DOMESTIC COLLECTION DATE FACTORING AGREEMENT
This Domestic Collection Date Factoring Agreement (this "Agreement"), dated and
effective as of the Effective Date, is entered into between ▇▇▇▇▇▇ FINANCIAL,
INC. ("▇▇▇▇▇▇"), with offices at ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇, and A.G.S. STATIONERY, INC. ("Client"), whose
address is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Telecopy No. (213)
234-9598, and will constitute the terms upon which ▇▇▇▇▇▇ will act as the sole
factor of Client. Capitalized terms used herein will have the meanings assigned
to such terms in Section 12 of this Agreement.
SECTION 1. SALE, PURCHASE AND APPROVAL OF ACCOUNTS
1.1. Client hereby agrees to sell, assign and transfer to ▇▇▇▇▇▇, and ▇▇▇▇▇▇
hereby agrees to purchase all of Client's Accounts, with full power to
▇▇▇▇▇▇ to collect and otherwise deal with such Accounts as the sole and
exclusive owner thereof. ▇▇▇▇▇▇ will purchase an Account on the
shortest selling terms for the Purchase Price thereof upon receipt by
▇▇▇▇▇▇ of (a) the invoice copy evidencing such Account or (b)
information acceptable to ▇▇▇▇▇▇ concerning such Account if such Account
has been transmitted by Client to ▇▇▇▇▇▇ through Transmission.
1.2. (a) Client will submit for ▇▇▇▇▇▇'▇ credit approval the credit
requirements of Client's customers, a description of Client's normal
selling terms and such other information as ▇▇▇▇▇▇ requests concerning
Client's customers. ▇▇▇▇▇▇ may, in ▇▇▇▇▇▇'▇ sole credit judgment,
establish credit lines for sales to Client's customers on Client's
normal selling terms or on other selling terms approved by ▇▇▇▇▇▇ by
Written Notice. Client may also submit for ▇▇▇▇▇▇'▇ credit approval
specific orders from Client's customers and ▇▇▇▇▇▇ may, in ▇▇▇▇▇▇'▇ sole
credit judgment, approve such orders on a single order credit approval
basis. All of ▇▇▇▇▇▇'▇ credit approvals will be by written Notice
and/or Transmission to Client. All sales to a customer within the
credit line established for such customer on Client's normal selling
terms or within the single order credit approvals given by ▇▇▇▇▇▇ for
orders from such customer will be Approved Accounts provided that
Delivery is completed while the credit line or single order credit
approval remains in effect.
(b) ▇▇▇▇▇▇ may amend or withdraw a credit line or single order credit
approval at any time prior to Delivery by notifying Client verbally
and/or by Written Notice or Transmission. A single order credit
approval will be automatically withdrawn: (i) in the event Delivery is
not made on or prior to the expiration date indicated on the single
order credit confirmation form ▇▇▇▇▇▇ sends to Client by Written Notice
or Transmission; or (ii) in the event any change is made in any of the
terms of the Account without ▇▇▇▇▇▇'▇ prior approval by Written Notice
or Transmission.
(c) ▇▇▇▇▇▇ will have no liability to Client or to any customer for
▇▇▇▇▇▇'▇ refusal to credit approve an Account or ▇▇▇▇▇▇'▇ withdrawal or
amendment of a credit approval.
1.3. ▇▇▇▇▇▇ will assume the Credit Risk on all Approved Accounts. ▇▇▇▇▇▇
will have full recourse to Client for all Non-Approved Accounts.
1.4. If at any time a customer becomes the subject of an insolvency
proceeding or otherwise becomes financially unable to pay Accounts, then
in the event that monies were at any time owing by such customer for
both Approved Accounts and Non-Approved Accounts, any amount when paid
by or credited to the customer may be deemed applied as follows:
(a) If ▇▇▇▇▇▇ issued single order approvals, all amounts paid by or
credited to the customer may be deemed applied first to Approved
Accounts.
(b) If ▇▇▇▇▇▇ established a credit line for such customer and if the
credit line was in force at the time amounts were paid by or credited to
the customer, such amounts may be deemed applied first to Non-Approved
Accounts in their order of maturity. When the credit line is canceled,
thereafter any amount paid or credited may be deemed applied first to
Approved Accounts.
1.5. If a bankruptcy or insolvency proceeding is instituted by or against a
customer and if ▇▇▇▇▇▇ agrees by Written Notice to Client to make a
claim in such proceeding for Non-Approved Accounts, all amounts
distributed to ▇▇▇▇▇▇ in such proceeding may be shared pro rata between
Approved Accounts and Non-Approved Accounts.
SECTION 2. ADVANCES, PAYMENT FOR ACCOUNTS, COMMISSIONS, FEES AND LEDGER DEBT
2.1. Subject to the terms and conditions of this Agreement, ▇▇▇▇▇▇ may, upon
Client's request, and in ▇▇▇▇▇▇'▇ sole discretion, make advances to
Client or for Client's account against the Purchase Price of Accounts in
amounts, in ▇▇▇▇▇▇'▇ sole discretion, of up to seventy percent (70%) of
the Purchase Price of such Accounts. Notwithstanding the foregoing, if
at any time the aggregate Net Amount of Accounts arising from sales to a
single customer exceeds an amount equal to thirty percent (30%) of the
total Net Amount of all Accounts from all customers outstanding at such
time, ▇▇▇▇▇▇ will not make any advances on any such Accounts in excess
of said amount.
2.2. As payment for an Account, (a) the Purchase Price of such Account, not
to exceed the Collected Amount of such Account, less advances, interest
and any other amounts due ▇▇▇▇▇▇ will be credited to Client's account on
the Collection Date for such Account and (b) if the Account is an
Approved Account which remains partially or fully unpaid solely as a
result of the financial inability of the customer thereon to pay such
Approved Account and if such Account is not subject to a Dispute, the
Purchase Price of such Approved Account less any Collected Amounts
previously credited to Client's account with respect to such Approved
Account and less advances, interest and any other amounts due ▇▇▇▇▇▇
will be credited to Client's account on the Approved Payment Date for
such Approved Account.
2.3. At the time ▇▇▇▇▇▇ purchases an Account, ▇▇▇▇▇▇ will charge Client's
account with a factoring commission of one and one-half percent (1.50%)
of the Net Amount of the Account. On Accounts bearing payment terms in
excess of sixty (60) days, the factoring commission will be increased by
one quarter of one percent (0.25%) for each thirty (30) days or part
thereof that the stated terms exceed sixty (60) days.
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2.4. ▇▇▇▇▇▇ will charge Client's account ▇▇▇▇▇▇'▇ standard wire transfer fee
on all wire transfers, and Client will reimburse ▇▇▇▇▇▇ for exchanges on
checks, charges for returned items and all other bank charges. Client
will also pay ▇▇▇▇▇▇, and ▇▇▇▇▇▇ may charge Client's account with, all
data transmission telephone charges relating to Transmissions. Client
agrees to bear the cost of all filing fees, filing taxes, search
reports, legal fees and other charges incurred by ▇▇▇▇▇▇ in the
perfection, protection, preservation and enforcement of ▇▇▇▇▇▇'▇ rights
in any collateral in which Client has granted ▇▇▇▇▇▇ a security
interest. Client also agrees to promptly pay all fees, costs and
expenses (including, without limitation, attorneys fees and allocated
costs of internal counsel) incurred by ▇▇▇▇▇▇ in connection with the
creation, or administration of this Agreement or any related
instruments, documents or agreements, including the negotiation and
documentation of any waivers, forbearances, amendments or other
modifications relating to this Agreement or any such related agreements,
and all fees, costs and expenses will be part of the Obligations, will
be payable on demand and will be secured by any collateral in which
Client has granted ▇▇▇▇▇▇ a security interest. ▇▇▇▇▇▇ may also, at
▇▇▇▇▇▇'▇ option, charge Client's account for all amounts owing by Client
to ▇▇▇▇▇▇ under this Agreement and for all other Obligations.
SECTION 3. INTEREST AND COLLECTION CLEARANCE CHARGE
3.1. Client will pay ▇▇▇▇▇▇ interest on the Daily Balance. Interest will be
calculated daily at a rate per annum equal to two and one-half percent
(2.50%) plus the Base Rate (the "Interest Rate") and will be charged to
Client's account monthly at the end of each month. The Interest Rate
will also be chargee to Client on all other Obligations, except those
specifying a different rate, from the date incurred through the date
paid. Any publicly announced decrease or increase in the Base Rate will
result in an adjustment to the Interest Rate on the next Business Day.
After the occurrence of an Event of Default and for so long as such
Events of Default continues, all the Obligations will, at ▇▇▇▇▇▇'▇
option, bear interest at a rate per annum equal to three percent (3.0%)
plus the Interest Rate. Interest will be calculated on the basis of a
360-day year for the actual number of days elapsed. In no event will
the total amount of interest received by ▇▇▇▇▇▇ pursuant to the terms of
this Agreement exceed the maximum rate permitted by applicable law and
in the event excess interest is determined by a court of competent
jurisdiction to have been paid by Client to ▇▇▇▇▇▇, such excess interest
will be applied as a credit against the outstanding Obligations and
Client will not have any action against ▇▇▇▇▇▇ for any damages arising
out of the payment or collection of such excess interest.
3.2. If funds remain with ▇▇▇▇▇▇ past the Collection Date or Approved Payment
Date, as applicable, and there are no outstanding Obligations ("matured
funds"), ▇▇▇▇▇▇ will credit Client's account with interest on such
matured funds at the rate per annum equal to the Base Rate minus three
percent (3.0%). Any change in the Base Rate will result in an
adjustment in the matured funds rate on the next Business Day.
3.3. If an Account or any payment is charged back to Client after the
Collection Date or Approved Payment Date, as applicable, Client will pay
▇▇▇▇▇▇ interest at the Interest Rate on the Net Amount of such Account
or on such payment from such date to the charge back date.
