CONSENT
TO
SECURITY AGREEMENT
(SUPPLEMENT TO FACTORING AGREEMENT)
June 5, 1997
Republic Business Credit Corporation
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Re: Yes Clothing Co.
Gentlemen:
The undersigned acknowledge receipt of the Security Agreement
(Supplement to Factoring Agreement) (the "Agreement") being entered into
concurrently herewith by and between you and Yes Clothing Co. (the "Client").
The undersigned acknowledge that their consent to the foregoing
Agreement is not required, but the undersigned nevertheless do hereby consent
to the foregoing Agreement and to the documents and agreements referred to
therein and to all future modifications and amendments thereto, and any
termination thereof.
Sincerely yours,
/s/ GUY ANTHOME
----------------------------------
Guy Anthome
[LOGO] REPUBLIC BUSINESS CREDIT
SECURITY AGREEMENT
(SUPPLEMENT TO FACTORING AGREEMENT)
CLIENT: YES CLOTHING CO.
DATE: JUNE 5, 1997
This Security Agreement between Republic Business Credit Corporation
("Republic") and the client named above ("Client"), is a supplement to the
Factoring Agreement between Republic and Client dated May 15, 1994 (the
"Factoring Agreement"). This Supplement is hereby incorporated into the
Factoring Agreement and made a part thereof and is subject to the other
terms, conditions, covenants and warranties thereof. All terms (including
capitalized terms) used herein shall have the meanings ascribed to them in
the Factoring Agreement, unless otherwise defined in this Supplement.
1. GRANT OF SECURITY INTEREST. As security for the unconditional payment
and performance when due of all of the Client's "Obligations" (as defined in
Factoring Agreement), including without limitation, any and all liabilities,
indebtedness, obligations, guarantees, representations, warranties and
covenants now existing or hereafter arising under this Security Agreement or
otherwise, the client hereby grants Republic a continuing security interest
in all of Client's right, title and interest in the following types of
property, whether now owned or existing or hereafter acquired or arising, and
wherever located (collectively, the "Collateral"):
(i) All inventory and goods, including without limitation, all
inventory and goods held for sale or lease or to be furnished under contracts
of service, raw materials, work in process, finished goods, goods in transit,
advertising, packaging and shipping materials, and all designs, creations,
patterns, styles, samples and all other materials, and supplies
(collectively, the "Inventory");
(ii) All documents, including without limitation, documents of
transport, payment and title relating to any of the foregoing and all such
other documents as are made available to Client for the purpose of ultimate
sale or exchange of goods or for the purpose of loading, unloading, storing,
shipping, transhipping, manufacturing, processing or otherwise dealing with
goods in a manner preliminary to their sale or exchange;
(iii) All rights, claims, rights of offset, rights of return,
actions and causes of action, against any person, including without
limitation, those arising out of the purchase by Client of any of its
Inventory, and all rights of stoppage in transit, replevin, reclamation and
rights of an unpaid vendor or as a lienor;
(iv) All other collateral described in the Factoring Agreement; and
(v) All proceeds, insurance proceeds, products and accessions of or
to any and all of the foregoing, and all collateral and security for, and
guarantees of, any and all of the foregoing, and all books and records
relating to any and all of the foregoing (including without limitation, any
and all microfilm, microfiche, computer programs and records, source
materials, tapes and discs) and all equipment containing said books and
records. The term "Collateral" as used in the Factoring Agreement shall be
deemed to include all of the Collateral described above, for all purposes of
the Factoring Agreement. Nothing herein shall be deemed to constitute a
commitment or agreement on the part of Republic to make loans or other
advances to Client or to permit Client to incur Obligations, all of which
remain a matter of Republic's sole and absolute discretion.
2. REPRESENTATIONS AND WARRANTIES. Client represents and warrants to
Republic that all of the following representations and warranties are
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true and correct on the date hereof and will continue to be true and correct
throughout the term of this Security Agreement.
(a) Client, if a corporation, is duly authorized, existing and in
good standing under the laws of the jurisdiction of its incorporation. Client
is and will continue to be qualified and licensed in all jurisdictions in
which the nature of the business transacted by it, or the ownership or
leasing of its property, make such qualification or licensing necessary, and
Client has all the requisite power and authority to carry on its business as
it is now, or may hereafter be, conducted.
(b) The execution, delivery and performance of this Security
Agreement, the Factoring Agreement and all other documents, instruments and
agreements between Republic and the Client (collectively, the "Factoring
Documents") have been duly authorized by all necessary corporate and other
action, are enforceable against Client in accordance with their terms, and do
not conflict with any instrument or agreement to which Client is a party or
to which any of its property is subject.
