Document:

Sunset Suits Holdings, Inc.: Exhibit 10.6 - Prepared by TNT Filings Inc.

  

Exhibit 10.6

(ENGLISH TRANSLATION)

AGREEMENT ON THE ENTRY INTO A LOAN DEBT  

(with the borrower’s participation) 

An agreement was entered into on 08.02.2007 in Poznań by and between ING Bank Śląski Spółka Akcyjna with its registered office in Katowice, ul. Sokolska 34, which is entered into the Register of Entrepreneurs at the District Court in Katowice, Commercial Department of the National Court Register under the number KRS 0000005459 with a tax ID number (NIP) 634-013-54-75 and share capital of PLN 130,100,000 and paid up share capital of PLN 130,100,000, Branch in Poznań, ul. Piekary 7, hereinafter referred to as the “Bank", 

represented by:  

1. Barbara Jablońska - Assistant Manager of the Risk Management Department in the North-West Region

2.
Małgorzata Kozanecka - Senior Corporate Client Risk Appraisal Specialist 

and 

SUNSET SUITS Spółka Akcyjna  

with its registered office at ulica Garbary 57, 61-758 Poznań 

with a REGON statistical number: 300388584

which is entered into the Register of Entrepreneurs of the National Court Register, national court register (KRS) number: 0000265620, District Court in Poznań, 21st Commercial Department of the National Court Register with the tax ID number (NIP) 778-143-92-59 

represented by:  

1) Marek Kaczmarek - President of the Management Board

2)
Bogdan Zegar - Vice President of the Management Board 

hereinafter referred to as the "Entrant to the Debt"
 

of the following wording:  

§ 1

1.

The Bank represents that the Borrower, Mirosław Kranik, domiciled at ulica Garbary 57/1, 61-758 Poznań, holder of personal identity card series FW number 7104306 issued by KPMO Rawa Mazowiecka, having a statistical number (PESEL) of: 54052510257, conducting business activities under the name of: “Sunset Suits, Men’s Fashion - Moda Męska" with its registered office at ulica Garbary 57, 61-758 Poznań, which is entered into the register of sole-proprietorships of the City Council in Poznań under the number 15097/94/S, REGON statistical number 008223478, tax ID number (NIP) 785-004-14-54, owes the Bank the amount of PLN 7,800,977.22 in words: seven million, eight hundred thousand, nine hundred and seventy seven 22/100 zlotys, comprising:
 

a)

principal of PLN 5,387,201.10;  

b)

contractual interest accrued until 27/09/2006 in the amount of PLN 1,609,425.66;
 

c)

contractual interest accrued from 02/02/2007 in the amount of PLN 5,419.67;
 

d)

penalty interest on overdue liabilities accrued until 01/02/2007 in the amount of PLN 798,930.79;
 

from the loan granted under agreement no. 885/KI/10/K/2000 of 01/03/2000 for a zloty-denominated loan indexed by the Swiss franc exchange rate at the zloty equivalent of CHF 3,750,000.01, together with subsequent annexes, restructured by Restructuring Agreement no. 05/KG/CBK/03 of 10/03/2003 with subsequent annexes, a Restructuring Agreement of 24/04/2006 and a Restructuring Agreement of 02/02/2007.
 

2.

The Entrant to the Debt represents that he is familiar with the content of the agreement referred to in para. 1 and recognises the Bank’s claim both in principle and at its level.
 

§ 2

1.

The Entrant to the Debt represents that he is entering into the above debt with interest and costs and makes the commitment to the Bank to repay it jointly and severally with the Borrower:
 

-

in accordance with agreement no. 885/KI/10/K/2000 of 01/03/2000 for a zloty-denominated loan indexed by the Swiss franc exchange rate at the zloty equivalent of CHF 3,750,000.01, together with subsequent annexes, restructured by Restructuring Agreement no. 05/KG/CBK/03 of 10/03/2003 with subsequent annexes, the Restructuring Agreement of 24/04/2006 and the Restructuring Agreement of 02/02/2007.
 

2.

The Entrant to the Debt undertakes to make an additional early repayment of the principal amount of the loan at a level of PLN 1,758.4 k within 7 days of the date of receipt of funds from bonds no later than by 30 April 2007.
 

3.

The Bank expresses consent to the entry into the Debt.
 

§ 3

The Entrant to the Debt represents that:
 

-

he has received all the corporate consents of the authorities of the Entrant to the Debt which are required to execute and perform this Agreement and is attaching them hereto;
 

-

he has received the Borrower’s consent to enter into the Debt.
 

§ 4

The Entrant to the Debt hereby undertakes to submit a written representation on the date of signature of this agreement regarding his surrender to enforcement, which is attached as Appendix 1 to this agreement.
 

2

§ 5

The detailed principles defining the liability of the Entrant to the Debt under agreement no. 885/KI/10/K/2000 of 01/03/2000 for a zloty-denominated loan indexed by the Swiss franc exchange rate at the zloty equivalent of CHF 3,750,000.01, together with subsequent annexes, restructured by Restructuring Agreement no. 05/KG/CBK/03 of 10/03/2003 with subsequent annexes, the Restructuring Agreement of 24/04/2006 and the Restructuring Agreement of 02/02/2007 shall be specified through Annex no. 1 to the last Restructuring Agreement and shall become binding at the time that the Agreement on the Entry into the Loan Debt becomes effective and the said Annex no. 1 is signed.
 

§ 6

This agreement on the Entry into the Debt enters into force at the time that the decision to register the increase in the share capital through non-cash contributions made by the Entrant to the Debt becomes effective.
 

§ 7

1.

All amendments to this agreement must be made in writing in order to be valid.
 

2.

Matters not governed by this agreement shall be subject to the provisions of the Civil Code, the Banking Law and other generally applicable provisions of the law.  

3.

Disputes between the Parties shall be settled by the court with jurisdiction over the place of the Bank’s registered office.
 

§ 8

Three identical counterparts of the agreement have been prepared, of which the Borrower, the Bank and the Entrant to the Debt shall each receive one.
 

I, the undersigned, Mirosław Kranik, domiciled at ulica Garbary 57/1, 61-758 Poznań, holder of personal identity card series FW number 7104306 issued by KPMO Rawa Mazowiecka, having a statistical number (PESEL) of: 54052510257, conducting business activities under the name of: “Sunset Suits, Men’s Fashion - Moda Męska" with its registered office at ulica Garbary 57, 61-758 Poznań, which is entered into the register of sole-proprietorships of the City Council in Poznań under the number 15097/94/S, REGON statistical number 008223478, tax ID number (NIP) 785-004-14-54,
 

express consent to SUNSET SUITS Spółka Akcyjna, with its registered office at ulica Garbary 57, 61-758 Poznań with a REGON statistical number 300388584, which is entered into the Register of Entrepreneurs of the National Court Register, National Court Register (KRS) number: 0000265620, District Court in Poznań, 21st Commercial Department of the National Court Register with the tax ID number (NIP) 778-143-92-59
 

3

represented by:  

1) Marek Kaczmarek - President of the Management Board

2) Bogdan Zegar - Vice President of the Management Board
 

entering into my Debt from all liabilities to ING Bank Śląski Spółka Akcyjna with its registered office in Katowice arising from the loan granted under agreement no. 885/KI/10/K/2000 of 01/03/2000 for a zloty-denominated loan indexed by the Swiss franc exchange rate at the zloty equivalent of CHF 3,750,000.01, together with subsequent annexes, restructured by Restructuring Agreement no. 05/KG/CBK/03 of 10/03/2003 with subsequent annexes, the Restructuring Agreement of 24/04/2006 and the Restructuring Agreement of 02/02/2007.
 

............................................................................

(signature) 

 

 

 

 

 

4

Appendix 1  

REPRESENTATION 

Pursuant to article 97.1 and 97.2 of the Banking Law (consolidated text Journal of Laws of 2002, No. 72, item 665, as amended), acting on behalf of:
 

SUNSET SUITS Spółka Akcyjna  

with its registered office at ulica Garbary 57, 61-758 Poznań 

with a REGON statistical number: 300388584

which is entered into the Register of Entrepreneurs of the National Court Register, National Court Register (KRS) number: 0000265620, District Court in Poznań, 21st Commercial Department of the National Court Register 

represented by: 

1) Marek Kaczmarek - President of the Management Board 

2)
Bogdan Zegar - Vice President of the Management Board 

hereinafter referred to as the "Entrant to the Debt"  

We represent that we surrender to enforcement conducted on the basis of a bank enforcement title issued by ING Bank Śląski S.A. with its registered office in Katowice, Branch in Poznań, hereinafter referred to as the “Bank”.
 

The Bank may issue a bank enforcement title to the zloty equivalent of the amount of PLN 11,701,465.83 (in words: eleven million, seven hundred and one thousand, four hundred and sixty five 83/100 zlotys) in order to recover claims arising from Agreement no. 885/KI/10/K/2000 of 01/03/2000 for a zloty-denominated loan indexed by the Swiss franc exchange rate at the zloty equivalent of CHF 3,750,000.01, together with subsequent annexes, restructured by Restructuring Agreement no. 05/KG/CBK/03 of 10/03/2003 with subsequent annexes, the Restructuring Agreement of 24/04/2006 and the Restructuring Agreement of 02/02/2007 executed with Mr. Mirosław Kranik, domiciled at ulica Garbary 57/1, 61-758 Poznań, holder of personal identity card series FW number 7104306 issued by KPMO Rawa Mazowiecka, having a statistical number (PESEL) of 54052510257, conducting business activities under the name of “Sunset Suits, Men’s Fashion - Moda Męska" with its registered office at ulica Garbary 57, 61-758 Poznań, which is entered into the register of sole-proprietorships of the City Council in Poznań under the number 15097/94/S, REGON statistical number 008223478, tax ID number (NIP) 778-004-14-54, 

which we joined on the basis of the Agreement of 08/02/2007 on the Entry into a Loan Debt.
 

We simultaneously represent that the Bank may apply to the court to award a bank executory clause to the enforcement title up to 31/12/2012.
 

Poznań, 08/02/2007 

(date and place of submission of the Representation)  

............................................................................

(signatures of persons authorised to represent the Entrant to the Debt, company seal) 

5

Appendix 1 to the agreement on the transfer of ownership of chattels specified by kind or collection of items no. 31/2002 of 28/11/2002 as security 

List of commercial goods alienated to the favour of ING Bank Śląski S.A. (value of alienation of PLN 1.0 M) - as at 31/03/2007
 

	
  
  No.

