Exhibit 10.3

 

REASSIGNMENT AND TERMINATION AGREEMENT

(this “Agreement”)

 

 

September 11, 2015

 

Joe’s Jeans Subsidiary, Inc.

2340 S. Eastern Avenue

Commerce, CA 90040

 

Hudson Clothing, LLC

1231 S. Gerhart Avenue

Commerce, CA 90022

 

GBG USA Inc.

350 Fifth Avenue, 9th Floor

New York, NY 10118

 

Ladies and Gentlemen:

 

Please refer to the factoring arrangements between THE CIT GROUP/COMMERCIAL
SERVICES, INC. (“CIT”) and JOE’S JEANS SUBSIDIARY, INC. (“Joe’s”) and HUDSON
CLOTHING, LLC (“Hudson” and together with Joe’s, the “Existing Clients”) as set
forth in that certain Amended and Restated Factoring Agreement dated as of
September 30, 2013 (as amended, restated, supplemented or otherwise modified,
the “Factoring Agreement”) between the Existing Clients and CIT.  All
capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Factoring Agreement, unless otherwise defined
herein.

 

Joe’s has requested that CIT reassign to Joe’s all of Joe’s Accounts factored
with CIT which remain outstanding as of the date of this Agreement and to
terminate Joe’s as a party to the Factoring Agreement in connection with the
sale of Joe’s Accounts to GBG USA Inc. (“GBG”) pursuant to that certain Asset
Purchase Agreement dated as of September 11, 2015 between Joe’s Jeans Inc. and
GBG (the “Purchase Agreement”).  CIT is willing to agree to such reassignment
and termination of Joe’s as a party to the Factoring Agreement pursuant to the
terms and conditions set forth herein.

 

1.                                      Termination and Reassignment.

 

Subject to and conditioned upon CIT’s receipt of an executed counterpart of this
Agreement, duly executed and delivered by the Existing Clients and GBG:

 

(a)                                 Joe’s is hereby terminated as a party to the
factoring arrangements heretofore entered into between CIT and the Existing
Clients and the Factoring Agreement, and Joe’s (inclusive

 

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of any transferee of the Reassigned Factored Accounts (as defined below)) is
hereby released from its obligations thereunder, except for the provisions of
this Agreement and those provisions of the Factoring Agreement relating to the
Surviving Obligations (as defined below),which in no event shall apply to any
transferee of the Reassigned Factored Accounts; and

 

(b)                                 CIT shall reassign to Joe’s, without
recourse and without warranty or representation of any kind, all of Joe’s
Accounts factored with CIT which remain outstanding as of the date of this
Agreement (all such reassigned factored accounts being herein called the
“Reassigned Factored Accounts”).

 

For avoidance of doubt, Joe’s hereby acknowledges that nothing herein shall
affect or be deemed to be a release of any of its obligations as a guarantor
under and in connection with that certain Amended and Restated Revolving Credit
Agreement of even date herewith by and among CIT, as agent and a lender
thereunder, Hudson, Joe’s and certain other guarantors thereunder (the “Credit
Agreement”), including, without limitation, its obligations to guaranty any and
all obligations of Hudson under the Factoring Agreement.

 

2.                                      Release by Joe’s.

 

In consideration of the agreements by CIT set forth herein, Joe’s hereby
unconditionally releases, discharges and acquits CIT from payment and
performance of all obligations, liabilities and indebtedness to Joe’s of every
kind, nature or description, direct or indirect, absolute or contingent, joint
or several, secured or unsecured, due or not due, primary or secondary,
liquidated or unliquidated, contractual or tortious, whenever arising or
acquired in connection with the Factoring Agreement, except only for those
obligations created by the terms of this Agreement.  Without limiting the
generality of the foregoing, Joe’s releases CIT from its obligation to pay the
purchase price on any Reassigned Factored Account, and all credit approvals
previously issued by CIT with respect thereto are hereby withdrawn and
rescinded.  In furtherance thereof, CIT shall not have any further obligation to
collect, or take any other action in respect of, any of the Reassigned Factored
Accounts other than to remit collections thereof hereafter received by CIT to
GBG in accordance with Section 6 of this Agreement.

