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EXHIBIT 10.47
LETTER OF CREDIT/GUARANTY AGREEMENT
THIS AGREEMENT is made this day of November, 1997 between
Jalate, Ltd. ("CLIENT") and Xxxxxx Financial, Inc. ("XXXXXX"). All capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed thereto in the Collection Date Factoring Agreement between Client and
Xxxxxx having an Effective Date of June 30, 1997 (the "FACTORING AGREEMENT").
WHEREAS, Client will, from time to time, request Xxxxxx to finance its
purchase of merchandise by (i) establishing letters of credit in favor of the
sellers of such merchandise or (ii) issuing a guaranty of PAYMENT in favor of
any such sellers or other issuers of letters of credit in favor of such sellers,
or (iii) honoring sight or term drafts drawn by any seller of such merchandise;
and
WHEREAS, when such merchandise is delivered, Client will request Xxxxxx,
in its sole discretion, to deliver such merchandise to Client for the purposes
of manufacturing or resale, or both.
NOW, THEREFORE, in consideration of the foregoing premise and for other
good and valuable consideration, receipt and sufficiency of which is
acknowledged, Client and Xxxxxx agree as follows:
1. Client will, from time to time, request that Xxxxxx finance the purchase
of merchandise by (i) establishing a letter of credit in favor of the
seller thereof or (ii) issuing a guaranty of payment in favor of such
seller or other issuer of a letter of credit in favor of such seller, or
(iii) agreeing to honor sight or term drafts drawn against Xxxxxx by the
seller of such merchandise.
2. Within a reasonable time thereafter Xxxxxx will advise Client if Xxxxxx is
willing to finance such purchase as aforesaid and the terms and conditions
upon which Xxxxxx is willing to do so; it being understood and agreed that
in all instances Xxxxxx shall have sole and complete discretion to
determine whether or not or to what extent Xxxxxx is willing to assist in
financing any such purchase of merchandise.
3. If Xxxxxx is willing to finance such purchase, it will establish a letter
of credit, issue its guaranty, or honor drafts as aforesaid, subject to
whatever terms and conditions Xxxxxx may specify in any such letter of
credit, guaranty or other agreements.
4. Client unconditionally agrees to indemnify Xxxxxx and hold it harmless from
any and all indebtedness, obligations and liabilities Xxxxxx may incur in
connection with any letter of credit which it may establish or obtain for
Client's account, or in connection with any guaranty Xxxxxx may issue and
Client will pay all such indebtedness, obligations and liabilities upon
Xxxxxx'x demand and in United States currency.
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5. Xxxxxx will have the right at any time and without notice to charge
Client's account on Xxxxxx'x books with the amount of any and all
indebtedness, obligations or liabilities paid or incurred by Xxxxxx in
connection with any such letter of credit guaranty or draft including, but
without limitation, (i) all amounts which may be charged to Xxxxxx by any
bank or other financial institution issuing such letter of credit, (ii)
bank charges, (iii) fees and commissions, (iv) duties, (v) cost of
insurance and (vi) such other charges and expenses, including interest,
attorneys' fees and collection charges, which may pertain either directly
or indirectly to such letter of credit guaranty or draft, or to the
merchandise referred to therein. Client further agrees that any debit
balance which may exist in its account by virtue of the foregoing charges
will be repaid upon Xxxxxx'x demand and in United States currency.
6. Client agrees to hold Xxxxxx harmless for any errors or omissions whether
caused by Xxxxxx or otherwise, and Client's unconditional obligation to
Xxxxxx hereunder shall not be modified or diminished for any reason.
7. Xxxxxx shall not be responsible for the existence, character, quality,
condition or value of the property purporting to be represented by
documents; for the validity, sufficiency or genuineness of documents, even
if such documents shall in effect prove to be in any or all respects
invalid, insufficient, fraudulent or forged; for the time, place, manner or
order in which shipments are made; for partial or incomplete shipments or
failure or omission to ship any or all of the property referred to in any
Letter of Credit or Guaranty; for any deviation from instructions, delay,
default or fraud by the shipper or anyone else in connection with the
property or the shipping thereof; for any breach of contract between any
shipper or any vendor and Client. Client agrees that any action taken by
Xxxxxx under or in connection with any letter of credit, guaranty or draft
or the related documents or property, if taken in good faith, shall be
binding on Client and shall not cause Xxxxxx any resulting liability to
Client, and in furtherance thereof, Client hereby agrees to and waives
notice of any extension of the maturity or time for payments or for
presentation of drafts, acceptance or documents or any other modifications
of the terms of any letter of credit or guaranty.
8. Client agrees to procure promptly any necessary import or other licenses
for the import of the property and to comply with all foreign and domestic
governmental regulations in connection with the shipment of the property or
the financing thereof, and to furnish such certificates in that respect as
Xxxxxx may at any time require. In this connection Client warrants and
represents that all shipments made under any letter of credit or guaranty
are in accordance with and are not prohibited by the governmental laws and
regulations of the countries in which the shipments originate or terminate.
Client assumes all risks and liability for all present and future local,
state or governmental taxes, levies or embargo of any country, state, city
or other political sub-division wherein payments are to be made or where
such drafts may be drawn, negotiated, accepted or paid; and Client assumes
all risks, liability and responsibility for any laws, customs and
regulations which may be effective in the countries wherein payments are to
be made or where such drafts are drawn, negotiated or paid.
9. Client hereby grants to Xxxxxx a continuing security interest in all of
Client's now owned and hereafter acquired inventory acquired in connection
with any of Xxxxxx'x letters of credit
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and/or guaranties and/or honoring any drafts drawn against Xxxxxx and
further grants, to Xxxxxx a security interest in and assign to Xxxxxx all
of Client's right, title and interest in or to shipping documents, drafts,
warehouse receipts, bills of lading and other documents or instruments with
respect to such inventory, and the proceeds thereof, and the contract
rights relating thereto as collateral security for all Obligations.