	
  
  Showroom 

	
  
  Address  

	
  
  Value at retail prices  

	
  
  1

	
  
  Sunset Suits Moda Męska ul. Dolnośląska 25 Plejada, 41-923 Bytom

	
  
  ul. Dolnośląska 25 Plejada, 41-923 Bytom

	
  
  PLN 281,355.40  

	
  
  2

	
  
  Sunset Suits Moda Męska ul. Orląt Lwowskich 138, 41-200 Sosnowiec
   

	
  
  ul. Orląt Lwowskich 138, 41-200 Sosnowiec
   

	
  
  PLN 577,416.40  

	
  
  3

	
  
  Sunset Suits Moda Męska -Centrum Handlowe - Łódź III Ml, ul. Brzezińska 27/29, 90-307 Łódź
   

	
  
  Łódź III Ml, ul. Brzezińska 27/29, 90-307 Łódź
   

	
  
  PLN 241,404.90  

	
  
  4

	
  
  Sunset Suits Moda Męska ul. Górczewska 124, 01-109 Warsaw Park Wola
   

	
  
  ul. Górczewska 124, 01-109 Warsaw Park Wola
   

	
  
  PLN 222,876.00  

	 	 
	

    ................................................................................

    Alienator 	
    

    ................................................................................

    Bank     

 

 

 

 

 

6

Appendix 1 to the agreement on the transfer of ownership of chattels specified by kind or collection of items no. 31/2002 of 28/11/2002 as security 

List of commercial goods alienated to the favour of ING Bank Śląski S.A. (value of alienation of PLN 1.0 M) - as at 28/02/2007
 

	
  
  No.

	
  
  Showroom 

	
  
  Address  

	
  
  Value at retail prices  

	
  
  1

	
  
  Sunset Suits Moda Męska ul. Dolnośląska 25 Plejada, 41-923 Bytom

	
  
  ul. Dolnośląska 25 Plejada, 41-923 Bytom

	
  
  PLN 265,527.20  

	
  
  2

	
  
  Sunset Suits Moda Męska ul. Orląt Lwowskich 138, 41-200 Sosnowiec
   

	
  
  ul. Orląt Lwowskich 138, 41-200 Sosnowiec
   

	
  
  PLN 547,848.30  

	
  
  3

	
  
  Sunset Suits Moda Męska -Centrum Handlowe - Łódź III Ml, ul. Brzezińska 27/29, 90-307 Łódź
   

	
  
  Łódź III Ml, ul. Brzezińska 27/29, 90-307 Łódź
   

	
  
  PLN 236,147.00  

	
  
  4

	
  
  Sunset Suits Moda Męska ul. Górczewska 124, 01-109 Warsaw Park Wola
   

	
  
  ul. Górczewska 124, 01-109 Warsaw Park Wola
   

	
  
  PLN 221,290.80  

	 	 
	

    ................................................................................

    Alienator 	
    

    ................................................................................

    Bank     

 

 

 

 

 

 

7

Appendix 1 to the agreement on the transfer of ownership of chattels specified by kind or collection of items no. 31/2002 of 28/11/2002 as security 

List of commercial goods alienated to the favour of ING Bank Śląski S.A. (value of alienation of PLN 1.0 M) - as at 31/01/2007
 

	
  
  No.

	
  
  Showroom 

	
  
  Address  

	
  
  Value at retail prices  

	
  
  1

	
  
  Sunset Suits Moda Męska ul. Dolnośląska 25 Plejada, 41-923 Bytom

	
  
  ul. Dolnośląska 25 Plejada, 41-923 Bytom

	
  
  PLN 248,335.50  

	
  
  2

	
  
  Sunset Suits Moda Męska ul. Orląt Lwowskich 138, 41-200 Sosnowiec
   

	
  
  ul. Orląt Lwowskich 138, 41-200 Sosnowiec
   

	
  
  PLN 565,026.00  

	
  
  3

	
  
  Sunset Suits Moda Męska -Centrum Handlowe - Łódź III Ml, ul. Brzezińska 27/29, 90-307 Łódź
   

	
  
  Łódź III Ml, ul. Brzezińska 27/29, 90-307 Łódź
   

	
  
  PLN 216,398.70  

	
  
  4

	
  
  Sunset Suits Moda Męska ul. Górczewska 124, 01-109 Warsaw Park Wola
   

	
  
  ul. Górczewska 124, 01-109 Warsaw Park Wola
   

	
  
  PLN 250,046.10  

	 	 
	

    ................................................................................

    Alienator 	
    

    ................................................................................

    Bank     

 

 

8

RESTRUCTURING AGREEMENT 

A Restructuring Agreement was entered into on 02/02/2007 in Poznań by and between ING Bank Śląski Spółka Akcyjna with its registered office in Katowice, ul. Sokolska 34, which is entered into the Register of Entrepreneurs at the District Court in Katowice, Commercial Department of the National Court Register under the number KRS 0000005459 with a tax ID number (NIP) 634-013-54-75 and share capital of PLN 130,100,000 and paid up share capital of PLN 130,100,000, Branch in Poznań, ul. Piekary 7, hereinafter referred to as the “Bank", represented by:
 

1)

Barbara Jablońska - Assistant Manager of the Risk Management Department in the North-West Region
 

2)

Małgorzata Kozanecka - Senior Corporate Client Risk Appraisal Specialist
 

and  

Mirosław Kranik, domiciled at ulica Garbary 57/1, 61-758 Poznań, holder of personal identity card series FW number 7104306 issued by KPMO Rawa Mazowiecka, having a statistical number (PESEL) of: 54052510257, conducting business activities under the name of: “Sunset Suits, Men’s Fashion - Moda Męska" with its registered office at ulica Garbary 57, 61-758 Poznań, which is entered into the register of sole-proprietorships of the City Council in Poznań under the number 15097/94/S, REGON statistical number 008223478, tax ID number (NIP) 785-004-14-54,
 

hereinafter referred to as the “Debtor”
 

(hereinafter referred to as the Agreement), of the following wording:
 

§ 1 

Subject and timing of the restructuring 

1.

Further to the Debtor’s difficult financial and economic situation which does not allow for the repayment of the whole of the due debt to the Bank, the Bank expresses consent to the further, conditional restructuring of the debt arising from the loan granted under agreement no. 885/KI/10/K/2000 of 01/03/2000 for a zloty-denominated loan indexed by the Swiss franc exchange rate, together with subsequent annexes restructured by Restructuring Agreement no. 05/KG/CBK/03 of 10/03/2003 with subsequent annexes and the Restructuring Agreement of 24/04/2006.
 

2.

The Bank issued Bank Enforcement Title no. 02/2006 against the Debtor on 28/09/2006 confirming the liability arising from the loan agreement specified in para. 1.
 

3.

The Parties jointly confirm that the Debtor’s debt to the Bank under the loan agreement specified in para. 1, as at 02/02/2007 amounts to a total of PLN 7,795,557.55 (in words: seven million, seven hundred and ninety five thousand, five hundred and fifty seven 55/100 zlotys), comprising:
 

a)

principal of PLN 5,387,201.10;   

b)

unpaid contractual interest, as at the date of issue of the Bank Enforcement Title, of PLN 1,609,425.66;
 

9

c)

unpaid increased interest on the debt from the principal which was not paid on time, as at the date of issue of the Bank Enforcement Title, of PLN 299,178.32;
 

d)

unpaid interest on the principal amount of the loan referred to in para. 3.a) and on the interest referred to in para. 3.b) and c) which has accrued from the date of issue of the Bank Enforcement Title referred to in para. 2 up to 01/02/2007, in the amount of PLN 499,752.47.
 

4.

The Debtor recognises his due debt with respect to the Bank in principle and at the level under the agreement referred to in para. 1 and in the amount specified in para. 3.
 

5.

This Agreement was executed up to 29/12/2011.  

6.

The Debtor’s debt specified in para. 3 is registered on loan account no. 73 1050 1520 1000 0022 6836 1876.
 

7.

The Bank shall not file an application to announce the Debtor’s bankruptcy during the validity of this Agreement and shall not conduct enforcement proceedings against the Debtor on condition that he observes all the provisions of this Agreement.
 

§ 2

Accrual of interest 

1.

The Bank waives the right to charge and collect penalty and statutory interest in accordance with the provisions of the Bank Enforcement Title of 28/09/2006, as referred to in § 1.2, during the validity of this Agreement.
 

2.

In the event of the termination of this Agreement, the Bank shall charge penalty and statutory interest from the date on which the notice of termination passes on the Bank's outstanding receivables, in accordance with the provisions of the Bank Enforcement Title of 28/09/2006, as referred to in § 1.2.
 

§ 3

Repayment of the debt 

1.

The Debtor is obliged to repay the whole of the debt from the principal specified in § 1.3.a) at the following times and amounts:
 

a)

5 instalments at a level of PLN 40,000.00 payable on the last day of every month from 28/02/2007 to 30/06/2007;

b)

18 instalments at a level of PLN 60,000.00 payable on the last day of every month from 31/07/2007 to 31/12/2008;
 

c)

35 instalments at a level of PLN 115,000.00 payable on the last day of every month from 31/01/2009 to 30/11/2011;
 

d)

the final repayment of the loan is due on 29/12/2011, i.e. the instalment of principal in the amount of PLN 82,210.10.
 

10

2.

The Bank shall charge interest monthly on the debt from the principal during the period from 02/02/2007 to 30/01/2008, at the level of the interest rate based on the WIBOR rate and the Bank’s margin of 2.0 percentage points p.a.; whereas during the period from 31/01/2008 to 29/12/2011, the Bank shall charge and collect interest monthly on the last day of the calendar month at the level of the interest rate based on the WIBOR rate plus the Bank’s margin of 2.0 percentage points p.a.  The first time the Bank collects interest shall be on 28/02/2008 for the period from 31/01/2008 to 27/02/2008.
 

3.

The interest rate which is based on the WIBOR rate is set on the basis of 1-month zloty-denominated deposits on the interbank market (WIBOR 1M) and is calculated as the mean of the last 10 quotations of the calendar month preceding the date of signature of this Agreement.
 

4.

The Bank may change the level of the margin specified in para. 2 in the event of the appearance of circumstances during the loan period for which the Bank is not responsible and which affect the profitability of granting the loan or increasing the lending risk.  A change in the level of the margin is justified by the following circumstances:
 

a)

the need to establish or increase the previously established specific risk provisions for receivables from the loan in accordance with the applicable provisions of the law;
 

b)

the need to establish or increase the previously established specific risk provisions for receivables from the loan as a consequence of a change in the law regulating the principles of establishing provisions for risk related to the activities of banks;
 

c)

an increase in the capital requirements regarding conducting banking activities and as a consequence of a change in the provisions of the law regulating the principles of financial management of banks;
 

d)

a reduction in the market value of the security for the repayment of the loan, which has been established;
 

e)

the appearance of arrears in the Debtor’s settlement of public law performances (in particular taxes and social insurance contributions).
 

A change in the margin in the above manner cannot result in its increase by more than 2 percentage points.
 

When making the change in the margin, the Bank shall notify the Debtor of its new level in writing specifying:
 

a)

the circumstances justifying the change in the margin;
 

b)

the date from which the margin at the amended level is effective, whereby this cannot be a date before the first day of the interest period starting after the date of delivery of the notice.
 

