Exhibit 10.2
Letterhead of Sportswear International (USA), Inc.
c/o Cygne Designs, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
As of August 1, 1999
Xx. Xxxxxx Xxxxxx
Xxxxxxxx Limited
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Xxx:
We refer to that (i) certain Amended and Restated Acquisition Agreement,
dated as of August 1, 1999 (the "Acquisition Agreement"), by and among
M.T.G.I.-Textile Manufacturers Group (Israel) Ltd., an Israeli corporation
("MTGI"), MBS (Cygne) Company, a Delaware corporation, A.C. Services, Inc., a
Delaware corporation, and Jordache Limited, a Delaware corporation ("Jordache"),
and that certain Management Agreement, dated as of August 1, 1999, between MTGI
and T.S. Wear Me & Co., an Israeli corporation and an affiliate of Jordache
("TSW"), pursuant to which TSW is managing the business of MTGI from and after
August 1, 1999 pending the closing of the transactions contemplated by the
Acquisition Agreement.
This letter confirms our agreement with respect to certain purchase orders
of Sportswear International (USA), Inc. ("Sportswear") pending the closing of
the transactions contemplated by the Acquisition Agreement as follows:
1. Sportswear will assign to Jordache (or its designee) all of
Sportswear's accounts receivable arising from unfilled purchase orders to
WalMart Stores Inc. ("WalMart") at July 31, 1999, and Xxxxxxxx will pay to
Sportswear all amounts due in respect of such receivables as set forth
below.
2. With respect to finished goods which at July 31, 1999 have been
shipped by MTGI to Sportswear but which Sportswear has not yet shipped to
WalMart, Jordache shall, on August 11, 1999, purchase such finished goods
and pay to Sportswear 97% of the net invoice price to WalMart (after giving
effect to WalMart's standard terms), it being understood and agreed that
Jordache shall pay to The First International Bank of Israel, Ltd., on
behalf of Sportswear, U.S. $3,642,141.20 which Sportswear owes such bank in
respect of the invoices relating to the finished goods which Xxxxxxxx is
purchasing pursuant to this Section 2. Jordache shall be entitled to offset
against the payment due pursuant to the
As of August 1, 1999
Page 2
preceding sentence the amount due to Jordache or its subsidiaries from MTGI
for fabric used in manufacturing the inventory sold to Jordache for which
payment is being made pursuant to this Section 2. At the time Sportswear is
ready to ship such product to WalMart, Jordache shall transfer title to
such inventory to Sportswear in exchange for Sportswear's assignment to
Jordache of the account receivable arising from Sportswear's shipment of
such finished goods to WalMart. In the event that WalMart has not, within
120 days after the later of (i) the date of the invoice to WalMart or (ii)
the date the goods to which the invoice relates are delivered to WalMart,
paid all or any portion of any account receivable transferred to Jordache
pursuant to this Section 2, then Sportswear shall repurchase the unpaid
portion of the invoice from Jordache.
3. With respect to all finished goods manufactured for WalMart after
August 1, 1999, MTGI shall sell such goods to Jordache, which shall
immediately pay to MTGI the MTGI invoice price plus the following
additional costs: (i) freight, brokerage, duty and quota, (ii) DSL
warehousing and distribution costs, and (iii) NOR Industries commission;
provided, however, that to the extent these additional costs have not yet
been paid by Sportswear, Jordache shall pay them directly to the
appropriate parties as they become due and payable. Jordache shall be
entitled to offset against the payment due pursuant to the preceding
sentence the amount due to Jordache or its subsidiaries from MTGI for
fabric used in manufacturing the inventory sold to Jordache for which
payment is being made pursuant to this Section 3. At the time Sportswear is
ready to ship such product to WalMart, Jordache shall transfer title to
such inventory to Sportswear in exchange for Sportswear's assignment to
Jordache of the account receivable arising from Sportswear's shipment of
such finished goods to WalMart. Neither Sportswear nor MTGI shall have any
liability to Jordache if WalMart for any reason refuses to pay all or any
portion of any account receivable transferred to Jordache pursuant to this
Section 3.
4. All inventory and accounts receivable sold or assigned hereunder
shall be sold or assigned free and clear of all liens, and each such sale
or assignment shall constitute a representation and warranty by the selling
or assigning party that the inventory or account receivable, as the case
may be, is free and clear of all liens. Sportswear shall, at Xxxxxxxx's
request, execute UCC-1 Financing Statements relating to the WalMart
accounts receivable the title of which is transferred to Jordache.
Sportswear shall notify WalMart that payment under the accounts receivable
transferred to Jordache should be made directly to Jordache.
