EXHIBIT 10.58
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[LETTERHEAD OF THE CIT GROUP/COMMERCIAL SERVICES, INC.]
Date: June 13, 1997
TARRANT APPAREL GROUP
0000 X. Xxxxxxxxxx Xxxx.
Xxx Xxxxxxx, Xx 00000
ACCOUNTS RECEIVABLE FINANCING AGREEMENT
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Ladies and Gentlemen:
In consideration of our extending loans and other financial accommodations to
you on one or more occasions, the following shall constitute the accounts
receivable financing agreement (the "Agreement") between us.
I. DEFINITIONS
1.1 All terms used herein and defined in the California Uniform Commercial Code
shall have the meanings given therein unless otherwise defined herein.
1.2 "Accounts" shall mean and include all of your accounts and accounts
receivable created by or arising from your sales of goods or rendition of
services to Xxxxxx New York, a division of The Limited Corporation and to Target
Stores, a division of Xxxxxx Xxxxxx Corporation, (including, without limitation,
all accounts and accounts receivable arising from sales made or services
rendered under any of your trade names (such as Fashion Resources) or styles, or
through any of your divisions), and all instruments, documents, contract rights,
chattel paper, and general intangibles arising out of such sales or rendition of
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services.
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1.3 "Business Day" shall mean a day other than a Saturday, Sunday or legal
holiday under the laws of the States of California and/or New York.
1.4 "Chase Rate" shall mean the per annum rate of interest publicly announced
by The Chase Manhattan Bank in New York, New York, from time to time as its
prime rate. The Chase Rate shall be determined by us at the close of business
on the last Business Day of each calendar month. (The prime rate is not intended
to be the lowest rate of interest charged by The Chase Manhattan Bank to its
borrowers.)
1.5 "Collateral" shall mean and include: (a) Accounts; (b) all of your present
and future monies, securities and other property now or hereafter held or
received by or in transit to us from or for your account, whether for
safekeeping, pledge, custody, transmission, collection or otherwise; (c) all of
your present and future deposits, balances, sums and credits in our possession
or control; arising out of the Accounts, (d) all of your present and future
liens, security interests, rights, remedies, title and interest in, to and in
respect of the Accounts including, without limitation; (i) rights and
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remedies under or relating to guaranties, contracts of suretyship, letters of
credit, credit insurance, or other types of credit enhancements, (ii) rights of
stoppage in transit, rescission, replevin, repossession, reclamation and other
rights and remedies of an unpaid vendor, lienor or secured party, (iii) goods
described in invoices, documents, contracts or instruments with respect to, or
otherwise representing or evidencing Accounts, including, without limitation,
returned, repossessed and reclaimed goods, and (iv) deposits by and property of
Customers or other persons securing the Obligations of Customers; (e) all of
your books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, computer programs, bills of lading and other shipping
evidence, statements, correspondence, memoranda, credit files and other data
(written, electronic or otherwise) relating to the Collateral or any Customer,
together with the file cabinets or containers in which the foregoing are stored
("Records"); (f) all proceeds and products of the foregoing, in any form,
including, without limitation, insurance proceeds and any claims against third
parties for loss or damage to or destruction of any or all of the foregoing.
1.6 "Customer" shall mean Xxxxxx New York, a division of the Limited
Corporation and Target Stores, a division of Xxxxxx Xxxxxx Corporation.