A change in the level of the margin in the above manner does not constitute an amendment to the loan agreement and does not require its termination.
 

11

5.

The interest will be changed in monthly periods.   The date of change of the interest rate is the first day of the calendar month following the date of signature of this Agreement and the first business day of each successive calendar month.
 

6.

The following principles of paying interest are set:
 

-

the contractual interest referred to in § 1.3.b) at a level of PLN 1,609,425.66 (in words: one million, six hundred and nine thousand, four hundred and twenty five 66/100 zlotys) shall be cancelled after the full, punctual repayment of the debt from the principal specified in § 1.3.a), whereby punctual repayment of the debt in this case is also considered late payment of up to 10 calendar days after the agreed payment terms;
 

-

the increased interest referred to in § 1.3.c) at a level of PLN 299,178.32 (in words: two hundred and ninety nine thousand, one hundred and seventy eight 32/100 zlotys) shall be cancelled after the full, punctual repayment of the debt from the principal specified in § 1.3.a), whereby punctual repayment of the debt in this case is also considered late payment of up to 10 calendar days after the agreed payment terms;
 

-

the penalty interest referred to in § 1.3.d) at a level of PLN 499,752.47 (in words: four hundred and ninety nine thousand, seven hundred and fifty two 47/100 zlotys) shall be cancelled after the full, punctual repayment of the debt from the principal specified in § 1.3.a), whereby punctual repayment of the debt in this case is also considered late payment of up to 10 calendar days after the agreed payment terms;
 

-

the contractual interest charged by the Bank from 30/01/2008, as referred to in para. 2 shall be suspended in repayment until 29/12/2011 and shall be cancelled after the full, punctual repayment of the debt from the principal specified in § 1.3.a), whereby punctual repayment of the debt in this case is also considered late payment of up to 10 calendar days after the agreed payment terms;
 

7.

The debt shall be repaid by the Bank making drawings - at its own discretion - of funds from the bank account:
 

-

number: 94 1050 1520 1000 0005 0332 1077 held for the Debtor at ING Bank Śląski S.A. Branch in Poznań.
 

The Bank’s drawing of the funds in the above manner shall not require the Debtor to provide any additional instructions.
 

8.

The Debtor is obliged to ensure that funds are available on the bank account specified in para. 7 on the repayment dates specified in para. 1 and para. 2 at a level which is sufficient to cover the Bank’s receivables.
 

9.

The Debtor hereby authorises the Bank to draw funds from the bank account referred to in para. 7 for the repayment of all of the Debtor’s liabilities to the Bank arising hereunder in accordance with the terms of this Agreement.  The Debtor authorises the Bank to draw funds in the above manner before all other payments, with the exception of payments arising from enforcement titles and, in the event of a lack of sufficient funds on this account on the due dates, authorises the Bank to draw the due amounts from all future payments made to this account before all other payments with the exception of payments arising from enforcement titles.
 

12

§ 4

Increased interest 

The Bank charges increased interest on debts which are not repaid on time at the level specified in the Order of the President of the Management Board of ING Bank Śląski S.A. which applies to this.  Interest is collected in the manner specified in 

§ 3.7.  

§ 5

Early repayment of the loan 

The Debtor is entitled to repay the principal early in whole or in part by previously giving instructions on the day before the intended repayment of the principal in whole or in part.
 

§ 6

Commission 

1.

The Debtor shall pay the Bank a commission of 0.05 % on the principal amount of the debt specified in § 1.3.a), which amounts to PLN 2,693.60 (in words: two thousand, six hundred and ninety three 60/100 zlotys). The commission is payable on the date of signature of the Agreement.  

2.

The commission shall be collected from the bank account specified in § 3.7.
 

The Bank’s collection of funds for the repayment of the Debtor’s liabilities from the commission does not require the Debtor’s submission of any additional instructions and shall take place in the manner specified in § 3.7.
 

§ 7 

Security of repayment 

1.

The Parties agree that the current legal security defined in the loan agreement referred to in § 1.1 herein shall remain effective until the full repayment of all of the Debtor’s liabilities encompassed by this Agreement.  This security includes:
 

1)

the alienation of items defined by kind on the basis of alienation agreement no. 26/CBK/2001 of 23/02/2001, i.e. commercial goods: suits, jackets, trousers, shirts, waistcoats and ties of a total value of PLN 8,000,000.00 which are located in the Sunset Suits, Men’s Fashion-Moda Męska company showrooms with an assignment of rights under the insurance policy;
 

Because the Debtor filed an application to release security in the form of the alienation encompassed by the agreement on the alienation of items defined by kind, no. 26/CBK/2001 of 23/02/2001, in order to contribute the items encompassed by this Agreement to the company of the Entrant to the Debt, the Bank expressed consent to the above release (vide: Representation on the waiver of security constituting appendix 1 hereto) on condition that the Entrant to the Debt re-establishes the security in the form of an alienation to the Bank within 7 days of the date on which the appropriate resolution is passed.
 

13

2)

the alienation of items defined by kind on the basis of alienation agreement no. 25/CBK/2001 of 23/02/2001, i.e. stocks of raw materials and finished goods: suits, jackets, trousers, shirts and waistcoats of a total value of PLN 2,000,000.00 which are located in the production plant in Krzyżanowo, which is owned by Mirosław Kranik Sunset Suits, Men’s Fashion-Moda Męska with an assignment of rights under the insurance policy;
 

3)

an ordinary mortgage for the amount of PLN 106,800.00 on real property located in Błociszewo, constituting the property of Ewelina Ligocka - Kranik, domiciled in Krzyżanowo 7 - Municipality of Śrem - for which the District Court in Śrem holds the land and mortgage register no. 35.080;
 

4)

an ordinary mortgage for the amount of PLN 119,600.00 on real property located in Śrem, constituting the property of Ewelina Ligocka - Kranik, domiciled in Krzyżanowo 7 - Municipality of Śrem - for which the District Court in Śrem holds the land and mortgage register no. 31.485;
 

5)

an ordinary mortgage for the amount of PLN 112,200.00 on real property located in Śrem, constituting the property of Ewelina Ligocka - Kranik, domiciled in Krzyżanowo 7 - Municipality of Śrem - for which the District Court in Śrem holds the land and mortgage register no. 32.392;
 

6)

an ordinary mortgage for the amount of PLN 220,300.00 on real property located in Marianowo, constituting the property of Ewelina Ligocka - Kranik, domiciled in Krzyżanowo 7 - Municipality of Śrem - for which the District Court in Śrem holds the land and mortgage register no. 28.700;
 

7)

a capped mortgage to the amount of PLN 1,000,000.00 on real property located in Krzyżanowo, constituting the property of Ewelina Ligocka - Kranik, domiciled in Krzyżanowo 7 - Municipality of Śrem - for which the District Court in Śrem holds the land and mortgage register no. 22371;
 

8)

an ordinary mortgage for the amount of PLN 180,000.00 on real property located in Suchy Las, constituting the property of the spouses Mirosław Kranik domiciled in Poznań at ul. Garbary 57/1 and Ewelina Ligocka - Kranik, domiciled in Krzyżanowo 7 - Municipality of Śrem - for which the District Court in Poznań holds the land and mortgage register no. 100.072;
 

9)

an ordinary mortgage for the amount of PLN 180,000.00 on real property located in Suchy Las, constituting the property of Mirosław Kranik, domiciled in Poznań at ul. Garbary 57/1, for which the District Court in Poznań holds the land and mortgage register no. 100.074;
 

10)

a court registered pledge on stocks of raw materials, work in progress and finished goods of a total value of PLN 1,000,000.00 constituting the property of Sunset Textile Ewelina Ligocka-Kranik with its registered office in Poznań at ul. Garbary 57, located at the production plant in Żagań at ul. Fabryczna 4-6, established on the basis of a registered pledge agreement on items marked by kind no. 42/2002 of 13/08/2002, together with an assignment of rights under the insurance policy;

14

11)

a court registered pledge on weaving and sewing machinery of a total net book value as at 30/06/2002 of PLN 3,000,979.26 constituting the property of Mirosław Kranik Sunset Suits Men’s Fashion in Poznań at ul. Garbary 57, located at the production plant in Krzyżanowo, as specified in Appendix 1 to the agreement on the establishment of a registered pledge on items marked by their identity no. 44/2002 of 03/09/2002, together with an assignment of rights under the insurance policy;
 

12)

a court registered pledge on weaving machinery of a total net book value as at 30/06/2002 of PLN 661,399.56 constituting the property of Sunset Textile Ewelina Ligocka-Kranik with its registered office in Poznań at ul. Garbary 57, located at the production plant in Żagań at ul. Fabryczna 4-6 and at the production plant in Krzyżanowo, as specified in Appendix 1 to the agreement on the establishment of a registered pledge on items marked by their identity no. 46/2002 of 03/09/2002, and Appendix 1 to the agreement on the establishment of a registered pledge on items marked by their identity no. 47/2002 of 05/09/2002, together with an assignment of rights under the insurance policy;
 

13)

a court registered pledge on weaving machinery of a net book value as at 30/06/2002 of PLN 600,006.21 constituting the property of Mirosław Kranik Sunset Suits Men’s Fashion in Poznań at ul. Garbary 57, located at the production Mirosław Kranik Sunset Textile production plant in Żagań at ul. Fabryczna 4-6, as specified in Appendix 1 to the agreement on the establishment of a registered pledge on items marked by their identity no. 45/2002 of 03/09/2002, together with an assignment of rights under the insurance policy;
 

14)

a court registered pledge on shop fittings of a total value of PLN 1,767,314.90; the parties understand the notion of shop fittings as shelving, counters, tables, cupboards, shelves, desks and chairs, constituting the property of Mirosław Kranik Sunset Suits Men’s Fashion in Poznań at ul. Garbary 57, as specified together with their location in Appendix 1 to the agreement on the establishment of a registered pledge on items marked by kind no. 43/2002 of 03/09/2002, together with an assignment of rights under the insurance policy;
 

The Bank expressed its consent to the in-kind contribution of the items encompassed by the above Agreement to the company of the Entrant to the Debt in accordance with the Debtor’s request of 26/01/2007.
 

15)

a court registered pledge on vehicles constituting the property of Mirosław Kranik domiciled in Poznań at ul. Garbary 57/1, established on the basis of agreements establishing a registered pledge from number 6/CBK/02 of 09/07/2002 to number 29/CBK/02 of 09/07/2002, from number 31/CBK/02 of 09/07/2002 to number 39/CBK/02 of 09/07/2002, number 6/CBK/03 of 27/03/2003 and number 11/CBK/03 of 09/06/2003, together with an assignment of rights from the insurance policy (except for registered pledges numbered 11/CBK/02, 12/CBK/02, 13/CBK/02, 18/CBK/02, 29/CBK/02, 31/CBK/02, 32/CBK/02, 36/CBK/02 and 38/CBK/02);
 

16)

a blank, signed bill of exchange issued by the Debtor and guaranteed by Ewelina Ligocka-Kranik.
 