5. This Agreement shall automatically terminate upon the earlier to
occur of the closing of the transactions contemplated by the Acquisition
Agreement or the termination of the Acquisition Agreement in accordance
with its terms.
As of August 1, 1999
Page 3
6. This Agreement contains all of the terms, conditions and
representations and warranties agreed upon by the parties relating to the
subject matter of this Agreement and supersedes all prior agreements,
negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter. This Agreement
shall not be amended or modified except by a writing duly executed by
Xxxxxxxx and Sportswear indicating an intention to amend this Agreement.
7. This Agreement shall be governed by and construed in accordance
with the law of the State of New York.
8. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, executors, successors and permitted assigns, but except as
contemplated herein, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, directly or
indirectly, by Jordache or Sportswear; provided, however, that Jordache may
assign any or all of its rights, interest or obligations hereunder to any
one or more direct or indirect wholly owned subsidiaries of Jordache,
provided, however, that no such assignment by Jordache shall limit or
affect Xxxxxxxx's obligations hereunder.
9. Any dispute, controversy or claim arising out of or in connection
with or relating to this Agreement, any breach or alleged breach hereof, or
the transaction contemplated hereby, shall be resolved and settled by
arbitration by three arbitrators. Within fifteen (15) days after written
demand for arbitration is sent by one party to the other, Jordache and
Sportswear shall each select one arbitrator, and the two arbitrators so
selected shall select a third arbitrator. The parties shall endeavor to
complete arbitration within 60 days after delivery of written notice
demanding arbitration. The decision of the arbitrators shall be binding and
conclusive upon the parties. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in New York County, State of New York under the
commercial rules then in effect of the American Arbitration Association.
The expense of arbitration shall be borne equally by the parties to the
arbitration and each party shall bear and pay for the cost of its own
experts, witnesses, evidence, counsel and other costs in connection with
the preparation and presentation of its case; provided, however, in the
event either party alleges fraud or that the position of the other party is
not supportable in good faith, and the arbiters find that such fraud or bad
faith exists, the arbiters shall be free to award costs in such arbiters'
discretion.
As of August 1, 1999
Page 4
If this Agreement correctly sets forth our understanding, please sign the
copy of this letter below and return to us.
Very truly yours,
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Chairman, President and Chief
Executive Officer
ACCEPTED AND AGREED:
JORDACHE LIMITED
By: /s/ Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxx
Title: Authorized Signatory
The undersigned hereby guarantees the performance by Sportswear of its
obligations under the last sentence of Section 2 hereof.
ACCEPTED AND AGREED:
M.T.G.I.-TEXTILE MANUFACTURERS GROUP (ISRAEL) LTD.
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Director
[ Letterhead of JORDACHE ]
August 24, 1999
Xx. Xxxxxxx Xxxxxx
Sportswear International USA Inc.
c/o Cygne Designs, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Re: Letter Agreement dated as of August 1, 1999
Dear Xx. Xxxxxx:
This will confirm that the above referenced Agreement, a copy of which is
attached hereto, is amended so that Paragraph 3 reads in full as follows:
"With respect to all finished goods manufactured for WalMart after August
1, 1999, Sportswear shall sell such goods to Jordache, landed duty paid, and
Jordache shall immediately pay to Sportswear, the MTGI invoice price, plus the
following additional costs: (i) freight, brokerage, duty and quota, (ii) DSL
warehousing and distribution costs, and (iii) NOR Industries commission;
provided, however, that to the extent these additional costs have not yet been
paid by Sportswear, Jordache shall pay them directly to the appropriate parties
as they become due and payable. Jordache shall be entitled to offset against the
payment due pursuant to the preceding sentence the amount due to Jordache or its
subsidiaries from MTGI for fabric used in manufacturing the inventory sold to
Jordache for which payment is being made pursuant to this section 3. At the time
Sportswear is ready to ship such product to WalMart, Jordache shall transfer
title to such inventory to Sportswear in exchange for Sportswear's assignment to
Jordache of the account receivable arising from Sportswear's shipment of such
finished goods to WalMart. Neither Sportswear nor MTGI shall have any liability
to Jordache if WalMart for any reason refuses to pay all or any portion of any
account receivable transferred to Jordache pursuant to this Section 3."
All other terms and conditions of the Agreement remain unchanged and are in
full force and effect. If this correctly sets forth our understanding, please
sign below.
Very truly yours,
Jordache Limited
By:/s/ Xxxxxx Xxxxxxxxxx
Authorized Signatory
Accepted and Agreed:
/s/ Xxxxxxx Xxxxxx
Sportswear International USA Inc.
