EXHIBIT 10.41
PLEDGE AGREEMENT
(TARRANT APPAREL GROUP)
THIS PLEDGE AGREEMENT (this "AGREEMENT"), dated as of June 16, 2006 is
executed by each of the undersigned pledgors (each a "PLEDGOR" and, together
with any other entity that becomes a pledgor hereunder, the "PLEDGORS") and
GUGGENHEIM CORPORATE FUNDING, LLC a Delaware limited liability company
("GUGGENHEIM"), as Collateral Agent (in such capacity, the "COLLATERAL AGENT")
for itself and the other lenders (Guggenheim and such other lenders,
collectively the "LENDERS") as are, or may from time to time become, parties to
the Credit Agreement (as defined below).
W I T N E S S E T H:
- - - - - - - - - -
RECITALS
A. Pledgors, as Borrower and Guarantors, the Lenders and the Collateral
Agent have entered into a Credit Agreement dated of even date herewith (as
amended, supplemented, restated or otherwise modified from time to time, the
"CREDIT AGREEMENT"), pursuant to which the Lenders have agreed to make available
Loans to the Pledgor as more specifically set forth in the Credit Agreement;
B. Pursuant to each guaranty entered into pursuant to the Credit
Agreement, each Pledgor (other than Borrower in the case of the Credit
Agreement) has guaranteed to the Lenders the payment and performance when due of
all Guaranteed Obligations, as described in such guaranty;
C. It is a condition precedent to the making of Loans to the Borrower
under the Credit Agreement that each Pledgor shall have executed and delivered
to the Collateral Agent this Pledge Agreement;
D. Each Pledgor will obtain benefits from the incurrence of Loans by
the Borrower under the Credit Agreement and, accordingly, desires to execute
this Credit Agreement in order to satisfy the condition described the preceding
paragraph and to induce the Lenders and the Collateral Agent to enter into the
Credit Agreement and other Loan Documents, and as a condition to the making of
the Loans thereunder, the Pledgor has agreed to grant to the Collateral Agent a
security interest in the Collateral (as hereinafter defined);
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged by it, and in order to induce the Lenders to make
Loans to the Pledgor pursuant to the Credit Agreement, the Pledgor agrees with
the Collateral Agent, for the benefit of the Collateral Agent and the ratable
benefit of the Lenders, as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"COLLATERAL" means, collectively, (a) the Pledged Shares; (b) the
Pledged Notes; (c) the Pledged LLC Interests; (d) the Pledged Partnership
Interests; (e) all other Pledged Property, whether now or hereafter delivered to
the Collateral Agent in connection with this Agreement; and (f) all proceeds of
any of the foregoing; except to the extent such Pledged Shares or Pledged LLC
Interests relate to the Excluded Foreign Subsidiaries other than the Luxembourg
Subsidiary.
"DEFAULT" means any Event of Default or any condition or event which,
after notice or lapse of time or both, would constitute an Event of Default.
"DISTRIBUTIONS" mean all dividends, liquidating dividends, shares of
stock resulting from stock splits, reclassifications, warrants, options and
other distributions (whether similar or dissimilar to the foregoing) on or with
respect to any Pledged Shares or other shares of capital stock constituting
Collateral, but shall not mean Dividends.
"DIVIDENDS" means cash dividends and cash distributions with respect to
any Pledged Shares made out of capital surplus.
"EVENT OF DEFAULT" means any event described in SECTION 5.1.
"EXCLUDED PROPERTY" means (1) any membership interest in PBG7, LLC, a
California limited liability company, for so long as such company constitutes an
uncapitalized, non-operating Subsidiary, (2) any membership interests or capital
stock of the Excluded Foreign Subsidiaries, other than the Luxembourg Subsidiary
and (3) any interest in excess of 65% of the Luxembourg Subsidiary.
"LUXEMBOURG SUBSIDIARY" means Tarrant Luxembourg Sarl.
"INITIAL PLEDGED SHARES" means the capital stock more particularly
described in Attachment I hereto, as amended and supplemented from time to time.
