EXHIBIT 10.107.1
 
DATED 13th JUNE, 2002
 
 
FASHION RESOURCE (TCL), INC. (1)
 
and
 
UPS CAPITAL GLOBAL TRADE FINANCE
CORPORATION (2)
 
 
CHARGE OVER SHARES
 
 
BARLOW LYDE & GILBERT
24th Floor
Nine Queen’s Road Central
Hong Kong

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THIS CHARGE is made the 13th day of June, 2002.
 
BY:
 
(1)  FASHION RESOURCE (TCL), INC. a company incorporated under the laws of the
state of California in the United States of America whose registered office is
at 3151 East Washington Boulevard, Los Angeles, Ca 90023, USA (the “Chargor”)
 
IN FAVOUR OF:
 
(2)  UPS CAPITAL GLOBAL TRADE FINANCE CORPORATION in its capacity as trustee for
the Beneficiaries (the “Security Trustee”)
 
WHEREAS:
 
(A)  Under the terms of a syndicated letter of credit facility agreement (the
“Letter of Credit Facility Agreement”) entered into on even date herewith by and
between Tarrant Company Limited, Marble Limited and Trade Link Holdings Limited
(the “Borrowers”) and the Beneficiaries, the Security Trustee agreed, inter
alia, to make available to the Borrowers a facility for the issue of letters of
credit, upon the terms and subject to the conditions set out therein.
 
(B)  Under the terms of a Guarantee and Security Agreement entered into on even
date herewith by the Chargor and Tarrant Apparel Group in favour of the Security
Trustee (the “Guarantee and Security Agreement”), the Chargor agreed to
unconditionally guarantee (jointly and severally with Tarrant Apparel Group) to
the Security Trustee the punctual payment, performance and discharge of all
obligations on the part of each of the Borrowers to be paid, performed or
discharged, whether directly or indirectly, under or pursuant to the terms of
the Letter of Credit Facility Agreement, upon the terms and subject to the
conditions set out therein.
 
(C)  The Chargor has agreed to enter into this Charge as continuing security for
its obligations under the Guarantee and Security Agreement.
 
THIS DEED WITNESSES:
 
1.  INTERPRETATION
 
1.1  In this Charge and the Recitals, unless the context requires otherwise:
 
“Additional Securities”
  
means all stocks shares and securities beneficially owned by the Chargor
represented by any stock or share certificates or other documents of title from
time to time deposited by the Chargor with the Security Trustee and/or

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its nominees with the intent that they shall be subject to the Charge herein
contained either in addition to or in substitution for the Original Securities;
“Beneficiaries”
  
the Security Trustee, the Agent (as defined in the Letter of Credit Facility
Agreement) and each of the Banks (as defined in the Letter of Credit Facility
Agreement);
“Dividends”
  
means all dividends, interest and other sums which are or may become payable to
the registered holder of the Securities in its capacity as such by the relevant
issuer, and includes:

 

 
(a)
 
the right to receive any and all such sums and all claims in respect of any
default in paying such sums; and

 

 
(b)
 
all forms of remittance of such sums and any bank or other account to which such
sums may be paid or credited;

 
“Dollars” and “HK$”
  
mean the lawful currency for the time being of Hong Kong;
“Event of Default”
  
means the event mentioned in Clause 6 of this Charge;
“Hong Kong”
  
means the Hong Kong Special Administrative Region of the People’s Republic of
China;
“Original Securities”
  
means all stock shares and securities listed in Schedule 1 for which the stock
or share certificate or other documents of title have been deposited by the
Chargor with and/or registered in the name of the Security Trustee and/or its
nominees;
“Secured Obligations”
  
means all of the Chargor’s obligations under the Guarantee and Security
Agreement;
“Securities”
  
means the Original Securities and Additional Securities and, where the context
permits, includes the Dividends and all allotments, accretions, offers, rights,
and benefits at any time accruing offered or arising in respect of the
Securities; and
“Security Documents”
  
means the Guarantee and Security Agreement.