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3.4. To allow for collection clearance on all checks and other payments
remitted by Client's customers, Client will, in addition to interest,
pay ▇▇▇▇▇▇ each month a collection clearance charge based on four (4)
calendar days. ▇▇▇▇▇▇ will charge Client's account at the end of each
month for the collection clearance charge.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1. Client represents, warrants and covenants as to each Account that, at
the time of its creation, the Account is a valid, bona fide account,
representing an undisputed indebtedness incurred by the named customer
for goods actually sold and delivered; there are no setoffs, offsets or
counterclaims, genuine or otherwise, against the Account; the Account
does not represent a sale to any of Client's subsidiaries, affiliates,
directors, officers, agents, stockholders, or employees, or a
consignment, guarantied sale, or ▇▇▇▇ and hold transaction, or a cash on
delivery sale; no agreement exists permitting any deduction or discount
(other than the discount stated on the invoice); Client is the lawful
owner of the Account and has the right to sell and assign the same to
▇▇▇▇▇▇; the Account is free of all security interests, liens and
encumbrances (including tax liens) other than those in favor of ▇▇▇▇▇▇,
and the Account is due and payable in accordance with its terms.
4.2. Client will not grant or suffer to exist in favor of any party other
than ▇▇▇▇▇▇ any lien upon or security interest in Client's inventory.
4.3. Client is a solvent corporation, duly incorporated and in good standing
under the laws of the State of California and qualified in all States
where such qualification is required; the execution, delivery and
performance of this Agreement have been duly authorized and are not in
contravention of any applicable law, Client's corporate charter or
by-laws or any agreement or order by which Client is bound; Client is
not, to the best of Client's knowledge, in violation of any law,
ordinance, rule regulation, order or other requirement of any government
or any instrumentality or agency thereof.
4.4. Client will not change Client's corporate name or the location of
Client's office or open any new offices without giving ▇▇▇▇▇▇ at least
thirty (30) days prior Written Notice. At the present time, Client
carries on business only at the above address and the addresses set
forth below.
NONE.
4.5. All books and records pertaining to the Accounts or to any inventory
owned by Client will be maintained solely and exclusively at the above
address or the addresses listed in Section 4.4 hereof and no such books
and records will be moved or transferred without giving ▇▇▇▇▇▇ thirty
(30) days prior Written Notice.
4.6. After ▇▇▇▇▇▇'▇ request, Client will hold all returned, replevied or
reclaimed goods relating to accounts coming into Client's possession in
trust for ▇▇▇▇▇▇ and all such goods will be segregated and identified as
held in trust for ▇▇▇▇▇▇'▇ benefit and Client
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will, at ▇▇▇▇▇▇'▇ request, and at Client's expense, deliver such goods
to such place or places as ▇▇▇▇▇▇ may designate.
4.7. The trade names or styles set forth below are the only trade names or
styles under which Client transacts business or has transacted business
during the last five (5) years; Accounts sold to ▇▇▇▇▇▇ hereunder and
represented by invoices bearing such trade names or styles are wholly
owned by Client; the undertakings, representations and warranties made
in connection therewith will be identical to and of the same force and
effect as those made with respect to invoices bearing Client's corporate
name; Client's use of any trade names or styles is in compliance with
all laws regarding the use of such trade names or styles. Client will
give ▇▇▇▇▇▇ thirty (30) days prior Written Notice of the change of any
trade name or style or Client's use of any new trade name or style.
GUESS ? STATIONERY
Client hereby assigns, transfers, and conveys to ▇▇▇▇▇▇, effective upon
the occurrence of any Event of Default hereunder, the non-exclusive
right and license to use all trade names and trade styles owned or used
by Client together with any goodwill associated therewith, all to the
extent necessary to enable ▇▇▇▇▇▇ to realize on any assets of Client in
which Client has granted ▇▇▇▇▇▇ a security interest. Such right and
license is granted free of charge without requirement that any monetary
payment whatsoever be made to Client or any third party by ▇▇▇▇▇▇.
4.8. Discounts, credits and allowances on Accounts may be issued, granted or
allowed by Client to customers and returns may be accepted by Client
until ▇▇▇▇▇▇ notifies Client to the contrary by Written Notice or
Transmission. Such discounts, credits or allowances once issued may be
claimed only by the customer. Client will issue and assign to ▇▇▇▇▇▇
all full credit memos relating to credits on Accounts and any other
credit memos ▇▇▇▇▇▇ requests relating to credits on Accounts immediately
upon ▇▇▇▇▇▇'▇ request but in no event more than two (2) weeks from the
date on which such credits are granted to the customers.
4.9. To the best of Client's knowledge, there are no judgments outstanding
against or affecting Client, its officers, directors or affiliates or
any of Client's property and there are no actions, charges, claims,
demands, suits, proceedings, or governmental investigations now pending
or threatened against Client or any of Client's property.
4.10. Client agrees that no provision in this Agreement and no course of
dealing between the parties shall be deemed to create any fiduciary duty
by ▇▇▇▇▇▇ to Client. Client agrees that neither ▇▇▇▇▇▇ nor any of
▇▇▇▇▇▇'▇ affiliates, officers, directors, shareholders, employees,
attorneys, or agents shall have any liability with respect to, and
Client hereby waives, releases, and agrees not to ▇▇▇ any of them upon,
any claim for any special, indirect, incidental; or consequential
damages suffered or incurred by Client in connection with, arising out
of, or in any way related to this Agreement or any of the transactions
contemplated by this Agreement. Client hereby waives, releases, and
agrees not to ▇▇▇ ▇▇▇▇▇▇ or any of ▇▇▇▇▇▇'▇ affiliates, officers,
directors, shareholders employees, attorneys, or agents for punitive
damages in respect of any claim in
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connection with, arising out of, or in any way related to this Agreement
or any of the transactions contemplated by this Agreement.
4.11. Client agrees to give ▇▇▇▇▇▇ prompt notice of the termination of, or the
occurrence of any default under, that certain Manufacturing License
Agreement between Guess ?, Inc. and Client dated March 1, 1996, as
amended from time to time.
SECTION 5. DISPUTES, CHARGEBACKS AND RESERVES
5.1. With respect to any Account, upon the occurrence of a breach of any of
the representations or warranties contained in Section 4.1, or upon the
assertion by a customer of a Dispute, such Account may, at ▇▇▇▇▇▇'▇
option, be charged back to Client. In the event Client does not, within
fifteen (15) days of ▇▇▇▇▇▇'▇ request, deliver to ▇▇▇▇▇▇ a copy of the
invoice and such other information as ▇▇▇▇▇▇ requests relating to an
Account with respect to which information was transmitted to ▇▇▇▇▇▇
through Transmission, ▇▇▇▇▇▇ will have the right to charge back such
Account to Client.
5.2. Client will notify ▇▇▇▇▇▇ immediately by Written Notice in the event
that a customer alleges any Dispute, or returns or desires to return any
goods purchased from Client relating to an Account. ▇▇▇▇▇▇ may but is
not obligated to settle, compromise, adjust or litigate all such
Disputes or returns upon such terms as ▇▇▇▇▇▇ deems advisable. If an
unadjusted Dispute delays the payment of any Approved Account when due,
▇▇▇▇▇▇ will have the right to charge back to Client that Account.
5.3. If ▇▇▇▇▇▇ notifies Client verbally and/or by Written Notice or
Transmission that a customer which only accepts invoices for
payment-from Client through Transmission is requesting that Client
review its invoice data for correctness and re-transmit invoices by
Transmission and if after thirty (30) days from the date of such Notice
such invoices remain unposted to such customer's records, ▇▇▇▇▇▇ will
place the Accounts evidenced by such invoices on Dispute.
5.4. ▇▇▇▇▇▇ may, at ▇▇▇▇▇▇'▇ option, charge back to Client all amounts owing
on Non-Approved Accounts which are not paid when due.
5.5. Client will pay ▇▇▇▇▇▇, or ▇▇▇▇▇▇ may charge Client's account with, the
amount of any payment which ▇▇▇▇▇▇ receives with respect to a
Non-Approved Account if such payment is subsequently disgorged by
▇▇▇▇▇▇, whether as a result of any proceeding in bankruptcy or
otherwise.
5.6. Client shall purchase promptly all Accounts charged back by ▇▇▇▇▇▇,
provided, however, that until payment by Client to ▇▇▇▇▇▇ of all monies
due with respect to such charged back Account, title thereto shall
remain with ▇▇▇▇▇▇. At such time as Client shall pay to ▇▇▇▇▇▇ all
monies due with respect to such charged back account, title shall pass
to Client subject, however, to ▇▇▇▇▇▇'▇ security interest therein.
Client agrees to indemnify and save ▇▇▇▇▇▇ harmless from and against any
and all loss, costs and expenses caused by or arising out of disputed
Accounts, including, but not limited to, collection expenses and
attorney's fees incurred with respect thereto.
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5.7. ▇▇▇▇▇▇ may maintain such reserves as ▇▇▇▇▇▇, in ▇▇▇▇▇▇'▇ sole
discretion, deems advisable as security for the payment and performance
of the Obligations, including, without limitation, reserves for the
amount of any Account which is subject to a Dispute.
SECTION 6. ADMINISTRATION
6.1. Client will, from time to time, (i) execute and deliver to ▇▇▇▇▇▇
confirmatory schedules of Accounts assigned to ▇▇▇▇▇▇ (each an
"Assignment Schedule"), together with one copy of each invoice,
acceptable evidence of shipment and such other documentation and proofs
of delivery as ▇▇▇▇▇▇ may require or (ii) transmit to ▇▇▇▇▇▇ by
Transmission information concerning Accounts and, upon ▇▇▇▇▇▇'▇ request,
deliver to ▇▇▇▇▇▇ copies of invoices, acceptable evidence of shipment
and such other documentation and proofs of delivery as ▇▇▇▇▇▇ may
require relating to Accounts so transmitted. Client will not deliver
Assignment Schedule in connection with Transmissions, but Client
acknowledges and agrees that every invoice transmitted to ▇▇▇▇▇▇ by
Transmission will be deemed to have been sent pursuant to the terms and
conditions of Assignment Schedules. Each invoice relating to an Account
and all copies thereof will bear a notice, in form satisfactory to
▇▇▇▇▇▇, that the Account has been sold and assigned to and is payable
only to ▇▇▇▇▇▇. Client agrees that Client will not change such notice
on invoices and will not direct its customers to pay Client or any third
party amounts due under invoices. Client agrees to prepare and mail all
invoices relating to Accounts, but ▇▇▇▇▇▇ may do so at ▇▇▇▇▇▇'▇ option.