"PLEDGED LLC INTERESTS" means the limited liability company interests
more particularly described in ATTACHMENT I hereto, as amended and supplemented
from time to time, including (a) all of each Pledgor's right, title and interest
in each limited liability company to which each such Pledged LLC Interest
relates, whether now existing or hereafter acquired, (b) all of its capital
therein and its interest in all profits, income, surpluses, losses and other
distribution to which such Pledgor shall at any time be entitled in respect of
such Pledged LLC Interests; (c) all other payments due or to become due to such
Pledgor in respect of Pledged LLC Interests, whether under any limited liability
company agreement or otherwise; (d) all of its claims, rights,
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powers, privileges, authority, options, security interests liens and remedies,
if any, under any limited liability company agreement or operating agreement, or
at law or otherwise in respect of such Pledged LLC Interests; (e) all present
and future claims, if any, of such Pledgor against any such limited liability
company for monies loaned or advance, for services rendered or otherwise; (f)
all of such Pledgor's rights under any limited liability company agreement or
operating agreement or at law to exercise and enforce every right, power,
remedy, authority, option and privilege of such Peldgor relating to such Pledged
LLC Interests; and (g) all other property hereafter delivered in substitution
for or in addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, securities,
interest, dividends, rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all thereof; provided, however, Pledged LLC Interests shall not include
Excluded Property.
"PLEDGED NOTES" shall mean all Notes more particularly described in
ATTACHMENT hereto, as amended and supplemented from time to time.
"PLEDGED PARTNERSHIP INTERESTS" means the entire general partnership
interest or limited partnership interest at any time owned by any Pledgor in any
general partnership or limited partnership organized under the laws of the
United States or any State or territory thereof or the District of Columbia,
including (a) all of each Pledgor's right, title and interest in each
partnership to which each such Pledged Partnership Interest relates, whether now
existing or hereafter acquired, (b) all of its capital therein and its interest
in all profits, income, surpluses, losses and other distribution to which such
Pledgor shall at any time be entitled in respect of such Pledged Partnership
Interests; (c) all other payments due or to become due to such Pledgor in
respect of Pledged Partnership Interests, whether under any partnership
agreement or otherwise; (d) all of its claims, rights, powers, privileges,
authority, options, security interests liens and remedies, if any, under any
partnership agreement or operating agreement, or at law or otherwise in respect
of such Pledged Partnership Interests; (e) all present and future claims, if
any, of such Pledgor against any such partnership for monies loaned or advance,
for services rendered or otherwise; (f) all of such Pledgor's rights under any
partnership agreement or operating agreement or at law to exercise and enforce
every right, power, remedy, authority, option and privilege of such Peldgor
relating to such Pledged Partnership Interests; and (g) all other property
hereafter delivered in substitution for or in addition to any of the foregoing,
all certificates and instruments representing or evidencing such other property
and all cash, securities, interest, dividends, rights and other property at any
time and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof.
"PLEDGED PROPERTY" means all Pledged Shares, Pledged Notes, Pledged
Partnership Interests, Pledged LLC Interests and all Dividends, Distributions,
securities, cash, instruments, interest payments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Shares.
"PLEDGED SHARES" means the Initial Pledged Shares and all other shares
of capital stock which are delivered by the Pledgor to the Collateral Agent as
Pledged Property hereunder; provided, however, Pledged Shares shall not include
Excluded Property.
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"RATABLE" or "RATABLY" means, in the context of a distribution of
Collateral or a distribution of proceeds of any of the Collateral, an allocation
of such Collateral or proceeds among the Lenders PRO RATA in accordance with
their respective portion of the aggregate dollar amount of the Secured
Obligations to which the distribution is being applied.
"SECURED OBLIGATIONS" means, collectively, the obligations of
the Borrower and the obligations of each Subsidiary under any of the Loan
Documents to which the Pledgor or any such Subsidiary is now or hereafter
becomes a party, including the "Obligations" (as that term is defined in the
Credit Agreement).
"U.C.C." means the Uniform Commercial Code as in effect in the State of
New York.
SECTION 1.2. CREDIT AGREEMENT DEFINITIONS, CROSS-REFERENCES, ETC.
Capitalized terms used herein (including the preamble and recitals hereof) shall
have the meanings assigned to them in the Credit Agreement, unless the context
otherwise requires or unless otherwise defined herein. References in this
Agreement, the Credit Agreement or any other Loan Document to this Agreement
shall mean this Agreement, including all amendments, modifications and
supplements and any exhibits or schedules to any of the foregoing, and shall
refer to this Agreement as the same may be in effect at the time such reference
becomes operative. References in this Agreement to any Section, unless otherwise
specified, are references to such Section of this Agreement, and references in
such Section to any clause, unless otherwise specified, are references to such
clause of such Section. References herein to "including" means including without
limiting the generality of any description preceding such term.
SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement, including its preamble and recitals, with such
meanings.
ARTICLE 2
PLEDGE
SECTION 2.1. GRANT OF SECURITY INTEREST. Each Pledgor hereby pledges,
assigns, charges, mortgages, delivers, sets over, conveys and transfers to the
Collateral Agent, for its benefit and the ratable benefit of the Lenders, and
hereby grants to the Collateral Agent, for its benefit and the ratable benefit
of the Lenders, a continuing security interest in and to, all of the Collateral.
SECTION 2.2. SECURITY FOR SECURED OBLIGATIONS. This Agreement and the
Collateral secure the payment in full and performance of all Secured
Obligations.
SECTION 2.3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE,
TRANSFER, ETC. All certificates and instruments representing or evidencing any
Collateral, including all Pledged Shares, shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto, shall be in suitable form for
transfer by delivery, and shall be accompanied by all necessary instruments of
transfer or assignment, duly executed in blank and, if such certificates
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and instruments are traded on a registered national security exchange and the
Collateral Agent shall so request, with signatures guaranteed by a member of a
registered national securities exchange or the National Association of
Securities Dealers, Inc. or by a commercial bank or trust company having an
office or correspondent in the United States. The Collateral Agent shall have
the right, at any time without notice to any Pledgor, to transfer to, or to
register in the name of the Collateral Agent or any of its nominees, any or all
of the Pledged Shares, subject only to the revocable rights of such Pledgor
specified in SECTION 4.6. In addition, the Collateral Agent shall have the right
at any time to exchange certificates or instruments representing or evidencing
any Pledged Shares for certificates or instruments of smaller or larger
denominations.
SECTION 2.4. DIVIDENDS ON PLEDGED SHARES. In the event that any
Dividend is to be paid on any Pledged Share at a time when no Default or Event
of Default has occurred and is continuing or would result therefrom and such
Dividend is otherwise permitted by the Credit Agreement, such Dividend may be
paid directly to the applicable Pledgor.
SECTION 2.5. NO DUTY TO COLLATERAL AGENT. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Beyond
reasonable care in the custody of any Collateral in its possession or control
and the accounting for moneys actually received by it hereunder, the Collateral
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral in its possession or
control if the Collateral is accorded treatment substantially equal to that
which it accords its own property, and the Collateral Agent shall not be liable
or responsible for any loss or damage to any of the Collateral, or from any
diminution in the value thereof, by reason of the act or omission of any
carrier, forwarding agency, or other agent selected by the Collateral Agent in
good faith.
SECTION 2.6. CONTINUING SECURITY INTEREST; TRANSFER OF SECURED
OBLIGATION. This Agreement shall:
(a) create a continuing security interest in the Collateral;
(b) remain in full force and effect until the payment in full
and performance of all Secured Obligations;
(c) be binding upon each Pledgor, its administrators,
successors and assigns, PROVIDED, HOWEVER, that no Pledgor may assign
any of its rights or obligations hereunder without the prior written
consent of the Collateral Agent and the Required Lenders; and
(d) inure to the benefit of the Collateral Agent and the
Lenders and their respective permitted successors, transferees and
assigns.
Without limitation to the foregoing, any Lender may assign or otherwise transfer
any Note, Loan or other Secured Obligation, held by it to any other Person, in
accordance with the terms of the Credit Agreement, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted herein
or otherwise. Upon the occurrence of the payment in full and performance of all
Secured Obligations, the security interest granted herein shall terminate and
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all rights to the Collateral shall revert to the Pledgors. Upon any such
termination, the Collateral Agent will, at the Pledgors' expense, deliver all
certificates and instruments representing or evidencing all Pledged Shares
together with all other Collateral held by the Collateral Agent hereunder, and
execute and deliver to each Pledgor, at such Pledgor's expense, such documents
as the Pledgor shall reasonably request to evidence such termination.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. WARRANTIES, ETC. Each Pledgor represents and warrants[, as
of the Closing Date,] as follows:
(a) The Pledgor is and at all times will be the legal and
beneficial owner of, and has and will have at all times good and
marketable title to (and has and will at all times have full right and
authority to pledge and assign) all Collateral, free and clear of all
Liens or other charges or encumbrances, except the Lien granted
pursuant hereto in favor of the Collateral Agent.
