closing Date.
3 Committed Raw Materials Purchase Orders
Seller has purchased and issued purchase orders for fabric, trims and
accessories in order to manufacture products relating to all the Customer
Purchase Orders (the "Committed Raw Materials"). Seller shall assign and
transfer to Purchaser all rights and obligations pertaining to such purchase
orders (the "Committed Raw Materials Purchase Orders").
4 Committed Raw Materials Payments and Letters of Credit
Purchaser shall reimburse Seller for all out-of-pocket moneys paid for the
purchase of Committed Raw Materials within five business days following the
verification of invoices and payments made by Seller. Purchaser shall pay Seller
the amounts due under letters of credit opened by Seller to purchase Committed
Raw Materials immediately upon such letters of credit becoming due and shall
replace those letters of credit, or portions thereof, corresponding to Committed
Raw Materials deliveries scheduled after August 31, 2001. Title ownership of
Committed Raw Materials shall only pass to Purchaser upon corresponding payments
to Seller.
5 Factory Lease
Seller shall lease, or cause to be leased, the Factory to Purchaser for the
period commencing May 1, 2001 and ending October 31, 2002 (the "Lease Term") for
a monthly charge, payable monthly in advance, of $35,257 until September 30,
2001, and $44,000 thereafter. A floor plan of the premises is attached hereto as
Schedule 5.
5 Guarantee to Preserve Assets
Purchaser shall maintain the Factory in the ordinary course of business, and
shall not remove Equipment, other than vehicles, from the Factory without the
written consent of Seller. A complete list of the Equipment is provided in
Schedule 6 attached hereto. At the end of the Lease Term, and in the case of the
earlier occurrence of a significant event, such as flood or fire, Purchaser and
Seller shall jointly take an inventory of the Equipment and Purchaser shall pay
Seller the then net book value of any missing Equipment and, at its option,
purchase, replace or repair any damaged Equipment; provided, however, that
Equipment having experienced ordinary wear and
May 9, 2001
AGREEMENT
tear shall not be considered damaged. The obligation of this Section 6 shall be
guaranteed by Cygne Designs, Inc.
7 Factory Employees
As of the Closing Date, Purchaser shall continue the employment of all employees
of Seller, including all expatriate employees (except up to a maximum of five
employees), actively employed immediately prior to the Closing Date listed in
Schedule 7 attached hereto (the "Continued Employees") under substantially
comparable terms of employment. Seller shall use its best efforts to ensure that
all Continued Employees be available to Purchaser. Seller shall pay or cause to
be paid all amounts due to employees of Seller, for wages, salary, bonuses,
commissions, incentive payments and other compensation (including, without
limitation, any vacation and sick pay) or any other benefit, perquisite, cost,
expense, entitlement, liability or obligation attributable to services provided
prior to the Closing Date.
8 Mutual Non-Hiring Covenant
Each of Seller and Purchaser shall not solicit or hire any of the other party's
employee or any Continued Employee until one month following the Lease Term, or
any extension thereof, without the written consent of the other party; provided,
however, that this restriction shall not apply to Xx. Xxxxxxxx Xxxxx, or to any
employee dismissed by either party.
9 Reimbursement Factory Expense between May 1 and the Closing Date
Purchaser shall reimburse Seller for the actual Factory expenses incurred from
May 1, 2001 through the Closing Date, excluding rent and depreciation, within
five business days following submission of such expenses.
10 Reimbursement of Future Factory Expenses
During the Lease Term, Purchaser shall reimburse Seller, within five business
days after submission, for the actual monthly Factory expenses incurred by
Seller; provided, however, that such expenses shall not include rent,
depreciation, or any personnel expenses paid directly by Purchaser. Purchaser
shall pay sub-contractors engaged in manufacturing Customer Purchaser Orders
directly for all work performed after May 1, 2001.
11 Jordanian Customs Bank Guarantee
Purchaser acknowledges that Seller has posted a bank guarantee in compliance
with Jordanian law. Seller will not have any obligation to increase the amount
of the bank guarantee after the closing date. Purchaser shall replace the bank
guarantee within 90 days from the Closing Date and, if Purchaser shall not have
done so, Seller shall then have the right to cancel its bank guarantee.
12 Goodwill Payment
In consideration for the rights to the trade name, customer relationships and
goodwill, Purchaser shall pay Seller the sum of $500,000, payable $200,000 at
the Closing, and the balance of $300,000 in fifteen $20,000 monthly
installments, commencing August 1, 2001 in accordance with the promissory note
attached as Schedule 12 hereto.
13 Jurisdiction
This Agreement shall be governed by the laws of the State of New York.