Client agrees to execute and deliver to ▇▇▇▇▇▇ such further instruments
of assignment, financing statements and instruments of further assurance
as ▇▇▇▇▇▇ may reasonably require. Client authorizes ▇▇▇▇▇▇ to execute
on Client's behalf and file such UCC financing statements as ▇▇▇▇▇▇ may
deem necessary in order to perfect and maintain the security interests
granted by Client in accordance with this Agreement. Client further
agrees that ▇▇▇▇▇▇ may file this Agreement or a copy thereof as such UCC
financing statement.
6.2. On any day when Client desires to have advances made in accordance with
subsection 2.1 Client shall give ▇▇▇▇▇▇ telephone notice of the
requested advance by 12:00 p.m. Los Angeles time. ▇▇▇▇▇▇ shall not
incur any liability to Client for acting upon any telephonic notice that
▇▇▇▇▇▇ believes in good faith to have been given by a duly authorized
officer or other person authorized to request advances on Client's
behalf or for otherwise acting in good faith under this subsection.
6.3. If any remittances are made directly to Client or Client's employees or
agents, Client will act as trustee of an express trust for Hellers
benefit, hold the same as ▇▇▇▇▇▇'▇ property and deliver the same to
▇▇▇▇▇▇ forthwith in kind. ▇▇▇▇▇▇ and/or such designee as ▇▇▇▇▇▇ may
from time to time appoint are hereby appointed Client's attorney-in-fact
to endorse Client's name on any and all checks or other forms of
remittances received by ▇▇▇▇▇▇ where such endorsement is required to
effect collection and to transmit notices to customers, in Client's or
▇▇▇▇▇▇'▇ name, that amounts owing by them have been assigned and are
payable directly to ▇▇▇▇▇▇; this power, being coupled with an interest,
is irrevocable.
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6.4. Client shall permit ▇▇▇▇▇▇ and any authorized representatives designated
by ▇▇▇▇▇▇ to visit and inspect any of the properties of Client,
including its financial and accounting records, and to make copies and
take extracts therefrom, and to discuss its affairs, finances, and
business with its officers at such times during normal business hours
and as often as ▇▇▇▇▇▇ requests. ▇▇▇▇▇▇ may, at any time after the
occurrence of an Event of Default, remove from Client's premises all
such records, files and books relating to Accounts.
6.5. If ▇▇▇▇▇▇ determines that the credit standing of a customer has
deteriorated after ▇▇▇▇▇▇ has assumed the Credit Risk on an Account,
Client will, at ▇▇▇▇▇▇'▇ request, exercise such rights as Client may
have to reclaim or stop the goods in transit, and Client hereby grants
to ▇▇▇▇▇▇ the right to take such steps in Client's or ▇▇▇▇▇▇'▇ name.
6.6. ▇▇▇▇▇▇ will render a monthly statement of account to Client within
twenty (20) days after the end of each month. Such statement of account
will constitute an account stated unless Client makes objection thereto
by Written Notice within thirty (30) days from the date such statement
is rendered to Client.
6.7. Client will maintain a system of accounting established and administered
in accordance with sound business practices to permit preparation of
financial statements in conformity with GAAP. Client will promptly
furnish ▇▇▇▇▇▇ with such statements prepared by or for Client showing
Client's financial condition and the results of Client's operations as
▇▇▇▇▇▇ requests verbally or by Written Notice, including without
limitation: (i) as soon as available but not later than sixty (60) days
after the end of each of Client's fiscal years and sixty (60) days after
the end of the second quarter of each of Client's fiscal years, Client's
balance sheet, income statement and the related statement of cash flows
for and as at the end of, the portion of Client's fiscal year then
elapsed and a statement of stockholder's equity for such period,
reviewed by Client's independent certified public accountants and
certified by Client to be prepared in accordance with generally accepted
accounting principles and to fairly present Client's financial position
and results of operations for such period; and (ii) as soon as available
but not later than sixty (60) days after the end of the first and third
quarters of each of Client's fiscal years, Client's balance sheet,
income statement and the related statement of cash flows for and as at
the end of, the portion of Client's fiscal year then elapsed and a
statement of stockholder's equity for such period, compiled by Client's
independent certified public accountants and certified by Client to
fairly present Client's financial position and results of operations for
such period. Client authorizes ▇▇▇▇▇▇ to communicate directly with
Client's independent certified public accountants and authorizes such
accountants to discuss Client's financial condition and financial
statements directly with ▇▇▇▇▇▇.
6.8. Client authorizes ▇▇▇▇▇▇ to disclose such information as ▇▇▇▇▇▇ deems
appropriate to persons making credit inquiries about Client.
SECTION 7. COLLATERAL SECURITY
As collateral security for all Obligations, Client hereby assigns and
grants to ▇▇▇▇▇▇ a continuing security interest in all of the following
property, whether now owned by Client
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or hereafter acquired by Client or arising in Client's favor: (i)
Accounts; (ii) general intangibles; (iii) monies,securities and other
property now or hereafter held or received by, or in transit to ▇▇▇▇▇▇
from or for Client, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all of Client's deposits and
credit balances in ▇▇▇▇▇▇'▇ possession; (iv) books, records and other
property at any time evidencing or relating to any of the foregoing
property; and (v) proceeds of any of the foregoing property including,
without limitation, the proceeds of any insurance policies covering any
of the foregoing property. Recourse to the collateral security herein
provided will not be required, and Client will at all times remain
liable for the payment and performance of the Obligations upon demand by
▇▇▇▇▇▇.
SECTION 8. EVENTS OF DEFAULT
The occurrence of any of the following acts or events will constitute an
Event of Default: (a) if Client fails to make payment of any of the
Obligations when due; (b) if Client fails to make any remittance
required by this Agreement; (c) if Client commits any breach of any of
the terms, representations, warranties, covenants, conditions or
provisions of this Agreement, or of any present or future supplement or
amendment hereto or of any other agreement between ▇▇▇▇▇▇ and Client;
(d) if Client becomes insolvent or unable to meet Client's debts as they
mature; (e) if Client fails to pay when due any material obligations or
liabilities owing by Client to any person or entity (including without
limitation, any United States and state taxes); (f) if Client delivers
to ▇▇▇▇▇▇ a false financial statement or if any representation,
warranty, certification, or other statement made by Client to ▇▇▇▇▇▇ is
false in any material respect when made; (g) if Client calls, or has
called by a third party, a meeting of creditors; (h) if any bankruptcy
proceeding, insolvency arrangement or similar proceeding is commenced by
or against Client; (i) if Client suspends or discontinues doing business
for any reason; (j) if a receiver or trustee of any kind is appointed
for Client or any of Client's property; (k) if any guarantor of Client's
Obligations dies or becomes insolvent or has commenced by or against
such guarantor any bankruptcy proceeding, insolvency arrangement or
similar proceeding; (l) if any guaranty of Client's Obligations is
terminated; (m) if any change of ownership occurs with respect to more
than forty (40%) percent of Client's capital stock; (n) if a notice of
lien, money judgment, levy, assessment, seizure or writ, or warrant of
attachment is entered or filed against Client or with respect to the
Accounts or any other collateral in which Client has granted ▇▇▇▇▇▇ a
security interest; (o) if Client sells, leases, transfers or otherwise
disposes of all or substantially all of Client's property or assets, or
consolidates with or merges into or with any corporation or entity; (p)
if there is a termination of, or the occurrence of an event of default
under, that certain factoring agreement between ▇▇▇▇▇▇ and Pacific Trim
& Belt, Inc., dated January 7, 1988, or that certain factoring agreement
between ▇▇▇▇▇▇ and Tag-It, Inc., dated June 24, 1991, or if an event of
default occurs under that certain factoring agreement between ▇▇▇▇▇▇ and
Western Findings, Inc. dated May 7, 1996; or (q) if any default or
termination occurs under that certain Manufacturing License Agreement
between Guess ?, Inc. and Client dated March 1, 1996.
Upon the occurrence and during the continuance of an Event of Default,
▇▇▇▇▇▇ will have the right to terminate this Agreement and all other
arrangements existing between ▇▇▇▇▇▇ forthwith and without notice, and
the Obligations will mature and become immediately due
9
and payable and ▇▇▇▇▇▇ will have the right to withhold any further
payments to Client until all Obligations have been paid in full. In
addition ▇▇▇▇▇▇ will have all of the rights of a secured party under the
UCC, including, without limitation, the right to take possession of any
collateral in which ▇▇▇▇▇▇ has a security interest and to dispose of
same at public or private sale and Client will be liable for any
deficiency. ▇▇▇▇▇▇ will not be required to proceed against any
collateral but may proceed against Client directly.
If either party to this Agreement shall bring any action for any relief
against the other, declaratory or otherwise, arising out of this
Agreement, the losing party shall pay to the prevailing party a
reasonable sum for attorney fees incurred in bringing such suit and/or
enforcing any judgment granted therein, all of which shall be deemed to
have accrued upon the commencement of such action and shall be paid
whether or not such action is prosecuted to judgment. Any judgment or
order entered in such action shall contain a specific provision
providing for the recovery of attorney fees and costs incurred in
enforcing such judgment. For the purposes of this section, attorney
fees shall include, without limitation, fees incurred in the following:
(1) postjudgment motions; (2) contempt proceedings; (3) garnishment,
levy, and debtor and third party examinations; (4) discovery; and (5)
bankruptcy litigation.