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1.2  In this Charge the expressions “Chargor” and “Security Trustee” shall where
the context permits include their respective successors and permitted assigns
and any persons deriving title under them.
 
1.3  In this Charge references to “Clauses” and “Schedules” are to clauses of
and schedules to this Charge. Clause headings are inserted for reference only
and shall be ignored in construing this Charge.
 
1.4  References herein to gender or the neuter include both genders and the
neuter. References herein to the singular include the plural and vice versa.
 
2.  CHARGE
 
2.1  The Chargor as legal and beneficial owner hereby mortgages, charges and
assigns by way of first fixed charge the Securities to the Security Trustee (as
trustee for and on behalf of each of the Beneficiaries) as a continuing security
for the due and punctual performance and observance by the Chargor of all the
Secured Obligations.
 
2.2  For the purpose of enabling the Securities to be registered in the name of
the Security Trustee or the nominee of the Security Trustee, or any purchaser of
the Securities from the Security Trustee, the Chargor undertakes:
 
(a)  forthwith upon the execution of this Charge to deposit, or procure that
there be deposited, with the Security Trustee or its nominee (i) the original
share certificates in respect of the Original Securities, (ii) instruments of
transfer in respect of the Original Securities, duly executed in blank by the
registered owner thereof and (iii) bought and sold notes for the Original
Securities duly signed by the Chargor as beneficial owner; and
 
(b)  in respect of any Additional Securities from time to time, to forthwith on
issue thereof, to deposit, or procure that there be deposited, with the Security
Trustee or its nominee the certificates or other documents or evidence of title
or ownership in respect of the Additional Securities together with instruments
of transfer and contract notes (where relevant) in respect thereof, duly
executed in blank by the registered owner and beneficial owner as appropriate.
 
2.3  The Chargor agrees that at any time after an Event of Default has occurred
(and is continuing) the Security Trustee may, at the cost of the Chargor,
register the Securities in the name of the Security Trustee or its nominee who
shall hold the Securities upon and subject to the terms of this Charge.
 
2.4  Nothing in this Charge shall be construed as placing on the Security
Trustee any liability whatsoever in respect of any calls, instalments or other
payments relating to any of the Securities or any rights, shares or other
securities accruing, offered or arising as aforesaid, and the Chargor shall on
demand indemnify the Security Trustee in respect of all calls, instalments or
other payments relating to any of the Securities and to any rights, shares and
other securities accruing, offered or arising as aforesaid in respect of any of
the Securities.

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3.  CONTINUING SECURITY
 
This Charge shall be a continuing security and shall remain in full force and
effect until the Secured Obligations have been paid in full, notwithstanding the
insolvency or liquidation or any incapacity or change in the constitution or
status of the Chargor or any other person or any intermediate settlement of
account or other matter whatsoever. This Charge is in addition to any charge,
guarantee or other security or right or remedy now or at any time hereafter held
by or available to the Security Trustee.
 
4.  REPRESENTATIONS AND WARRANTIES
 
The Chargor represents and warrants to the Security Trustee that:
 
(a)  the Chargor has full power, authority and legal right to enter into and
engage in the transactions contemplated by this Charge and has taken or obtained
all necessary corporate and other action to authorise the execution and
performance of this Charge;
 
(b)  this Charge constitutes legal, valid and binding obligations of the Chargor
enforceable in accordance with its terms;
 
(c)  the particulars of the Original Securities furnished to the Security
Trustee are, and the particulars of any Additional Securities furnished to the
Security Trustee will be, accurate and all the Securities have been validly
issued and in the case of shares, such shares are fully paid up;
 
(d)  the Chargor is the sole beneficial owner of the Original Securities, and,
on their deposit pursuant to this Charge, the Chargor will be the beneficial
owner of any Additional Securities, in each case free of all charges, liens,
options, encumbrances and third party rights of any kind; and
 
(e)  Securities registered in the name of the Chargor’s nominee are held by that
person as the Chargor’s nominee upon trust for the Chargor absolutely.
 