15

2.

In order to reinforce the security, the Debtor undertakes to additionally secure the loan specified in § 1 of this Agreement in the form of:
 

-

the signature of the Agreement on the Entry into a Loan Debt by SUNSET SUITS Spółka Akcyjna, with its registered office at ulica Garbary 57, 61-758 Poznań with a REGON statistical number 300388584, which is entered into the Register of Entrepreneurs of the National Court Register, National Court Register (KRS) number: 0000265620, District Court in Poznań, 21st Commercial Department of the National Court Register,
 

with the reservation that, in the event of the termination of this Agreement, the above security also represents security for the liability arising from the loan agreement referred to in § 1.1.
 

3.

In the event of a reduction in the value of the security which, in the Bank’s opinion, is material, the Debtor is obliged to establish additional security on the Bank’s demand within 7 days of the date of the demand under the sanction of the termination of the Agreement.
 

4.

In the event of the termination of this Agreement, all legal security on the loan specified in § 1.1 which is established earlier and all security established during its validity shall remain in force.
 

§ 8

The Debtor’s representations and commitments 

1.

The Debtor hereby represents that:  

a)

no court or administrative proceedings are pending against the Debtor which could have a negative impact on the performance of the Debtor’s obligations arising from this Agreement;
 

b)

the execution of this Agreement and the performance by the Debtor of the obligations arising from it shall not be in breach of the Debtor’s statutory documents.
 

2.

The Debtor hereby undertakes to:  

a)

deliver the following documents and information to the Bank:
 

-

monthly: information on the level of overdue receivables and liabilities, the balance of liabilities to other banks, financing institutions and liabilities to the state, the balance of stock constituting the security on the Bank’s receivables (including the list of all company showrooms with a definition of the value of goods alienated to the favour of ING in each of them), information on the book value of the remaining security on the Bank’s receivables, the monthly F-01 financial statements and monthly sales reports; 

-

monthly printouts of the balance of stock constituting security on the Bank’s receivables;
 

16

-

the annual financial statements 14 days from the official reporting date;
 

-

other explanations and documents regarding the economic and financial situation, as well as security on ING’s receivables - on the Bank’s demand;
 

b)

pass turnover through the account at ING BSK in proportion to the Bank’s share of financing the companies;
 

c)

not become involved in investments of a value of more than PLN 200.0 k without the Bank's consent;
 

d)

not to grant sureties and not to assume liabilities for third parties without the Bank’s consent;
 

e)

not to draw new loans or borrowings without the Bank’s consent;
 

f)

assign the whole of the profit generated to the company's equity;
 

g)

create a limited liability company on the basis of a part of the assets from the Debtor’s business activities conducted under the name of “Sunset Suits, Men’s Fashion - Moda. Męska” no later than by 30/06/2007 and assure the Bank of the status of observer at the Supervisory Board meetings of the newly established limited liability company.  The Debtor’s representation on the intention to establish the limited liability company mentioned above is attached as Appendix 2 to this Agreement;
 

h)

ensure that the limited liability company referred to in point g) enters into the debt arising from the agreement referred to in § 1.1 herein and the debts of ZPW 9 MAJA S.A. and MARPOL Sp. z o.o.;
 

i)

punctually service the ZPW 9 MAJA S.A. and MARPOL Sp. z o.o. debts, whereby punctual repayment of debts is also considered late repayment of up to 10 calendar days after the set payment term;
 

j)

continue to insure all assets constituting security of the Bank's receivables, as well as the assignment of rights from the insurance policies to the favour of ING BSK;
 

k)

not encumber any of his current or future assets, in particular, not to establish security on these assets for the repayment of liabilities to other creditors without the receipt of the Bank’s prior written consent;
 

l)

ensure that the Bank’s claims on the Debtor from this Agreement have at least the same priority in all respects as the claims of other creditors, with the exception of the creditors whose claims have priority under the generally applicable provisions of the law;
 

m)

respect the Bank’s rights to take restrictive action in the event that the Debtor fails to perform the terms and conditions of any other agreement executed with another creditor;
 

n)

submit a written representation on the surrender to enforcement together with the execution of this Agreement; a Representation on the surrender to enforcement shall also be submitted by the bill of exchange guarantor and Ewelina Ligocka-Kranik;
 

17

o)

present proof of submission and payment of the charges for applications filed with the court to change the content of the mortgage entries referred to in 

§ 7.1 to the Bank within 21 days of the date of signature of this Agreement;
 

p)

ensure that the Debtor’s liabilities to the Bank arising from the sureties granted on the ZPW 9 MAJA S.A. and MARPOL Sp. z o.o. liabilities are kept at a position which is at least equal to the Debtor’s liabilities arising from the sureties granted on the liabilities of other entities to other creditors throughout the whole of the period of validity of this Agreement, in particular he undertakes not to settle the liabilities to other creditors in a manner which breaches or restricts the correct extent to which the Bank’s claims are satisfied;  

q)

take steps to negotiate a suspension of the payment of interest with BWE by 28 February 2007 in a manner which is similar to the terms and conditions with BGŻ S.A. and ING Bank Śląski S.A. under the sanction of the Bank introducing current interest servicing;
 

r)

maintain proportionality of the repayments to banks from the funds obtained from the bond issue;
 

s)

present photocopies of compositions with banks including proposed terms of repayment of debt to the Bank by 28 February 2007.
 

§ 9

Default 

1.

The Bank may terminate the Agreement before the repayment date specified in the Agreement, as specified in § 1.5 in the event of the emergence of one of the following premises:
 

a)

the Bank establishes that the documentation, on the basis of which a decision was made to enter into the conditional restructuring, which was submitted, proves to be false or contains untrue information or any of the Debtor’s representations contained in this Agreement prove to be untrue;
 

b)

the Debtor fails to pay any of the receivables to the Bank arising from this Agreement in time;
 

c)

a threat to the punctual repayment of the loan and interest related to what the Bank believes to be a material worsening of the Debtor’s economic and financial position or the introduction of changes in the area of the Debtor’s organisational and legal form of activities or ownership structure, which, in the Bank’s opinion, will constitute a material threat to the Debtor performing his obligations arising from this Agreement;
 

d)

a reduction in the value of the security specified in § 7 of the Agreement, which is significant in the Bank’s opinion and a lack of consent of the Debtor to the establishment of additional security;  

18

e)

the failure of the Debtor to observe the terms of this Agreement, including the failure of the Debtor to meet any of the obligations specified in § 8 or a breach of the Regulations on financing business activity;
 

f)

the failure of the Debtor to perform his obligations arising from any loan agreement executed with another bank or such a change of terms and conditions of a loan agreement or agreements which, in the Bank’s opinion, constitutes a threat to the punctual repayment of the receivables specified in § 1.1; this applies, in particular, to possible changes involving the shortening of the repayment term;
 

g)

the termination of a loan agreement or restructuring agreement by another Bank or the initiation of debt recovery proceedings by another creditor;
 

h)

the better treatment of other creditors than the Bank in the event of a claim being filed by any creditor, with the exception of those creditors which have preference on the basis of the directly applicable provisions of the law.
 

2.

The termination of the Agreement referred to in para. 1 involves the Bank setting a new date for the earlier repayment than set forth in the Agreement.  The termination of the Agreement by the Bank becomes effective after the passage of 7 days from the date of its delivery by the Bank to the Debtor’s last address known to the Bank.  An undelivered notice of termination shall be filed with the case files together with an appropriate note on the reasons for the lack of delivery - with the effect of delivery, to which the Debtor expresses consent.
 

3.

In the event of the termination of the Agreement:
 

a)

the basis for filing claims is the loan agreement referred to in § 1.1;
 

b)

the Bank may treat payments made during the validity of this Agreement at its own discretion, deciding on the order of recording repayments (costs, auxiliary receivables, interest and principal).
 

§ 10

This Agreement is not a renewal (as defined by article 506 of the Civil Code) of the Debtor’s liability from the loan agreement referred to in § 1.1, but purely regulates the principles of repaying the debt.
 

§ 11

In matters not governed by this Agreement:
 

1)

the provisions of the current loan agreement executed by and between the parties shall remain in force and the version of the following which is in force on the date of signature of the Agreement shall be applied respectively:
 

a)

The Regulations on Financing Business Activity; 

b)

The Regulations on awarding loans in zlotys indexed by a convertible currency exchange rate. 

The Debtor represents that he has familiarised himself with the Regulations on Financing Business Activity and the regulations on awarding loans in zlotys indexed by a convertible currency exchange rate.
 

19

2)

The following shall apply:  

a)

the Banking Law; 

b)

the Civil Code; 

c)

other generally applicable provisions of the law.
 

§ 12

The Parties shall pass any disputes which may arise in connection with the performance of the provisions of this Agreement for settlement to the court with jurisdiction over the place of the Bank’s registered office.
 

§ 13

All amendments to this Agreement must be made in writing under the sanction of invalidity.
 

§ 14

Two counterparts of this Agreement have been prepared, one for each of the Parties.
 

§ 15

This Agreement shall become effective after the joint fulfilment of the following conditions:
 

1)

after the Debtor and the bill of exchange guarantor, Ms. Ewelina Ligocka-Kranik domiciled at Krzyżanowo 7, Municipality of Śrem, PESEL statistical number: 55061505906 submit appropriate representations to the Bank on the surrender to enforcement under the procedure of article 97.2 of the Banking Law (Journal of Laws no. 140, item 939) with respect to the loan agreement referred to in § 1.1,
 

2)

after the Parties sign this Agreement,
 

3)

after the signature of the Agreement on the Entry into the Loan Debt by Sunset Suits S.A. within 7 days of the date of signature of this restructuring agreement.
 

Additional provisions  

The Bank is authorised to provide access to the data in the Interbank Business Information System, the Bank Register, to business information bureaux operating on the basis of the Act on the provision of access to business information of 14 February 2003 (Journal of Laws No. 50, item 424) to the extent and on the terms and conditions specified in this Act.  

ING Bank Śląski Spółka Akcyjna is authorised to provide the data referred to above if the following conditions are jointly satisfied:  

-

the total amount of the Customer’s liabilities to the Bank amounts to at least PLN 500;
 

20

-

the receivables have been due for at least 60 days;

-

at least one month has passed from the time that the Bank sent a payment demand to the correspondence address specified by the Debtor, and if the Debtor has not specified such an address - to the address of the Debtor’s registered office, containing a warning of its intention to provide the data to the bureau, stating the company name and address of the bureau’s registered office to which the Bank will provide the data.
 