SECTION 9. TERM AND TERMINATION
This Agreement will continue in force and effect until terminated by
either party hereto giving the other party not less than sixty (60) days
prior Written Notice thereof; PROVIDED HOWEVER, that Client will not
terminate this Agreement so long as Client is indebted or obligated to
▇▇▇▇▇▇ in connection with any other agreements between ▇▇▇▇▇▇ and
Client.
Notwithstanding any such Written Notice of termination, Client's and
▇▇▇▇▇▇'▇ respective rights and obligations arising out of transactions
having their inception prior to the date of termination of this
Agreement will not be affected by the termination of this Agreement and
all terms, provisions and conditions hereof, including but not limited
to, the security interests thereinabove granted to ▇▇▇▇▇▇ (including
Accounts arising, acquired or created after the date of termination of
this Agreement), will continue in full force and effect until all
Obligations have been paid in full. All of the representations,
warranties, indemnities and covenants made by Client herein will survive
the termination of this Agreement.
SECTION 10. MODIFICATIONS, WAIVERS, NOTICES AND MISCELLANEOUS PROVISIONS
This Agreement may not be changed or terminated orally; it constitutes
the entire agreement between Client and ▇▇▇▇▇▇ and will be binding upon
Client's and ▇▇▇▇▇▇'▇ respective successors and assigns, but may not be
assigned by Client without ▇▇▇▇▇▇'▇ prior written consent. No delay or
failure on ▇▇▇▇▇▇'▇ part in exercising any right, privilege, or option
hereunder will operate as a waiver thereof or of any other right,
privilege or option. No waiver whatsoever will be valid unless in a
Written Notice, signed by ▇▇▇▇▇▇, and then only to the extent therein
set forth. If any term or provision of this Agreement is held invalid
under any statute, rule or regulation of any jurisdiction competent to
make such a decision, the remaining terms and provisions will not be
affected, but will remain in full force and effect.
10
Any Written Notice to be given under this Agreement will be in writing
addressed to the respective party as set forth in the heading to this
Agreement and will be personally served, telecopied or sent by overnight
courier service or United States mail and will be deemed to have been
given: (a) if delivered in person, when delivered; (b) if delivered by
telecopy, on the date of transmission if transmitted on a Business Day
before 4:00 p.m. (Los Angeles time) or, if not, on the next succeeding
Business Day; (c) if delivered by overnight courier, two (2) days after
delivery to such courier properly addressed; or (d) if by U.S. Mail,
four (4) Business Days after depositing in the United States mail, with
postage prepaid and properly addressed.
▇▇▇▇▇▇ conducts business under California personal property broker
license number 983 6725 and under California commercial finance lender
license number 943 2108.
SECTION 11. GOVERNING LAW, VENUE AND WAIVER OF JURY
THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO ANY CONFLICT OF
LAWS PRINCIPLES. CLIENT HEREBY CONSENTS CALIFORNIA. IF CLIENT
PRESENTLY IS, OR IN THE FUTURE BECOMES, A NON-RESIDENT OF THE STATE OF
CALIFORNIA, CLIENT HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO CLIENT, AT
CLIENT'S ADDRESS APPEARING IN ▇▇▇▇▇▇'▇ RECORDS AS SERVICE SO MADE SHALL
BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED AS AFORESAID.
WAIVER OF JURY TRIAL. CLIENT AND ▇▇▇▇▇▇ HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, OR ANY OTHER DOCUMENTS EXECUTED IN
CONNECTION WITH THIS AGREEMENT, OR ANY DEALINGS BETWEEN CLIENT AND
▇▇▇▇▇▇ RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND THE
BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. CLIENT AND ▇▇▇▇▇▇
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH OF CLIENT AND ▇▇▇▇▇▇ HAS ALREADY RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH OF CLIENT
AND ▇▇▇▇▇▇ WILL CONTINUE TO RELY ON THE WAIVER IN THE RELATED FUTURE
DEALINGS BETWEEN CLIENT AND ▇▇▇▇▇▇. CLIENT AND ▇▇▇▇▇▇ FURTHER WARRANT
AND REPRESENT THAT THEY KNOWINGLY AND VOLUNTARILY WAIVE THEIR RESPECTIVE
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
SECTION 12. DEFINITIONS
11
"Accounts" -- All presently existing or outstanding and all hereafter
created or acquired accounts (as that term is defined in the UCC),
contract rights, documents, notes, drafts, instruments and other forms
of obligations owed to or owned by Client arising or resulting from the
sale of goods or the rendering of services by Client, all general
intangibles relating hereto, all proceeds thereof, all guaranties and
security herefor, and all goods and rights represented hereby or arising
herefrom, including, but no limited to, returned, reclaimed and
repossessed goods and the rights of stoppage in transit, replevin and
reclamation.
"Approved Account" -- An Account with respect to which ▇▇▇▇▇▇ has issued
a credit approval which has not subsequently been withdrawn.
"Approval Payment Date" -- the date which is one hundred twenty (120)
days after the due date for payment of an Approved Account.
"Base Rate" -- The rate of interest publicly announced from time to time
by Bank of America National Trust and Saving Association.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of Illinois,
Pennsylvania, or California or is a day on which banking institutions
located in any such state are closed.
"Collection Amount" -- The amount received by ▇▇▇▇▇▇ from a customer in
payment of an Account up to the Net Amount of such Account.
"Collection Date" -- The date on which ▇▇▇▇▇▇ receives payment of an
Account.
"Credit Risk" -- The risk that a customer will be financially unable to
pay an Account at maturity, provided that the merchandise has been
received or services rendered and accepted by the customer without
Dispute.
"Daily Balance" -- The outstanding balance of all advances made by
▇▇▇▇▇▇ to Client or for Client's account in accordance with subsection
2.1 hereof less all amount credited to Client's account in accordance
with subsection 2.2. hereof.
"Delivery" -- The delivery of goods or performance of services in
accordance with the terms agreed to in writing between Client and a
customer, provided that if no such terms are specified in writing,
delivery shall mean delivery of goods or performance of services at the
customer's place of business.
"Dispute" -- A dispute or claim, bona fide or otherwise, as to price,
terms, quantity, quality, Delivery, or any cause or defense to payment
of an Account whatsoever other than financial inability of a customer to
pay the Account.
"Effective Date" -- The date set forth below ▇▇▇▇▇▇'▇ signature hereto.
"GAAP" - Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified
12
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board that are applicable to the circumstances as
of the date of determination.
"▇▇▇▇▇▇ Clients" -- Any persons, corporations, partnerships, companies,
associations or entities (other than Client) which have entered into
factoring, inter-credit or financing agreements with any of ▇▇▇▇▇▇'▇
offices.
"Ledger Debt" -- Indebtedness owing by Client to ▇▇▇▇▇▇ as a result of
▇▇▇▇▇▇'▇ purchases of invoices evidencing sales to Client by ▇▇▇▇▇▇
Clients.
"Net Amount" -- The gross amount of an Account less the discount offered
by Client and taken by ▇▇▇▇▇▇ at the time ▇▇▇▇▇▇ purchases such Account.
"Non-Approved Account" -- An Account with respect to which ▇▇▇▇▇▇ has
not issued a credit approval or has subsequently withdrawn a credit
approval.
"Obligations" -- All loans, advances, debts, liabilities, obligations,
covenants and duties owing by Client to ▇▇▇▇▇▇, direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, whether under this Agreement, that certain International
Factoring Agreement between ▇▇▇▇▇▇ and Client dated as of the Effective
Date, or any other agreement between ▇▇▇▇▇▇ and Client, including,
without limitation, Ledger Debt and indebtedness arising under any
guaranty made by Client for ▇▇▇▇▇▇'▇ benefit or issued by ▇▇▇▇▇▇ on
Client's behalf, including, without limitation, those certain Guaranties
dated as of the Effective Dated executed by Client with respect to
obligations owing to ▇▇▇▇▇▇ by (i) Pacific Trim & Belt, Inc.; (ii)
Tag-It, Inc.; and (iii) Western Findings, Inc.
"Purchase Price" -- An amount equal to the Net Amount of an Account,
less factoring commissions, credits (including, without limitation,
merchandise returns and credit memos), charge backs, allowances, and all
other charges provided hereunder.
"Transmission" -- Transmission through ▇▇▇▇▇▇'▇ proprietary system or
through Electronic Data Interchange.
"UCC" -- The Uniform Commercial Code as in effect on the date hereof in
the State of California, as amended from time to time, and any successor
statute.
"Written Notice" - Notice given in writing in accordance with Section 10
of this Agreement.
13
Witness the due execution hereof by the respective duly authorized officers of
the undersigned as of the Effective Date.
▇▇▇▇▇▇ FINANCIAL INC. A.G.S. STATIONERY, INC.
By: By:
---------------------------- ------------------------------------
Title: Title:
------------------------ ---------------------------------
Effective Date: July __, 1996
14
INTERNATIONAL FACTORING AGREEMENT
(Collection Date)
This International Factoring Agreement (this "Agreement"), dated and effective
as of the Effective Date, is entered into between ▇▇▇▇▇▇ FINANCIAL, INC.
("▇▇▇▇▇▇"), with offices at ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Telecopy No:
(▇▇▇) ▇▇▇-▇▇▇▇, and A.G.S. STATIONERY, INC. ("Client"), whose address is ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇ and will
constitute the terms upon which ▇▇▇▇▇▇ will act as the sole factor of Client's
Export Accounts. Capitalized terms used herein will have the meanings assigned
to such terms in Section 12 of this Agreement.
SECTION 1. SALE AND APPROVAL OF ACCOUNTS
1.1. Client hereby agrees to sell, assign and transfer to ▇▇▇▇▇▇ and ▇▇▇▇▇▇
hereby purchases from Client all of Client's now outstanding and
hereafter created or acquired Export Accounts (other than Export
Accounts for which Client has received collateral to secure the payment
of same) with full power to collect and otherwise deal therewith as the
sole and exclusive owner thereof.