1.7 "Eligible Accounts" shall mean the Accounts arising in the ordinary course
of your business which are evidenced by an invoice or other documentation
reasonably satisfactory to us. An Account shall not be deemed eligible in any
event unless such Account is subject to our first priority perfected security
interest and is not subject to any other lien or security interest. In
addition, no Account shall be an Eligible Account if:
(i) it arises out of a sale made by you to your affiliate or to a person,
firm, corporation, or other entity controlled by you or your affiliate; or
(ii) it is due or unpaid more than ninety (90) days after the original
invoice date; or
(iii) any representation, warranty or covenant contained in this
Agreement with respect to such Account has, in our reasonable determination,
been breached; or
(iv) the Customer is also your creditor or supplier (unless prior to our
acceptance, a no-offset letter has been received by and is, in our sole
discretion, acceptable to us); or
(v) the Customer shall (a) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or call
a meeting of its creditors, (b) admit in writing its inability, or be generally
unable, to pay its debts as they become due, (c) cease or materially decrease
operation of its present business, (d) make a general assignment for the benefit
of creditors, (e) commence a voluntary case under any State or Federal
bankruptcy or insolvency law (as now or hereafter in effect), (f) be adjudicated
a bankrupt or insolvent, (g) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (h) acquiesce to, or fail to have
dismissed, any petition which is filed against it in an involuntary case under
any such bankruptcy or insolvency law, or (i) take any action for the purpose of
effecting any of the foregoing; or
(vi) it arises out of a sale made by you to a Customer on a xxxx-and-hold,
guaranteed sale, sale-or-return, sale on approval, consignment or any other
repurchase or return basis or is evidenced by chattel paper; or
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(vii) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the Customer or the services giving rise to such
Account have not been completely performed by you and accepted by the Customer
or the Account otherwise does not represent a final sale or performance; or
(viii) the Accounts from such Customer exceed a credit limit
determined by us, in our sole discretion, to the extent such Account exceeds
such limit; or
(ix) the Customer has disputed liability, or the Customer has made any
claim with respect to any other Account due from such Customer to you, or the
Account otherwise is or may become subject to any set-off or recoupment by the
Customer, or the Account is contingent in any respect or for any reason; or
(x) you have allowed or made any agreement with any Customer for any
deduction therefrom, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each respective invoice
related thereto.
1.8 "Net Amount of Eligible Accounts" shall mean and include the gross amount
of Eligible Accounts less (a) returns, discounts, claims, credits and allowances
of any nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto, and (b) amounts thereof which are not paid by the
subject Customer due to an existing or alleged dispute, offset, recoupment or
counterclaim.
1.9 "LIBOR Rate" shall mean the rate of interest per annum at which deposits in
U.S. dollars are offered to major banks for a thirty day period in the London
Interbank market at approximately 11:00 a.m. (London time), as reported by the
Telerate System on page 3750 (or such other page as may replace such page 3750
on such system for the purpose of reporting London Interbank Offered Rates of
major banks) under the heading for British Bankers Association Interest
Settlement Rates in the column designated "USD" (U.S. Dollar) on the last
Business Day of each calendar month.
1.10 "Obligations" shall mean and include: (a) any and all of your
indebtedness, liabilities and obligations to us of every kind, nature and
description, direct or indirect, secured or unsecured, joint or several,
absolute or contingent, due or to become due, now existing or hereafter arising,
regardless of how they arise or were acquired or by what agreement or instrument
they may be evidenced or whether evidenced by any agreement or instrument, but
not including, all amounts owing by you to us by reason of purchases made by you
from other entities factored or financed by us; (b) any and all of your
obligations to us to perform acts or refrain from taking any action; and (c) any
and all amounts of charges, commissions, interest, costs, expenses and
attorneys' fees chargeable in connection with all of the foregoing all of which
indebtedness, liabilities, obligations and amounts, whether or not matured and
whether or not disputed, may be charged to your account hereunder, without prior
notice to you.
II. GRANT OF SECURITY INTEREST
2.1 To secure the prompt payment, performance and observance in full of all
Obligation, you hereby pledge, transfer, set over and assign to us, and grant to
us a continuing general security interest in, a lien upon and a right of set-off
against, all of the Collateral. Records shall, until delivered to or removed by
us, be kept by you in trust for us and without cost to us in appropriate
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containers in safe places on your premises. Each confirmatory assignment
schedule or other form of assignment at any time executed by you shall be deemed
to include the foregoing pledge, transfer, assignment and grant whether or not
same appears therein.
2.2 At such time as a Default has occurred and is continuing hereunder, you
will, upon our written request, provide us with (a) confirmatory assignment
schedules; and (b) such further schedules and/or information as we may
reasonably request. The items to be provided under this paragraph are to be in
form reasonably satisfactory to us and executed and delivered to us from time to
time so that we can confirm and maintain records of the Collateral. Your
failure to give any of such items to us or to otherwise comply with the
provisions hereof shall not affect, terminate, modify, diminish or otherwise
limit our lien upon or security interest in the Collateral, or your
representations, warranties or covenants under this Agreement.