(b) The delivery of the Collateral (including, without
limitation, the delivery of the Initial Pledged Shares) to the
Collateral Agent is effective to create a valid, perfected, first
priority security interest in such Collateral and all proceeds thereof,
securing the Secured Obligations, and no filing or other action is
necessary to perfect or protect such security interest, except that the
filing of a financing statement, the taking of possession or some other
action may be required under Section 9-315 of the U.C.C. to perfect a
security interest in certain proceeds of the Collateral that does not
constitute Pledged Shares or other securities or instruments.
(c) On the date hereof the Initial Pledged Shares constitute,
and at all times thereafter the Pledged Shares will constitute, 100% of
all of the issued and outstanding shares of each Subsidiary, except (i)
as otherwise set forth on Attachment I and (ii) with respect to the
Luxembourg Subsidiary of which on the date hereof the Pledged LLC
Interests will constitute, and at all time thereafter the Pledged LLC
Interests will constitute, 65% of all of the issued and outstanding
shares of the Luxembourg Subsidiary.
(d) The Pledged Shares have been duly authorized and validly
issued, and are fully paid, and nonassessable.
(e) No authorization, approval, or other action by and no
notice to or filing with, any Governmental Authority is or will be
required either:
(i) for the pledge by the Pledgor of any Collateral
pursuant to this Agreement or for the execution, delivery, or
performance of this Agreement by the Pledgor, or
(ii) for the exercise by the Collateral Agent of the
voting or other rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this
Agreement (except, with respect to any Pledged Shares, as may
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be required in connection with a disposition of such Pledged
Shares by laws affecting the offering and sale of securities
generally).
SECTION 3.2. WARRANTIES UPON PLEDGE OF ADDITIONAL COLLATERAL. Each
Pledgor shall be deemed to restate each representation and warranty set forth in
SECTION 3.1 as at the date of each pledge hereunder by the Pledgor to the
Collateral Agent of any Collateral with respect to such additional Collateral.
ARTICLE 4
COVENANTS
SECTION 4.1. PROTECT COLLATERAL; FURTHER ASSURANCES, ETC. No Pledgor
will sell, assign, transfer, pledge or encumber in any other manner the
Collateral (except in favor of the Collateral Agent hereunder) other than as
permitted in accordance with that certain Intercreditor Agreement between GMAC
Commercial Finance LLC, Guggenheim and the Pledgors, dated as of the date
hereofs. Each Pledgor will warrant and defend the right, title and security
interest herein granted to the Collateral Agent in and to the Collateral (and
all right, title and interest represented by the Collateral) against the claims
and demands of all Persons whomsoever. Each Pledgor agrees that at any time, and
from time to time, at the expense of such Pledgor, the Pledgor will promptly
execute and deliver all further Instruments, and take all further action, that
may be necessary, or that the Collateral Agent may reasonably request, in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral.
SECTION 4.2. ISSUANCE OF STOCK, ETC. No Pledgor will, subsequent to the
date of this Agreement, without the prior written consent of the Required
Lenders, cause or permit any Subsidiary to issue or grant any warrants, stock
options of any nature or other instruments convertible into shares of any class
of Stock or issue any additional shares of Stock or sell or transfer any
treasury Stock.
SECTION 4.3. TAXES. Each Pledgor will pay all taxes, assessments and
charges levied, assessed or imposed upon the Collateral before the same become
delinquent or become Liens upon any of the Collateral, except where the same may
be contested in good faith by appropriate proceedings and as to which adequate
reserves have been provided.
SECTION 4.4. STOCK POWERS, ETC. Each Pledgor agrees that all Pledged
Shares (and all other shares of Stock constituting Collateral) delivered by the
Pledgor pursuant to this Agreement will be accompanied by all necessary
instruments of transfer or assignment, duly executed in blank. Each Pledgor
will, from time to time upon the request of the Collateral Agent, promptly
deliver to the Collateral Agent such stock powers, instruments and similar
documents, satisfactory in form and substance to the Collateral Agent, with
respect to the Collateral as the Collateral Agent may reasonably request and
will, from time to time upon the request of the Collateral Agent, promptly
transfer any Pledged Shares or other shares of Stock constituting Collateral
into the name of the Collateral Agent or any nominee designated by the
Collateral Agent.