1.2. (a) Client will submit for ▇▇▇▇▇▇'▇ credit approval the Buyers' credit
requirements, a description of Client's normal selling terms and such
other information as ▇▇▇▇▇▇ may request concerning any Buyer. ▇▇▇▇▇▇
may, in its sole credit judgment, establish credit lines for sales to
Buyers on Client's normal selling terms. Client may also submit for
credit approval specific orders from Buyers and ▇▇▇▇▇▇ may, in its sole
credit judgment, approve such orders on a single order approval basis.
All of ▇▇▇▇▇▇'▇ credit approvals will be in writing. All sales to
Buyers within established credit lines and all sales to Buyers pursuant
to orders approved on a single order approval basis will be Approved
Accounts provided that Delivery is completed while the credit line or
single order approval remains in effect. Notwithstanding any provisions
herein to the contrary, sales to Korean Customers shall be on sixty (60)
day selling terms only and no invoice evidencing sales by Client to a
Korean Customer shall exceed U.S. $50,000. All sales to Korean
Customers on terms in excess of sixty (60) days and all invoices in
excess of U.S. $50,000 evidencing sales to Korean Customers shall be
Non-Approved Accounts.
(b) ▇▇▇▇▇▇ reserves the right to amend or withdraw a credit line at any
time by advice to Client, which advice will be promptly confirmed in
writing by ▇▇▇▇▇▇ at its option.
(c) ▇▇▇▇▇▇ may withdraw a single order credit approval by notifying
Client verbally and/or in writing at any time prior to Delivery. A
single order credit approval will be automatically withdrawn: (i) in the
event Delivery is not made on or prior to the expiration date indicated
on the written single order credit confirmation form ▇▇▇▇▇▇ sends to
Client; or (ii) in the event any change is made in the payment terms or
delivery date of the Export Account. Credit approvals will be withdrawn
automatically with respect to any Export Account for which Client fails
to assign such
15
Export Account to ▇▇▇▇▇▇ within fifteen (15) days of shipment of the
goods (but in no event later than 15 days prior to the due date of such
Export Account).
(d) ▇▇▇▇▇▇ shall have no liability to Client or to any Export Customer
for ▇▇▇▇▇▇'▇ refusal to credit approve an Export Account or ▇▇▇▇▇▇'▇
withdrawal or amendment of a credit approval.
1.3. ▇▇▇▇▇▇ will assume the Credit Risk on all Approved Accounts; PROVIDED,
HOWEVER, that Client shall assume the risk of loss prior to acceptance
of the goods by the Buyer or where nonpayment of the Export Accounts
results from any Dispute, acts of God, war, civil strife, currency
restrictions, or foreign political impediments.
1.4. If at any time a Buyer becomes the subject of an insolvency proceeding
or otherwise becomes financially unable to pay Export Accounts, then in
the event that monies were, at any time, owing by a Buyer for both
Approved Accounts and Non-Approved Accounts, any amount when paid by or
credited to the Buyer may be deemed applied as follows:
(a) if ▇▇▇▇▇▇ issued single order approvals, all payments paid by or
credited to the Buyer may be deemed applied first to Approved Accounts;
(b) if ▇▇▇▇▇▇ established a credit line for such Buyer and if the credit
line was in force at the time amounts were paid by or credited to the
Buyer, Export Accounts (or parts thereof) in excess of such line may be
deemed to succeed amounts within the line which are paid by or credited
to the Buyer. The succession of Export Accounts (or parts thereof) will
take place in the order of maturity and will be limited to amounts then
so paid or credited. The right of succession ceases when the line is
canceled and thereafter any amount paid or credited may be deemed
applied by ▇▇▇▇▇▇ in satisfaction of Approved Accounts in priority to
Non-Approved Accounts;
(c) if a bankruptcy or insolvency proceeding has been instituted by or
against the Buyer and if ▇▇▇▇▇▇ agrees to make a claim in such
proceeding for Non-Approved Accounts, all amounts distributed to ▇▇▇▇▇▇
may be shared pro-rata between Approved and Non-Approved Accounts.
SECTION 2. PAYMENT, FEES, COSTS AND EXPENSES
2.1. ▇▇▇▇▇▇ will purchase each Export Account on the shortest selling terms,
at its option, and will pay Client as the purchase price the net amount
thereof calculated by deducting from the gross amount of each Export
Account the discount, if any, ▇▇▇▇▇▇'▇ factoring commission and all
credits, including, without limitation, merchandise returns, allowances,
and chargebacks and all other charges provided for hereunder.
2.2. As payment for an Export Account, (a) the Collected Amount of such
Export Account less advances, interest and any other amounts due ▇▇▇▇▇▇
will be credited to Client's account on the Collection Date for such
Account and (b) if the Export Account is an Approved Account which
remains partially or fully unpaid solely as a result of the
16
financial inability of the customer thereon to pay such Approved Account
and if such Export Account is not subject to a Dispute, the purchase
price of such approved Account less any Collected Amounts previously
credited to Client's account with respect to such Approved Account and
less advances, interest and any other amounts due ▇▇▇▇▇▇ will be
credited to Client's account on the Approved Payment Date for such
Approved Account.
2.3. At the time ▇▇▇▇▇▇ purchases each approved Account, or thereafter,
▇▇▇▇▇▇ may, at Client's request, and in ▇▇▇▇▇▇'▇ sole discretion,
advance to Client up to seventy percent (70%) of the purchase price of
such Approved Account; PROVIDED, HOWEVER that if at any time the
aggregate Net Amount of Approved Accounts arising from sales to a single
Buyer exceeds an amount equal to thirty percent (30%) of the sum of (a)
the total Net Amount of all Export Accounts from all Buyers outstanding
at such time plus (b) the total net amount of all "Accounts" from all
sales to customers outstanding at such time under that certain Domestic
Collection Date Factoring Agreement dated as of the Effective Date, by
and between Client and ▇▇▇▇▇▇, as amended from time to time, then ▇▇▇▇▇▇
shall not make any advances on any such Approved Accounts in excess of
said amount.
2.4. At the time ▇▇▇▇▇▇ purchases each Export Account, ▇▇▇▇▇▇ will charge
Client's account a factoring commission equal to two and one-half
percent (2.50%) of the Net Amount of each Export Account. ▇▇▇▇▇▇ will
charge Client for all of ▇▇▇▇▇▇'▇ out-of-pocket expenses related to
credit reports, import handling fees and credit analysis/inquiry fees
charged by any Import Factor whether or not credit approval is granted.
2.5. ▇▇▇▇▇▇ will charge Client's account ▇▇▇▇▇▇'▇ standard wire transfer fee
on all wire transfers, and Client will reimburse ▇▇▇▇▇▇ for exchanges on
checks (including bank wire transfer charges), charges for returned
items and all other bank charges, including, without limitation,
currency exchange costs, and for all taxes and governmental charges
imposed, paid or payable in respect to sales or merchandise. ▇▇▇▇▇▇ may
also, at its option, charge Client's account for all amounts owing by
Client to ▇▇▇▇▇▇ under this Agreement and for all other Obligations.
2.6. All payments required to be made by either party under this Agreement
shall be made in United States Dollars. All sales to Buyers shall be
payable only in United States Dollars. In the event that any Buyer pays
an Export Account purchased by ▇▇▇▇▇▇ in currency other than United
States Dollars, the difference, if any, between the United States Dollar
amount due on such Export Account at the time of invoicing and the
amount in United States Dollar received by ▇▇▇▇▇▇ from the exchange of
such foreign currency into the United States Dollars shall be Client's
responsibility and shall be paid by Client to ▇▇▇▇▇▇. Client agrees to
pay any costs or expenses incurred by ▇▇▇▇▇▇ in connection with such
exchange, or, at Client's option, ▇▇▇▇▇▇ may charge Client's account for
same.
2.7. Client agrees to indemnify and save and hold ▇▇▇▇▇▇, its agents and
assignees harmless for any losses, costs, expenses or liability,
including duties, forwarder's fees, storage, sales or excise taxes or
other expenses, wire fees imposed by the Import Factor or its
17
transferring bank, transportation, freight, brokerage charges, cartage,
cables, warehousing, collection expenses and attorneys' fees, caused by
or arising out of or incurred in connection with (a) the export of
merchandise sold by Client to its Buyers; (b) Disputed Export Accounts;
or (c) the collection of Non-Approved Accounts by an Import Factor
(provided, however, that ▇▇▇▇▇▇ shall seek Client's consent before an
Import Factor incurs any external costs and/or expenses relating to the
collection of Non-Approved Accounts). Client further agrees to
immediately repay ▇▇▇▇▇▇ for any such sums incurred in connection with
the foregoing and ▇▇▇▇▇▇ may charge Client's account for all such sums.
These indemnities shall survive the termination of this Agreement.
2.8. Client agrees to bear the cost of all filing fees, filing taxes, search
reports, legal fees and other charges incurred by ▇▇▇▇▇▇ in the
perfection, protection and preservation of the rights and collateral
security herein granted to ▇▇▇▇▇▇. Client also agrees to promptly pay
all fees, costs and expenses (including, without limitation, attorneys
fees and allocated costs of internal counsel) incurred in connection
with the creation and administration of this Agreement or any related
instruments, documents and agreements, including the negotiation and
documentation of any waivers, forbearances, amendments or other
modifications relating to this Agreement or any such related agreements
and all such fees, costs and expenses shall be part of the Obligations,
shall be payable on demand and shall be secured by any collateral in
which Client has granted ▇▇▇▇▇▇ a security interest under this Agreement
or any related agreements.
SECTION 3. INTEREST
3.1. Client will pay ▇▇▇▇▇▇ interest on the Daily Balance. Interest will be
calculated daily at a rate per annum equal to two and one-half percent
(2.50%) plus the Base Rate (the "Interest Rate") and will be charged to
Client's account monthly at the end of each month. The Interest Rate
will also be charged to Client on all other Obligations, except those
specifying a different rate, from the date incurred through the date
paid. Any publicly announced decrease or increase in the Base Rate will
result in an adjustment to the Interest Rate on the next Business Day.