III. ADVANCES AND INTEREST
3.1 Subject to the terms and conditions of this Agreement, we shall make
advances of up to $25,000,000.00 outstanding at any one time (the "Maximum
Credit Facility") available to you upon your request therefor, as follows:
(a) we will make revolving credit advances, in amounts of up to one hundred
percent (100%) of the Net Amount of Eligible Accounts; and
(b) over-advances, in our sole discretion, in an amount not to exceed
$10,000,000.00 at any time, and, with the amount of any revolving credit
advances, not to exceed the Maximum Credit Facility.
3.3 All loans and advances (including, without limitation, any over-advances,
if any) by us to you under this Agreement shall constitute Obligations secured
by our security interest in all of the Collateral granted hereunder. All loans
or advances (including, without limitation, any over-advances, if any) shall be
charged to your account on our books, and shall be payable on demand at our
offices or at such other place as we may from time to time designate.
3.4 Interest shall be payable by you (and charged to your account as of the end
of each month) on the average of the net balances owing by you to us in your
account at the close of each day during such month at your option, interest on
all amounts outstanding will accrue at one of the following two rates:
(1) The Chase Rate minus 1.25%
or
(2) The LIBOR Rate plus 1.25%
You must inform us in writing, using a form of letter that we will provide to
you, that you will fax to us no later than three (3) Business Days before the
last day of each calendar month, which interest rate you have elected for the
succeeding calendar month If we do not receive written notice from you as
required above, then the interest rate currently in effect, i.e. either the
Chase Rate minus 1.25% or the LIBOR Rate plus 1.25%, will stay in effect until
we receive such a notice from you.
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Interest shall be calculated based on a 360-day year. Interest shall be charged
on all advances (including, without limitation, any over-advances, if any), all
charges hereunder, and any debit balance in your account. We shall be entitled
to charge your account at the rate provided for herein until all Obligations
have been paid and satisfied in full. In no event shall the rate charged
hereunder exceed the highest rate permissible under applicable law; however, in
the event that we receive or have received interest hereunder in excess of the
highest rate permissible under applicable law, such excess shall be applied in
reduction of the principal amount of the Obligation.
3.5. A facility fee of $2,500.00 shall be due and payable by you as of the date
set forth above and shall be charged to your account as of such date. Such
facility fee shall be deemed earned when due and shall not be subject to rebate
or proration for any reason.
3.6 We shall render to you each month a statement of your account which shall
be deemed to be correct and accepted by and binding upon you, and shall
constitute an account stated between us except to the extent that we receive a
written statement of your specific exceptions within sixty (60) days after such
statement has been rendered to you.
IV. REPRESENTATIONS, WARRANTIES AND COVENANTS
You hereby make the following representations, warranties and covenants which
shall survive the execution and delivery of this Agreement, shall be deemed to
be incorporated by reference in each confirmatory assignment schedule or other
form of assignment submitted by you to us, shall be deemed repeated and
confirmed every time we make a new advance to you, and shall be deemed repeated
and confirmed with respect to each item of Collateral as it is created or
otherwise acquired:
4.1 You are a duly organized and validly existing corporation, limited
liability company, partnership, or other business entity, qualified to do
business in all states where required; except as previously disclosed to us by
you, there are no actions, suits or other legal proceedings of any kind or
nature pending against you which involve the possibility of materially and
adversely affecting your business, assets, operations, condition or prospects,
financial or otherwise, or the Collateral, or your ability to perform this
Agreement; the execution, delivery and performance hereof are within your
corporate (or other business entity) powers, have been duly authorized, and are
not in contravention of any law or the terms of your certificate of
incorporation or bylaws (or other documents establishing your legal status), or
of any indenture, agreement or undertaking to which you are a party or by which
you or your properties are bound; and the most recent financial statements
provided to us by you fairly present your financial condition and there has been
no material adverse change in your financial condition since the date of such
financial statements.
