Exhibit 10.7

 

CALIFORNIA JUDICIAL REFERENCE AGREEMENT

 

This California Judicial Reference Agreement (“Agreement”) is entered into in
connection with any existing financing (other than consumer purpose financing)
(“Financing”) provided by U.S. Bank National Association (“Bank”) to Cherokee
Inc., a Delaware corporation (“Borrower”) evidenced, secured and/or supported by
one or more promissory notes, loan agreements, security agreements,
mortgages/deeds of trust, guaranties and/or other documents signed by the
undersigned parties, including but not limited to the Amended and Restated
Continuing Guaranty executed by Spell C. LLC, a Delaware limited liability
company (“Guarantor”) in favor of Bank in connection with the Financing (said
promissory note and such other agreements, together with amendments,
modifications, substitutions and replacements thereto, are hereinafter referred
to as the “Loan Documents”).

 

For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto (collectively, the “Parties”) agree as
follows:

 

1.             Any and all disputes, claims and controversies arising out of the
Loan Documents or the transactions contemplated thereby (including, but not
limited to, actions arising in contract or tort and any claims by a Party
against Bank related in any way to the Financing) (individually, a “Dispute”)
that are brought before a forum in which pre-dispute waivers of the right to
trial by jury are invalid under applicable law shall be subject to the terms of
this Agreement in lieu of the jury trial waivers otherwise provided in the Loan
Documents.

 

2.             Any and all Disputes shall be heard by a referee and resolved by
judicial reference pursuant to California Code of Civil Procedure Sections 638
et seq.

 

3.             The referee shall be a retired California state court judge or an
attorney licensed to practice law in the State of California with at least ten
(10) years’ experience practicing commercial law.  The Parties shall not seek to
appoint a referee that may be disqualified pursuant to California Code of Civil
Procedure Section 641 or 641.2 without the prior written consent of all Parties.

 

4.             If the Parties are unable to agree upon a referee within ten
(10) calendar days after one Party serves a written notice of intent for
judicial reference upon the other Party or Parties, then the referee will be
selected by the court in accordance with California Code of Civil Procedure
Section 640(b).

 

5.             The referee shall render a written statement of decision and
shall conduct the proceedings in accordance with the California Code of Civil
Procedure, the Rules of Court, and California Evidence Code, except as otherwise
specifically agreed by the parties and approved by the referee.  The referee’s
statement of decision shall set forth findings of fact and conclusions of law. 
The decision of the referee shall be entered as a judgment in the court in
accordance with the provisions of California Code of Civil Procedure Sections
644 and 645.  The decision of the referee shall be appealable to the same extent
and in the same manner that such decision would be appealable if rendered by a
judge of the superior court.

 

6.             Nothing in this Agreement shall be deemed to apply to or limit
the right of Bank (a) to exercise self help remedies such as (but not limited
to) setoff, or (b) to foreclose judicially or nonjudicially against any real or
personal property collateral, or to exercise judicial or nonjudicial power of
sale rights, (c) to obtain from a court provisional or ancillary remedies
(including, but not limited to, injunctive relief, a writ of possession,
prejudgment attachment, a protective order or the appointment of a receiver), or
(d) to pursue rights against a Party in a third-party proceeding in any action
brought against Bank (including actions in bankruptcy court).  Bank may exercise
the rights set forth in the foregoing clauses (a) through (d), inclusive,
before, during or after the pendency of any judicial reference proceeding. 
Neither the exercise of self help remedies nor the institution or maintenance of
an action for foreclosure or provisional or ancillary remedies or the opposition
to any such provisional remedies shall constitute a waiver of the right of any
Party, including, but not limited to, the claimant in any such action, to
require submission to judicial reference the merits of the Dispute occasioning
resort to such remedies.  No provision in the Loan Documents regarding
submission to jurisdiction and/or venue in any court is intended or shall be
construed to be in derogation of the provisions in any Loan Document for
judicial reference of any of Dispute.

 

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7.             If a Dispute includes multiple claims, some of which are found
not subject to this Agreement, the Parties shall stay the proceedings of the
Disputes or part or parts thereof not subject to this Agreement until all other
Disputes or parts thereof are resolved in accordance with this Agreement.  If
there are Disputes by or against multiple parties, some of which are not subject
to this Agreement, the Parties shall sever the Disputes subject to this
Agreement and resolve them in accordance with this Agreement.

 

8.             During the pendency of any Dispute which is submitted to judicial
reference in accordance with this Agreement, each of the Parties to such Dispute
shall bear equal shares of the fees charged and costs incurred by the referee in
performing the services described in this Agreement.  The compensation of the
referee shall not exceed the prevailing rate for like services.  The prevailing
party shall be entitled to reasonable court costs and legal fees, including
customary attorney fees, expert witness fees, paralegal fees, the fees of the
referee and other reasonable costs and disbursements charged to the party by its
counsel, in such amount as is determined by the Referee.

 

9.             In the event of any challenge to the legality or enforceability
of this Agreement, the prevailing Party shall be entitled to recover the costs
and expenses from the non-prevailing Party, including reasonable attorneys’
fees, incurred by it in connection therewith.

 

10.           THIS AGREEMENT CONSTITUTES A “REFERENCE AGREEMENT” BETWEEN OR
AMONG THE PARTIES WITHIN THE MEANING OF AND FOR PURPOSES OF CALIFORNIA CODE OF
CIVIL PROCEDURE SECTION 638.

 

[Signature page to follow]

 

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Dated as of: December 7, 2011

 

 

Agreed to:

 

U.S. BANK NATIONAL ASSOCIATION

 

 

 

 

By:

/s/ Gary P. Terrasi

 

Name

Gary P. Terrasi

 

Title:

Vice President

 

 

 

 

CHEROKEE INC.,

 

a Delaware corporation,

 

as Borrower

 

 

 

By:

/s/ Henry Stupp

 

Name

Henry Stupp

 

Title:

Chief Executive Officer

 

 

 

 

 

SPELL C. LLC,

 

a Delaware limited liability company,

 

as Guarantor

 

 

 

By:

/s/ Henry Stupp

 

Name

Henry Stupp

 

Title:

Chief Executive Officer

 

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