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SECTION 4.5. CONTINUOUS PLEDGE. Subject to SECTION 2.4, each Pledgor
will, at all times, keep pledged to the Collateral Agent pursuant hereto all
Pledged Shares, all Pledged Notes, all Pledged Partnership Interests, all
Pledged LLC Interests, all Dividends and Distributions with respect thereto, and
all other Collateral.
SECTION 4.6. VOTING RIGHTS; DIVIDENDS, ETC. Each Pledgor agrees to
deliver all Distributions at any time received by it, and all Dividends at any
time received by it (other than as permitted by SECTION 2.4), to the Collateral
Agent to be held as Collateral hereunder. In addition, each Pledgor agrees that:
(a) after any Event of Default shall have occurred and be
continuing or if any Default or Event of Default shall occur as a
result thereof, promptly upon receipt thereof by the Pledgor and
without any request therefore by the Collateral Agent, the Pledgor
shall deliver (properly endorsed where required hereby or requested by
the Collateral Agent) to the Collateral Agent all Dividends, all of
which shall be held by the Collateral Agent as additional Collateral
for use in accordance with SECTION 5.5;
(b) after any Event of Default shall have occurred and be
continuing, upon notice to the Pledgor by the Collateral Agent, all
rights of the Pledgor to exercise or refrain from exercising voting or
other consensual rights in respect of the Collateral shall cease and
all such rights shall thereupon become vested in the Collateral Agent
who shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights; and
(c) after any Event of Default shall have occurred and be
continuing, promptly upon request of the Collateral Agent, the Pledgor
shall deliver to the Collateral Agent such proxies and other documents
as may be necessary to allow the Collateral Agent to exercise the
voting and other consensual rights with respect to any Collateral;
PROVIDED, HOWEVER, that unless an Event of Default shall have occurred and be
continuing or result therefrom, each Pledgor shall be entitled to exercise, in
its reasonable judgment, but in a manner not inconsistent with the terms of the
Credit Agreement or any other Loan Document (including this Agreement), the
voting powers and all other incidental rights of ownership with respect to any
Pledged Shares or other shares of Stock constituting Collateral (subject to such
Pledgor's obligation to deliver to the Collateral Agent such Pledged Shares and
other shares in pledge hereunder); PROVIDED FURTHER, HOWEVER, that unless an
Event of Default shall have occurred and be continuing or result therefrom, such
Pledgor shall be entitled to the receipt of all Dividends in accordance with
SECTION 2.4 to the extent such Dividends were permitted to be paid pursuant to
the Credit Agreement.
All Dividends, Distributions, cash payments and proceeds which any Pledgor is
then obligated to deliver to the Collateral Agent, shall, until delivery to the
Collateral Agent, be held by the Pledgor separate and apart from its other
property in trust for the Collateral Agent. The Collateral Agent agrees that
unless an Event of Default shall have occurred and be continuing, the Collateral
Agent shall, upon the written request of any Pledgor, promptly deliver such
proxies and other documents, if any, as shall be reasonably requested by such
Pledgor which are necessary to allow the Pledgor to exercise voting power with
respect to any share of Stock
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(including Pledged Shares) constituting Collateral; PROVIDED, HOWEVER, that no
vote shall be cast, or consent, waiver or ratification given, or action taken by
the Pledgor that would impair in any material respect any Collateral or be
inconsistent with or violate any provision of the Credit Agreement or any other
Loan Document (including this Agreement).
SECTION 4.7. ADDITIONAL INFORMATION. A Pledgor will furnish to the
Collateral Agent and the Lenders written notice of the occurrence of any event
which would make any representation contained in ARTICLE 3 untrue at such time.
SECTION 4.8. ADDITIONAL PLEDGED COLLATERAL. In the event that any
Pledgor is required, under the terms of the Credit Agreement, the terms of any
other Loan Document or otherwise, to pledge any Collateral after the Closing
Date, such Pledgor shall pledge such Collateral, and be bound with respect to
such Collateral by all of the terms and conditions hereof, by delivery to the
Collateral Agent of an executed counterpart of a Supplement to Pledge Agreement
in the form of EXHIBIT A attached hereto.