(c) Set forth in the heading to this Security Agreement is Client's
true and correct name, and set forth on Exhibit A hereto is each prior name
of Client and each fictitious name, trade name and trade style by which
Client has been, or is now, known or has previously, or now, transacts
business. Client shall provide Republic with ten (10) business days advance
written notice before doing business under any other name, fictitious name,
trade name or trade style. Client has complied, and will hereafter comply,
with all laws relating to the conduct of business under, and the continuation
of the right to use, a corporate, fictitious or trade name or trade style.
(d) Client has places of business, and Inventory and other
Collateral is kept only at the locations identified on Exhibit A hereto.
Client will give Republic ten (10) business days' prior written notice of any
discontinuance, or change in location, of any place of business, or the
establishment of any new place of business, or any change in the location of
the places where Inventory or other Collateral is or is to be kept.
(e) Client is the sole owner of all of the Collateral, free and
clear of all liens, claims, security interests and encumbrances, except a
security interest in favor of Republic and/or Republic National Bank of New
York ("Republic Bank") and/or Republic Bank California N.A.
(f) None of the Collateral is affixed to any real property in such a
manner, or with such intent, as to make it a fixture or a part of the real
property. Client is not a lessee under any real property lease pursuant to
which the lessor has obtained or may obtain any rights to the Collateral, and
no such lease prohibits, restrains, or impairs Client's right to remove any
Collateral from the leased premises, whether such removal is to be
accomplished prior or subsequent to any default by Client under any such real
property lease or any termination thereof. Client shall, whenever requested
by Republic, cause the owner and lessor of any premises on which Collateral
is located, and any person having a lien, mortgage or deed of trust on any
such premises to execute and deliver to Republic, in form and substance
acceptable to Republic, whatever waivers and subordinations that Republic in
its sole discretion requires, so as to ensure that Republic's rights in and
to the Collateral are, and will continue to be, prior and superior to the
rights of any such owner, lessor or lienor. Client will keep in full force
and effect, and will comply with all the terms of, any lease of real property
where any of the Collateral now is or hereafter may be located.
(g) All of Client's assets useful or necessary in the conduct of
Client's business and all Collateral is in good working order and condition.
Client will not use the Collateral or any of Client's other assets in any
unlawful business or for any unlawful purpose and will not secrete or abandon
the Collateral or any other assets. Client will immediately advise Republic
in writing of any loss of, or material adverse change in the condition of any
of the Collateral or of any of Client's other assets.
(h) Client has complied, and will hereafter comply, with all
provisions of all laws, rules and regulations relating to Client, including,
but not limited to, those relating to environmental matters, hazardous and
waste materials, Client's ownership of real or personal property, conduct or
licensing of Client's business, payment and withholding of taxes, and payment
of minimum wages and other matters relating to employment of Client's
personnel.
(i) There is no claim, litigation, proceeding or investigation
pending or threatened by or against or affecting Client (or any basis
therefor known to Client) which might result, either separately or in the
aggregate, in any material adverse change in the business, prospects or
condition of Client, or in any impairment in the ability or right of Client
to carry on its business in substantially the same manner as it is now being
conducted. Client will immediately inform Republic in writing of any claim,
proceeding, litigation or investigation hereafter threatened or instituted by
or against Client involving amounts in excess of $25,000.
(j) Client has not, and will not, engage in any activity which
constitutes or may constitute a pattern of racketeering activity within the
meaning of, or may be illegal under, any statute of the United States or any
other governmental authority, and Client has not, and will not, engage in any
activity which may subject any of the Collateral or any of its other assets
to any forfeiture or other adverse claim.
(k) There is no fact which Client has not disclosed to Republic in
writing which could materially adversely affect the properties, business or
financial condition of Client or any of the Collateral or which it is
necessary to disclose in order to keep the foregoing representations and
warranties from being misleading.
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3. COVENANTS. Client shall at all times comply with the following
covenants, at its sole cost:
(a) Client will have and maintain, at its sole cost and expense,
insurance at all times with respect to all Inventory and all other insurable
Collateral, against risk of fire (including extended coverage), theft, and
all other usual risks and such special risks as Republic may designate and in
the case of motor vehicles, collision insurance, all such insurance to be in
such form and amounts, for such periods and written by such companies as may
be satisfactory to Republic, such insurance proceeds to be payable to
Republic and Client as their interest may appear; and all policies of
insurance shall provide for a minimum of twenty (20) days prior written
cancellation notice to Republic, and Client shall provide Republic with
proof, satisfactory to it, of full payment of all premiums thereon. All such
policies shall have endorsements thereon designating Republic as a secured
party thereunder and shall have lender's loss payee endorsements in favor of
Republic in such form as Republic may require. In addition, at the request of
Republic, the originals of such policies shall be delivered to and held by
Republic. In the event of failure to provide insurance as herein provided,
Republic may, at its option, but without any obligation, obtain such
insurance and Client shall pay to Republic, on demand, the cost thereof. The
cost of any such insurance which Republic may obtain shall be added to the
Obligations. Client's liability to Republic hereunder shall not be affected,
impaired, released, or discharged, in whole or in part, by reason of any
loss, theft, or destruction of, or depreciation or damage to, any Collateral,
regardless of the cause of any such loss, theft, destruction, depreciation or
damage, or absence or non-receipt of insurance proceeds and whether such
non-receipt of insurance proceeds is caused by the failure of the insurer to
pay claims or otherwise.
