EXHIBIT 10.57
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SPECIAL DEPOSIT ACCOUNT AGREEMENT
(SECURITY INTEREST IN DEPOSIT ACCOUNT)
To: Union Bank of California, N.A.
Office: Los Angeles Headquarters Xxxxxx
000 Xxxxx Xxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx Xxxxxx
Re: Borrower: Tarrant Apparel Group dba Fashion Resource
Secured Party: The Hongkong and Shanghai Banking Corporation, Ltd.,
Title of Special Deposit Account: Tarrant Apparel Group dba Fashion
Resource
Special Deposit Account for Hongkong Bank
Special Deposit Account Number: 2100691003
1. SECURITY INTEREST IN SPECIAL DEPOSIT ACCOUNT. This shall serve as notice
to Union Bank of California, N.A. ("Bank") that Tarrant Apparel Group dba
Fashion Resource ("Borrower") has assigned and granted to the Hongkong and
Shanghai Banking Corporation, Limited ("Secured Party") a security interest in
certain assets of Borrower, including among other things, all checks, drafts,
and other instruments deposited in account number 2100691003 ("Special Deposit
Account") maintained by Borrower with Bank, and any and all future deposits
thereto, and any and all proceeds thereof, including any interest earned
thereon.
2. BANK ACKNOWLEDGMENT. Bank acknowledges and agrees that Bank has received
notice of Secured Party's security interest in the Special Deposit Account.
Borrower has assigned to Secured Party all funds deposited in the Special
Deposit Account, and Bank shall act as Secured Party's agent with respect to the
receipt, processing, and application of those funds. For so long as this
Agreement remains in effect, Bank waives its rights of charge back, setoff
and/or banker's lien against the Special Deposit Account. Provided, however,
that nothing herein constitutes a waiver of, and Bank expressly reserves all of
its present and future rights (whether described as rights of setoff, banker's
lien, chargeback or otherwise and whether available to Bank at law, in equity,
under the Commercial Code, under any other agreement between Bank and Borrower
concerning the Special Deposit Account or otherwise) with respect to (a) Items
deposited to the Special Deposit Account that are returned unpaid, whether for
insufficient funds or for any other reason; (b) claims of breach of the
Commercial Code's warranties of good title or of no-material-alterations made
against Bank in connection with Items deposited to the Special Deposit Account;
and (c) Bank's usual and customary charges for services rendered in connection
with the Special Deposit Account. Secured Party acknowledges and agrees that
its security interest in the Special Deposit Account is subordinate to the
rights reserved by Bank in this paragraph.
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3. RETURNED ITEMS AND FEES. Bank will charge a separate deposit account
(#2100690988) to be maintained by Borrower for Items deposited to the Special
Deposit Account that are returned unpaid or returned for any reason and for
Bank's fees and charges relating to the Special Deposit Account. In the event
that there are insufficient funds in Borrower's separate account to cover the
amount of Bank's fees, charges, or returned Items, Bank may charge the Special
Deposit Account for the insufficiency. Bank reserves the right to place a hold
on funds deposited to the Special Deposit Account to the extent permitted by
Federal Reserve Regulation CC. Upon demand, Secured Party agrees to reimburse
Bank for Bank's fees, charges, and returned Items if there are insufficient
funds in Borrower's separate account for the Special Deposit Account to cover
such fees, charges, and returned Items.
4. SECURED PARTY'S ORDERS. Borrower hereby irrevocably authorizes and directs
Bank to honor only such withdrawal and transfer orders respecting the Special
Deposit Account as Secured Party may issue, notwithstanding any inconsistent or
conflicting orders given to Bank by Borrower.
5. RELEASE OF SECURITY INTEREST; TERMINATION OF AGREEMENT. This Agreement
shall remain in full force and effect until Bank receives at the Banking Office
Secured Party's written notice of release of its interest in, or assignment to
Borrower of, the Special Deposit Account. Notwithstanding the foregoing, either
Secured Party or Bank may terminate this Agreement by giving 30 days' written
notice to the other and to Borrower. Following such termination Bank shall
follow Secured Party's instructions for the payment of any balance of funds in
the Special Deposit Account. Termination shall not affect the duties or
responsibilities of any party hereto arising out of transactions occurring prior
to termination.
6. DEPOSITS BY BORROWER OR SECURED PARTY. For so long as this Agreement
remains in force, Bank may accept for deposit into the Special Deposit Account,
any checks, drafts, or other instruments for the payment of money (as used in
this Agreement, each an "Item" and collectively "Items") payable or endorsed to
Borrower, to Secured Party, to both of them, or to cash or bearer, whether
endorsed or unendorsed.
7. BANK'S DISCLAIMERS; SCOPE. Secured Party and Borrower acknowledge and
agree that (a) Bank makes no representations or warranties, express or implied,
concerning the validity, perfection, or priority of Secured Party's security
interest in the Special Deposit Account; (b) this Agreement applies only to the
Special Deposit Account designated above, but not to any other deposit account
which Borrower may now or hereafter maintain with Bank.
8. INDEMNIFICATION OF BANK BY BORROWER. Borrower agrees to defend, indemnify
and hold Bank, its directors, officers, employees, attorneys, successors and
assigns, harmless from and against any and all loss, liability, cost, damage and
expense, including, without limitation, legal and accounting fees and expenses,
arising in any manner whatsoever out of: (a) the acts, errors or omissions of
Borrower or Secured Party or the agent of either; and (b) Bank's acting in
accordance with the provisions of this
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Agreement, excepting only liability occasioned solely by Bank's gross negligence
or willful misconduct. In no event shall Bank be liable for any consequential,
indirect, punitive, or special damage relating to its performance of its duties
under this Agreement, excepting only damages caused by Bank's willful misconduct
or fraud.