4.2 Except for the security interests held by NationsBanc Commercial
Corporation (which is the subject of a separate agreement between us and
NationsBanc Commercial Corporation being delivered concurrently herewith) with
respect to each item of Collateral at the time our security interest attaches
thereto: (a) you shall be the sole owner, free and clear of all liens, claims,
security interests and encumbrances except in our favor, and fully authorized to
sell, transfer, pledge and grant a security interest in, such item of
Collateral; (b) each Account shall be genuine, valid and legally enforceable,
and represent an undisputed bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto with
respect to an absolute sale and delivery of goods upon your stated terms or
services theretofore rendered by you as of the date each Account is created; (c)
no Account is or shall be subject to any offset, recoupment, deduction, defense,
dispute, claim, counterclaim, discount or allowance except as may be stated in
the copy of the invoice delivered by you to us; (d) all statements made and all
unpaid balances appearing
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in the invoices, documents and agreements relating to each Account shall be true
and correct in all respects and what they purport to be; (e) none of the
Accounts arise from sales to consumers of goods to be used for personal, family
or household purposes; (f) all signatures and endorsements that appear thereon
shall be genuine and all signatories and endorsers shall have full capacity to
contract; and (g) none of the transactions underlying or giving rise to any item
of Collateral shall violate any applicable state or federal laws or regulations,
and all documents relating to such item of Collateral shall be legally
sufficient under such laws or regulations and shall be legally enforceable in
accordance with their terms.
4.3 All recording, filing and other requirements of giving public notice under
any applicable law or ordinance have been duly complied with by you. You will
from time to time, at your expense, perform all acts and execute all documents
requested by us, including, without limitation, the obtaining, executing,
delivering or filing of financing statements, landlord's or mortgagee's waivers,
third party processor letters, and other notices, and amendments and renewals
thereof, in order to create, perfect, maintain and enforce a valid first lien
upon, pledge of, or security interest in all of the Collateral in our favor.
All charges, expenses and fees we may incur in obtaining or filing any of the
foregoing, or in searching any public records in connection therewith, shall be
charged to your account and added to the Obligations.
4.4 Except as set forth in our separate agreement with NationsBanc Commercial
Corporation referred from section 4.2 above, you shall not pledge, sell, assign,
transfer, create or suffer to exist any security interest in or other lien or
encumbrance on any part of the Collateral to anyone other than us without our
prior written consent. You hereby agree to defend the same against any and all
persons whatsoever.
4.5 Each Customer, guarantor or endorser is to the best of your knowledge
solvent and will continue to be fully able to pay all Accounts on which it is
obligated in full when due.
4.6 You shall maintain your books, records and accounts in accordance with
generally accepted accounting principles consistently applied. You shall, at any
time and from time to time, furnish to us such balance sheets, earnings
statements, financial statements and other reasonable information regarding your
business affairs and financial condition, including, without limitation
schedules, agings and reports, as we may request, and in any event you shall
furnish us: (a) as soon as possible, but not later than one hundred twenty (120)
days after the close of each of your fiscal years, your financial statements as
of the end of such year, on a consolidated basis audited by a firm of
independent certified public accountants of recognized standing, selected by you
and reasonably acceptable to us; and (b) as soon as possible, but not later than
one hundred twenty (120) days after the end of each quarter hereafter, your
unaudited interim financial statements as of the end of such period and of the
portion of your fiscal year then elapsed, on a consolidated basis certified by
your principal financial officer prepared in accordance with generally accepted
accounting principles consistently applied, and fairly presenting the financial
position and results of your operations for such period. All such financial
statements do or shall fairly present your financial condition as of the dates
thereof or the results of your operations for the periods for which the same are
furnished All such other information is or shall be, at the time the same is so
furnished accurate and correct in all material respects and complete insofar as
completeness may be necessary to give us a true and accurate depiction of the
subject matter thereof.
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4.7 You shall keep all your insurable properties and properties in which you
have an interest insured against the hazards of fire, flood, sprinkler leakage,
those hazards covered by extended coverage insurance and such other hazards, and
for such amounts, as is customary in the case of companies engaged in businesses
similar to yours. You shall pay when due all premiums on any insurance policies
for your properties or assets. You shall also pay when due and discharge all
taxes, assessments, contributions and other charges upon or against you or your
properties or assets, including the Collateral. If any such premium, tax,
assessment, contribution or other charge remains unpaid after the date fixed for
the payment of same, or if any lien shall be claimed, we may after 10 days prior
written notice to you pay such premium, tax, assessment, contribution, charge or
claim, and the amount thereof shall be payable on demand, and until paid by you,
shall be charged to your account and added to and deemed part of the
Obligations.