5.  UNDERTAKINGS
 
The Chargor undertakes and agrees with the Security Trustee that during the
continuance of this Security and so long as the Secured Obligations or any part
thereof remains outstanding, the Chargor will, unless the Security Trustee
otherwise agrees in writing:
 
(a)  not create or attempt or agree to create or permit to arise or exist any
mortgage, debenture, charge, lien or encumbrance over all or any part of the
Securities or any interest therein or otherwise assign, deal with or dispose of
all or any part of the Securities (except under or pursuant to this Charge);
 
(b)  not grant in favour of any other person any interest in or any option or
other rights in respect of any of the Securities;

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(c)  ensure that no person holding any of the Securities as its nominee for the
time being does any of the acts prohibited in paragraphs (a) and (b) above;
 
(d)  at all times remain the sole beneficial owner of the Securities;
 
(e)  do or permit to be done every act or thing which the Security Trustee may
from time to time require for the purpose of enforcing the rights of the
Security Trustee hereunder;
 
(f)  not do or cause or permit to be done anything which may in any way
depreciate, jeopardise or otherwise prejudice the value of the Security
Trustee’s security hereunder; and
 
(g)  pay calls on the Securities when required by the Security Trustee.
 
6.  EVENTS OF DEFAULT
 
The following event shall constitute an Event of Default under this Charge:
 
(a)  if any Event of Default (as defined in the Security Documents) shall occur
under the Security Documents.
 
7.  POWER OF SALE
 
7.1  At any time after an Event of Default has occurred (and is continuing), the
Security Trustee may without further authority but upon giving not less than 24
hours prior written notice to the Chargor, sell or dispose of all or any part of
the Securities and may apply the proceeds of any such sale or disposition in or
towards the discharge of the costs thereby incurred and of the Secured
Obligations in such manner as it in its absolute discretion thinks fit.
 
7.2  The Security Trustee shall be entitled to exercise such power of sale in
such manner and at such time or times and for such consideration (whether
payable immediately or by instalments) as it shall in its absolute discretion
think fit (whether by private sale or otherwise) and so that the Securities (or
any relevant part thereof) may be sold (a) subject to any conditions which the
Security Trustee may think fit to impose, (b) to any person (including any
person connected with the Chargor or the Security Trustee) and (c) at any price
which the Security Trustee in its absolute discretion, considers to be the best
obtainable in the circumstances.
 
7.3  The Security Trustee is authorised to give a good discharge for any moneys
received by it pursuant to the exercise of its power of sale and a purchaser
shall not be bound to enquire whether the power of sale has arisen as herein
provided nor be concerned with the manner of application of the proceeds of
sale.

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7.4  Save for wilful fault or default of the Security Trustee, the Chargor shall
not have any claim against the Security Trustee in respect of any loss arising
out of any such sale or any
postponement thereof howsoever caused and whether or not a better price could or
might have been obtained upon the sale of the Securities or any of them by
deferring or advancing the date of such sale or otherwise howsoever.
 
7.5  The Chargor acknowledges that it shall not be entitled to exercise and
shall be deemed to have waived all rights of pre-emption or similar rights
conferred on it by the constitutional documents of the relevant company which
securities are subject to this Charge or any other agreements or documents to
which the Chargor is a party as soon as the power of sale of the Security
Trustee has arisen.
 
7.6  The Security Trustee shall be entitled to refer disputes over the
Securities to either the courts of Hong Kong or arbitration and to settle and
compromise on those disputes.
 
7.7  The powers under this Clause 7 are additional to any powers conferred on
the Security Trustee by law or other regulations.
 
