ANNEX I COMMERCIAL LETTER OF CREDIT AGREEMENT
Exhibit 10.3
Reference
is made to the General Financing Agreement dated as of August 24, 2007 (as the same may be amended,
supplemented or otherwise modified from time to time, the “Agreement”; capitalized terms used
herein have the meanings ascribed to them in the Agreement unless otherwise defined herein) by
and between The Talbots, Inc. (the “Borrower”) and Mizuho Corporate Bank, Ltd. (the “Bank”).
In regard to any commercial Letter of Credit issued by the Bank for the account of the Borrower
pursuant to the Agreement (herein called a “Credit”), the Borrower hereby agrees with the Bank as follows:
(a)
The Borrower will pay to the Bank an amount in US Dollars sufficient to pay each of the drafts in
respect of any Credit, together with all other amounts owing to the Bank in connection therewith,
(a) on demand in the case of sight drafts, (b) on maturity in the case of dollar time drafts and
(c) at such time before maturity as the Bank may require in the case of time drafts in a foreign
currency. In the case of drafts in foreign currency, such payments shall be in US Dollars at the
current rate of exchange for cable transfers, provided that, in any case, the Borrower may offer and
the Bank may, at its sole option, accept as means of payment first-class bankers' bills of exchange
in the amount and currency of the draft bearing the endorsement of the Borrower. If the Bank is not
reimbursed by the Borrower for amounts paid under a Credit by the close of business on the day of payment
by the Bank, the Borrower will pay interest on the amount due (a) from the date of such payment through the
second Business Day thereafter, at the rate quoted by the Bank to dealers in the New York Federal Funds market
for overnight borrowings (the “federal funds rate”) and (b) on and after the third Business Day thereafter
until reimbursement, at a rate equal to 2% per annum plus the higher of (i) the rate publicly announced by
the Bank from time to time as its “base”, “reference” or “prime” rate and (ii) the federal funds rate.
(b) The
Bank shall be and remain the owner of all goods and merchandise shipped relating to any of the
drafts or any Credit and all documents of title relating thereto and all documents attached to
the drafts and the goods and merchandise covered thereby and all goods and merchandise and documents
coming into the possession or control of the Bank or its correspondents or agents in connection
with any of the drafts or any Credit and of all proceeds thereof and title thereto shall vest and
remain in the Bank until payment of all Obligations of the Borrower. The Borrower will procure all
licenses required for the import, export or shipping of the aforesaid goods and merchandise and will
comply with all foreign and domestic laws and regulations with respect thereto. The Borrower shall
be chargeable with all risk, loss, liability, costs, expenses and charges with respect to the
merchandise, including, without limitation, those of shipment, entry, storage, care, handling,
manufacture and disposal, and the Borrower will indemnify and save the Bank harmless therefrom.
The Bank may at any time, whenever it may deem the same advisable or proper for its protection,
either before or after maturity of any of the Obligations, exercise any or all of its rights of
ownership, including the right of possession and
sale or other disposal, either with or
without notice, without liability to, and entirely at the expense of, the Borrower and without
relieving the Borrower from any Obligations, and the Borrower shall in no event have any property
rights in the said goods and merchandise or documents or proceeds, as purchaser, owner or otherwise,
during such period of ownership by the Bank, and shall have no rights against the Bank other than
that of a creditor for any excess proceeds in the hands of the Bank after all charges and expenses
and all obligations of the Borrower have been paid and all other Obligations of the Borrower have
been secured in a manner satisfactory to the Bank to reimburse the Bank for all amounts due and
owing to it and otherwise to indemnify and save it harmless. Any sale by the Bank may be made at
any broker's board or public or private sale, with or without notice of advertisement, for cash or
credit and for present or future delivery.
(c) The
users of any Credit and the drawers of any of the drafts shall be deemed to be the agents of the
Borrower and the Borrower shall assume all risk, loss, liabilities, charges, costs and expenses
with respect to their acts or omissions and also with respect to any error, delay, misdelivery
or loss in transmission of telegrams, cables, letters or other communications or documents or items
forwarded in connection with the drafts or any Credit, and the Borrower shall not be relieved from
any Obligations nor shall the terms hereof be affected by any thereof. Delivery to the Bank or its
correspondents or agents of any certificates or documents purporting to comply with the requirements
of any Credit or instructions of the Borrower shall be sufficient evidence of the validity, genuineness
and sufficiency thereof and of the good faith and proper performance of the shippers, drawers and
users of any Credit, their agents and assignees, and the Bank and its correspondents and agents
may, without further investigation and regardless of any notice or information to the contrary
(unless otherwise ordered by a court of competent jurisdiction), rely and act thereon without
liability or responsibility with respect thereto or with respect to the correctness or condition
of any shipment or merchandise to which the same may relate. No acceptance or payment of
overdrafts or irregular drafts or of drafts with irregular documents attached and no substitution
of property and no extension of any time limit specified in any Credit or instructions of the
Borrower shall, if assented to or approved by the Borrower, impair any rights of the Bank hereunder.
In case of variation between the documents called for by any Credit or instructions of the Borrower
and the documents accepted by the Bank or its correspondents or agents, the Borrower shall be
conclusively deemed to have waived any right to object to such variation with respect to any
action of the Bank or its correspondents or agents relating to such documents and to have ratified
and approved such action as having been taken at the direction of the Borrower unless the Borrower
immediately upon receipt of such documents or upon knowing of such variation promptly (but in any
event within 30 days) files an objection with the Bank in writing. The Bank shall not be liable
for any delay in giving, or failure to give, notice of the arrival of any goods or any other
notice, or for any error, neglect or default of any of its correspondents or agents or any
shipper, carrier, bailee or insurer; nor shall the Bank be responsible for the non-fulfillment
of any requirement of any Credit that drafts bear appropriate reference to any Credit or that the
amount of any draft be noted on the reverse of any Credit or that the Credit be surrendered or
taken up or that documents be forwarded apart from any drafts, and the Bank or its correspondents
or agents may, if they see fit, waive any such requirements.
