EXHIBIT 2.1
MUTUAL TERMINATION
AND RELEASE AGREEMENT
This Mutual Termination and Release Agreement, dated as of April 19,
2007 (this "AGREEMENT"), is by and among (i) Tarrant Apparel Group, a California
corporation ("PARENT"), (ii) 4366883 Canada Inc., a corporation incorporated
under the CANADA BUSINESS CORPORATIONS ACT ("CBCA") ("BUYER" and, together with
Parent, each a "BUYER PARTY" and collectively the "BUYER PARTIES"), (iii)
3681441 Canada Inc., a corporation incorporated under the CBCA ("368 CANADA"),
(iv) Buffalo Inc., a corporation incorporated under the CBCA ("BUFFALO INC."),
(v) 3163946 Canada Inc., a corporation incorporated under the CBCA ("316
CANADA"), (vi) Buffalo Corporation, a Delaware corporation ("BUFFALO US" and,
together with 368 Canada, Buffalo Inc., and 316 Canada, each a "TARGET COMPANY"
and collectively the "TARGET COMPANIES"), (vii) BFL Management Inc. in its
capacity as the sole trustee of The Buffalo Trust ("Trust"), and (viii) each
stockholder of Target Companies set forth in EXHIBIT A to the Purchase Agreement
(as defined below) (individually, "SELLER" and, collectively, "SELLERS" and,
together with Target Companies and Trust, each a "SELLER PARTY" and collectively
the "SELLER PARTIES").
RECITALS
A. Buyer Parties and Seller Parties are parties to that certain
Stock and Asset Purchase Agreement, dated December 6, 2006, as amended by
Amendment No.1 to Stock and Asset Purchase Agreement, dated March 20, 2007 (as
amended, the "PURCHASE AGREEMENT").
B. Buyer Parties and Seller Parties desire to terminate the
Purchase Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. CERTAIN DEFINITIONS. Undefined capitalized terms herein are
defined in the Purchase Agreement.
2. TERMINATION OF PURCHASE AGREEMENT. Buyer Parties and Seller
Parties hereby agree that the Purchase Agreement is terminated as of the date
hereof by mutual written consent in accordance with SECTION 10.1(A) thereof
without any liability on the part of Buyer Parties, Seller Parties, or any of
their respective subsidiaries, directors, officers, agents, representatives,
shareholders and other affiliates ("RELATED PARTIES") (and each of their
respective Related Parties).
3. RETURN OF DEPOSIT. Concurrently with the execution and
delivery of this Agreement, notwithstanding SECTION 2.1(C) of the Agreement to
the contrary, Buffalo International shall, and each other Seller Party shall
cause Buffalo International to, return U.S. $4,750,000 of the Deposit to Parent
without deduction or offset of any kind, and Buffalo International shall retain
U.S. $250,000 of the Deposit plus all of the interest accrued on the total of
the Deposit. Additionally, Buffalo International shall retain all interest
accrued on the U.S. $2 million borrowed from Guggenheim Corporate Funding, LLC
or its affiliates. Buffalo International shall deliver to Parent U.S. $4,750,000
of the Deposit in cash by wire transfer of immediately available funds pursuant
to the following wire transfer instructions:
BANK WIRE INSTRUCTIONS
Bank Name:
ABA#:
Account #:
Account Name:
4. FEES AND EXPENSES OF XXXXXXX. Buyer Parties hereby confirm
being solely responsible for the fees and expenses of RSM Xxxxxxx incurred in
connection with the services provided by RSM Xxxxxxx in connection with the
transactions proposed in the Purchase Agreement that were in addition to the
services RSM Xxxxxxx would otherwise have performed for any of the Seller
Parties, and would not have been performed by RSM Xxxxxxx but for the
transactions contemplated by the Purchase Agreement. Seller Parties shall be
solely responsible for all other fees and expenses of RSM Xxxxxxx, including all
fees and expenses for services that RSM Xxxxxxx would have performed for any of
the Seller Parties had the parties not entered into the Purchase Agreement.