8.  DIVIDENDS AND VOTING RIGHTS
 
8.1  Any Dividends, interest payments, distributions or other monies received at
any time before the occurrence of an Event of Default shall be paid to the
Chargor, and on and after the occurrence of an Event of Default, such sums shall
be paid to the Security Trustee and the Security Trustee shall have complete
discretion to retain such monies received by the Security Trustee or its nominee
for its own benefit and to apply the same as though they were proceeds from
exercising the power of sale hereunder and shall offset such monies against any
sum owing by the Chargor.
 
8.2  Until the security created by this Charge shall have become enforceable,
the Chargor shall be entitled to the exercise of all powers or rights incidental
to the ownership of the Securities (in particular, all voting rights attached to
the Securities).
 
8.3  The Security Trustee shall have power at any time after the security
created by this Charge shall have become enforceable either in its own name or
in the Chargor’s name and without notice to the Chargor or any other person to
exercise any powers or rights incidental to the ownership of the Securities or
any part thereof in such manner as it may think fit and in particular any voting
and/or other rights attached to any of the Securities.
 
9.  CLAIMS BY CHARGOR
 
The Chargor represents to and undertakes with the Security Trustee that it has
not taken and will not take any security in respect of its liability under this
Charge from any person. So long as any sum remains owing by the Chargor to the
Security Trustee, the Chargor shall not exercise any right of subrogation or any
other rights of a surety or enforce any security or other right or claim or
claim in the insolvency or liquidation of any person in competition with the
Security Trustee. If the Chargor receives any payment or benefit in breach of
this Clause, it shall hold the same upon trust for the Security Trustee and

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forthwith pay the same to the Security Trustee as a continuing security for the
Secured Obligations.
 
10.  TAXES AND OTHER DEDUCTIONS
 
All sums payable by the Chargor under this Charge shall be paid in full without
set-off or counterclaim or any restriction or condition and free and clear of
any tax or other deductions or withholdings, if it is required by any law or
regulation to make any deduction or withholding (on account of tax or
otherwise), from any payment, the Chargor shall, together with such payment, pay
such additional amount as will ensure that the Security Trustee receives (free
and clear of any tax or other deductions or withholdings) the full amount which
it would have received if no such deduction or withholding had been required.
The Chargor shall promptly forward to the Security Trustee copies of official
receipts or other evidence showing that the full amount of any such deduction or
withholding has been paid over to the relevant taxation or other authority.
 
11.  COSTS, CHARGES AND EXPENSES
 
The Chargor shall pay all reasonable costs and expenses in connection with
preparation, execution and registration of this Charge. The Chargor shall from
time to time forthwith on demand pay to or reimburse the Security Trustee for
all costs, charges and expenses (including legal and other fees on a full
indemnity basis) incurred by the Security Trustee in connection with the lawful
exercising any of its rights or powers hereunder or in suing for or seeking to
recover any sums due hereunder or otherwise preserving or enforcing its rights
hereunder or in defending any claims brought against it in respect of this
Charge (save and except for any claims against the Security Trustee arising from
the wilful misconduct or gross negligence of the Security Trustee, or from any
breach of the terms of this Charge by the Security Trustee), or in releasing or
re-assigning this Charge upon payment of all monies hereby secured and until
payment of the same in full, all such costs, charges and expenses shall be
secured by this Charge.
 
12.  INDEMNITY
 
12.1  The Chargor shall on demand indemnify the Security Trustee against all
losses, liabilities, damages, costs and expenses incurred by it in the lawful
enforcement of the terms and conditions hereof and against all actions,
proceedings, claims, demands, costs, charges and expenses which may be incurred,
sustained or arise in respect of the non-performance or non-observance of any of
the Secured Obligations or any undertakings and agreements on the part of the
Chargor herein contained or in respect of any matter or thing done or omitted
relating in any way whatsoever to the Securities (save and except for any claims
against the Security Trustee arising from the wilful misconduct or gross
negligence of the Security Trustee, or from any breach of the terms of this
Charge by the Security Trustee).
 