 

	
  
  company seal and signatures of personnel authorised to represent the Debtor
   

	 	

company seal and signatures of personnel authorised to represent the Bank
 

As the bill of exchange guarantor, I accept all the terms and conditions of this Restructuring Agreement and express consent to the continuation of the guarantee.  Ewelina Ligocka-Kranik domiciled at Krzyżanowo 7, Municipality of Śrem, PESEL statistical number 55061505906. 

 

 

 

21Sunset Suits Holdings, Inc.: Exhibit 10.7 - Prepared by TNT Filings Inc.

Exhibit 10.7

(ENGLISH TRANSLATION)

Agreement on the entry into a loan debt  

An agreement was executed on 15/05/2007 in Warsaw, by and between Bank Gospodarki Żywnościowej Spółka Akcyjna with its registered office in Warsaw, at ul. Kasprzaka 10/16, a Company with fully paid up share capital of PLN 43,136,764 (the nominal value of the conditional increase in share capital is PLN 117,540), which is registered in the Register of Entrepreneurs in the National Court Register held by the District Court for the Capital City of Warsaw, 12th Commercial Department in Warsaw, under the KRS number 0000011571, holder of tax ID number (NIP) 526-10-08-546, hereinafter referred to as the Bank, represented by:
 

1) Tadeusz Piela - proxy  

2) Janina Kiedrowicz - proxy  

and  

SUNSET SUITS Spółka Akcyjna with its registered office in Poznań, at ul. Garbary 57, a Company with share capital of PLN 60,120,000, paid up to the amount of PLN 59,995,000, registered in the Register of Entrepreneurs in the National Court Register held by the District Court in Poznań, 21st Commercial Department of the National Court Register under the KRS number 0000265620, holder of tax ID number (NIP) 778-143-92-59, hereinafter referred to as the Entrant to the Debt,
 

represented by:  

1). Bogdan Zegar - President of the Management Board  

of the following wording:  

1.

The Bank represents that the following loans (hereinafter referred to as “Loans”) were granted to Mr. Mirosław Kranik, domiciled at ul. Garbary 57/1, 61-758 Poznań, holder of PESEL statistical number 54052510257, conducting business activities under the name of Sunset Suits Men’s Fashion - Moda Męska Mirosław Kranik (hereinafter referred to as the “Borrower"):
 

a)

a renewable loan on the terms and conditions specified in loan agreement no. 298/219/l/00/B/K/00 of 06/10/2000 and a medium-term business activity loan on the terms and conditions specified in loan agreement no. 290/219/I/00/B/K/00 of 03/10/2000, which were encompassed by composition No. 1 on 21/03/2002, after which they were restructured under composition agreement no. 2/CRW/2005 of 19/08/2005;
 

b)

a special overdraft facility on the terms and conditions specified in loan agreement no. 62/69/l/00/B/K/00 of 28/02/2000, which was encompassed by composition No. 2 on 21/03/2002, after which it was restructured under composition agreement no. 3/CRW/2005 of 19/08/2005.
 

The loan agreements and composition agreements referred to above are attached as Appendices from no. 1 to no. 7 hereto.
 

2.

As at 15/05/2007, the Borrower’s debt from the Loans referred to in point 1 of this agreement amounts to:
 

a)

under loan no. 298/219/I/00/B/K/00 and loan no. 290/219/I/00/B/K/00, which were encompassed by composition no. 1 on 21/03/2002 and were later encompassed by composition agreement no. 2/CRW/2005 of 19/08/2005: USD 4,831,341.02, (in words: four million, eight hundred and thirty one thousand, three hundred and forty one 02/100 US dollars) and PLN 3,162,360.00 (in words: three million, one hundred and sixty two thousand, three hundred and sixty 00/100 zlotys), of which:
 

due principal:  USD 20,868.20 

principal not yet due:  USD 3,772,520.76  

current interest: USD 1,037,952.06 and PLN 3,162,360  

b)

under loan no. 62/69/I/00/B/K/00, which was encompassed by composition no. 2 on 21/03/2002 and was later encompassed by composition agreement no. 3/CRW/2005 of 19/08/2005: PLN 4,667,860.71, (in words: four million, six hundred and sixty seven thousand, eight hundred and sixty 71/100 zlotys), of which:
 

due principal:  PLN 271.60  

principal not yet due:  PLN 2,640,046.22 

current interest: PLN 2,027,542.89 

3.

The Entrant to the Debt represents that he has familiarised himself with the wording of the loan agreements and composition agreements and is entering into the debt described in point 1 and point 2 herein and undertakes to repay the above debt jointly and severally with the Borrower, including the total principal amounts of the loans, together with interest and possible costs of proceedings, in accordance with the provisions of composition agreement no. 2/CRW/2005 of 19/08/2005 and composition agreement no. 3/CRW/2005 of 19/08/2005.
 

4.

Notwithstanding the provisions contained in composition agreement no. 2/CRW/2005 and in composition agreement no. 3/CRW/2005 - the Entrant to the Debt undertakes to make an additional early repayment of a part of the debt from the principal amounts of the Loans referred to in points 1 and 2 herein, at an amount of no less than PLN 5,000,000 (in words: five million zlotys), from funds originating from the issuance of debt instruments conducted by Sunset Suits S.A.  The repayment shall be made within 7 days of the date on which the Entrant to the Debt receives the funds from the issuance of the debt instruments.
 

The funds from the above repayment shall be used to repay the debt from the principal amount of the Loans in proportions selected at the Bank’s discretion.
 

5.

The Entrant to the Debt undertakes to present agreements to the Bank which have been executed with other banks - the Borrower’s creditors regarding: the entry into the debt or the assumption of the Borrower’s debt, the repayment of this debt and the confirmation of the repayment of debts from funds originating from the issuance of debt instruments.
 

2

6.

The Entrant to the Debt represents that he has obtained all the necessary corporate consents from the authorities of the Entrant to the Debt for executing and performing this agreement.
 

7.

Pursuant to article 97.1 and 97.2 of the Banking Law of 29 August 1997 (Journal of Laws of 2002, No. 72, item 665 as amended), the Entrant to the Debt represents that, in the event of the failure to fulfil the main performances and the auxiliary performances related to the main performances from the Loans encompassed by composition agreement no. 2/CRW/2005 of 19/08/2005 and composition agreement no. 3/CRW/2005 of 19/08/2005, it surrenders to enforcement of payment conducted in accordance with the provisions of the Civil Procedures Code under a bank enforcement title, which Bank Gospodarki Żywnościowej S.A. may issue to the amount of USD 5,898,000 and PLN 8,566,000 (in words: five million, eight hundred and ninety eight thousand US dollars and eight million, five hundred and sixty six thousand zlotys).  The Bank may apply for an executory clause to be awarded to the bank enforcement title no later than by 31/12/2015.
 

8.

Pursuant to article 105.4d of the Banking Law of 29 August 1997, the Bank may provide information - through Biuro Informacji Kredytowej Spółka Akcyjna with its registered office in Warsaw - Customer Service Office at ul. Pruszkowska 17 - to financial institutions, which are subsidiaries of banks, regarding the liabilities of the Entrant to the Debt which arise under this agreement and which are related to the performance of banking activities.
 

9.

Pursuant to article 105a.2 of the Banking Law of 29 August 1997, the Entrant to the Debt expresses consent to the Bank and Biuro Informacji Kredytowej Spółka Akcyjna with its registered office in Warsaw - Customer Service Office at ul. Pruszkowska 17 processing and providing access to information which applies to it and which constitutes a banking secret after the expiry of its obligation arising from this agreement - to the extent provided for by the provisions of the Banking Law and other legal Acts.
 

The consent may be revoked at any time.  

10.

The Borrower has been informed that Sunset Suits S.A. is entering into the debt described in point 1 and point 2 herein and expresses consent to this through the signature of this agreement.
 

11.

All amendments to this agreement must be made in writing under the sanction of invalidity.
 

12.

This agreement is exempt from transfer tax.  

13.

Matters not governed by this agreement are subject to the respective provisions of the Civil Code.
 

14.

3 counterparts of the agreement have been prepared, one for each of the Parties and one counterpart for the Borrower.
 

	
  
  ......................................................................................

  (Seal and signature of the entrant into the debt). 

	 	
  
  ......................................................................................

  (Bank’s seal and signatures of authorised personnel) 

3

I declare that I accept the wording of this agreement and express my consent to SUNSET SUITS SA. with its registered office in Poznań entering the debt described in point 1 and point 2 of this agreement.
 

......................................................................

(Borrower’s seal and signature)

I represent that I understand the wording of this agreement on the entry into the debt.
 

......................................................................

(Guarantor’s signature) 

 

 

 

 

 

4

Appendix no. 4 to the Agreement on the entry into the loan debt executed on 15/05/2007
 

Composition No. 2/CRW/2005  

executed on 19 August 2005 in Warsaw by and between:  

Bank Gospodarki Żywnościowej Spółka Akcyjna with its registered office in Warsaw at ul. Kasprzaka 10/16, registered in the register of entrepreneurs of the National Court Register held by the District Court for the Capital City of Warsaw, 19th Commercial Department of the National Court Register under the number KRS 11571, which is represented by:
 

Mr. Tadeusz Piela - proxy 

Ms. Ewa Brozi - proxy  

hereinafter referred to as the “Bank”  

Mr. Mirosław Ryszard Kranik, domiciled at ul. Garbary 57/1, 61-758 Poznań, holder of personal ID card series FW number 7104306 issued by KPMO Rawa Mazowiecka on 14/07/1972, holder of PESEL statistical number 54052510257, conducting business activities under the company name of: “Sunset Suits Men's Fashion - Moda Męska" Kranik Mirosław with its registered office at ul. Garbary 57, 61-758 Poznań,
 

hereinafter referred to as the “Debtor”  

hereinafter jointly referred to as the “Parties”  

In order to secure the performance of the Bank’s claims arising from loan agreement no. 289/219/I/00/B/K/00 for a renewable loan executed on 06/10/2000 and loan agreement no. 290/219/I/00/B/K/00 for a medium-term business activity loan executed on 03/10/2000 by and between the Bank and the Debtor, which were encompassed by composition no. 1 on 21/03/2002.
 

The Parties represent that they are terminating Composition no. 1 of 31/03/2002 as of 19/08/2005 and are executing Composition no. 2/CRW/2005, hereinafter referred to as the “Composition”, of the following wording:
 

§ 1  

1.

The Bank represents that it converted the principal amount in zlotys into US dollars on 21/03/2002 at the Debtor’s request.  As a result, on the date of signature of the Composition, the Debtor’s debt to the Bank under the loan agreement and the Composition described in the preamble to the Composition amounts to a total of USD 5,218,207.32 (in words: five million, two hundred and eighteen thousand, two hundred and seven 32/100 US dollars) and PLN 3,162,360.00 (in words: three million, one hundred and sixty two thousand, three hundred and sixty 00/100 zlotys) consisting of:
 

1)

principal in the amount of USD 4,714,554.66 (in words: four million, seven hundred and fourteen thousand, five hundred and fifty four 66/100 US dollars);

5

2)

interest in the amount of USD 503,652.66 (in words: five hundred and three thousand, six hundred and fifty two 66/100 US dollars);

3)

interest in the amount of PLN 3,162,360.00 (in words: three million, one hundred and sixty two thousand, three hundred and sixty 00/100 zlotys).