4.8 You shall be liable for any tax or penalty imposed upon any transaction
under this Agreement or giving rise to the Account or which we may be required
to withhold or pay for any reason; you agree to indemnify and hold us harmless
with respect thereto, and to repay to us on demand the amount thereof, and until
paid by you, such amount shall be charged to your account and added to and
deemed part of the Obligations. If any Account includes a charge for any tax
payable to any governmental taxing authority, we are hereby authorized in our
sole discretion to pay the amount thereof to the proper taxing authority for
your account and to charge your account therefor. You shall notify us if any
Account includes any tax due to any such taxing authority and in the absence of
your notice, we shall have the right to retain the full proceeds of such
Account.
4.9 You shall comply with all laws, rules, regulations and orders of any
legislative, administrative or judicial body or official, applicable to your
properties and assets, including the Collateral, or to the operation of your
business except where any failure of compliance would not be materially adverse
to our interests.
4.10 Any mergers or acquisitions which are approved by Tarrant Apparel Group's
Board of directors will be notified to us in writing within 24 hours.
4.11 Your Records and chief executive office shall be kept at your address as
it appears on the first page of this Agreement. You shall give us thirty (30)
days' prior written notice of any change in your name, trade names or styles, or
location(s).
4.12 You shall from time to time make such payments to us as we shall request
so that the aggregate balance in your loan account shall not at any time exceed
the Maximum Credit Facility.
4.13 You shall maintain at all times a minimum Tangible Net Worth of
$30,000,000.00. For purposes hereof, your Tangible Net Worth is defined as the
aggregate of your paid up capital, reserves and retained profits, or losses,
after deducting all amounts attributable to goodwill, licenses and all other
assets that would be treated as intangibles pursuant to generally accepted
accounting principles in the United States of America in effect from time to
time and consistently applied.
4.14 You shall maintain at the end of each of your fiscal years a Debt to
Equity Ratio of not more than 2.0:1.0. The Debt to Equity Ratio is defined as
total liabilities (current and long term) divided by Tangible Net Worth.
4.15 You shall not have two consecutive fiscal quarters where you have
sustained net losses.
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V. CUSTODY, INSPECTION, COLLECTION AND HANDLING
OF COLLATERAL AND RECORDS
5.1 Until we have advised you to the contrary, you may and will enforce,
collect and receive all amounts owing on the Accounts, for our benefit and on
our behalf, but at your expense; such privilege shall terminate automatically
upon the occurrence and/or continuance of a Default Any and all checks, cash,
notes or other instruments or property received by you with respect to Accounts
shall be held by you in trust for us, separate from your own or anyone else's
property and funds, and immediately turned over to us with proper assignments or
endorsements. This shall be accomplished by your instructing all of your
Customers to remit funds to a lock box, which lock box shall be maintained at
such bank or banks as are reasonably acceptable to us, and which shall be under
our exclusive control. We shall provide you with copies of the deposit slips
for each day's deposits on the next following business day, and on the first
business day of each week we shall provide you with a report of all collections
for the preceding week showing the gross amount of such Accounts and the net
amount collected thereon. All amounts received by us in payment of Accounts
will be credited to your account immediately upon our receipt of "good funds".
No checks, drafts or other instruments received by us shall constitute final
payment to us unless and until such instruments have actually cleared and been
collected. We shall be entitled to charge your account with amounts we receive
in payment of Accounts and which we may thereafter be required to turn over or
return for any reason.
Upon automatic termination of your privilege to enforce, collect and
receive all amounts owing on the Accounts for our benefit and on our behalf, or
at any other time and without any cause or notice thereof to you, we shall have
the right to send notice(s) of assignment or notice(s) of our security interest
to any Customers or any other persons obligated on, holding or otherwise
concerned with any of the collateral, and thereafter we shall have the sole
right to collect the Accounts and/or take possession of the Collateral and the
Records. Any and all of our collection expenses, including, but not limited to,
the reasonable fees and expenses of our independent attorneys, the fees of our
collection agencies, stationery and postage, telephone and facsimile expenses,
shall be charged to your account and added to the Obligations.
5.2 You shall keep and maintain, at your cost and expense, the Records and all
books and records pertaining to the Collateral in such detail, form and scope as
is indicated by generally accepted accounting standards. You will xxxx your
Records with appropriate notations satisfactory to us, disclosing that such
Collateral has been pledged, assigned, and transferred to us and that you have
granted to us a security interest therein.