(b) So long as any of the Obligations are outstanding, Client shall
maintain Collateral so that the total "value" of the Collateral shall at all
times be not less than 150% of the total amount of the outstanding
Obligations, and, for purposes of this covenant, the term "value" with
respect to the Inventory shall mean the lower of wholesale cost or wholesale
market value. Client acknowledges that the foregoing covenant is a material
part of the consideration to Republic for entering into this Security
Agreement, and extending credit pursuant thereto, and that one of the reasons
for the foregoing covenant is to provide an equity cushion and adequate
protection to Republic caused by the delays, difficulty and expense which can
occur in liquidation of the Collateral, and probability of rapid
deterioration in the value of the Collateral in a liquidation, and other
circumstances.
(c) Client shall not sell, exchange, trade, lease or otherwise
transfer any of the Inventory, or any other Collateral, without Republic's
specific prior written consent, except for sales of finished Inventory for
fair consideration in the ordinary course of business, and not in
satisfaction of any pre existing debt.
(d) Client shall: (i) perform any and all steps requested by
Republic to perfect its security interest in the Inventory and other
Collateral, such as placing and maintaining signs, appointing custodians and
transferring Inventory to warehouses under the control of Republic or its
designee. If any Inventory is in the possession or control of Client's agents
or processors, Client shall notify such agents or processors of Republic's
security interest therein, and upon request instruct them to hold all such
Inventory for Republic's account and subject to Republic's instructions; (ii)
execute and deliver to Republic, each month, or at any time upon Republic's
request, a written certification of Inventory, in such form as Republic may
from time to time request; (iii) allow Republic through any of its officers
or agents, at all reasonable times, to examine and inspect the Inventory and
any of the other Collateral and to examine, inspect, utilize, and make copies
and/or extracts from all of Client's books and records, relating to the
Collateral; (iv) promptly notify Republic in writing of any change of
Client's officers, directors and key employees, a death of any co-partner or
joint venturer (if Client is a partnership or joint venture), any sale or
purchase out of the regular course of Client's business, and any material
adverse change in the business or financial affairs of Client; (v) make
available Client and its officers, employees, and agents and Client's books,
computer discs, runs and printouts, records and files to the extent that
Republic may deem necessary in order to prosecute or defend any such suit or
proceeding relating to Client or the Collateral; (vi) pay when due all
brokers' fees, freight, cargo insurance, demurrage charges, warehousing
and/or storage charges, duties, taxes and assessments upon the Collateral, or
for its use or operation, or upon the proceeds thereof, or upon this Security
Agreement, or upon any instrument or instruments evidencing the Obligations.
Republic may, at its option, but without obligation and without waiving any
of its rights and remedies, discharge any of the foregoing, and Client agrees
to reimburse Republic on demand for any payment made or any expense incurred
by Republic pursuant to the foregoing authorization; and any such payment
made or expense incurred shall be deemed to be Obligations.
4. EVENTS OF DEFAULT; REMEDIES.
(a) The occurrence of any of the following events with respect to
Client or any obligor, maker, endorser, acceptor, surety or guarantor of, or
any other party to, any of the Obligations or the Collateral (each and all of
whom, including Client, are included in the term "Obligor" as hereinafter
used in this Section 4) shall constitute a "default" under this Security
Agreement: failure to pay or perform when due any of the Obligations
(including without limitation, any breach of the Factoring Agreement or this
Security Agreement or any other present or future instrument or agreement
with Republic); failure to pay when due any sum payable
3
with respect to any of the Collateral; the occurrence of any default or event
of default under or as specified in the Factoring Agreement with respect to
the Client or any other Obligor; failure of any Obligor, after demand, to
furnish any financial information to Republic or to permit Republic to
inspect any books or records of any Obligor; any loss, theft, or substantial
damage to or destruction of any or all of the Collateral; any levy,
assessment, attachment, seizure, lien or encumbrance for any cause or reason
whatsoever, shall be made upon all or any part of the Collateral or any other
asset of Client; institution against Client of any criminal proceedings,
including without limitation, any criminal proceedings with respect to which
forfeiture of any or all of the property of the Client is a penalty provided
by law; if, in the judgment of Republic, any impairment occurs in the value
of the Collateral or in the financial responsibility of any Obligor or in the
prospect of payment or performance of any of the Obligations; or death of any
guarantor or revocation or termination of any guarantee of any or all of the
Obligations or the Collateral; or Republic, acting in good faith and in a
commercially reasonable manner, deems itself insecure. Upon the occurrence of
any such default, all of the Obligations shall, without notice or demand, at
the election of Republic, forthwith become and be immediately due and
payable, notwithstanding any time or credit allowed under any of the
Obligations, or under any instruments evidencing the same.