ARTICLE 5
EVENTS OF DEFAULT; REMEDIES
SECTION 5.1. EVENTS OF DEFAULT. Each of the following shall constitute
an "EVENT OF DEFAULT" hereunder:
(a) if there shall occur any Event of Default under the Credit
Agreement;
(b) if any of the Collateral shall be attached or levied upon
or seized in any legal proceeding, or held by virtue of any Lien or
distress; or
(c) if any representation or warranty of any Pledgor set forth
herein or in the Credit Agreement shall be untrue in any material
respect or if any Pledgor shall default in the due performance and
observance of any covenant contained herein and such default shall
continue unremedied for a period of ten (10) Business Days after notice
thereof shall have been given to such Pledgor by the Collateral Agent
specifying such Default in reasonable detail.
SECTION 5.2. ACTIONS UPON EVENT OF DEFAULT. In addition to its rights
and remedies provided hereunder, whenever an Event of Default shall have
occurred and be continuing, the Collateral Agent shall have all rights and
remedies of a secured party upon default under the U.C.C. or other applicable
law. Any notification required by law of any intended disposition by the
Collateral Agent of any of the Collateral shall be deemed reasonably and
properly given if given at least ten (10) days before such disposition. Without
limitation of the above, the Collateral Agent may, or upon direction of the
Required Lenders shall, whenever an Event of Default shall have occurred and be
continuing, without prior notice to the Pledgor, take all or any of the
following actions:
(a) transfer all or any part of the Collateral into the name
of the Collateral Agent or its nominee, without disclosing that such
Collateral is subject to the Lien hereunder;
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(b) notify the obligors on any of the Collateral to make
payment to the Collateral Agent of any amount due or to become due
thereunder;
(c) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer
than the original period) any obligations of any nature of any party
with respect thereto;
(d) endorse any checks, drafts, or other writings in a
Pledgor's name to allow collection of the Collateral;
(e) take control of any proceeds of the Collateral; and
(f) execute (in the name, place and stead of any Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 5.3. ATTORNEY-IN-FACT. Each Pledgor hereby irrevocably appoints
the Collateral Agent its true and lawful attorney, with full power of
substitution, in the name of the Pledgor, the Collateral Agent, the Lenders or
otherwise, for the sole use and benefit of the Collateral Agent and the Lenders,
but at the Pledgors' expense, upon the occurrence and during the continuation of
an Event of Default to take any action and to execute any instrument which the
Collateral Agent may deem reasonably necessary or advisable to accomplish the
purposes of this Agreement.
SECTION 5.4. PRIVATE SALES. (a) Each Pledgor recognizes that the
Collateral Agent may be unable, after the occurrence and during the continuance
of any Event of Default, to effect a public sale of any or all the Pledged
Shares by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "SECURITIES ACT") and applicable state securities law or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers that will be obligated to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Collateral Agent shall be under no
obligation to delay sale of any of the Pledged Shares for the period of time
necessary to permit such Subsidiary to register such securities for public sale
under the Securities Act, or under applicable state securities law, even if such
Subsidiary would agree to do so.
(b) Each Pledgor further agrees to use its best efforts, after
the occurrence and during the continuance of an Event of Default, to do
or cause to be done all such acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Shares pursuant to this
SECTION 5.4 valid and binding and in compliance with any and all other
applicable Requirements of Law.
SECTION 5.5. APPLICATION OF PROCEEDS. All cash proceeds received by the
Collateral Agent in respect of any sale of, collection from, or other
realization upon, all or any
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part of the Collateral may, in the discretion of the Collateral Agent, be held
by the Collateral Agent as additional collateral security for, or then or at any
time thereafter be applied (after payment of any amounts payable to the
Collateral Agent pursuant to SECTIONS 9.3 AND 9.4 of the Credit Agreement and
SECTION 5.6 of this Agreement) in whole or in part by the Collateral Agent
against, all or any part of the Secured Obligations in the following order:
(a) FIRST, ratably, to the unpaid interest (including
post-petition interest) accrued and then due or owing on the Secured
Obligations and to the aggregate amount of fees described in SECTION
3.3.2 of the Credit Agreement which have accrued and are unpaid;
(b) SECOND, ratably, among the holders of Notes, on account of
all principal of any Secured Obligations then due or owing; and
(c) THIRD, to any other Secured Obligations then due or owing.