5.3 At all reasonable times, and upon 24 hours prior notice to you we shall
have: full access to, and the right to check inspect, examine and make abstracts
and copies from, your Records and all other books, records, audits,
correspondence and papers relating to the Collateral; the right to confirm and
verify all Accounts; and the right to do whatever we may deem necessary to
preserve or protect our interests in the Obligations and the Collateral, and in
furtherance thereof, we may, without cost or expense to us, use such of your
personnel, supplies and space as may be reasonably necessary. Upon 24
hours,prior notice to you, we or our agents may enter upon any of your premises
at any time and from time to time during business hours for the purpose of
inspecting the Collateral and any and all Records pertaining thereto. At any
time we may make copies of and remove or require you to deliver any or all such
Records. In order to cover any costs and expenses we may incur in connection
with performing any of the aforementioned checks, verifications, inspections or
examinations (collectively, "Examinations"), we shall be entitled to charge your
account a fee for each day or part thereof in which such Examinations are
conducted, plus any additional out-of-pocket
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costs and expenses we incur as a result of conducting such Examinations.
5.4 You shall, immediately upon obtaining knowledge thereof, notify us of any
reclamation, return or repossession of goods; any claim or dispute asserted by
any Customer or other obligor; any loss or destruction of, or substantial damage
to, any of the Collateral; and any other matter affecting the value,
enforceability or collectibility of any of the Collateral. Except in the normal
course of business and consistent with your historical practices, you shall not,
without our consent, settle, compromise or adjust any Account (or extend the
time for payment thereof) or grant any additional discounts, allowances or
credits thereon.
5.5 You hereby constitute us and any of our agents or designees, as your
attorneys-in-fact, at your own cost and expense, to exercise at any time after
the occurrence of a Default, all or any of the following powers, which being
coupled with an interest, shall be irrevocable until all Obligations have been
paid in full: to receive, take, endorse, assign, deliver, accept and deposit, in
our name or yours, any and all checks, notes, remittances, wire transfers or
other electronic forms of payment, drafts and other documents and instruments
and documents relating to the Collateral; to receive, open and dispose of all
mail addressed to you and to notify postal authorities to change the address for
delivery of mail to such address as we may designate; to give Customers notice
of our interest in the Accounts and to request from Customers at any time, in
your name or ours or that of our designee, information concerning the Accounts;
to notify Customers to make payment directly to us; to execute in your name and
on your behalf any financing statements (including, without limitation, any
continuations thereof or amendments thereto); and to take or bring, in your name
or ours, all steps, actions or proceedings deemed by us necessary or desirable
to effect collection of the Collateral or to preserve, protect or enforce our
interest therein.
5.6 Nothing herein contained shall be construed to constitute you as our agent
for any purpose whatsoever. We shall not be responsible nor liable for any
shortage, discrepancy, damage, loss or destruction of any Collateral wherever
the same may be located and regardless of the cause thereof We shall not, under
any circumstances or in any event whatsoever, have any liability for an error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Accounts or any instrument received in payment thereof or for any
damage resulting therefrom. If permitted under the provisions of this Agreement,
we may, without notice to or consent from you, xxx upon or otherwise collect,
extend the time of payment of, or compromise or settle for cash, credit or
otherwise upon any terms, any of the Accounts or any securities, instruments or
insurance applicable thereto and release the obligor thereon, free of any claims
or defenses based upon suretyship law or the like. We are authorized and
empowered to accept the return of goods represented by any of the Accounts,
without notice to or consent by you, all without discharge or in any way
affecting your liability hereunder. We do not, by anything herein or in any
assignment or otherwise, assume any of your obligations under any contract or
agreement, and we shall not be responsible in any way for the performance by you
of any of the terms and conditions thereof.
5.7 We have the right at any time and from time to time to employ and have
present on any of your premises one or more custodians selected by us, each of
whom shall have the right to exercise any and all of our rights hereunder. You
hereby agree to cooperate with any such custodian and to do whatever we may
reasonably request by way of preserving and protecting the Collateral. All
expenses incurred by us by reason of the employment of the custodian shall be
payable on demand, and until paid by you, shall be charged to your account and
added to and deemed part of the Obligations.