2.

The Debtor represents that he recognises the debt referred to in para. 1 at the full amount.
 

1.

The claim encompassed by this Composition shall be recorded on the loan account held at the Bank, about which the Debtor will be informed by recorded delivery post within 7 days of the date of signature of this Composition.
 

§ 2

1.

The debtor undertakes to repay the debt described in § 1.1 of the Composition on the following terms and conditions: 

The principal in the amount of USD 4,714,554.66 (in words: four
million, seven hundred and fourteen thousand, five hundred and fifty four 66/100
US dollars) shall be repaid between 19/08/2005 and 31/12/2013 in monthly
instalments payable by the last day of every month, according to the following
repayment schedule:

  	- 08/2005 - 12/2005	USD 100,000.00	payable monthly at	USD 20,000.00	(5 instalments)
	- 01/2006 - 12/2007	USD 672,000.00	payable monthly at	USD 28,000.00	(24 instalments)
	- 01/2008 - 12/2010	USD 1,116,000.00	payable monthly at	USD 31,000.00	(36 instalments)
	- 01/2011 - 06/2011	USD 234,000.00	payable monthly at	USD 39,000.00	(6 instalments)
	- 07/2011 - 11/2013	USD 2,523,000.00	payable monthly at	USD 87,000.00	(29 instalments)
	- 12/2013	USD
      69,554.66 (final instalment)	 	 

2.

The interest rate on the principal amount of the debt is set per annum with a variable interest rate at the level of LIBOR 3M + 2.5 pp margin.
 

The level of LIBOR 3M announced 2 business days before the start of a given calendar month shall be used to set the level of the interest rate for the month.
 

3.

The level of interest specified in para. 2 on the date of execution of the Composition is 6.1931% (LIBOR 3 M rate plus the Bank’s margin of 2.5 pp.) and applies to interest charged to the end of the calendar month in which the Composition was executed.
 

4.

Interest shall accrue on the assumption that the financial year has 365 days, 1 day = 1/365 of a year and each month has the actual number of calendar days in that month.
 

The Bank shall notify the Debtor and the Guarantor of changes in the level of interest on the Composition by posting information on the notice board in the Bank’s Branch in Poznań, ul. Piekary 17 regarding the level of the LIBOR 3M rate which will be applicable in the next settlement period, specifying the date on which the level of the interest rate will be changed.
 

5.

Interest charged monthly for the period from 19/08/2005 to 18/08/2007 shall be suspended for repayment until 31/12/2013.
 

6.

Current interest charged monthly from 19/08/2007 shall be payable on the last business day of every month for the current month.
 

6

7.

The interest described in § 1.1.2 and § 1.1.3 of the Composition charged up to 18/08/2005 in the amount of USD 503,652.66 and PLN 3.162,360.00 shall be suspended for repayment until 31/12/2013.
 

8.

In the event that the Debtor repays the debt from the principal amount of the loan encompassed by this composition in whole, as referred to in § 1.1.1 by 31/12/2013, as well as the current interest referred to in § 2.6, the Bank shall cancel the interest which is suspended for repayment until 31/12/2013 from:
 

a)

interest accrued monthly for the period from 19/08/2005 to 18/08/2007;
 

b)

the interest described in § 1.1.2 and § 1.1.3 of the Composition charged up to 18/08/2005 in the amount of USD 503,652.66 and PLN 3,162,360.00.
 

§ 3

1.

The liabilities (instalments of principal and interest) arising from the Composition shall be repaid through the encumbrance of the Debtor’s current account no. 94 2030 0045 1110 0000 0041 8520 held at the Bank or the transfer of funds to the Debtor’s loan account.
 

2.

The receivables from this Composition are charged and paid in US dollars or another convertible currency or in zlotys, with the use of the sell rate in the exchange rate tables which are in force at the Bank on the day that the payments are made.
 

3.

The date for repaying the liabilities arising from this Composition is considered the date on which the funds are credited to the Bank’s appropriate account.
 

4.

The Debtor undertakes to ensure that funds are kept on the account referred to in para. 1 of this paragraph at the level required for the repayment of the interest and principal instalments at the times of their payment, as specified in § 2.
 

5.

A change in bank account numbers for any reason does not constitute an amendment to the Composition and does not require an annex; the Bank shall inform the Debtor of every change in the account forthwith.
 

§ 4

The Bank shall collect increased interest on the unpaid debt described in § 1.1.1 of the Composition at the times specified in § 2.1, or upon the expiry of the notice of termination of the Composition, at a level of 1.5 times the interest rate specified in 

§ 2.2 which applies in the periods for which the interest accrues.  

§ 5

1.

The legal security for the repayment of the debt encompassed by the Composition is the current security arising from loan agreements no. 289/219/I/00/B/K/00, no. 290/219/l/00/B/K/00 and Composition no. 1 i.e.:
 

1)

an ordinary mortgage for the amount of PLN 4,000,000 established on real property located in Łódź, for which the District Court for Łódź-Śródmieście in Łódź holds the land and mortgage register KW 111,218;

7

2)

an ordinary mortgage for the amount of PLN 3,300,000 established on real property located in Krzyżanowo, for which the District Court in Śrem holds the land and mortgage register KW 22,371, in which Ewelina Ligocka-Kranik is entered as the owner of the land and buildings, together with the assignment of rights to the insurance policy;

3)

a capped mortgage to the amount of PLN 4,000,000 established on real property located in Krzyżanowo, for which the District Court in Śrem holds the land and mortgage register KW 31,614, in which Mirosław Kranik is entered as the owner of the land and buildings, together with the assignment of rights to the insurance policy;

4)

a capped mortgage to the amount of PLN 2,000,000 established on real property located in Błociszewo, for which the District Court in Śrem holds the land and mortgage register KW 33,327, in which Ewelina Ligocka-Kranik is entered as the owner of the land and buildings;

5)

a capped mortgage to the amount of PLN 2,000,000 established on real property located in Krzyżanowo, for which the District Court in Śrem holds the land and mortgage register KW 22,487, in which Ewelina Ligocka-Kranik is entered as the owner of the land and buildings;
 

6)

a capped mortgage to the amount of PLN 1,000,000 established on real property located in Grabianowo, for which the District Court in Śrem holds the land and mortgage register KW 29,836, in which Ewelina Ligocka-Kranik is entered as the owner of the land and buildings;
 

7)

a capped mortgage to the amount of PLN 500,000 established on real property located in Krzyżanowo, for which the District Court in Śrem holds the land and mortgage register KW 29,128, in which Ewelina Ligocka-Kranik is entered as the owner of the land and buildings;
 

8)

a capped mortgage to the amount of PLN 500,000 established on real property located in Krzyżanowo, for which the District Court in Śrem holds the land and mortgage register KW 29,730, in which Ewelina Ligocka-Kranik is entered as the owner of the land and buildings;
 

9)

a court registered pledge on rights to the “Sunset Suits" trademark in the amount of PLN 11,000,000.00 - entry dated 27/08/2001 under item 851925 - under the decision of the District Court in Poznań, 16th Commercial Registered Pledge Department, on the basis of pledge agreement no. 336/KK/2001 on the right arising from the registered trademark of 25/05/2001, annex no. 1 of 21/03/2002 and annex no. 2 of 19/08/2005;
 

10)

a court registered pledge on raw materials (exterior and interior fabrics, inserts and accessories) of a value of PLN 12,500,000 - entry dated 17/11/2000 under item 776582 under the decision of the District Court in Poznań, 16th Commercial Registered Pledge Department, on the basis of pledge agreement no. 301/KK/00 of 16/10/2000, annex no. 1 of 21/03/2002 and annex no. 2 of 19/08/2005 together with the assignment of the rights from insurance policies.  The current value as at 30/06/2005 is PLN 3,410,497.84;  

8

11)

the alienation of finished goods (suits, shirts, ties, coats, anoraks and jumpers) located in the central warehouse in Krzyżanowo and Żagań of a value of PLN 3,000,000 - alienation agreement of 06/10/2000, annex no. 1 of 21/03/2002, annex no. 2 of 04/03/2003 and annex no. 3 of 19/08/2005 together with the assignment of rights from their insurance policies.  The current value as at 30/06/2005 is PLN 3,000,000.00;

12)

the alienation of finished goods (suits, shirts, ties, coats, anoraks and jumpers) located in the central warehouse in Krzyżanowo and Żagań of a value of PLN 3,000,000 - alienation agreement of 03/10/2000, annex no. 1 of 21/03/2002, annex no. 2 of 04/03/2003 and annex no. 3 of 19/08/2005 together with the assignment of rights from their insurance policies.  The current value as at 30/06/2005 is PLN 3,000,000.00;

13)

the alienation of finished goods (suits, shirts, ties, coats, anoraks and jumpers) located in the central warehouse in Krzyżanowo and Żagań of a value of PLN 4,000,000 - alienation agreement of 29/12/2000, annex no. 1 of 21/03/2002, annex no. 2 of 04/03/2003 and annex no. 3 of 19/08/2005 together with the assignment of rights from their insurance policies.  The current value as at 30/06/2005 is PLN 4,000,000.00;  

14)

the alienation of machines - alienation agreement of 25/05/2001, annex no. 1 of 21/03/2002 and annex no. 2 of 19/08/2005:  

-

LECTRA material cutting machine (description: cutter vector 2500 V2 D1 no. 517,518),
 

-

MOLEY standard 500/1600 + KRM A D450 no. 03983049/447, with an assignment of rights from their insurance policies;
 

15)

the alienation of vehicles - alienation agreement of 19/06/2001, annex no. 1 of 21/03/2002 and annex no. 2 of 19/08/2005:  

-

a Ford Escort passenger car, registration number PZR 005K (current PO \ 4839F), engine number WL62513, chassis number WFOAXXGCAAWL62513, year of manufacture 1998,
 

-

a Mercedes Benz 614D van,  (current PO \ 5165F), registration number PZD 488Y engine number 90490800025209, chassis number WDB6683231N068842, year of manufacture 1997,
 

together with the assignment of rights from their insurance policies;
 

16)

a civil law surety submitted by Ms. Ewelina Ligocka-Kranik;
 

17)

two blank, signed bills of exchange issued by the Debtor and guaranteed by Ewelina Ligocka-Kranik together with promissory declarations;  

18)

a power of attorney for the Debtor’s bank accounts held at the Bank.
 

2.

On the Bank’s demand - the Debtor is also obliged to establish the security mentioned in points 1 - 15 as the debt arising from the loan agreements mentioned in the preamble is repaid as security on the repayment of the claims from Composition no. 3/CRW/2005 executed on 19/08/2005 by and between the Bank and the Debtor.
 