5. RELEASE. Buyer Parties, on the one hand, and Seller Parties,
on the other hand, and each of them, on behalf of itself and all present or
former subsidiaries and other affiliates, hereby releases the other parties and
their Related Parties (and each of their respective Related Parties) from all
claims, demands, debts, liabilities, obligations, agreements, promises, losses,
damages, demands, rights, actions or causes of action, whether known or unknown,
whether at law or equity, whether direct or derivative (herein "CLAIM" or
"CLAIMS") arising under or relating to the Purchase Agreement or any of the
transaction(s) described or referred to in the Purchase Agreement; PROVIDED,
HOWEVER, that nothing in this Agreement shall be construed to release any Claim
arising under or relating to this Agreement or that certain confidentiality
agreement between Buffalo Inc. and Parent, dated June 1, 2006, as amended to
date (the "CONFIDENTIALITY AGREEMENT"), other than paragraphs 16, 17 and 18 of
the Confidentiality Agreement, which provisions, and any Claims related thereto,
are included in the Claims released hereby. All Evaluation Material shall be
promptly return by the Receiving Parties to the Disclosing Party (as those terms
are defined in the Confidentiality Agreement).
6. PUBLICITY. Except as may be required by law or the rules of
any stock exchange on which a party's securities are then listed, none of the
Buyer Parties or the Seller Parties will, at any time, publicly disclose,
discuss or comment on the circumstances giving rise to termination of the
Purchase Agreement in a manner that is materially different from or inconsistent
with the disclosure provided in the press release of Parent approved by Buffalo
International concurrently herewith or in any other writing approved by Parent
and Buffalo International.
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7. REPRESENTATIONS AND WARRANTIES. Buyer Parties, on the one
hand, and Seller Parties, on the other hand, and each of them, hereby represent
and warrant to the other parties that: (a) it has full power and authority to
enter into this Agreement and to perform its obligations hereunder in accordance
with its provisions, (b) this Agreement has been duly authorized, executed and
delivered by such party, and (c) this Agreement constitutes a legal, valid and
binding obligation of such party, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity.
8. GOVERNING LAW. This Agreement and the performance of the
obligations of the parties hereunder will be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
choice of Law principles.
9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
10. HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
(SIGNATURES CONTINUE ON FOLLOWING PAGES)
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IN WITNESS WHEREOF, the parties have executed this Mutual Termination
and Release Agreement on the date first above written.
TARRANT APPAREL GROUP
By: /S/ XXXXX XXXXX
-----------------------------------------
Name: XXXXX XXXXX
-----------------------------------------
Title: CHIEF FINANCIAL OFFICER
-----------------------------------------
4366883 CANADA INC.
By: /S/ XXXXXX XXXX
-----------------------------------------
Name: XXXXXX XXXX
-----------------------------------------
Title: CHIEF EXECUTIVE OFFICER
-----------------------------------------
BUFFALO INTERNATIONAL INC.
By: /S/ XXXXXXX XXXXXX
-----------------------------------------
Name: XXXXXXX XXXXXX
-----------------------------------------
Title: DIRECTOR AND SECRETARY
-----------------------------------------
3681441 CANADA INC.
By: /S/ XXXXXXX XXXXXX
-----------------------------------------
Name: XXXXXXX XXXXXX
-----------------------------------------
Title: DIRECTOR AND PRESIDENT
-----------------------------------------
BUFFALO CORPORATION
By: /S/ XXXXXXX XXXXXX
-----------------------------------------
Name: XXXXXXX XXXXXX
-----------------------------------------
Title: DIRECTOR AND PRESIDENT
-----------------------------------------
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED]
4183517 CANADA INC.
By: /S/ XXXXXXX XXXXXX
-----------------------------------------
Name: XXXXXXX XXXXXX
-----------------------------------------
Title: DIRECTOR AND PRESIDENT
-----------------------------------------
3979512 CANADA INC.
By: /S/ XXXXXXX XXXXXX
-----------------------------------------
Name: XXXXXXX XXXXXX
-----------------------------------------
Title: DIRECTOR AND PRESIDENT
-----------------------------------------
THE BUFFALO TRUST
By: BFL MANAGEMENT INC.
Title: TRUSTEE
By: /S/ XXXXXX XXXXXXXX
--------------------------------
Name: XXXXXX XXXXXXXX
--------------------------------
Title: DIRECTOR
--------------------------------
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