After the occurrence of an Event of Default and for so long as such
Event of Default continues, all the Obligations will, at ▇▇▇▇▇▇'▇
option, bear interest at a rate per annum equal to three percent (3.0%)
plus the Interest Rate. Interest will be calculated on the basis of a
360-day year for the actual number of days elapsed. In no event will
the total amount of interest received by ▇▇▇▇▇▇ pursuant to the terms of
his Agreement exceed the maximum rate permitted by applicable law and in
the event excess interest is determined by a court of competent
jurisdiction to have been paid by Client to ▇▇▇▇▇▇, such excess interest
will be applied as a credit against the outstanding Obligations and
Client will not have any action against ▇▇▇▇▇▇ for any damages arising
out of the payment or collection of such excess interest.
3.2. If funds remain with ▇▇▇▇▇▇ past the Collection Date or Approved Payment
Date, as applicable and there are no outstanding Obligations ("matured-
funds"), ▇▇▇▇▇▇ will pay Client interest on such matured funds at the
rate per annum equal to the Base Rate
18
minus three percent (3.0%). Any change in the Base Rate shall result in
an adjustment in the matured funds rate on the next Business Day.
3.3. To allow for collection clearance on all checks and other payments
remitted by Buyers, Client will pay a collection clearance charge
computed as follows: (a) total cash collections for the month,
multiplied by (b) four (4) days, multiplied by (c) the Interest Rate,
divided by (d) 360 days. ▇▇▇▇▇▇ will charge Client's account at the end
of each month for the collection clearance charge.
3.4. If an Approved Account is charged back after the Collection Date Client
shall pay interest at the Interest Rate on the Net Amount from such date
to the chargeback date.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1. Client represents, warrants and covenants as to each Export Account sold
and assigned hereunder that, at the time of its creation the Export
Account is a valid, bona fide account, representing an undisputed
indebtedness incurred by the named Buyer for goods actually sold and
delivered; there are no setoffs, offsets or counterclaims, genuine or
otherwise, against the Export Account; the Export Account does not
represent a sale to a parent, subsidiary or affiliate; the Export
Account does not represent a consignment, a guarantied sale or a ▇▇▇▇
and hold transaction or a cash on delivery sale; no agreement exists
permitting any deduction or discount against the Export Account (other
than the discount stated on the invoice); Client owns the Export Account
and has the right to sell and assign the same to ▇▇▇▇▇▇ and the Import
Factor; the Export Account is free of all security interests, liens and
encumbrances (including tax liens) other than those in ▇▇▇▇▇▇'▇ favor;
the currency of payment of each Export Account shall be U.S. Dollars;
and the Export Account is due and payable in accordance with its terms.
4.2. Client will not grant or suffer to exist in favor of any party other
than ▇▇▇▇▇▇, any lien upon or security interest in the Client's
inventory.
4.3. Client is a solvent corporation; duly incorporated and in good standing
under the laws of the State of California and qualified in all States
where such qualification is required; the execution, delivery and
performance of this Agreement have been duly authorized and are not in
contravention of any applicable law, Client's corporate charter or
bylaws or any agreement or order by which Client is bound; Client is
not, to the best of Client's knowledge, in violation of any law,
ordinance, rule, regulation, order or other requirement of any
government or any instrumentality or agency thereof.
4.4. Client will not change its corporate name or the location of its office
or open any new offices without at least thirty (30) days prior written
notice to ▇▇▇▇▇▇. At the present time, Client carries on business only
at the above address and the addresses set forth below.
NONE
19
4.5. All books and records pertaining to Export Accounts or to any inventory
owned by Client will be maintained solely and exclusively at the above
address or the addresses listed in subpart 4.4 above and no such books
and records shall be moved or transferred without at least thirty (30)
days prior written notice to ▇▇▇▇▇▇. Upon ▇▇▇▇▇▇'▇ request, Client will
hold all returned, replevied or reclaimed goods relating to Export
Accounts coming into Client's possession in trust for ▇▇▇▇▇▇ and all
such goods shall be segregated and identified as held in trust for
▇▇▇▇▇▇'▇ benefit and Client agrees to deliver such goods to such place
or places as ▇▇▇▇▇▇ may designate at ▇▇▇▇▇▇'▇ request and at Client's
expense.
4.6. Upon ▇▇▇▇▇▇'▇ request, Client will hold all returned, replevied or
reclaimed goods relating to Export Accounts coming into Client's
possession in trust for ▇▇▇▇▇▇ and all such goods shall be segregated
and identified as held in trust for ▇▇▇▇▇▇'▇ benefit and Client agrees
to deliver such goods to such place or places as ▇▇▇▇▇▇ may designate at
▇▇▇▇▇▇'▇ request and at Client's expense.
4.7. The trade names or styles set forth below are the only trade names or
styles under which Client transacts business or has transacted business
under the last five (5) years; Export Accounts sold hereunder and
represented by invoices bearing such trade names or styles are wholly
owned by Client; the undertakings, representations and warranties made
in connection therewith shall be identical to and of the same force and
effect as those made with respect to invoices bearing Client's corporate
name; Client's use of any trade names or styles is in compliance with
all laws regarding the use of such trade names or styles. Client agrees
to give thirty (30) days prior written notice of the change of any trade
name or style or its use of any new trade name or style.
GUESS ? STATIONERY
4.8. No discounts, credits or allowances will be issued, granted or allowed
by Client to Buyers and no returns will be accepted without ▇▇▇▇▇▇'▇
prior written consent; provided, however, that with respect to Export
Accounts that have not been assigned to an Import Factor, until notified
to the contrary, Client may presume ▇▇▇▇▇▇'▇ consent. Discounts,
credits or allowances once issued may be claimed only by the Buyer.
4.9. Client will maintain, as the insured party, all insurance necessary to
cover the risk of loss of or damage to goods shipped by Client until
▇▇▇▇▇▇'▇ or any Import Factor's interests therein are terminated
(including, without limitation, marine, war or other hazards of transit,
loss, damage, fire, theft and all other risks, in such amounts and with
such companies as are acceptable to ▇▇▇▇▇▇ and the Import Factor). Such
policies shall provide that loss thereunder shall be payable to ▇▇▇▇▇▇
and the Import Factor as their interests may appear, and ▇▇▇▇▇▇ and the
Import Factor may apply the proceeds of such insurance to the
Obligations, whether or not due, in such order of application as ▇▇▇▇▇▇
and the Import Factor may determine. Such policies or certificates
shall immediately be deposited with ▇▇▇▇▇▇ and the Import Factor.
20
4.10. So long as any credit approval to any particular Buyer remains
outstanding, all sales to such Buyer will be assigned to ▇▇▇▇▇▇.
4.11. To the best of Client's knowledge, there are no judgments outstanding
against or affecting Client, its officers, directors or affiliates or
any of Client's property and there are no actions, charges, claims,
demands, suits, proceedings, or governmental investigations now pending
or threatened against Client or any of Client's property.
4.12. Client agrees that no provision in this Agreement and no course of
dealing between the parties shall be deemed to create any fiduciary duty
by ▇▇▇▇▇▇ to Client. Client agrees that neither ▇▇▇▇▇▇ nor any of
▇▇▇▇▇▇'▇ affiliates, officers, directors, shareholders employees,
attorneys, or agents shall have any liability with respect to, and
Client hereby waives, releases, and agrees not to ▇▇▇ any of them upon,
any claim for any special, indirect, incidental, or consequential
damages suffered or incurred by Client in connection with, arising out
of, or in any way related to this Agreement or any of the transactions
contemplated by this Agreement. Client hereby waives, releases, and
agrees not to ▇▇▇ ▇▇▇▇▇▇ or any of ▇▇▇▇▇▇'▇ affiliates, officers,
directors, shareholders, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or
in any way related to this Agreement or any of the transactions
contemplated by this Agreement.
4.13. Client acknowledges and agrees that ▇▇▇▇▇▇ is relying on all of the
foregoing representations, warranties and covenants in Section 4 in
entering into its agreements with all Import Factors for the factoring
of Export Accounts.
4.14. Client agrees to give ▇▇▇▇▇▇ prompt notice of the termination of, or the
occurrence of any default under, that certain Manufacturing License
Agreement between Guess ?, Inc. and Client dated March 1, 1996, as
amended from time to time.
SECTION 5. DISPUTES, CHARGEBACKS AND RESERVES
5.1. With respect to any Export Account, upon the occurrence of a breach of
any of the representations or warranties contained in Section 4, or upon
the assertion by a Buyer of a Dispute (a) such Export Account, if it is
an Approved Account will automatically become a Non-Approved Export
Account and (b) such Export Account may at ▇▇▇▇▇▇'▇ option, be charged
back to Client. In the event that ▇▇▇▇▇▇ has remitted the purchase
price of an Export Account that is subsequently the subject of a Dispute
by a Buyer, then Client shall promptly repay ▇▇▇▇▇▇ the amount of such
remittance less all amounts not disputed by the Buyer. This provision
will survive any termination of this Agreement.
5.2. Client will notify ▇▇▇▇▇▇ immediately in the event that a Buyer alleges
any Dispute, or returns or desires to return any goods purchased.
▇▇▇▇▇▇ may, but is not obligated to settle, compromise, adjust or
litigate all such Disputes or returns upon such terms as it deems
advisable. If an unadjusted Dispute delays the payment of any Approved
Account when due, ▇▇▇▇▇▇ shall have the right to charge back that
Approved Account.
21
5.3. ▇▇▇▇▇▇ may, at its option, charge back all amounts owing on Non-Approved
Accounts which are not paid when due.
5.4. ▇▇▇▇▇▇ will have the right to charge back to Client any payment received
with respect to a Non-Approved Account if such payment is subsequently
disgorged by ▇▇▇▇▇▇, whether as a result of any proceeding in bankruptcy
or otherwise.