(b) Upon the occurrence of any default and at any time thereafter,
Republic may, at its option, do any or all of the following: (i) cease
advancing money or extending credit to or for the benefit of Client; (ii)
exercise all of the rights and remedies granted to secured parties by the
provisions of the applicable Uniform Commercial Code and all other applicable
law; (iii) institute legal proceedings to foreclose upon the security
interests granted in and by the Factoring Agreement and this Security
Agreement, to recover judgment for all Obligations, and to collect the same
out of any of the Collateral; (iv) institute legal proceedings for the
recovery of possession of any or all of the Collateral and for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, and Client waives any bond or surety
otherwise required in connection therewith, any demand for possession prior
to the institution of any such proceedings and any requirement that Republic
not dispose of any of the Collateral until after trial or judgment; (v)
institute legal proceedings for sale, under the judgment or decree of any
court of competent jurisdiction, of any of the Collateral; (vi) institute
legal proceedings for the appointment of a receiver pending foreclosure
hereunder or the sale of any of the Collateral under the order of a court of
competent jurisdiction or under other legal process, and Client hereby
consents to the appointment of a receiver in any such proceedings and waives
any and all bonds in connection therewith; (vii) personally or by agents or
representatives or employees or attorneys, enter any premises where
Collateral is or may be, without hindrance, and take possession of any part
or all of the Collateral at any time, wherever the same may be, with or
without process of law and without being responsible for loss or damage; keep
or store any or all of the Collateral on Client's premises and remain on such
premises or cause a custodian to remain thereon, in exclusive control
thereof, without charge, for so long as Republic deems necessary; process or
complete the processing, manufacturing or repair of any or all of the
Collateral, and in connection therewith Republic shall have the exclusive
right to utilize any or all of the Client's premises, machinery, equipment,
fixtures, and other assets without charge; and Republic may demand, xxx for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to, any of the Collateral and/or sell or dispose of
all or any part of the same, free from any and all claims of Client or of any
other party claiming by, through or under Client, at law or in equity, at one
or more public or private sales, in such place or places (including without
limitation, the premises of Client), in lots or in bulk, at such time or
times, in such order, and upon such terms as Republic shall determine in its
sole discretion, in its condition at the time Republic obtains possession or
after further processing or repair, with or without any previous demand or
notice to Client or advertisement of any such sale or other disposal except
as may be required by law. Republic shall have the right to conduct such
disposition on Client's premises without charge for such time or times as
Republic deems fit, or on Republic's premises, or elsewhere and the
Collateral need not be located at the place of disposition. Republic may
directly or through any affiliated company purchase or lease any Collateral
at any such disposition and, if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Client of any liability Client may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale.
The power of sale hereunder shall not be exhausted by one or more sales, and
Republic may from time to time adjourn any sale to be made pursuant to this
Section, by oral announcement at the time of the sale, without any further
notice or publication. If Republic shall demand possession of the Collateral
or any part thereof pursuant to this Security Agreement, Client shall, at its
own expense, forthwith cause such Collateral or any part thereof designated
by Republic to be assembled and made available or delivered to Republic at
any place reasonably designated by Republic. In the event that any mandatory
requirement of applicable law shall obligate Republic to give prior written
notice to Client of any of the foregoing acts, Client hereby covenants and
agrees that a notice sent to it, in writing, by first class or certified
United States mail, addressed to it at its address set forth below, and
deposited in the United States mail at least five (5) days before the date of
any such act, shall be deemed to be reasonable notice of such act and,
specifically, reasonable notification of the time and place of any public or
private sale hereunder
4
and reasonable notification of the time after which
any intended sale or disposition thereof is to be made. Any and all
attorneys' fees, expenses, costs, liabilities and obligations incurred by
Republic with respect to the foregoing shall be added to and become part of
the Obligations.