2
The Bank shall not be responsible for (a) verifying the existence of any act, condition or
statement made by any beneficiary (or any transferee) in relation to any drawing or presentment
under a Credit, (b) verifying the type, quantity or condition of any goods or merchandise shipped
to which any draft or Credit relates, (c) the validity or genuineness of certificates or other
documents delivered under a Credit even if such certificates or other documents should in fact
prove to be invalid, fraudulent or forged, (d) any breach of contract between any beneficiary
(or any transferee) and the Borrower, (e) any consequences beyond the Bank's control or (f) any
act or omission of the Bank or its correspondents or agents so long as the Bank acts in good faith
without gross negligence.
(d) Any Credit or instructions of the Borrower may, in the discretion
of the Bank or its correspondents or agents, be interpreted by them in accordance with the Uniform
Customs and Practice for Documentary Credits of the International Chamber of Commerce, as adopted
or amended from time to time, or any other rules, regulations and customs prevailing at the place
where any Credit or instructions of the Borrower is available or the drafts are drawn or negotiated.
The Bank and its correspondents and agents may accept and act upon the name, signature, or act of
any Person purporting to be the administrator, executor, trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, liquidator, receiver, legal representative, or
any other Person succeeding or purporting to succeed de facto or de jure to the powers, rights or
privileges of any Person designated in any Credit or instructions of the Borrower in the place of
the name, signature, or act of such Person. Except where the Borrower shall give the Bank
directions in writing to the contrary, the Bank and its correspondents and agents may honor drafts
relating to shipments in excess of the quantity called for in any Credit or instructions of the
Borrower (it being agreed and understood that the liability of the Borrower to reimburse the Bank
for payments made or obligations incurred on such drafts shall be limited to the amount of the
Credit or the amount specified in the instructions of the Borrower). Unless otherwise specified
in any Credit or instructions of the Borrower, the Bank and its correspondents and agents may
accept as "bills of lading" any documents acknowledging receipt by
the carrier for transportation.
(e) Any action taken, and any inaction or omission, by the Bank or any
of its correspondents and agents in connection with any Credit or any instructions of the Borrower
or any drafts or any related documents or merchandise, shall, if in good faith, conclusively be
deemed to be authorized by the Borrower, whether expressly so or not, and any such action, inaction
or omission shall be binding on the Borrower and shall not result in any liability of the Bank or
any of its correspondents or agents relating thereto. The Borrower will indemnify the Bank and its
correspondents and agents and each of their respective officers, directors, employees and advisors
and defend and hold them harmless from and against any and all liabilities, obligations, claims,
damages, losses, penalties, actions, suits, costs, expenses and disbursements (including counsel
fees and charges) of any kind or nature whatsoever which they may sustain or incur or be charged
with by reason or in consequence of the issuance of any Credit, the payment or acceptance of any
draft, the refusal or failure to pay or to accept any draft, or any action or inaction in connection
with any Credit, instructions of the Borrower, drafts or related documents or goods and merchandise,
or any action or inaction in reliance upon the provisions hereof.
3
Without limitation by reason of
the foregoing, the Borrower further agrees that in case of issue by the Bank, at the request of the Borrower,
of an agreement to indemnify a steamship or other carrier from loss sustained by reason of its
compliance with a request by the Bank that such carrier deliver goods and merchandise relating to
any drafts without surrender of a duly endorsed xxxx of lading or similar document, the Borrower
will indemnify and hold the Bank harmless from any and all claims which may be made against the
Bank by reason of the Bank’s having given such indemnity agreement. The Borrower also agrees that
upon receipt of the xxxx of lading or similar document the Borrower will obtain a written
cancellation of such indemnity agreement from the carrier or its agents. The Borrower also hereby
waives the requirements of the related Credit, if any exists, and authorizes the Bank to accept or
to pay or to accept and to pay any drafts and/or demands made on the Bank, with or without the
related documents pertaining to such merchandise.
(f) The obligations of the Borrower hereunder shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the terms hereof
under all circumstances, including, without limitation: (i) any lack of validity or enforceability
of the Agreement, any other Credit Document or any other agreement, instrument or other document
executed in connection with any of the foregoing; (ii) any amendment or waiver of, or any consent
to departure from, any of the foregoing; (iii) the existence of any claim, set-off , defense or
other right which the Borrower may have at any time against any beneficiary (or any Person for
whom any beneficiary may be acting), the Bank, or any other Person whether in connection with the
Agreement or any other Credit Document, the transactions contemplated herein or therein, or any
unrelated transactions; (iv) any statement or any other document presented under any Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (v) payment by the Bank at any time under any Credit
against presentation of a draft or certificate which does not comply with the terms of any Credit
or by a Person not then authorized to draw under any Credit; (vi) the automatic extension of the
expiration date of any Credit or (vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
IN
WITNESS WHEREOF, the Undersigned has caused this Letter of Credit
Agreement to be duly executed as of the date set forth below.
| Date: July 31, 2008 | ||||
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| By: /s/ Xxxxxx X. Xxxxxx | ||||
| Name: Xxxxxx X. Xxxxxx | ||||
| Title: Chief Financial Officer and Treasurer | ||||