 

3.                                      Actions Taken by CIT Upon Effectiveness
of Agreement; Joe’s Representations.

 

(a)                                 Upon the effectiveness of this Agreement,
CIT (i) agrees to terminate Uniform Commercial Code financing statements or
other filings by CIT relating to the Reassigned Factored Accounts, (ii) shall
execute and deliver to Joe’s a Bill of Sale and Assignment in the form of
Exhibit A attached hereto (the “Bill of Sale”), and (iii) shall at no cost to
CIT execute such other agreements or take such other action as GBG and/or Joe’s
may reasonably request in connection with CIT’s reassignment to Joe’s of the
Reassigned Factored Accounts.  In furtherance of the foregoing, CIT hereby
authorizes Joe’s, GBG and their respective counsel or other designees to file
any or all such lien release documents in connection with the collateral
terminations and releases necessary to terminate all security interests and
other liens of public record in the Reassigned Factored Accounts and any other
Purchased Assets (as such term is defined in the Purchase Agreements), if any,
which may be filed in CIT’s name.

 

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(b)                                 Joe’s hereby represents and warrants to GBG
that (i) the accounts listed on Schedule A attached to the Bill of Sale
represent all of the Purchased Accounts Receivable (as defined in the Purchase
Agreement)  factored with CIT that remain outstanding as of the date of this
Agreement; and (ii) the accounts listed on Schedule A attached to the Bill of
Sale together with the Non-Factored Sales represent all of the accounts
receivable related to the Joe’s Business other than the Excluded Accounts
Receivable (as such terms are defined in the Purchase Agreement) and do not
include any accounts receivable related to the Hudson Business (as defined in
the Purchase Agreement).  Such representation and warranty shall be subject to
Joe’s indemnification obligations set forth in Section 7.02(a) of the Purchase
Agreement.

 

4.                                      Condition Precedent.

 

The effectiveness of this Agreement and the releases and reassignments by CIT
are subject to and conditioned upon the receipt by CIT of a counterpart of this
Agreement duly executed and delivered by the Existing Clients and GBG.

 

5.                                      Surviving Obligations.

 

Anything contained elsewhere in this Agreement to the contrary notwithstanding,
Joe’s is not released from and hereby ratifies and confirms its continuing
liability to CIT for, and Hudson hereby ratifies and confirms its continuing
liability to CIT for, the full and indefeasible payment and performance of the
following (collectively, the “Surviving Obligations”):

 

All obligations of Joe’s that survive termination of the Factoring Agreement,
all amounts relating to Joe’s Accounts factored with CIT, and all amounts of
interest, fees, expenses, charges, debits and/or any additions or amounts which
arise out of clerical errors and/or omissions, each of which CIT would be
entitled to charge Joe’s in accordance with the Factoring Agreement without
regard to termination thereof;

 

all of which, together with all reasonable and customary charges incident
thereto, shall be paid to CIT by Joe’s or at the option of CIT, charged to
Hudson’s account under the Factoring Agreement.

 

6.                                      Remittances of Collection of Accounts.

 

From time to time after the effectiveness of this Agreement, Joe’s and Hudson
hereby directs CIT, and CIT hereby agrees, to remit to GBG any collections,
consisting of collected funds, on the Reassigned Factored Accounts which are
identified to Joe’s account and the Reassigned Factored Accounts, less any
unpaid Surviving Obligations and all bank wire charges incurred by CIT in making
remittances pursuant to this Agreement.  Notwithstanding the foregoing, it is
understood and agreed, however, that the term “collections” as used herein shall
not and shall not be deemed to include any “on account” payments and/or credit
memos which are identified to Joe’s account and which were received prior to the
date hereof unless and until such items have been resolved by CIT and have been
identified by CIT to the Reassigned Factored Accounts.  In the event that, any
payment and/or transfer with regard to a Reassigned Factored Account is sought
to be recovered by

 

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the payor or a representative thereof (including a trustee in bankruptcy or
assignee for the benefit of creditors) on the grounds of preference, fraudulent
conveyance and/or otherwise (“Avoidance Action”), then CIT shall promptly so
advise GBG and Joe’s in writing.  Following such written notice, GBG shall have
the exclusive right and obligation, at its sole cost and expense, to contest,
defend, or settle such claim, except in the case where GBG fails to do so and in
such case CIT may defend at the expense of GBG and Joe’s.  Subject to the
limitations set forth in Section 7 below, Joe’s and GBG shall indemnify and hold
harmless CIT from any and all loss, claim, liability, cost or expense, including
reasonable attorneys’ fees, which may be incurred by reason any claims and/or as
a result of: (a) CIT’s recognition of GBG’s interests and/or remittances to GBG
as herein provided; (b) any non-payment, claim, refund or dishonor of any check,
transfer, credit and/or payment received by CIT on or after the date of this
Agreement, the proceeds of which were remitted to GBG, (c) an Avoidance Action
and/or (d) any accounting, application and/or other errors or omissions
resulting in proceeds being remitted to the GBG. The indemnities herein shall
survive termination of this Agreement.  Any remittance to GBG hereunder shall be
made by check by CIT payable to GBG or its designee and mailed to GBG pursuant
to its written instructions.