After termination of the Commitments, any surplus of such cash or cash proceeds
held by the Collateral Agent and remaining after payment in full of all the
Secured Obligations (or provision therefor being made in cash or Cash Equivalent
Investments), shall be paid over to the applicable Pledgor or to whomsoever may
be lawfully entitled to receive such surplus.
SECTION 5.6. INDEMNITY AND EXPENSES. Each Pledgor hereby indemnifies
and holds harmless the Collateral Agent and the Lenders from and against any and
all claims, losses, and liabilities growing out of or resulting from this
Agreement (including enforcement of this Agreement), except claims, losses, or
liabilities resulting from the Collateral Agent's gross negligence or willful
misconduct. Upon demand, the Pledgors will pay, or cause to be paid, to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which the Collateral Agent may incur in connection with:
(a) the administration of this Agreement;
(b) the custody, preservation, use, or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral;
(c) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder and any action taken by the Collateral Agent
under SECTION 6.4; and
(d) the failure by any Pledgor to perform or observe any of
the provisions hereof.
ARTICLE 6
MISCELLANEOUS
SECTION 6.1. LOAN DOCUMENT. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
11
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including Article 10 thereof.
SECTION 6.2. NOTICES. All notices hereunder shall be in writing or by
telecopy and shall be sufficiently given to the Collateral Agent, the Lenders or
the Pledgors if addressed or delivered to them at, in the case of the Collateral
Agent and the Lenders, their respective addresses and telecopier numbers
specified in SECTION 10.2 of the Credit Agreement and, in the case of the
Pledgors, at the address specified in the Credit Agreement (in each case with
copies addressed as provided in SECTION 10.2 of the Credit Agreement), or at
such other address as any party may designate to any other party by written
notice. All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; when received if
deposited in the mail, postage prepaid, if mailed; when transmission is
verified, if telecopied; and on the next Business Day, if timely delivered to an
air courier guaranteeing overnight delivery.
SECTION 6.3. OBLIGATIONS NOT AFFECTED. The obligations of the Pledgors
under this Agreement shall remain in full force and effect without regard to,
and shall not be impaired or affected by:
(a) any amendment or modification or addition or supplement to
the Credit Agreement, any Note, any other Loan Document, any Instrument
delivered in connection therewith or any assignment or transfer
thereof;
(b) any exercise, non-exercise or waiver by the Collateral
Agent or any Lender of any right, remedy, power or privilege under or
in respect of, or any release of any guaranty or collateral provided
pursuant to, this Agreement, the Credit Agreement, or any other Loan
Document;
(c) any waiver, consent, extension, indulgence or other action
or inaction in respect of this Agreement, the Credit Agreement or any
other Loan Document or any assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like, of any Pledgor or
any other Person, whether or not such Pledgor shall have notice or
knowledge of any of the foregoing.
SECTION 6.4. PROTECTION OF COLLATERAL. The Collateral Agent may from
time to time, at its option, perform any act which any Pledgor agrees hereunder
to perform and which such Pledgor shall fail to perform after being requested in
writing to so perform (it being understood that no such request need be given
after the occurrence and during the continuance of an Event of Default) and the
Collateral Agent may from time to time take any other action which the
Collateral Agent reasonably deems necessary for the maintenance, preservation or
protection of any of the Collateral or of its security interest therein.
SECTION 6.5. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any jurisdiction.
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SECTION 6.6. HEADINGS. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement.