9

3.

The Debtor and the Mortgage Debtors are obliged to submit petitions to the competent court to make changes to the land and mortgage registers listed in para. 1, points 1 - 8 regarding the timing for the repayment of the liability secured by the mortgage.
 

4.

The costs of adapting and updating the security in connection with this composition shall be borne by the Debtor.
 

§ 6

Under this Composition, the Debtor undertakes to:  

1.

Pass turnover through the account at the Bank at a level of no less than the Bank’s share in the financing of the Debtor with bank loans;
 

2.

Renew the insurance policies on the assets constituting the security of the Bank’s claims and make an assignment of these agreements to the Bank, as well as provide proof of payment of the premiums for the property insurance encompassed by the insurance throughout the whole of the repayment term;
 

3.

Not dispose of and not encumber assets which are the subject of security of the repayment of the debt without the Bank’s consent;
 

4.

Submit monthly information on the level of stock constituting the subject of alienation and the registered pledge;
 

5.

Prepare and submit quarterly financial statements in accordance with the Central Statistical Office [GUS] forms, i.e. F-01, together with additional information presenting the economic, financial and asset situation, as well as other reporting on the Bank’s demand;
 

6.

Punctually settle liabilities which are subject to the provisions of the Tax Ordinance of 29 August 1997;
 

7.

Inform the Bank of the loans and borrowings, as well as sureties obtained from other banks;
 

8.

Enable the Bank’s employees or persons authorised by it to enter the registered office or another place where business is conducted in order to hold an inspection, including an audit of the accounting ledgers and documents with regard to the assessment of the observance of the terms of the Composition, the Debtor’s economic and financial situation and the state of the items of security for the repayment of the debt;
 

9.

Enable the Bank to perform a financial assessment of the activities conducted at least once every 6 months, with particular emphasis on its profitability;
 

10.

Prepare and present valuations of the subject of security on the Bank’s demand and at his own expense throughout the validity of the Composition if, in the Bank’s opinion, the value of the subject of the security changes significantly;
 

11.

Inform the Bank of the planned decisions which have a significant impact on his legal, as well as economic and financial situation before they are made and immediately inform the Bank of changes in the share capital;  

10

12.

Submit an annual representation on the recognition of the debt arising from this Composition on the last calendar day of every year.
 

13.

Transform the business of “Sunset Suits Men’s Fashion Moda Męska" into a commercial law company no later than by 30/06/2007 and assure the Bank of the status of observer at this company’s supervisory board meetings.
 

14.

Ensure that the newly established commercial law company, as specified in para. 13, enters into the debts from the loans with BGŻ S.A. drawn by the companies: AC Market Sp z o.o. in Poznań ul. Półwiejska 17, Tesnus S.A. in Poznań Garbary 57 and Sunset Textile Ewelina Ligocka - Kranik in Poznań ul. Garbary 57 no later than 30 days after the transformation;  

15.

Enter into the debts arising from the Compositions executed on 19/08/2005 with: AC Market Sp z o.o. in Poznań ul. Półwiejska 17, Tesnus S.A. in Poznań Garbary 57 and Sunset Textile Ewelina Ligocka - Kranik in Poznań ul. Garbary 57;  

16.

Punctually service the debts of: AC Market Sp z o.o. in Poznań ul. Półwiejska 17, Tesnus S.A. in Poznań Garbary 57 and Sunset Textile Ewelina Ligocka - Kranik in Poznań ul. Garbary 57 from the agreements on the entry into the debt of 19/08/2005;  

17.

Establish a power of attorney to use current account number 94 2030 0045 1110 0000 0041 8520 held at the Bank to secure the repayments of the liabilities arising from the compositions entered into on 19/08/2005 with: AC Market Sp z o.o. in Poznań ul. Półwiejska 17, Tesnus S.A. in Poznań Garbary 57 and Sunset Textile Ewelina Ligocka - Kranik in Poznań ul. Garbary 57;  

18.

The Debtor undertakes to successively increase the value of the security referred to in § 5.1.10-13 to the values arising from the security agreements;
 

19.

Successively increase assets, i.e. goods and showroom fittings which constitute the security on the Compositions of 19/08/2005 executed with: AC Market Sp z o.o. in Poznań ul. Półwiejska 17 to a value of PLN 3,000,000.00 and Tesnus S.A. in Poznań Garbary 57 to a value of PLN 3,000,000.00.
 

§ 7

1.

In the event of a threat to the punctual repayment of an instalment, the Debtor is obliged to notify the Bank of this forthwith.
 

2.

In the event that the Debtor fails to perform any of the
obligations specified in the Composition, as well as failing to perform other
obligations with respect to the Bank or the emergence of other events which
should constitute an effective threat to the Debtor performing the Composition,
in particular:
 

-

the failure to repay any of the instalments at the level and time specified in 

§ 2;  

-

in the event of a negative assessment by the Bank of the implementation of the restructuring programme presented by the Debtor on 23/11/2004 updated on 30/06/2005;
 

11

-

the submission of a petition to initiate enforcement by other creditors against the Debtor;
 

-

a significant reduction in the value of assets constituting the security on the Composition;
 

the Bank may terminate the Composition with a notice period of 21 days.  In the event of a threat of the Debtor’s bankruptcy, the Bank may terminate the Composition with a notice period of 7 days.
 

3.

In the event of the termination of the Composition by the Bank for the reasons described in para. 2 or its dissolution for other reasons, the repayments made shall not be subject to reimbursement, whereas the Bank shall file for the repayment of the unpaid part of the claims with force.
 

§ 8

In the event of the failure by the Debtor to settle the payments at the times and on the principles specified in the Composition in § 2, or its termination, all receipts of funds for the repayment of receivables arising from this Composition are treated as the repayment of the Bank’s receivables in the following order: enforcement costs, fees, commissions, interest and principal.
 

§ 9

This Composition does not constitute a renewal of the debt as defined by article 506 of the Civil Code.
 

§ 10

1.

The Parties jointly agree that all of the Bank’s correspondence shall be sent to the Debtor’s following address: ul. Garbany 57, 61-758 Poznań.
 

2.

In the event of a change of address, the Debtor is obliged to notify the Bank of this forthwith.
 

3.

In the event of a lack of notification, it is agreed that the Bank’s correspondence or representations sent to the last known address shall be considered effectively delivered.
 

4.

In the event of the inability of the post office (courier) to deliver correspondence or a representation and such correspondence being left in the post office, the effect of delivery shall take place after the passage of the time allowed for its collection.
 

§ 11

1.

Amendments to the terms of the Composition must be made in writing under the sanction of invalidity.
 

2.

The invalidity or ineffectiveness of some provisions of the Composition shall not affect the validity and effectiveness of its remaining provisions.
 

12

§ 12

Matters not regulated by this Composition shall be subject to the generally applicable provisions of the law, in particular the Banking Law and the Polish Civil Code.
 

§ 13

The Parties shall submit disputes arising from the Composition for settlement to the Court with jurisdiction over the location of the Bank’s Regional Branch in Poznań.
 

§ 14

The Debtor expresses his consent to the processing of his personal details by the Bank in accordance with the Personal Data Protection Act of 29/08/1997 (Journal of Laws No. 101, item 926).
 

§ 15

Two counterparts of the Composition have been prepared, one for each of the Parties.

§ 16

1.

The Composition becomes effective on the date of its signature.

2.

Composition no. 1 of 21/03/2002 on the repayment of the debt arising from the loan agreements described in the preamble of the Composition executed by and between the Parties shall be dissolved on the date on which this Composition becomes effective.
 

§ 17

The Composition was read, accepted and signed by the Parties.
 

	
...........................................

    for the Debtor  	

...........................................

    for the Bank 

I, Ewelina Ligocka-Kranik, domiciled at Krzyżanowo 7, Municipality of Śrem, holder of personal ID card series WL number 1599847 issued by the Mayor of the City of Konin on 08/06/1981, holder of PESEL statistical number 55061505906, express consent to my husband - Mirosław Kranik - executing this Composition.
 

I represent that I express consent to the processing of my personal details by the Bank in accordance with the Personal Data Protection Act of 29/08/1997 (Journal of Laws No. 101, item 926).
 

............................................

(signature) 

The document was signed in my presence.  

............................................

(signature of the Bank’s employee)  

13

Appendix no. 5 to the Agreement on the entry into the loan debt executed on 15/05/2007
 

Composition No. 3/CRW/2005  

executed on 19 August 2005 in Warsaw by and between:  

Bank Gospodarki Żywnościowej Spółka Akcyjna with its registered office in Warsaw at ul. Kasprzaka 10/16, registered in the register of entrepreneurs of the National Court Register held by the District Court for the Capital City of Warsaw, 19th Commercial Department of the National Court Register under the number KRS 11571, which is represented by:
 

Mr. Tadeusz Piela - proxy 

Ms. Ewa Brozi - proxy  

hereinafter referred to as the “Bank”  

and

Mr. Mirosław Ryszard Kranik, domiciled at ul. Garbary 57/1, 61-758 Poznań, holder of personal ID card series FW number 7104306 issued by KPMO Rawa Mazowiecka on 14/07/1972, holder of PESEL statistical number 54052510257, conducting business activities under the company name of: “Sunset Suits Men's Fashion - Moda Męska" Kranik Mirosław with its registered office at ul. Garbary 57, 61-758 Poznań,
 

hereinafter referred to as the “Debtor”  

hereinafter jointly referred to as the “Parties”
 

In order to ensure the performance of the Bank’s claims arising from the loan agreement executed by and between the Bank and the Debtor on 28/02/2000 no. 62/69/I/00/B/K/00 for a special overdraft facility, which was included in composition no. 2 on 21/03/2002, the Parties are entering into a composition of the following wording, hereinafter referred to as the “Composition”:
 

§ 1

1.

The Bank represents that, on the date of signature of the Composition, the Debtor’s due debt to the Bank under the loan agreement and the Composition, as described in the preamble to the Composition, amounts to a total of PLN 4,784,626.32 (in words: four million, seven hundred and eighty four thousand, six hundred and twenty six 32/100 zlotys), consisting of:
 

1)

principal in the amount of PLN 3,045,046.22 (in words: three million, forty five thousand and forty six 22/100 zlotys);
 

2)

interest in the amount of PLN 1,739,580.10 (in words: one million, seven hundred and thirty nine thousand, five hundred and eighty 10/100 zlotys), which accrued up to 18/08/2005.  

2.

The Debtor represents that he recognises the debt referred to in para. 1 at the full amount.
 

14

3.

The claim encompassed by this Composition shall be recorded on the loan account held at the Bank, about which the Debtor will be informed by recorded delivery post within 7 days of the date of signature of this Composition.
 

§ 2

1.