(c) Client and Republic agree that the following conduct by Republic
with respect to any disposition of Collateral shall conclusively be deemed
commercially reasonable (but other conduct by Republic including, but not
limited to, Republic's use in its sole discretion of other or different
times, places and manners of noticing, and conducting any disposition of
Collateral shall not be deemed unreasonable): Any public or private
disposition as to which on no later than the fifth calendar day prior thereto
written notice thereof is mailed or personally delivered to Client and, with
respect to any public disposition, on no later than the fifth calendar day
prior thereto notice thereof describing in general, non-specific terms the
Collateral to be disposed of is published in the Los Angeles Daily Journal,
the Metropolitan News or the Los Angeles Times; which is held in Los Angeles
County at any place designated by Republic with or without the Collateral
being present and which commences at any time between 8:00 A.M. and 5:00 P.M.
Without limiting the generality of the foregoing, Client expressly agrees
that, with respect to any disposition of accounts, receivables and general
intangibles (collectively "Intangibles") it shall be commercially reasonable
for Republic to direct any prospective purchaser thereof to ascertain
directly from Client any and all information (and Republic shall not be
required to maintain records of, or answer any inquiries) concerning the
Intangibles offered for disposition including, but not limited to, the terms
of payment, aging and delinquency, if any, of the Intangibles, the financial
condition of any maker or guarantor thereof or debtor thereunder, any
collateral therefor and the condition and location of the goods, if any, that
are the subject of any of the Intangibles.
(d) All proceeds realized as the result of any disposition of the
Collateral shall be applied by Republic first to the costs, expenses,
liabilities, obligations and attorneys' fees incurred by Republic in the
exercise of its rights under this Security Agreement, second to the interest
due upon any of Client's Obligations and third to the principal of Client's
Obligations in such order as may be determined by Republic in its sole
discretion. In the event that, as a result of the disposition of any of the
Collateral, Republic directly or indirectly enters into a credit transaction
with any third party, Republic shall have the option, exercisable at any
time, in its sole discretion, of either reducing the Obligations by the
principal amount of such credit transaction or deferring the reduction
thereof until the actual receipt by Republic of cash therefor from such third
party. The surplus, if any, shall be paid to Client or other persons legally
entitled thereto; if any deficiency shall arise, Client shall remain liable
to Republic therefor.
5. FURTHER ASSURANCES; POWER OF ATTORNEY. Client will at any time or from
time to time, upon request of Republic, sign such financing statements,
continuation statements and amendments thereto and such trust receipts,
security agreements and other agreements or instruments as Republic
determines to be necessary or desirable to preserve and protect any of
Republic's rights hereunder. Client hereby agrees to pay all filing fees and
reimburse Republic for all costs and expenses of any kind incurred in any way
in connection with the Collateral. Client hereby grants to Republic an
irrevocable power of attorney coupled with an interest, authorizing Republic
(through any of its officers, employees, attorneys or agents), at any time
and from time to time, at its option but without obligation, with or without
notice to Client, and at Client's sole expense, to do any or all of the
following, in Client's name or otherwise: (i) execute, deliver, present,
file, record, endorse (with full recourse to Client), assign, and take
control of any and all warehouse, shipping, dock and other receipts, letters
of credit (including without limitation of the foregoing, applications for
letters of credit, red clause letters of credit, agreements to letters of
credit, letters of indemnity to steamship companies, ship-side bonds, air
releases to airline companies and/or freight forwarders and indemnification
agreements in favor of issuers of letters of indemnity to steamship
companies, ship-side bonds and air releases, and waivers of discrepancies in
documentation), notes, tax refund checks or warrants from any and all
governmental agencies, instruments, acceptances, checks, drafts, money
orders, customs duty drawbacks, chattel paper, invoices, trust receipts,
bills of lading, title documents, and evidence of indebtedness, and any and
all financing statements, continuation financing statements, financing
statement amendments, security agreements, assignments, certificates of
title, application for vehicle title, affidavits, reports, notices,
schedules, claims, proofs of claim in bankruptcy and all other documents and
instruments, and take all such other and further action, as Republic may, in
its sole and absolute discretion, deem advisable in order to perfect,
maintain, improve or protect Republic's security interest in the Collateral,
or to carry out or enforce any of Republic's rights and remedies under
Factoring Agreement and/or this Security Agreement, or to collect any sums
owed to Republic or for which Client may be or become liable, or to carry out
or consummate any transaction contemplated by this Security Agreement and any
documents or instruments executed in connection herewith or relating hereto;
(ii) pay, contest or settle any lien, charge, encumbrance, security interest
and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same;
(iii) grant extensions of time to pay, compromise and/or settle any claims
for less than face value, and execute and deliver all releases and other
documents in connection therewith; (iv) pay any sums required on account of
Client's taxes or to secure the release of any liens therefor, or both;