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5.8 You shall pay and we shall be entitled to charge your account with, and add
to and deem part of the Obligations, all costs and expenses incurred by us in
connection with the enforcement of this Agreement and the protection,
maintenance, disposition, preservation and enforcement of the Obligations, the
Collateral, or the pledges, liens and security interests granted to us
hereunder. The foregoing costs and expenses shall include, without limitation,
all reasonable fees and expenses of our independent attorneys, all search fees,
the cost of all public record filings, and wire transfer charges.
VI. EVENTS OF DEFAULT; ACCELERATION
6.1 All Obligations shall, at our option and notwithstanding any time or credit
allowed by any instrument evidencing or representing same, be immediately due
and payable without notice or demand upon the occurrence of any one or more of
the following events of default ("Default"): (a) default in the payment or
performance, of any of the Obligations within 5 business days of our written
notice to you that same is due and payable including, without limitation, your
failure to pay to us any Obligation due on demand; (b) default by any guarantor,
endorser or other person liable on the Obligations under any guarantee,
endorsement, suretyship agreement or other agreement of such person with or in
favor of us; (c) your making any material misrepresentation, orally or in
writing, to us whether for the purpose of obtaining credit or an extension of
credit, or otherwise; (d) the passage of 5 business days after written notice by
us to you and of your breach of any representation, warranty or covenant
contained in this Agreement or in any other agreement, supplement, note or
schedule with or in favor of us; (e) the discontinuance or suspension of the
operation of your present business, or your becoming unable to meet your debts
as they mature, or your becoming insolvent; (f) your calling any meeting of
creditors, or having a creditors' committee appointed; (g) the commencement by
you of any action, case or proceeding for relief under any provision of the
Federal bankruptcy laws or any other applicable Federal or State bankruptcy,
insolvency, or other similar law, or your making a general assignment for the
benefit of creditors, or the appointment of a receiver, custodian or trustee of
any kind for you or any of your property; or if any such action, case or
proceeding is commenced against you and is not dismissed within sixty (60) days
thereafter.
VII. RIGHTS AND REMEDIES AFTER DEFAULT
7.1 Upon the occurrence of any Default, and at any time thereafter if such or
any other Default shall then be continuing, we shall have the right (in addition
to any other rights we may have under this Agreement or otherwise) without the
issuance of any further notice or demand to you: (a) to appropriate, set-off and
apply to the payment of any or all of the Obligations, any or all Collateral, in
such manner as we shall in our sole discretion determine; (b) to enforce payment
of the Obligations or any Collateral; (c) to settle, compromise or release, in
whole or in part, any amounts owing on the Collateral; (d) to prosecute any
action suit or proceeding with respect to the Collateral; (e) to extend the time
of payment of any and all Collateral, to make allowances and adjustments with
respect thereto and to issue credits in your or our name; and (f) to sell,
assign and deliver the Collateral (or any part thereof), at public or private
sale, for cash, upon credit or otherwise, at our sole option and discretion, and
we may bid or become purchaser at any such sale, if public, free from any right
of redemption which is hereby expressly waived. If applicable law requires
issuance of a notice designating the place and time of any public sale or of the
time after which any private sale or other intended disposition of the
Collateral is to be made, you agree that the giving of five (5) days notice by
us to your address shown on the first page hereof (or such other address of
which we have received notice as provided herein) shall be deemed to be
reasonable notice thereof and you waive any other notice with respect thereto
unless such notice is contrary to applicable law. The net cash proceeds
resulting from the exercise of any of the foregoing rights or remedies shall be
applied by us
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to the payment of the Obligations in such order as we may elect, and you shall
remain liable to us for any deficiency.
7.2 We shall have the right in our sole discretion to determine which rights or
remedies, and in which order any of the same, are to be exercised, and we may at
any time pursue, relinquish, subordinate, modify or take any other action with
respect thereto, without in any way modifying or affecting any of them. We may,
at all times, proceed directly against you to enforce payment of the Obligations
and shall not be required to take any action of any kind to preserve, collect or
protect our or your rights in the Collateral.
7.3 The enumeration of the foregoing rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to, and not by way of
limitation of, any other rights or remedies we may have under applicable law
including the California Uniform Commercial Code. The exercise of any right or
remedy shall not preclude the exercise of any other right or remedy, all of
which shall be cumulative and not alternative.