12.2  The Security Trustee may retain and pay out of any money in the Security
Trustee’s hands all sums necessary to effect the indemnity contained in Clause
12.1 and all sums payable by the Chargor under Clause 12.1 shall form part of
the Secured Obligations.

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13.  FURTHER ASSURANCE
 
13.1  The Chargor shall at any time and from time to time (whether before or
after the security hereby created shall have become enforceable) execute such
further legal or other mortgages, charges or assignments and do all such
transfers, assurances, acts and things as the Security Trustee may require over
or in respect of the Securities to secure all monies, obligations and
liabilities hereby covenanted to be paid or hereby secured or for the purposes
of perfecting and completing any assignment of the Security Trustee’s rights,
benefits or obligations hereunder and the Chargor shall also give all notices,
orders and directions which the Security Trustee may require.
 
13.2  Without limiting the foregoing, the Chargor agrees from time to time to
execute and sign or to procure that the person for the time being holding any of
the Securities as the Chargor’s nominee executes and signs all transfers, powers
of attorney, proxies and other documents which the Security Trustee may require
for perfecting the Security Trustee’s title to any of the Securities or for
vesting or enabling it to vest the same in itself, its nominee or in any
purchaser including, without limitation, such resolutions by the Chargor or the
person holding any of the Securities as the Chargor’s nominee as the Security
Trustee shall require for the purposes of approving and passing for registration
any transfers of any of the Securities or for such other purposes as the
Security Trustee shall from time to time require.
 
13.3  The Chargor will do or permit to be done everything which the Security
Trustee may from time to time require to be done for the purpose of enforcing
the Security Trustee’s rights hereunder and will allow the name of the Chargor
to be used as and when required by the Security Trustee for that purpose.
 
14.  POWER OF ATTORNEY
 
The Chargor irrevocably appoints the Security Trustee by way of security to be
its attorney (with full power of substitution) and in its name or otherwise on
its behalf and as its act and deed to sign, seal, execute, deliver, perfect and
do all deeds, instruments, acts and things which may be required or which the
Security Trustee shall think proper or expedient for carrying out any
obligations imposed on the Chargor hereunder or for exercising any of the powers
hereby conferred or for giving to the Security Trustee the full benefit of this
security and so that the appointment hereby made shall operate as a general
power of attorney made under the Powers of Attorney Ordinance (Chapter 31 of the
Laws of Hong Kong). The Chargor ratifies and confirms and agrees to ratify and
confirm any deed, instrument, act or thing which such attorney or substitute may
execute or do.
 
15.  EVIDENCE OF DEBT
 
Any statement of account purporting to show, or an admission by the Chargor of,
an amount due from the Chargor under the Security Documents or from the Chargor
under this Charge and signed as correct by any officer of the Security Trustee
shall, in the absence of manifest error, be conclusive evidence against the
Chargor of the amount so due.
 

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16.  SUSPENSE ACCOUNT
 
The Security Trustee may place and keep any monies received by virtue of this
Charge (whether before or after the insolvency or liquidation of the Chargor or
the Company) to a suspense account for so long as the Security Trustee may think
fit in order to preserve the rights of the Security Trustee to sue or prove for
the whole amount of its claims against the Chargor or any other person.
 
17.  GENERAL
 
17.1  No failure or delay by the Security Trustee in exercising any right, power
or remedy hereunder shall impair such right, power or remedy or operate as a
waiver thereof, nor shall any single or partial exercise of the same preclude
any further exercise thereof or the exercise of any other right, power or
remedy. The rights, powers and remedies herein provided are cumulative and do
not exclude any other rights, powers and remedies provided by law. If at any
time any provision of this Charge is or becomes illegal, invalid or
unenforceable under the laws of any other jurisdiction, the legality, validity
and enforceability of such provision under the law of any other jurisdiction,
and of the remaining provisions of this Charge, shall not be affected or
impaired thereby.
 