5
(v) upon the occurrence of any default, to receive, and open and
examine all mail addressed to Client, and in the exercise of such right,
Republic shall have the right, in the name of Client, to notify the Post
Office authorities to change the address for the delivery of mail addressed
to Client to such other address as Republic may designate, including without
limitation, Republic's own address, in which event Republic shall turn over
to Client all of such mail not relating to the Collateral; (vi) upon any
default, direct any financial institution to pay to Republic all monies on
deposit by Client with said financial institution, regardless of any loss of
interest, charge or penalty as a result of payment before maturity; (vii)
settle and adjust, and give releases with respect to, any insurance claim
that relates to any of the Collateral, and obtain payment therefore directly
to Republic, and make all determinations and decisions with respect to any
such insurance and any such insurance claim, and endorse Client's name on any
check, draft, instrument or other item of payment or the proceeds of such
insurance; and (viii) take any action or pay any sum required of Client
pursuant to this Security Agreement and any other present or future
agreements. Any and all sums paid and any and all costs, expenses,
liabilities, obligations, accounting fees, adjustors' fees, consulting fees,
appraisal fees, and attorneys' fees incurred by Republic with respect to the
foregoing shall be added to and become part of the Obligations and shall be
payable on demand. Republic shall have no liability to Client for any action
taken or omitted to be taken by it pursuant to the foregoing power of
attorney. In no event shall Republic's rights under this Security Agreement
or any other documents or agreements be deemed to indicate that Republic is
in control of the Client or Client's business or management or that Republic
has control over the daily management functions or operating decisions of
Client.
6. GENERAL.
(a) Republic shall not be deemed to have waived any of its rights
hereunder or under the Factoring Agreement or any other agreement, instrument
or paper signed by Client unless such waiver is in writing and signed by
Republic and specifically refers to the right being waived. No delay or
omission on the part of Republic in exercising any right shall operate as a
waiver of such right or of any other right. A waiver upon any occasion shall
not be construed as a bar or waiver of any right or remedy on any future
occasion. All of the rights and remedies of Republic, under Factoring
Agreement, this Security Agreement and under any other agreement, instrument
or document, shall be cumulative and may be exercised singularly or
concurrently.
(b) Client hereby assents to any agreement Republic may elect to
enter into with any other party providing for the sharing or the
participation of said party with Republic in the Obligations and/or the
Collateral or any realizations thereon. Republic shall have no obligation to
give any credit references for or with respect to Client to any third party.
(c) This Security Agreement shall continue in full force and effect
until all of the Obligations have been paid and performed in full and the
Factoring Agreement has been terminated. Notwithstanding any termination of
this Security Agreement and payment and performance of all Obligations,
Republic shall not be required to deliver a termination statement with
respect to any financing statement filed by it until Client has executed and
delivered to Republic a General Release, in form acceptable to Republic,
whereby Client releases any and all known and unknown claims of Client
against Republic.
(d) All notices to be given hereunder shall be in writing and may be
served either personally or by telecopy, or by depositing the same in the
United States mail, first-class postage prepaid, or ordinary, registered or
certified mail addressed to Republic or Client at the addresses shown in the
Factoring Agreement or herein, or at any other address as shall be designated
by one party in a written notice to the other party. Any such notice shall be
deemed to have been given upon delivery in the case of notices personally
delivered or sent by telecopy, or at the expiration of two (2) business days
following the deposit thereof in the United States mail (except that any
notice of disposition of Collateral pursuant to Section 4 above that is
mailed shall be deemed given at the time of deposit thereof in the United
States mail).
(e) Client shall defend, indemnify and hold Republic, and its
directors, officers, employees, agents, attorneys and affiliates harmless
from and against any and all claims, costs (including without limitation,
attorneys' fees), losses, demands, actions, causes of action, lawsuits,
damages, penalties, fines, judgments and liabilities of any kind or nature in
any manner relating to Client's business, assets or operations, or otherwise
relating to Client, including (but not limited to) any of the foregoing
arising from any breach of any representation, warranty, covenant or
provisions contained in this Security Agreement or any other document or
agreement between Client and Republic, or any other transaction contemplated
thereby or relating hereto or thereto, and including (but not limited to) any
of the foregoing arising from any law, rule or regulation relating to
hazardous or toxic materials or waste or the environment, or relating to the
withholding or payment of income or other taxes, or relating to wages or
hours of Client's employees. Defense of any action or proceeding with respect
to which Republic or others are entitled to indemnity hereunder shall be by
attorneys of Republic's choice, at Client's expense. This indemnity agreement
shall continue in full force and effect notwithstanding any termination of
this Security Agreement or termination of the security interests granted
herein.