9. INDEMNIFICATION OF BANK BY SECURED PARTY. Secured party agrees to
indemnify, release, and hold Bank, its directors, officers, employees,
attorneys, successors and assigns, harmless from and against any and all loss,
liability, cost, damage and expense including, without limitation, legal and
accounting fees and expenses, arising in any manner whatsoever out of Bank's
acting on any notice, orders or instructions concerning the Special Deposit
Account given to Bank by Secured Party.
10. BANKRUPTCY; LEGAL PROCESS. In the event that Borrower becomes subject to
voluntary or involuntary proceedings under the U.S. Bankruptcy Code, or if the
Bank is served with legal process which the Bank in good faith believes affects
the Special Deposit Account, Bank shall have the right to place a hold on funds
deposited to the Special Deposit Account until such time as the Bank receives an
appropriate court order or other assurances satisfactory to Bank establishing
that the funds may be disbursed according to the provisions of this Agreement.
Bank shall immediately provide Borrower and Secured Party notice of any hold
placed by Bank under this paragraph.
11. NOTICES. Any notice given by any party under this Agreement shall be
effective only if (a) given in writing and (b) personally delivered, sent by
United States mail, postage prepaid, or sent by telecopier or other
authenticated message, charges prepaid and addressed to the respective address
set forth herein or in Bank's records for Borrower and Secured Party,
respectively. Either Secured Party, Borrower, or Bank may change the place to
which notices, requests, and other communications are to be sent by giving
written notice of such change to the others.
Notwithstanding the foregoing, Bank shall have no obligation to act upon any
Orders, Secured Party's Release, or other notices or instructions given to Bank
hereunder until received in writing at the address specified below.
Union Bank of California, N.A. (Bank)
Office: Los Angeles Headquarters Xxxxxx
000 Xxxxx Xxxxxxxx
Xxx Xxxxxxx, Xx 00000
Telecopier: 000-000-0000
Telex: 188612 UNIONBK UT
Telephone: 000-000-0000
Attention: Xxxxxxx Xxxxxxxx or Xxxxx Xxxx or Xxxxxxxx Xxxxxx
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Tarrant Apparel Group dba Fashion Resource (Borrower)
0000 Xxxx Xxxxxxxxxx Xxxx., Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000)000-0000
Telephone: (000)000-0000
Attention: Xxxx Xxxxxxxx
The Hongkong and Shanghai Banking Corporation, Ltd., (Secured Party)
Xxxxx 00, 0 Xxxxxx Xxxx Xxxxxxx
Xxxx Xxxx
Telecopier: 000-0000-0000
Telex: 73205 HSBC HX
Telephone: 000-0000-0000
Attention: Xxxxx Xxxxxx, CFA
12. SUCCESSORS AND ASSIGNS; NO THIRD PARTY RIGHTS; ENTIRE AGREEMENT;
AMENDMENTS; CALIFORNIA LAW; COUNTERPARTS; CAPTIONS; NON-WAIVER; RIGHTS
CUMULATIVE; CORPORATE/PARTNERSHIP AUTHORITY. The provisions of this Agreement
shall be binding upon and inure to the benefit of Bank, Secured Party and
Borrower and their respective successors and assigns and to no other person,
firm or entity; provided, however, that neither Secured Party nor Borrower may
assign any of its rights hereunder without Bank's prior written consent. This
Agreement constitutes the entire agreement between Bank, on the one hand, and
Secured Party and Borrower on the other hand, concerning the subject matter
hereof. Except to the extent inconsistent herewith, all other agreements
between Bank and Secured Party or Borrower concerning the Special Deposit
Account shall remain in full force and effect. This Agreement shall be
construed and interpreted in accordance with California law. This Agreement may
be executed in counterparts, each of which shall be an original, and all of
which shall constitute but one and the same instrument. Each person signing on
behalf of a party hereto warrants that such party has performed all corporate or
partnership actions necessary to make this Agreement a binding obligation,
enforceable in accordance with its terms. No modification, amendment or
alteration of this Agreement will be effective against any party hereto unless
specifically agreed upon in a writing signed by that party.
13. ARBITRATION. Any controversy or claim between or among the parties arising
out of or relating to this Agreement, or the breach thereof, shall at the
request of any party be determined by mandatory and binding arbitration. The
arbitration shall be conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the American Arbitration
Association
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("AAA"). The arbitration shall be conducted within the County of Los Angeles,
California. The arbitrator(s) shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an issue is arbitrable
shall be determined by the arbitrator(s). Judgment upon the arbitration award
may be entered in any court having jurisdiction.
The foregoing is hereby acknowledged and agreed to, effective _____________,
1997.
THE HONGKONG AND SHANGHAI BANK CORP., LTD.
By: /s/ Xxxxx Xxxxxx
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Title: Corporate Relationship Manager
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TARRANT APPAREL GROUP DBA FASHION RESOURCE TARRANT APPAREL GROUP DBA FASHION
RESOURCE
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Title: Vice President-Finance & CFO Title: Chief Operating Officer
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UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxx Xxxxx Xxxxxx
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Title: Vice President
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