5.5. ▇▇▇▇▇▇ may maintain such reserves as it, in its sole discretion, deems
advisable as security for the payment and performance of the
Obligations.
SECTION 6. ADMINISTRATION
6.1. Client agrees to execute and deliver to ▇▇▇▇▇▇ and/or the Import Factor
assignment schedules of Export Accounts sold to ▇▇▇▇▇▇, in the form
prescribed by ▇▇▇▇▇▇ or the Import Factor, together with one copy of
each invoice and/or ▇▇▇▇ (or in the case of Mexico; an original invoice)
and, within seven (7) days of any request by ▇▇▇▇▇▇ or any Import
Factor, acceptable evidence of shipment and such other documentation and
proofs of delivery as ▇▇▇▇▇▇ may require. Each invoice and/or ▇▇▇▇ to a
Buyer and all copies thereof shall bear the appropriate assignment
notices in the forms provided to Client from time to time. Client
agrees to prepare and mail all invoices, but ▇▇▇▇▇▇ or the Import Factor
may do so if required. Client agrees to execute and deliver such
further instruments of assignment, financing statements and instruments
of further assurance as reasonably required. Client authorizes ▇▇▇▇▇▇
to execute on Client's behalf and file such UCC financing statements as
▇▇▇▇▇▇ deems necessary in order to perfect and maintain the security
interests granted by Client in accordance with this Agreement and any
other agreement between ▇▇▇▇▇▇ and Client, and Client further agrees
that ▇▇▇▇▇▇ may file this agreement or a copy thereof as such UCC
financing statement.
6.2. On any day when Client desires to have advances made in accordance with
subsection 2.3, Client shall give ▇▇▇▇▇▇ telephone notice of the
requested advance by 12:00 p.m. Los Angeles time. ▇▇▇▇▇▇ shall not
incur any liability to Client for acting upon any telephonic notice that
▇▇▇▇▇▇ believes in good faith to have been given by a duly authorized
officer or other person authorized to request advances on Client's
behalf or for otherwise acting in good faith under this subsection.
6.3. If any remittances are made directly to Client, its employees or agents
on Export Accounts, Client agrees to act as trustee of an express trust
for the benefit of ▇▇▇▇▇▇ and the Import Factor, hold the same as
▇▇▇▇▇▇'▇ and the Import Factor's property and deliver the same to ▇▇▇▇▇▇
forthwith in kind. ▇▇▇▇▇▇, any Import Factor and/or their assignees
and/or such designees as either of them may from time to time appoint
are hereby appointed jointly and severally, as Client's attorney-in-fact
to endorse Client's name on any and all checks, acceptances, drafts,
bills, money orders or other forms of remittances received by ▇▇▇▇▇▇
and/or an Import Factor on Export Accounts, where such endorsement is
required to effect collection and to transmit notices to Buyers, in the
name of Client or ▇▇▇▇▇▇ or any Import Factor, that amounts owing by
Buyers
22
have been assigned and are payable directly to ▇▇▇▇▇▇ and/or such Import
Factor; this power, being coupled with an interest, is irrevocable.
6.4. Client shall permit ▇▇▇▇▇▇ and any authorized representatives designated
by ▇▇▇▇▇▇ to visit and inspect any of the properties of Client,
including financial and accounting records, and to make copies and take
extracts therefrom and to discuss its affairs, finances, and business
with its officers at such reasonable times during normal business hours
and as often as may be reasonably requested. ▇▇▇▇▇▇ may, at any time
after default by Client hereunder, remove from Client's premises all
such records, files and books relating to Export Accounts.
6.5. If ▇▇▇▇▇▇ determines that the credit standing of a Buyer has
deteriorated after ▇▇▇▇▇▇ or an Import Factor have assumed the Credit
Risk on an Export Account, Client agrees, at ▇▇▇▇▇▇'▇ request, to
exercise such rights as it may have to reclaim or stop the goods in
transit, and Client hereby grants to ▇▇▇▇▇▇ the right to take such steps
in the name of Client or ▇▇▇▇▇▇.
6.6. ▇▇▇▇▇▇ shall render a monthly statement of account to Client within
twenty (20) days after the end of each month. Such statement of account
shall constitute an account stated unless written objection thereto is
made within thirty (30) days from the date such statement is mailed.
6.7. Client will maintain a system of accounting established and administered
in accordance with sound business practices to permit preparation of
financial statements in conformity with GAAP. Client will promptly
furnish ▇▇▇▇▇▇ with such statements prepared by or for Client showing
Client's financial condition and the results of Client's operations as
▇▇▇▇▇▇ requests verbally or by Written Notice, including without
limitation: (i) as soon as available but not later than sixty (60) days
after the end of each of Client's fiscal years and sixty (60) days after
the end of the second quarter of each of Client's fiscal years, Client's
balance sheet, income statement and the related statement of cash flows
for and as at the end of, the portion of Client's fiscal year then
elapsed and a statement of stockholder's equity for such period,
reviewed by Client's independent certified public accountants and
certified by Client to be prepared in accordance with generally accepted
accounting principles and to fairly present Client's financial position
and results of operations for such period; and (ii)as soon as available
but not later than sixty (60) days after the end of the first and third
quarters of each of Client's fiscal years, Client's balance sheet,
income statement and the related statement of cash flows for and as at
the end of, the portion of Client's fiscal year then elapsed and a
statement of stockholder's equity for such period, compiled by Client's
independent certified public accountants and certified by Client to
fairly present Client's financial position and results of operations for
such period. Client authorizes ▇▇▇▇▇▇ to communicate directly with
Client's independent certified public accountants and authorizes such
accountants to discuss Client's financial condition and financial
statements directly with ▇▇▇▇▇▇.
23
6.8. Client authorizes ▇▇▇▇▇▇ to disclose such information as ▇▇▇▇▇▇ deems
appropriate to persons making credit inquiries about Client. ▇▇▇▇▇▇
shall have the right to assign any Export Account purchased by it under
this Agreement to any other Person.
SECTION 7. COLLATERAL SECURITY
As collateral security for all Obligations, Client hereby assigns and
grants to ▇▇▇▇▇▇ a continuing security interest in: (i) all presently
existing and hereafter created Export Accounts; (ii) general intangibles
with respect to Export Accounts; (iii) all monies, securities and other
property now or hereafter held or received by, or in transit to ▇▇▇▇▇▇
from or for Client, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all deposits and credit
balances in ▇▇▇▇▇▇'▇ possession; (iv) all returned, reclaimed or
repossessed goods relating to Export Accounts and the documents
evidencing or relating to such goods; (v) all books, records and other
property at any time evidencing or relating to Export Accounts; and (vi)
all proceeds of the foregoing including the proceeds of any insurance
policies covering the foregoing. Recourse to the collateral security
herein provided shall not be required, and Client shall at all times
remain liable for the payment and performance of the Obligations, upon
demand by ▇▇▇▇▇▇.
SECTION 8. EVENTS OF DEFAULT
The occurrence of any of the following acts or events shall constitute
an Event of Default: (a) nonpayment of any of the Obligations when due;
(b) failure to make any remittance required by this Agreement; (c)
breach of any of the terms, representations, warranties, covenants,
conditions or provisions of this Agreement, or of any present or future
supplement or amendment hereto or of any other agreement between ▇▇▇▇▇▇
and Client; (d) if Client becomes insolvent or unable to meet its debts
as they mature; (e) the failure to pay when due any material obligations
or liabilities owing by Client or any person or entity (including
without limitation, any United States and state taxes); (f) the delivery
to ▇▇▇▇▇▇ of a false financial statement or if any representation,
warranty, certification or other statements made by Client to ▇▇▇▇▇▇ is
false in any material respect; (g) if Client or a third party calls a
meeting of Client's creditors; (h) commencement by or against Client of
any bankruptcy proceeding, insolvency arrangement or similar proceeding;
(i) suspension or discontinuance of business for any reason; (j) if a
receiver or trustee of any kind is appointed for Client or any of its
property; (k) if any guarantor of the Obligations shall become insolvent
or have commenced by or against such guarantor any bankruptcy
proceeding, insolvency arrangement or similar proceeding; (1) if any
guaranty of Client's Obligations is terminated; (m) if any change of
ownership occurs with respect to more than forty (40%) percent of
Client's capital stock; (n) if a notice of lien, levy or assessment is
filed of record or a levy, seizure or attachment occurs with respect to
any Export Accounts or any other collateral in which ▇▇▇▇▇▇ has been
granted a security interest; (o) if the sale, lease, transfer or other
disposition of all or substantially all of Client's property or assets,
or the consolidation or merger with or into or with any corporation or
entity without the prior written consent of ▇▇▇▇▇▇; (p) if there is a
termination of, or the occurrence of an event of default under, that
certain factoring agreement between ▇▇▇▇▇▇ and Pacific Trim & Belt,
Inc., dated January 7, 1988, or that certain factoring agreement between
▇▇▇▇▇▇ and Tag-It, Inc., dated June 24, 1991, or if an event of default
occurs under that certain factoring
24
agreement between ▇▇▇▇▇▇ and Western Findings, Inc. dated May 7, 1996;
(q) if any default or termination occurs under that certain
Manufacturing License Agreement between Guess ?, Inc. and Client dated
March 1, 1996, or (r) if there is an Event of Default under that certain
Domestic Collection Date Factoring Agreement dated as of the Effective
Date between Client and ▇▇▇▇▇▇.
Upon the occurrence of an Event of Default, ▇▇▇▇▇▇ shall have the right
to terminate this Agreement and all other arrangements existing between
the parties forthwith and without notice, and the Obligations shall
mature and become immediately due and payable and ▇▇▇▇▇▇ shall have the
right to withhold any further payments to Client until all Obligations
have been paid in full. In addition ▇▇▇▇▇▇ shall have all of the rights
of a secured party under the Uniform Commercial Code, including, without
limitation, the right to take possession of any collateral in which
▇▇▇▇▇▇ has a security interest and to dispose of same at public or
private sale and Client will be liable for any deficiency. ▇▇▇▇▇▇ shall
not be required to proceed against any collateral but may proceed
against Client directly.