(f) As used in this Security Agreement, the term "affiliate" of any
party shall mean and include any person, firm or corporation controlling,
6
controlled by or under common control with such party, but in no event shall
Republic be deemed to be an "affiliate" of Client for purposes of this
Security Agreement or for any other purpose whatsoever. As used in this
Security Agreement, the term "Client" shall be deemed to include the
individual or individuals, association, partnership or corporation named
herein as "Client," and (a) any successor, and any association, partnership,
corporation or other person to which all or substantially all of the business
or assets of Client shall have been transferred, and (b) in the case of a
partnership, any general or limited partnership which shall have been created
by reason of, or continue in existence after the admission of any new partner
or partners therein, or the dissolution of the existing partnership by, or
the condition thereof after the death, resignation or other withdrawal of any
partner.
(g) Client shall reimburse Republic for all attorneys' fees,
accounting fees, and investigation fees, and for all filing, recording,
publication, search and other costs and expenses which Republic may incur
pursuant to or in connection with this Security Agreement or any transaction
contemplated hereby or with respect to any of the Collateral or in connection
with the defense or enforcement of its rights, remedies and interests
(whether or not any suit is brought or judgment obtained). Without limiting
the generality of the foregoing, Client will pay all such expenses and
attorneys' fees incurred by Republic in connection with the enforcement of
payment and performance of all Obligations and in any litigation relating to,
or affecting this Security Agreement, and in any case or proceeding under any
provision of the Bankruptcy Code (including without limitation, Chapter 7 or
11, thereof), or any successor statute thereto, the negotiating of this
Security Agreement and any other agreements or documents relating to Client,
the enforcement of any of its rights; the filing or prosecution of a claim in
any action or proceeding (including without limitation, any probate claim,
bankruptcy claim, third-party claim, secured creditor claim or reclamation
complaint); the protection of, obtaining possession of, or enforcement of its
security interest in the Collateral, or the representation of Republic in any
litigation with respect to Client or its affairs. All attorneys' fees and
costs to which Republic may be entitled pursuant to this Section shall
immediately become part of Client's Obligations.
(h) If this Security Agreement be signed by more than one party,
their obligations hereunder shall be joint and several. This Security
Agreement does not create, and shall not be construed as creating, any rights
enforceable by any person not a party to this Security Agreement. If any
provision of this Security Agreement is held by a court of competent
jurisdiction to be invalid, illegal or unenforceable, the remaining
provisions of this Security Agreement shall nevertheless remain in full force
and effect.
(i) Neither Republic, nor any of its directors, officers, employees,
agents, attorneys or any other person affiliated with or representing
Republic shall be liable for any claims, demands, losses or damages, of any
kind whatsoever, made, claimed, incurred or suffered by the undersigned or
any other party through the ordinary negligence of Republic, or any of its
directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Republic.
(j) This Security Agreement and the Factoring Agreement, and the
other written documents and instruments between Republic and Client set forth
in full the terms of agreement between the parties, are intended as the full,
complete and exclusive contract governing the relationship between the
parties, and supersede all prior and contemporaneous oral discussions,
promises, representations, warranties, agreements and understandings between
the parties. This Security Agreement may not be modified or amended, nor may
any rights hereunder be waived, except in a writing signed by the party
against whom enforcement of the modification, amendment or waiver is sought.
No course of dealing between the parties, no usage of trade, and no parol or
extrinsic evidence of any nature shall be used or be relevant to supplement,
explain or modify any term or provision of this Security Agreement or any
supplement or amendment thereto. This Security Agreement shall be construed
in an even-handed manner and not strictly against or in favor of any party
hereto, nor shall any ambiguities in this Security Agreement be construed
strictly against or in favor of any party hereto.
(k) Client agrees that any claim or cause of action by Client
against Republic, or any of Republic's directors, officers, employees,
agents, accountants or attorneys, based upon, arising from, or relating to
this Security Agreement, or any other present or future agreement, or any
other transaction contemplated hereby or thereby or relating hereto or
thereto, or any other matter, cause or thing whatsoever, whether or not
relating hereto or thereto, occurred, done, omitted or suffered to be done by
Republic, or by Republic's directors, officers, employees, agents,
accountants or attorneys, whether sounding in contract or in tort or
otherwise, shall be barred unless asserted by Client by the commencement of
an action or proceeding in a court of competent jurisdiction by the filing of
a complaint within twelve months after the first act, occurrence or omission
upon which such claim or cause of action, or any part thereof, is based and
service of a summons and complaint on an officer of Republic or any other
person authorized to accept service of process on behalf of Republic, within
thirty (30) days thereafter. Client agrees that such twelve-month period of
time is a reasonable and sufficient time for a Client to investigate and act
upon any such claim or cause of action. The twelve-month period provided
herein shall not be waived, tolled, or extended except by a specific written
agreement of Republic. This provision shall survive any termination of this
Security Agreement or any other agreement.