 

7.                                      Unapplied Funds and Credits.

 

CIT may receive hereafter from time to time certain payment items consisting of
cash payments received from customers of Joe’s (collectively, “Customers”)
and/or credit memos that have been identified to Joe’s but which CIT has been
unable to identify to the Reassigned Factored Accounts or otherwise resolve
using CIT’s ordinary and customary application procedures (collectively,
“Unapplied Credits”).  GBG and Joe’s acknowledge that the Unapplied Credits may:
(i) relate to accounts receivable that have not been factored by Joe’s with CIT,
(ii) be subject to refund or return to the Customers or other parties in
interest and/or (iii) be subject to adjustment due to accounting, application
and/or other error or omission.  Nevertheless CIT shall periodically convey to
GBG the Unapplied Credits by check or by wire transfer pursuant to the same
instructions provided herein for remittances on Reassigned Factored Accounts. 
Joe’s and GBG shall indemnify and hold harmless CIT from any and all loss,
claim, liability, cost or expense, including reasonable attorneys’ fees, which
may be incurred by reason any claims and/or as a result of: (a) CIT’s
recognition of GBG’s interests and/or remittances to GBG as herein provided;
(b) any non-payment, claim, refund or dishonor of any check, transfer, credit
and/or payment received by CIT on or after the date of this Agreement, the
proceeds of which were remitted to GBG, (c) an Avoidance Action in relation to
any Unapplied Credit, the proceeds of which were remitted to the GBG and/or
(d) any accounting, application and/or other errors or omissions resulting in
proceeds being remitted to the GBG.  The indemnities herein shall survive
termination of this Agreement; provided, that notwithstanding anything in this
Agreement to the contrary, GBG’s aggregate liability to CIT under this Agreement
shall in no event exceed the aggregate amount of actual collections remitted to
GBG pursuant to Section 6 and 7.  The indemnity set forth in Sections 6 and 7
shall be CIT’s sole and exclusive remedy with respect to any obligations of GBG
in connection with this Agreement and the transactions contemplated hereby.

 

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8.                                      Ratification by Hudson.

 

Hudson hereby agrees, that except as specifically provided herein, the Factoring
Agreement shall remain in full force and effect, and Hudson hereby ratifies and
confirms all of the terms and conditions set forth therein.

 

9.                                      Miscellaneous.

 

This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same agreement. A facsimile or
electronically transmitted signature shall constitute an original signature for
the purposes of binding the parties hereunder.  Any party delivering an executed
counterpart of this Agreement by facsimile or electronically also shall deliver
an original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability and
binding effect of this Agreement.  This Agreement constitutes the sole and
entire agreement of the parties to this with respect to the subject matter
contained herein and supersedes all prior and contemporaneous representations,
warranties, understandings and agreements, both written and oral with respect to
such subject matter.  Accordingly, in the event of any conflict or between the
statements in the body of this Agreement and the Factoring Agreement, the
statements in the body of this Agreement shall control.  This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
California; and shall be binding upon the parties hereto and their respective
successors and assigns.  If any provision of this Agreement or the application
thereof to any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.  The Existing Clients agrees
to pay all costs and expenses incurred by CIT in connection with the
preparation, execution, modification, performance, administration and
enforcement of this Agreement, including all reasonable fees and expenses
attributable to the services of CIT’s attorneys (whether in-house or outside),
search fees and public record filing fees and all costs that may be incurred. 
This Agreement may not be amended or changed in any respect or in any manner
other than by a writing signed by the parties hereto. No course of dealing
between the parties hereto shall change or modify this agreement.  Each party
represents and warrants to each other party that it has the authority to enter
into this Agreement and that the person signing for such party is authorized and
directed to do so.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH
PARTY WAIVES TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATED TO THIS
AGREEMENT.