VIII. WAIVERS
8.1 You hereby waive notice of dishonor, demand, presentment, protest and
notice of protest with respect to any and all instruments included in or
evidencing any of the Obligations or the Collateral, notice of acceptance
hereof, notice of loans or advances made, credit extended, Obligations incurred,
Collateral received, delivered, or released, or any other action taken in
reliance hereof and any and all other demands and notices of any description,
except such as are expressly provided for herein.
8.2 No act, delay or omission on our part in exercising any right or remedy
shall operate as a waiver of such or any other right or remedy. No single or
partial waiver by us of any provision of this Agreement, or breach or default
hereunder, or of any right or remedy shall operate as a waiver of such or any
other provision breach default, right or remedy on a future occasion.
IX. TERMINATION; APPLICABLE LAW AND WAIVER
OF JURY TRIAL; MISCELLANEOUS
9.1 Upon acceptance by us, this Agreement shall become effective as of the date
appearing on the first page hereof, and shall continue in full force and effect
until one year (1) year(s) from the date of such acceptance and from year to
year thereafter, unless sooner terminated as herein provided. Each of us may
terminate this Agreement at any time by giving the other party written notice
stating a termination date not less than sixty (60) days from the date such
notice is given. We shall have the right to terminate this Agreement
immediately at any time without prior notice upon the occurrence or during the
continuance of a Default. Unless sooner demanded, all of your Obligations shall
become due and payable as of any termination, and pending a final accounting, we
may withhold any balances in your account (unless supplied with an indemnity
satisfactory to us) to cover all of your Obligations.
9.2 Notwithstanding any termination of this Agreement, all of our rights, liens
and security interests hereunder shall continue in full force and effect until
all Obligations have been paid and satisfied in full.
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9.3 This Agreement, together with any written and duly executed supplement(s),
contains the entire understanding between us with respect to the subject matter
hereof. Neither this Agreement nor any portion or provision hereof may be
changed, modified, amended, waived, supplemented, discharged, canceled or
terminated orally or by any course of dealing between us, or in any manner other
than by an agreement in writing, expressly referring hereto and signed by the
party to be charged. The section titles contained in this Agreement are intended
for convenience only and do not constitute and shall not be interpreted as part
of this Agreement.
9.4 Except as otherwise provided herein, all notices, requests and demands
hereunder shall be: (a) addressed to the party to be served at the address shown
on the first page hereof, or to such other address as either party may designate
by written notice to the other in accordance with this provision; and (b) deemed
to have been given or made: if by hand, immediately upon delivery; if by telex
or facsimile, immediately upon sending; if by overnight delivery service, one
day after dispatch; and if by ordinary mail or registered/certified mail-return
receipt requested (with proper postage prepaid), three (3) days after mailing.
9.5 This Agreement shall be binding upon and inure to the benefit of each of
the parties hereto and their respective successors and assigns, except that you
may not assign or transfer any of our rights or obligations under this Agreement
without prior written consent of the other party.
9.6 The parties hereto acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments or
supplements thereto.
9.7 This Agreement shall be deemed to have been made in Los Angeles, California
and shall be interpreted, and the rights and liabilities of the parties hereto
shall be determined, in accordance with the laws of the State of California. As
part of the consideration for new value this day given, you hereby consent to
the jurisdiction of any state or federal court located within the State of
California. Nothing herein shall affect the right to serve process in any manner
permitted by law or shall limit our right to bring proceedings against you in
the courts of any other jurisdiction. You waive any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens.
--------------------
9.8 If any provision of this Agreement, including, without limitation, any
provision relating to charges constituting interest payable by you under this
Agreement is contrary to, prohibited by, or deemed invalid under applicable laws
or regulations, such provision shall be inapplicable and deemed omitted to the
extent so contrary, prohibited or invalid, but the remainder hereof shall not be
invalidated thereby and shall be given effect so far as possible.
9.9 TO THE EXTENT PERMITTED BY APPLICABLE LAW, WE HEREBY MUTUALLY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS
AGREEMENT OR ANY OTHER AGREEMENTS OR TRANSACTIONS BETWEEN US.
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If the foregoing is in accordance with your understanding, please so indicate by
signing and returning to us the original and one copy of this Agreement. After
being accepted below by one of our officers in California, we shall forward a
copy to you with signatures completed for your files.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
Read and Agreed to:
TARRANT APPAREL GROUP
By /s/ Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President-Finance & CFO
Accepted at Los Angeles, California
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By /s/ Xxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
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