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(l) As a material part of the consideration to Republic for entering
into this Security Agreement, Client agrees that all actions and proceedings
arising out of or relating to this Security Agreement or to any transaction
in connection herewith shall, at the option of Republic, be litigated
exclusively in courts located in the State of California, and that, at the
option of Republic, the exclusive venue therefore shall be in Los Angeles
County, California; Client hereby consents and submits to the jurisdiction of
any such court and hereby waives personal service of any summons and
complaint or other process or papers to be issued therein and hereby agrees
that service of such summons and complaint or process may be made by
registered or certified mail addressed to Client at its address as set forth
below; failure on the part of Client to appear or answer within thirty (30)
days after the mailing of such summons, complaint or process shall constitute
a default entitling Republic to enter a judgment or order as demanded or
prayed for therein. Client further waives any right to transfer or change the
venue of any such action or proceeding. Client, in any litigation in which
Republic and Client shall be adverse parties, waives the right to interpose
any defense based upon any Statute of Limitations or any claims of laches and
any set-off or counterclaim of any nature or description. This Security
Agreement is being entered into in the State of California. This Security
Agreement shall be governed by the internal laws (and not the conflict of law
rules) of the State of California.
(m) REPUBLIC AND CLIENT EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY
IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO: (i) THIS SECURITY AGREEMENT OR THe FACTORING AGREEMENT; OR (ii)
ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN REPUBLIC AND
CLIENT; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF REPUBLIC OR CLIENT OR ANY
OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER
PERSONS AFFILIATED WITH REPUBLIC OR CLIENT; IN EACH OF THE FOREGOING CASES,
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
Client:
YES CLOTHING CO.
/s/ GUY ANTHOME
By ------------------------------------
Chairman & CEO
/s/ XXXXXXX XXXXX
By ------------------------------------
Secretary
Republic:
REPUBLIC BUSINESS CREDIT CORPORATION
/s/ XXXXX XXXXX
By ------------------------------------
Senior (Vice) President
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EXHIBIT A
Client's prior names, fictitious names, trade names and trade styles, past
and present (Section 2(c)):
Xxxxx Xxxx, Inc., Xxxxx Xxxx, Xxxxxxx B, Elegant Miss, Tangerine,
Pinc-Coconuts, Sedan, Misfits-Men, GMS-Junior, GMS-Men, Body Glove, Audience,
CS Sportswear, Yes Wear, Into Reality,
Locations of Collateral (Section 2(d)):
0000 X. Xxxxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
9
AMENDMENT TO FACTORING AGREEMENT
June 5, 1997
Republic Business Credit Corporation
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Gentlemen:
Reference is made to the Factoring Agreement between us dated May 15,
1994 (the "Factoring Agreement").
This will confirm that the Factoring Agreement is amended as follows,
effective June 1, 1997:
1. CHANGE IN INTEREST RATE. The first sentence of Section 5.B. is
amended to read as follows: "All interest charges to our account shall be at
2% above the reference rate of Republic National Bank of New York ("Republic
Reference Rate"), computed on the basis of a 360-day year for the actual
number of days elapsed and charged to our account at the end of each month."
This Amendment, the Factoring Agreement, any prior written amendments to
the Factoring Agreement signed by you and us, and the other written documents
and agreements between you and us set forth in full all of your and our
representations and agreements with respect to the subject matter hereof and
supersede all prior discussions, representations, agreements and
understandings between us with respect to the subject hereof. As herein
expressly amended, all of the terms and provisions of the Factoring Agreement
(as the same may have been previously amended), and all other documents and
agreements between you and us shall continue in full force and effect and the
same are hereby ratified and confirmed.
Please confirm the foregoing by signing the enclosed copy of this letter
and returning it to us.
Sincerely yours,
YES CLOTHING CO.
By /s/ GUY ANTHOME
-------------------------------------
Title Chairman & CEO
----------------------------------
ACCEPTED AND AGREED:
REPUBLIC BUSINESS CREDIT CORPORATION
By /s/ XXXXX XXXXX
------------------------------------
Title Senior Vice President
---------------------------------
CONSENT
The undersigned guarantor acknowledges that his consent is not required to
the foregoing Amendment, but the undersigned nevertheless does consent to the
foregoing Amendment.
/s/ GUY ANTHOME
---------------------------------------
Guy Anthome
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