14 Arbitration
Any dispute, controversy or claim arising out of or in connection with or
relating to this Agreement, any breach or alleged breach hereof, or the
transaction contemplated hereby, shall be resolved and settled by arbitration by
three arbitrators. Within fifteen (15) days after written demand for arbitration
is sent by one party to the other, Purchaser and Seller shall each select one
arbitrator, and the two arbitrators so selected shall select a third arbitrator.
The parties shall endeavour to complete arbitration within 60 days after
delivery of written notice demanding arbitration. The decision of the
arbitrators shall be binding and conclusive upon the parties.
May 9, 2001
AGREEMENT
Judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction. Any such arbitration shall be held in New York County,
State of New York under the commercial rules then in effect of the American
Arbitration Association. The expense of arbitration shall be borne equally by
the parties to the arbitration and each party shall bear and pay for the cost
of its own experts, witnesses, evidence, counsel and other costs in connection
with the preparation and presentation of its case; provided, however, in the
event either party alleges fraud or that the position of the other party is not
supportable in good faith, and the arbiters find that such fraud or bad faith
exists, the arbiters shall be free to award costs in such arbiters' discretion.
15 Entire Agreement
This Agreement, including the Schedules hereto, contains all of the terms and
conditions agreed upon by the parties relating to the subject matter of this
Agreement and shall not be amended or modified except by a writing duly executed
by Seller and Purchaser.
16 Timing of the Essence
Seller and Purchaser recognize that, since customers are prepared to place
orders for Spring 2001 within the next few weeks, timing is of the essence. This
Agreement shall be null and void, and neither Seller nor Purchaser shall have
any obligations to each other if the Closing does not occur on or prior to May
18, 2001. This Agreement shall be deemed to have Closed upon occurrence of the
first payment from Purchaser to Seller.
Agreed, this 9th of May, 2001
For Cygne Designs, Inc. For Best Knits L.L.C.
By: /s/ Xxxxxxx Xxxxxx By: /s/
------------------------ -----------------------------
By: Xxxxxxx Xxxxxx, CEO By: Best Knits Company W.L.L.
May 9, 2001
AGREEMENT
Schedule 5
Floor plan of Factory premises.
Schedule 6
A complete list of machinery, equipment, computers, computer hardware and
software, furniture and fixtures and vehicles.
Include, for each item over $1,000:
Description
Part number
Date of purchase
Purchase price
Accumulated depreciation and net book value as of May 1, 2001
Schedule 7
A list of employees of Seller, including expatriate employees, actively
employed immediately prior to the Closing Date.
Include, for each employee:
Name
Position
Date of birth
Date of hire
Salary
Special benefits, if any
Contractual obligations, if any (other than benefits and entitlements required
by law)
AGREEMENT
May 9, 2001
Schedule 12
PROMISSORY INSTALLMENT NOTE
FOR GOOD AND VALUABLE CONSIDERATION, the undersigned Borrower does hereby
promise to pay to Best Knits L.L.C. (Lender) with an address at _______________
_____________ or at such other places as may, from time to time, be designated
in writing by the holder of this Note, the amount of THREE HUNDRED THOUSAND
DOLLARS ($300,000). Said amount is to be payable in FIFTEEN (15)
NON-INTEREST-BEARING INSTALLMENTS of TWENTY THOUSAND DOLLARS ($20,000) the first
of which is due on or before the 1st day of August, 2001, and following payments
to be made on or about the 1st day of each consecutive month. In the event
Lender shall have notified Borrower in writing of Borrower's failure to make any
payments due hereunder and Borrower shall have failed to cure the default within
five business days of receipt of such notification, all remaining payments shall
be accelerated and become due within five business days.
All sums payable hereunder are payable in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts and shall be payable without relief or
benefit of any valuation, stay, appraisement, extension, or redemption laws now
or hereafter existing and with reasonable attorneys fees should this Note be
referred to an attorney for collection of the amount due hereunder.
The Maker shall have the right to prepay all or any part of the unpaid principal
balance evidenced by this Note at anytime.
The Maker waives demand, presentment for payment, notice of dishonor, protest
and notice of protest.
This Note shall be governed by the laws of the State of New York. Borrower
hereby submits to the jurisdiction of the Supreme Court of the State of New York
for all proceedings involving this Note.
This Note and every covenant and agreement herein contained shall be binding
upon the undersigned and its successors and assigns, and shall inure to the
benefit of Payee and its successors and assigns.
This Note may not be changed or terminated orally.
IN WITNESS WHEREOF, the undersigned has executed these presents as of the
date of May , 2001.
Borrower: Cygne Designs, Inc.
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ONE COPY EXECUTED
AS OF MAY 13TH, 2001
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By: /s/ Xxxxxxx Xxxxxx
---------------------- Date: May , 2001
By: Xxxxxxx Xxxxxx
Title: CEO