17.2  The liabilities and obligations of the Chargor under this Charge shall
remain in force until full, proper and valid payment of the Secured Obligations.
 
17.3  Without limiting Clause 17.2, neither the liability of the Chargor nor the
validity or enforceability of this Charge shall be prejudiced, affected or
discharged by:
 
(a)  the granting of any time or indulgence to the Chargor or any other person;
 
(b)  any variation or modification of the Security Documents or any other
document referred to herein or therein;
 
(c)  the invalidity or unenforceability of any obligation or liability of the
Chargor under the Security Documents to which it is a party;
 
(d)  any invalidity or irregularity in the execution of the Security Documents;
 
(e)  any deficiency in the powers of the Chargor to enter into or perform any of
its obligations under the Security Documents to which it is a party or any
irregularity in the exercise thereof or any lack of authority by any person
purporting to act on behalf of the Chargor;
 
(f)  the insolvency or liquidation or any incapacity, disability or limitation
or any change in the constitution or status of the Chargor, or anything
analogous thereto;
 
(g)  any other Security Document, charge, guarantee or other security or right
or remedy being or becoming held by or available to the Security Trustee or by
any of the same being or becoming wholly or partly void, voidable or
unenforceable or

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by the Security Trustee at any time releasing, refraining from enforcing,
varying or in any other way dealing with any of the same or any power, right or
remedy the Security Trustee may now or hereafter have from or against the
Chargor or any other person;
 
(h)  any waiver, exercise, omission to exercise, compromise, renewal or release
of any rights against the Chargor or any other person or any compromise,
arrangement or settlement with any of the same; and
 
(i)  any act, omission, event or circumstance which would or may but for this
provision operate to prejudice, affect or discharge this Charge or the liability
of the Chargor hereunder.
 
17.4  This Charge may be enforced without the Security Trustee first having
recourse to any other security or rights or taking any other steps or
proceedings against the Chargor or any other person and may be enforced for any
balance due after resorting to any one or more other means of obtaining payment
or discharge of the monies, obligations and liabilities hereby secured.
 
17.5  Notwithstanding any discharge, release or settlement from time to time
between the Security Trustee and the Chargor, if any security, disposition or
payment granted or made to the Security Trustee in respect of the Secured
Obligations by the Chargor or any other person is avoided or set aside or
ordered to be surrendered, paid away, refunded or reduced by virtue of any
provision, law or enactment relating to bankruptcy, insolvency, liquidation,
winding-up, composition or arrangement for the time being in force, the Security
Trustee shall be entitled hereafter to enforce this Charge as if no such
discharge, release or settlement had occurred.
 
17.6  Any amendment or waiver of any provision of this Charge and any waiver of
any default under this Charge shall only be effective if made in writing and
signed by the Security Trustee.
 
17.7  This Charge shall be binding upon and enure to the benefit of each party
hereto and its successors and permitted assignees and transferees.
 
17.8  The Security Trustee may assign and/or transfer all or any of its rights
and/or obligations under this Charge or grant participations in all or any of
its rights and/or obligations under this Charge to any other person and for such
purposes, the Security Trustee shall be entitled to make disclosure on
confidential basis of information about the Chargor. The Chargor undertakes to
take all necessary actions and sign all documents required by the Security
Trustee in connection with any such novation, assignment or transfer.
 
17.9  The illegality, invalidity or unenforceability of any provision of this
Charge or any of the Security Documents under the law of any jurisdiction shall
not affect its legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
 
17.10  This Charge may be signed in any number of counterparts, all of which
when taken together shall constitute one and the same instrument. Either party
may enter into this Charge by signing any such counterpart.
 