SECTION 6.7. GOVERNING LAW; JURISDICTION. (a) THIS AGREEMENT SHALL BE
DEEMED TO BE MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
(b) EACH PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT (AND EACH PLEDGOR AGREES THAT SUCH
JURISDICTION WILL BE EXCLUSIVE WITH RESPECT TO CLAIMS BROUGHT BY SUCH
PLEDGOR AGAINST THE COLLATERAL AGENT OR ANY LENDER), AND EACH PLEDGOR
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR
FEDERAL COURT. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF ANY INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(c) Each Pledgor hereby irrevocably designates, appoints and
empowers CT Corporation System, whose present address is 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, as its authorized agent to receive, for and
on its behalf and on behalf of its property, service of process in the
State of New York when and as such legal actions or proceedings may be
brought in the courts of the State of New York or of the United States
of America sitting in the Southern District of New York, and such
service of process shall be deemed complete upon the date of delivery
thereof to such agent whether or not such agent gives notice thereof to
such Pledgor, or upon the earliest of any other date permitted by
applicable law. It is understood that a copy of said process served on
such agent will as soon as practicable be forwarded to the applicable
Pledgor, at the address referred to in SECTION 6.2 above, but such
Pledgor's failure to receive such copy shall not affect in any way the
service of said process on said agent as the agent of such Pledgor.
Each Pledgor irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the
mailing of the copies thereof by certified mail, return receipt
requested, postage prepaid, to the Pledgor at its address referred to
in SECTION 6.2 above, such service to become effective upon the earlier
of (i) the date 10 calendar days after such mailing or (ii) any earlier
date permitted by applicable law. Each Pledgor agrees that it will at
all times continuously maintain an agent to receive service of process
in the State of New York on behalf of the Pledgor and its properties
and in the event that, for any reason, the agent named above or its
successor shall no longer serve as its agent to receive service of
process in the State of New York on its behalf, it shall promptly
appoint a successor so to serve and shall advise the agent and the
Lenders thereof (and shall furnish to the agent the consent of any
successor agent so to act). Nothing in this SECTION 6.7 shall affect
the right of the Collateral Agent or any Lender to bring proceedings
against any Pledgor in the courts of any other jurisdiction or to serve
process in any other manner permitted by applicable law.
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SECTION 6.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon each Pledgor and shall inure to the benefit of the Collateral Agent and
Lenders and their respective successors and assigns. No Pledgor may assign this
Agreement or delegate any of its duties hereunder.
SECTION 6.9. WAIVER OF JURY TRIAL, ETC. THE COLLATERAL AGENT AND EACH
PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF THE COLLATERAL AGENT, SUCH LENDERS, OR THE
PLEDGOR. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE COLLATERAL AGENT AND
SUCH LENDERS ENTERING INTO THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 6.10. LIMITATION OF LIABILITY. Neither the Collateral Agent,
the Lenders nor any Affiliate thereof, shall have any liability with respect to,
and EACH PLEDGOR HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX UPON, ANY CLAIM
FOR ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES SUFFERED
BY THE PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREIN OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION HEREWITH.
SECTION 6.11. WAIVER OF SUBROGATION. Each Pledgor hereby irrevocably
waives any and all rights it may have against such Subsidiary or its assets (by
subrogation or otherwise) by reason of any amounts received hereunder by the
Collateral Agent or the Lenders and agrees that such rights will not be
exercised.
SECTION 6.12. COUNTERPARTS, EFFECTIVENESS, ETC. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
executed by the Pledgors and the Collateral Agent and be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Pledgors and the Collateral Agent (or notice thereof
satisfactory to the Collateral Agent) shall have been received by the Collateral
Agent and notice thereof shall have been given by the Collateral Agent to the
Pledgors and each Lender.
[signatures on following page]
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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
executed as of the date first above written.
PLEDGORS
TARRANT APPAREL GROUP
By: /S/ XXXXXX XXXX
---------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer
NO! JEANS, INC.
By: /S/ XXXXXX XXXX
---------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer
TAG MEX, INC.
By: /S/ XXXXXX XXXX
---------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer
FASHION RESOURCE (TCL), INC.
By: /S/ XXXXXX XXXX
---------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer
PRIVATE BRANDS, INC.
By: /S/ XXXXXX XXXX
---------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer
[SIGNATURE PAGE TO PLEDGE AGREEMENT]
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XXXX XXX INTERNATIONAL, LLC
By: /S/ XXXXXXX XXXXX
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
TAG MEX, LLC
By: /S/ XXXXXXX XXXXX
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
UNITED APPAREL VENTURES, LLC
By: /S/ XXXXXX XXXX
---------------------------------------
Name: Xxxxxx Xxxx
Title: Manager
ROCKY APPAREL, LLC
By: /S/ XXXXXXX XXXXX
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
Acknowledged and Agreed to:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Collateral Agent
By: /S/ XXXXXXX X. XXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
16