10. Until Xxxxxx is repaid, Client agrees to keep the merchandise adequately
covered by insurance in companies, in amounts and under policies acceptable
to Xxxxxx but at Client's expense, and to assign the policies or
certificates of insurance to Xxxxxx or to make the loss or adjustment, if
any, payable to Xxxxxx at Xxxxxx'x option and to, upon demand, furnish
Xxxxxx with evidence of acceptance of such assignment by the insurers.
11. All advances made by Xxxxxx under or in connection with such purchase of
merchandise shall bear interest at the rate set forth in the Factoring
Agreement. If Xxxxxx, in its sole discretion, shall deliver possession to
Client of any property shipped under a Xxxxxx letter of credit or guaranty,
such merchandise will continue to stand as security for all Obligations and
Client agrees to hold such merchandise as Trustee, subject to the terms and
provisions of this Agreement, and subject to the terms and provisions of
the Uniform Commercial Code, if applicable, and Client agrees to execute
such instruments and file such instruments as are deemed necessary or
desirable by Xxxxxx in order to insure that Xxxxxx'x security will not be
impaired in any such transfer of possession.
12. Upon the sale by Client of any such merchandise, the accounts receivable or
other proceeds generated thereby shall be assigned and delivered to Xxxxxx
and shall be applied to the payment of the Obligations.
13. Client agrees to pay Xxxxxx all bank charges incurred or paid by Xxxxxx in
connection with any letter of credit. In addition to such bank charges,
Client shall pay to Xxxxxx three percent (3.0%) per annum of the face
amount of each letter of credit or guaranty for each month, or part thereof
that said letter of credit or guaranty is outstanding.
14. The following acts or occurrences shall constitute a default under this
Agreement:
(a) Client's failure to pay any amounts owing to Xxxxxx when due or
upon Xxxxxx'x demand;
(b) Client's sale outside the ordinary course of business or pledge or
attempted pledge of any merchandise entrusted to Client;
(c) Client fails to comply with any of the terms, conditions or
provisions of this Agreement;
(d) Client's default under the Factoring Agreement or under any other
agreement between Client and Xxxxxx.
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15. Upon the occurrence of a default under this Agreement, the Factoring
Agreement or under any of the terms and conditions of any promissory note,
financing statement, agreement or other document given to Xxxxxx by Client,
then and in any such event, Xxxxxx may terminate this Agreement, demand
payment from Client of all sums owing to Xxxxxx and exercise any rights and
remedies given Xxxxxx hereunder or under any such other documents or under
the Uniform Commercial Code, if applicable. Client hereby waives
presentment, demand, protest and notice as to any instrument given to
Xxxxxx hereunder and with respect to any notice to which we might otherwise
be entitled. Client expressly authorizes Xxxxxx to take possession of any
and all merchandise subject to Xxxxxx'x xxxx and to sell it immediately
without advertisement, and without notice to Client, at private sale or at
public auction, or at broker's board or otherwise at Xxxxxx'x option, at
such times, at such places and for such prices, and upon such terms and
conditions as Xxxxxx may xxxx proper and to apply the net proceeds of such
sales, after deducting the expenses thereof, to the Obligations, and Client
agrees to be responsible for any deficiency upon Xxxxxx'x demand. If any
such sale be at broker's board or at public auction, Xxxxxx may be a
purchaser at such sale free from any right of redemption which Client
hereby expressly waives and releases. In furtherance of such disposition of
any such merchandise, Client shall execute such power of attorney or other
documents Xxxxxx may request.
16. Xxxxxx shall be entitled to offset and apply to the Obligations any sums or
property of Client's coming into Xxxxxx'x possession or to hold the same as
attachable security for any of the Obligations no matter how arising and
whether under this Agreement or otherwise. Client acknowledges that Xxxxxx
shall also be entitled to establish reserves in the aggregate amount of all
letters of credit or guaranties outstanding from time to time against
amounts otherwise available to Client for Revolving Loans under that
certain Revolving Loan Agreement dated June 30, 1997 between Client and
Xxxxxx, as amended from time to time.
17. Xxxxxx'x failure to exercise any rights hereunder shall not operate as a
waiver of any of its rights and remedies contained in this Agreement or in
any other agreement between Client and Xxxxxx and all of such rights and
remedies are cumulative and not alternative.
18. This Agreement embodies the entire agreement among the parties hereto and
supersedes all prior commitments, agreements, representations, and
understandings, whether written or oral, relating to the subject matter
hereof, and may not be contradicted or varied by evidence of prior,
contemporaneous, or subsequent oral agreements or discussions of the
parties hereto.
19. This Agreement shall be binding upon and inure to the benefit of Client's
and Xxxxxx'x respective successors and assigns.
20. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES.
21. This Agreement, on acceptance by Xxxxxx, shall continue until the earlier
of (i) termination by either party giving to the other party thirty (30)
days prior written notice or (ii) termination of the Factoring Agreement,
but any such termination of this Agreement shall not
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terminate or otherwise affect an), of Client's Obligations or Xxxxxx'x
rights hereunder and such Obligations, and rights shall continue until all
of the Obligations are paid in full.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their thereunto duly authorized officers on the date first set forth
above.
JALATE, LTD. XXXXXX FINANCIAL, INC.
By: [SIG] By: [SIG]
___________________________ ________________________________
Name: [ILLEGIBLE] Name: [ILLEGIBLE]
_________________________ ______________________________
Title: V.P. FINANCE & CFO Title: V.P.
________________________ _____________________________
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