If either party to this Agreement shall bring any action for any relief
against the other, declaratory or otherwise, arising out of this
Agreement, the losing party shall pay to the prevailing party a
reasonable sum for attorney fees incurred in bringing such suit and/or
enforcing any judgment granted therein, all of which shall be deemed to
have accrued upon the commencement of such action and shall be paid
whether or not such action is prosecuted to judgment. Any judgment or
order entered in such action shall contain a specific provision
providing for the recovery of attorney fees and costs incurred in
enforcing such judgment. For the purposes of this section, attorney fees
shall include, without limitation, fees incurred in the following: (1)
postjudgment motions; (2) contempt proceedings; (3) garnishment, levy,
and debtor and third party examinations; (4) discovery; and (5)
bankruptcy litigation.
SECTION 9. TERM AND TERMINATION
This Agreement shall continue in force and effect until terminated by
either party hereto giving the other party not less than sixty (60) days
prior written notice thereof; PROVIDED, HOWEVER, that this Agreement
shall terminate automatically upon termination of the Collection Date
Factoring Agreement dated as of the effective Date, by and between
Client and ▇▇▇▇▇▇. Notice of termination shall be given as provided in
Section 10; provided, however, that this Agreement shall not terminate
so long as Client is indebted or obligated to ▇▇▇▇▇▇ in connection with
any other financing arrangements. Notwithstanding such notice of
termination, the respective rights and obligations of the parties hereto
arising out of transactions having their inception prior to the
specified date of termination shall not be affected by such termination
and all terms, provisions and conditions hereof, including but not
limited to, the security interests hereinabove granted to ▇▇▇▇▇▇, shall
continue in full force and effect until all Obligations have been paid
in full. All of the indemnities, representations, warranties and
covenants made by Client herein shall survive the termination of this
Agreement.
SECTION 10. MODIFICATIONS, WAIVERS, NOTICE AND MISCELLANEOUS PROVISIONS
25
This Agreement may not be changed or terminated orally; it constitutes
the entire agreement between the parties and shall be binding upon their
respective successors and assigns, but may not be assigned by Client
without ▇▇▇▇▇▇'▇ prior written consent. No delay or failure on ▇▇▇▇▇▇'▇
part in exercising any right, privilege, or option hereunder shall
operate as a waiver thereof or of any other right, privilege or option.
No waiver whatsoever shall be valid unless in writing, signed by ▇▇▇▇▇▇,
and then only to the extent therein set forth. If any term or provision
of this Agreement is held invalid under any statute, rule or regulation
of any jurisdiction competent to make such a decision, the remaining
terms and provisions shall not be affected, but shall remain in full
force and effect. If any term or provision of this Agreement is held
invalid under any statute, rule or regulation of any jurisdiction
committed to make such a decision, the remaining terms and provisions
will not be affected but will remain in full force and effect. ▇▇▇▇▇▇
conducts business under California personal property broker license
number 983 6725 and under California commercial finance lender license
number 943 2108.
Unless otherwise specifically provided herein, all notices shall be in
writing addressed to the respective party as set forth below and may be
personally served, telecopied or sent by overnight courier service or
United States mail and shall be deemed to have been given: (a) if
delivered in person, when delivered; (b) if delivered by telecopy, on
the date of transmission if transmitted on a Business Day before 4:00
p.m. (Los Angeles time) or, if not, on the next succeeding Business Day;
(c) if delivered by overnight courier, two days after delivery to such
courier properly addressed; or (d) if by U.S. Mail, four Business Days
after depositing in the United States mail, with postage prepaid and
properly addressed.
If to Client: A.G.S. Stationery, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇: ▇▇▇▇▇▇ FINANCIAL, INC.
Attn: Portfolio Manager
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: 818/409-1659
With a copy to: ▇▇▇▇▇▇ FINANCIAL, INC.
Attn: Legal Department
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: 818/548-4963
or to such other address as the party addressed shall have previously designated
by written notice to the serving party.
SECTION 11. GOVERNING LAW, VENUE AND WAIVER OF JURY
26
THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF CALIFORNIA. CLIENT HEREBY CONSENTS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF CALIFORNIA. IF CLIENT
PRESENTLY IS, OR IN THE FUTURE BECOMES, A NON-RESIDENT OF THE STATE OF
CALIFORNIA, CLIENT HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES THAT IF SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO CLIENT, AT CLIENT'S ADDRESS
APPEARING IN ▇▇▇▇▇▇'▇ RECORDS AND SERVICE SO MADE SHALL BE COMPLETE TEN (10)
DAYS AFTER THE SAME HAS BEEN POSTED AS AFORESAID
WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT, OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND
THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THE PARTIES ACKNOWLEDGE
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH OF THEM HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THE WAIVER IN ITS
RELATED FUTURE DEALINGS. THE PARTIES FURTHER WARRANT AND REPRESENT THAT THEY
KNOWINGLY AND VOLUNTARILY WAIVE THEIR RESPECTIVE JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
SECTION 12. DEFINITIONS
"Approved Account" -- An Export Account with respect to which ▇▇▇▇▇▇ has issued
a credit approval which has not subsequently been withdrawn.
"Approved Payment Date" -- The date which is (a) one hundred twenty (120) days
after the due date for payment of an Approved Account if the Approved Account is
an Export Account other than a Portuguese or Italian Account, or (b) 180 days
after the due date of such Approved Account if it is a Portuguese or Italian
Account.
"Base Rate" -- The rate of interest publicly announced from time to time by Bank
of America National Trust and Savings Association as its prime or base rate (or
equivalent).
"Business Day" -- Any day excluding Saturday, Sunday and any day which is a
legal holiday Under the laws of the States of Illinois, Pennsylvania or
California or is a day on which banking institutions located in any such states
are closed.
"Buyer" -- Any of Client's customers located outside of the United States of
America that are obligated on the Export Accounts.
"Collected Amount" -- The amount received by ▇▇▇▇▇▇ in payment of an Export
Account.
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"Collection Date" -- (a) if received prior to 12:00 p.m. (Los Angeles time)the
date on which ▇▇▇▇▇▇ receives payment of an Export Account in Glendale,
California, or (b) if received after 12:00 p.m. (Los Angeles time) the next
Business Day after which ▇▇▇▇▇▇ receives payment of an Export Account in
Glendale, California.
"Credit Risk" -- The risk that a Buyer will be financially unable to pay an
Export Account at maturity, provided that the merchandise has been received and
accepted by the Buyer without Dispute.
"Daily Balance" -- The outstanding balance of all advances made by ▇▇▇▇▇▇ to
Client or for Client's account in accordance with subsection 2.3 hereof less all
amounts credited to Client's account in accordance with subsection 2.2 hereof.
"Delivery" -- The delivery of goods in accordance with the terms of same agreed
to in writing between Client and Buyer, provided that if no such terms are
specified in writing, delivery shall mean delivery at the Buyer's place of
business.
"Dispute" -- A dispute or claim, bona fide or otherwise, as to price, terms,
quantity, quality, delivery of goods or any cause or defense to payment
whatsoever other than financial inability to pay.
"Effective Date" -- The date set forth below ▇▇▇▇▇▇'▇ signature hereto.
"Export Accounts" -- All presently existing and hereafter created accounts,
contract rights and general intangibles relating thereto, notes, drafts and
other forms of obligations owed to or owned by Client arising or resulting from
the sale of goods or the rendering of services by Client to Buyers, all proceeds
thereof, all guaranties and security therefor, and all goods and rights
represented thereby or arising therefrom including, but not limited to, the
right of stoppage in transit, replevin and reclamation.
"GAAP" - Generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board that are applicable to the circumstances as of the
date of determination.
"Import Factor" -- The factor, with respect to a particular Export Account, with
whom ▇▇▇▇▇▇ has an interfactor agreement pursuant to which such factor has
agreed to collect the Export Account and/or to assume the Credit Risk.
"Korean Customer" -- Any of Client's customers located in Korea.
"Net Amount" -- The gross amount of an Export Account less the discount offered
by Client and taken by ▇▇▇▇▇▇.
"Non-Approved Account" -- An Export Account with respect to which ▇▇▇▇▇▇ or an
Import Factor has not issued a credit approval or has subsequently withdrawn a
credit approval.
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"Obligations" -- All loans, advances, debts, liabilities, obligations, covenants
and duties owing by Client to ▇▇▇▇▇▇, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, whether
under this Agreement, that certain International Factoring Agreement between
▇▇▇▇▇▇ and Client dated as of the Effective Date, or any other agreement between
▇▇▇▇▇▇ and Client, including, without limitation, Ledger Debt and indebtedness
arising under any guaranty made by Client for ▇▇▇▇▇▇'▇ benefit or issued by
▇▇▇▇▇▇ on Client's behalf, including without limitation, those certain
Guaranties dated as of the Effective Date and executed by Client with respect to
obligations owing to ▇▇▇▇▇▇ by (i) Pacific Trim & ▇▇▇▇, Inc.; (ii) Tag-it, Inc.;
and (iii) Western Findings, Inc.
"Person" -- Any natural person, corporation, limited partnership, general
partnership, joint stock company, joint venture, association, company, trust,
bank, trust company, land trust, business trust or other organization, whether
or not a legal entity, and any government and agency and political subdivision
thereof.
"Portuguese or Italian Account" -- An export Account arising from the sale of
goods or the rendering of services by Client to a Buyer located in Portugal or
Italy.
Witness the due execution hereof by the respective duly authorized officers of
the undersigned as of the Effective Date.
▇▇▇▇▇▇ FINANCIAL INC. A.G.S. STATIONERY, INC.
By: /s/ By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------- ---------------------------------
Title: /s/ SRVP 8/6/96 Title: President
-------------------------- ------------------------------
Effective Date: July __, 1996
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