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18.  NOTICES
 
18.1  Each notice, demand or other communication to be given or made under this
Charge shall be in writing and delivered or sent to the relevant party at its
address or fax number set out
below (or such other address or fax number as the addressee has by five days’
prior written notice specified to the other party):
 
To the Chargor:
 
Fashion Resources (TCL), Inc.
Fax Number:        (+1 323) 881-0032
Attention:              Patrick Chow
     
              To the Security Trustee:
 
UPS   Capital Global Trade Finance Corporation
Telecopy/Fax Number:        (+1 404) 828-4408
Attention:                              Kurt A. Niemeyer

 
18.2  Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by mail, two
days after the date of posting; (b) if given or made by personal delivery, when
delivered and (c) if given or made by fax, when the party dispatching the fax
receives evidence in form of an acknowledgement of receipt of the entire fax by
the other party from the dispatching party’s facsimile machine.
 
19.  GOVERNING LAW AND JURISDICTION
 
19.1  This Charge is governed by and shall be construed in accordance with the
laws of Hong Kong.
 
19.2  For the exclusive benefit of the Security Trustee, the parties irrevocably
agree that the courts of Hong Kong are to have jurisdiction to settle any
disputes which may arise out of or in connection with this Charge.
 
19.3  Each of the parties hereto irrevocably waives any objection which it may
now or hereafter have to the laying of the venue of any proceedings in the
courts of Hong Kong and any claim that any such proceedings have been brought in
an inconvenient forum and further irrevocably agrees that a judgement in any
proceedings brought in the courts of Hong Kong shall be conclusive and binding
upon the relevant party and may be enforced in the courts of any other
jurisdiction, in each case to the fullest extent permitted by law.
 
19.4  Nothing contained in this Clause shall limit the right of the Security
Trustee to take proceedings against the Chargor in any other court of competent
jurisdiction, nor shall the taking of proceedings in one or more jurisdictions
preclude the taking of proceedings in any other jurisdiction, whether
concurrently or not.
 
19.5  To the extent that the Chargor has or hereafter may acquire any immunity
(sovereign or otherwise) from any legal action, suit or proceeding, from the
jurisdiction of any court or

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from set-off or any legal process (whether service or notice, attachment prior
to judgement, attachment in aid of execution of judgement, execution of
judgement or otherwise) with respect to itself or any of its property, the
Chargor hereby irrevocably waives and agrees not to plead or claim such immunity
in respect of its obligations under this Charge.
 
20.  RELEASE AND DISCHARGE
 
If the Secured Obligations and all other moneys due and payable under the Note
Instrument shall have been duly repaid and all the agreements, undertakings,
terms and conditions contained therein and in the Security Documents to be
performed and observed by the Chargor and other parties thereto (other than the
Security Trustee) shall have been duly performed and observed or in the event of
conversion of the entire principal amount under the Note Instrument into new
shares in the capital of the Company, the Security Trustee shall at any time
thereafter at the request of the Chargor, forthwith release and discharge this
Charge and the security hereby created and release, reassign and transfer all
the Securities to the Chargor or as the Chargor shall direct and the Chargor
shall bear the costs for such release and/or discharge and/or transfer.
 
IN WITNESS WHEREOF the Chargor has executed this Charge under seal on the day
and year first before written.

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SCHEDULE 1
 
PARTICULARS OF SECURITIES
 
Registered Holder

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Number of ordinary shares
of HK$1.00 each in
Tarrant Company Limited

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Certificate No(s)

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Fashion Resource (TCL), Inc.
    
599,999
    
- 19 -
Gerard Rose
(Alias: Gerard Guez)
    
1
    
- 17 -

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Signed and delivered
In the presence of:
     
FASHION RESOURCE (TCL), INC.
           
By:
 
/s/      Gerard Guez       

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Antonio Silva Jr.
Notary public
     
 
 
Address:

 
Gerard Guez
Chairman
 
3151 East Washington Blvd.
Los Angeles, CA 90023

 
My commission expires:
March 8, 2006
[NOTARY SEAL]
 
Accepted:
 
UPS CAPITAL GLOBAL TRADE FINANCE CORPORATION
By:
 
/s/    SANJEEV CHOPRA        

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Sanjeev Chopra
Business Development

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