 

The parties to this Agreement prefer that any dispute between or among them be
resolved in litigation subject to the above jury trial waiver.  If, and only if,
a pre-dispute jury trial waiver of the type provided for herein is unenforceable
in litigation to resolve any dispute, claim, cause of action or controversy
under this Agreement or any other document (each, a “Claim”) in the venue where
the Claim is being brought pursuant to the terms of this Agreement, then, upon
the written request of any party, such Claim, including any and all questions of
law or fact relating thereto, shall be determined exclusively by a judicial
reference proceeding.  Except as otherwise provided herein, venue for any such
reference proceeding shall be in the state or federal court in the County or
District where venue is appropriate under applicable law (the “Court”).  The
parties shall select a single neutral referee, who shall be a retired state or
federal judge.  If the parties cannot agree upon a referee within 30

 

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days, the Court shall appoint the referee.  The referee shall report a statement
of decision to the Court.  Notwithstanding the foregoing, nothing in this
paragraph shall limit the right of any party at any time to exercise self-help
remedies, foreclose against collateral or obtain provisional remedies (including
without limitation, requests for temporary restraining orders, preliminary
injunctions, writs of possession, writs of attachment, appointment of a
receiver, or any orders that a court may issue to preserve the status quo, to
prevent irreparable injury or to allow a party to enforce its liens and security
interests).  The parties shall bear the fees and expenses of the referee equally
unless the referee orders otherwise.  The referee also shall determine all
issues relating to the applicability, interpretation, and enforceability of this
section. The parties acknowledge that any Claim determined by reference pursuant
to this section shall not be adjudicated by a jury.

 

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If this correctly states the terms of our agreement with respect to the subject
matter hereof, please so indicate by signing this letter in the spaces marked
for your signatures.

 

 

Yours very truly,

 

 

 

 

 

THE CIT GROUP/COMMERCIAL SERVICES, INC.

 

 

 

 

 

By:

/s/ Kulwant Kaur

 

 

Name: Kulwant Kaur

 

 

Title: Vice President

 

 

 

 

AGREED AND ACCEPTED:

 

 

 

JOE’S JEANS SUBSIDIARY INC.

 

 

 

 

 

By:

/s/ Hamish Sandhu

 

 

 

Name: Hamish Sandhu

 

 

Title: CFO

 

 

 

 

 

HUDSON CLOTHING, LLC

 

 

 

 

 

By:

/s/ Hamish Sandhu

 

 

 

Name: Hamish Sandhu

 

 

Title: Treasurer

 

 

 

 

 

GBG USA INC.

 

 

 

 

 

By:

/s/ Robert K. Smits

 

 

 

Name: Robert K. Smits

 

 

Title: EVP - Secretary

 

 

Signature Page to Reassignment and Termination Agreement

 

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EXHIBIT A

 

BILL OF SALE AND ASSIGNMENT

 

THIS BILL OF SALE AND ASSIGNMENT (the “Assignment”) is made and executed this
11th day of September 2015, by THE CIT GROUP/COMMERCIAL SERVICES, INC. (the
“Assignor”) to JOE’S JEANS SUBSIDIARY INC. (the “Assignee”).

 

W I T N E S S E T H

 

For and in consideration of the sum of $1.00 and other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, the Assignor does hereby bargain, sell, assign, transfer, deliver
and quitclaim to the Assignee all right, title and interest of the Assignor in
the accounts listed on Schedule A attached hereto and incorporated herein by
reference, which were previously sold, assigned and conveyed by the Assignee to
the Assignor pursuant to the provisions of that certain factoring agreement
between the Assignor and the Assignee.

 

ALL OF SUCH ACCOUNTS ARE BEING SOLD AND ASSIGNED BY THE ASSIGNOR TO THE ASSIGNEE
WITHOUT RECOURSE AND WITHOUT WARRANTIES, EXPRESS OR IMPLIED, OF ANY
KIND, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF TITLE, COLLECTABILITY,
MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY
EXPRESSLY DISCLAIMED.

 

IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed
and delivered on the day and year first above written.

 

 

THE CIT GROUP/COMMERCIAL SERVICES, INC.

 

 

 

 

 

By:

 

 

 

Title:

 

 

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SCHEDULE A

TO

BILL OF SALE AND ASSIGNMENT

 

See list of invoices attached hereto

 

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