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:
<PAGE>
BANK WIRE INSTRUCTIONS
Bank Name:
ABA#:
Account #:
Account Name:
4. FEES
AND EXPENSES OF RICHTER. Buyer Parties hereby confirm
being solely
responsible for the
fees and expenses of RSM Richter incurred in
connection with the
services provided by RSM Richter in
connection
with the
transactions proposed
in the Purchase
Agreement that were in addition to the
services RSM
Richter would otherwise have performed for any of the Seller
Parties, and
would not have been performed by RSM Richter but