The debtor undertakes to repay the debt described in § 1.1 of the Composition on the following terms and conditions:
 

The principal in the amount of PLN 3,045,046.22 (in words: three million, forty five thousand and forty six 22/100 zlotys) shall be repaid between 19/08/2005 and 31/12/2013 in monthly instalments payable by the last day of every month, according to the following repayment schedule:

  	- 08/2005 - 12/2005	PLN 85,000.00	payable monthly at	PLN 17,000.00	(5 instalments)
	- 01/2006 - 12/2007	PLN 480,000.00	payable monthly at	PLN 20,000.00	(24 instalments)
	- 01/2011 - 06/2011	PLN 1,302,000.00	payable monthly at	PLN 31,000.00	(42 instalments)
	- 07/2011 - 11/2013	PLN 1,131,000.00	payable monthly at	PLN 39,000.00	(29 instalments)
	- 12/2013	PLN
      47,046.22 (final instalment)	 	 

2.

The interest rate on the principal amount of the debt described in para. 1 is set per annum with a variable interest rate at the level of WIBOR 3M + 1.5 pp margin.
 

The level of the WIBOR 3M rate which is in effect in the given calendar month is set as the arithmetical mean of the quotations in the period from the first to the twenty third day of the previous month.
 

3.

The level of interest specified in para. 2 on the date of execution of the Composition is 6.19% (WIBOR 3 M rate plus the Bank’s margin of 1.5 pp.) and applies to interest charged to the end of the calendar month in which the Composition was executed.
 

4.

Interest shall accrue on the assumption that the financial year has 365 days, 1 day = 1/365 of a year and each month has the actual number of calendar days in that month.
 

The Bank shall notify the Debtor and the Guarantor of changes to the level of interest on the Composition by posting information on the notice board in the Bank’s Branch in Poznań, ul. Piekary 17 regarding the level of the WIBOR 3M rate which will be applicable in the next settlement period, specifying the date on which the level of the interest rate will be changed.
 

5.

Interest charged monthly for the period from 19/08/2005 to 18/08/2007 shall be suspended for repayment until 31/12/2013.
 

6.

Current interest charged monthly from 19/08/2007 shall be payable on the last business day of every month for the current month.
 

7.

The interest described in § 1.1.2 of the Composition charged up to 18/08/2005 in the amount of PLN 1,739,580.10 shall be suspended for repayment until 31/12/2013.
 

8.

In the event that the Debtor repays the debt from the principal amount of the loan encompassed by this composition in whole, as referred to in § 1.1.1 by 31/12/2013, as well as the current interest referred to in § 2.6, the Bank shall cancel the interest which is suspended for repayment until 31/12/2013 from:
 

15

a)

interest accrued monthly for the period from 19/08/2005 to 18/08/2007
 

b)

the interest described in § 1.1.2 of the Composition charged up to 18/08/2005 in the amount of PLN 1,739,580.10.
 

§ 3

1.

The liabilities (instalments of principal and interest) arising from the Composition shall be repaid through the encumbrance of the Debtor’s current account no. 94 2030 0045 1110 0000 0041 8520 held at the Bank or the transfer of funds to the Debtor’s loan account.
 

2.

The date for repaying the liabilities arising from this Composition is considered the date on which the funds are credited to the Bank appropriate account.
 

3.

The Debtor undertakes to ensure that funds are kept on the account referred to in para. 1 of this paragraph at the level required for the repayment of the interest and principal instalments at the times of their payment, as specified in § 2.
 

4.

A change in bank account numbers for any reason does not constitute an amendment to the Composition and does not require an annex; the Bank shall inform the Debtor of every change in the account forthwith.
 

§ 4

The Bank shall collect increased interest on the unpaid debt described in § 1.1.1 of the Composition at the times specified in § 2.1 or upon the expiry of the notice of termination of the Composition at a level of 1.5 times the interest rate specified in 

§ 2.2 which applies in the periods for which the interest accrues.  

§ 5

1.

The legal security for the repayment of the debt encompassed by the Composition is the current security arising from loan agreement no. 62/69/I/00/B/K/00 and Composition no. 2 i.e.:
 

1)

an ordinary mortgage for the amount of PLN 3,000,000.00 established on real property located in Krzyżanowo, for which the District Court in Śrem holds the land and mortgage register KW 31.614, in which Mirosław Kranik is entered as the owner of the land and buildings;
 

2)

an assignment of rights from the insurance policy on the real property on which the mortgage has been established to the favour of the Bank;
 

3)

a blank, signed bill of exchange issued by the Debtor and guaranteed by Ewelina Ligocka-Kranik, together with a promissory declaration;  

4)

a civil law surety submitted by Ms. Ewelina Ligocka-Kranik;
 

5)

a power of attorney for the Debtor’s bank accounts held at the Bank.
 

16

2.

The Debtor is obliged to submit a petition to the competent court to make changes to the land and mortgage register referred to in para. 1.1 regarding the timing for the repayment of the liability secured by the mortgage.
 

3.

The costs of adapting and updating the security in connection with this Composition shall be borne by the Debtor.
 

§ 6

Under this Composition, the Debtor undertakes to:  

1.

Pass turnover through the account at the Bank at a level of no less than the Bank’s share in the financing of the Debtor with bank loans;
 

2.

Renew the insurance policies on the assets constituting the security of the Bank’s claims and make an assignment of these agreements to the Bank, as well as provide proof of payment of the premiums for the property insurance encompassed by the insurance throughout the whole of the repayment term;
 

3.

Not dispose of and not encumber assets which are the subject of security of the repayment of the debt without the Bank’s consent;
 

4.

Submit monthly information on the level of stock constituting the subject of alienation and the registered pledge;
 

5.

Prepare and submit quarterly financial statements in accordance with the Central Statistical Office [GUS] forms, i.e. F-01, together with additional information presenting the economic, financial and asset situation, as well as other reporting on the Bank’s demand;
 

6.

Punctually settle liabilities which are subject to the provisions of the Tax Ordinance of 29 August 1997;
 

7.

Inform the Bank of the loans and borrowings, as well as sureties obtained from other banks;
 

8.

Enable the Bank’s employees or persons authorised by it to enter the registered office or another place where business is conducted in order to hold an inspection, including an audit of the accounting ledgers and documents with regard to the assessment of the observance of the terms of the Composition, the Debtor’s economic and financial situation and the state of the items of security for the repayment of the debt;
 

9.

Enable the Bank to perform a financial assessment of the activities conducted at least once every 6 months, with particular emphasis on its profitability;
 

10.

Prepare and present valuations of the subject of security on the Bank’s demand and at his own expense throughout the validity of the Composition if, in the Bank’s opinion, the value of the subject of the security changes significantly;
 

11.

Inform the Bank of the planned decisions which have a significant impact on his legal, as well as economic and financial situation before they are made and immediately inform the Bank of changes in the share capital;  

17

12.

Submit an annual representation on the recognition of the debt arising from this Composition on the last calendar day of every year.
 

13.

Transform the business of “Sunset Suits Men’s Fashion Moda Męska" into a commercial law company no later than by 30/06/2007 and assure the Bank of the status of observer at this Company’s supervisory board meetings.
 

14.

Ensure that the newly established commercial law company, as specified in para. 13, enters into the debts from the loans with BGŻ S.A. drawn by the companies: AC Market Sp z o.o. in Poznań ul. Półwiejska 17, Tesnus S.A. in Poznań Garbary 57 and Sunset Textile Ewelina Ligocka - Kranik in Poznań ul. Garbary 57 no later than 30 days after the transformation;  

15.

Enter into the debts arising from the Compositions executed on 19/08/2005 with: AC Market Sp z o.o. in Poznań ul. Półwiejska 17, Tesnus S.A. in Poznań Garbary 57 and Sunset Textile Ewelina Ligocka - Kranik in Poznań ul. Garbary 57;  

16.

Punctually service the debts of: AC Market Sp z o.o. in Poznań ul. Półwiejska 17, Tesnus S.A. in Poznań Garbary 57 and Sunset Textile Ewelina Ligocka - Kranik in Poznań ul. Garbary 57 from the agreements on the entry into the debt;
 

17.

Successively increase assets, i.e. goods and showroom fittings which constitute the security on the Compositions of 19/08/2005 executed with: AC Market Sp z o.o. in Poznań ul. Półwiejska 17 to a value of PLN 3,000,000.00 and Tesnus S.A. in Poznań Garbary 57 to a value of PLN 3,000,000.00.
 

§ 7

1.

In the event of a threat to the punctual repayment of an instalment, the Debtor is obliged to notify the Bank of this forthwith.
 

2.

In the event that the Debtor fails to perform any of the obligations specified in the Composition, as well as failing to perform other obligations with respect to the Bank or the emergence of other events which should constitute an effective threat to the Debtor performing the Composition, in particular:
 

-

the failure to repay any of the instalments at the level and time specified in 

§ 2;  

-

in the event of a negative assessment by the Bank of the implementation of the restructuring programme presented by the Debtor on 23/11/2004 updated on 30/06/2005;
 

-

the submission of a petition to initiate enforcement by other creditors against the Debtor;
 

-

a significant reduction in the value of assets constituting the security on the Composition;
 

The Bank may terminate the Composition with a notice period of 21 days.
 

In the event of a threat of the Debtor’s bankruptcy, the Bank may terminate the Composition with a notice period of 7 days.
 

18

3.

In the event of the termination of the Composition by the Bank for the reasons described in para. 2 or its dissolution for other reasons, the repayments made shall not be subject to reimbursement whereas the Bank shall file for the repayment of the unpaid part of the claims with force.
 

§ 8

In the event of the failure by the Debtor to settle the payments at the times and on the principles specified in the Composition in § 2 or its termination, all receipts of funds for the repayment of receivables arising from this Composition are treated as the repayment of the Bank’s receivables in the following order: enforcement costs, fees, commissions, interest and principal.
 

§ 9

This Composition does not constitute a renewal of the debt as defined by article 506 of the Civil Code.
 

§ 10

1.

The Parties jointly agree that all of the Bank’s correspondence shall be sent to the Debtor’s following address: ul. Garbany 57, 61-758 Poznań.
 

2.

In the event of a change of address, the Debtor is obliged to notify the Bank of this forthwith.
 

3.

In the event of a lack of notification, it is agreed that the Bank’s correspondence or representations sent to the last known address shall be considered effectively delivered.
 

4.

In the event of the inability of the post office (courier) to deliver correspondence and such correspondence being left in the post office, the effect of delivery shall take place after the passage of the time allowed for its collection.
 

§ 11

1.

Amendments to the terms of the Composition must be made in writing under the sanction of invalidity.
 

2.

The invalidity or ineffectiveness of some provisions of the Composition shall not affect the validity and effectiveness of its remaining provisions.
 

§ 12

Matters not regulated by this Composition shall be subject to the generally applicable provisions of the law, in particular the Banking Law and the Polish Civil Code.
 

§ 13

The Parties shall submit disputes arising from the Composition for settlement to the Court with jurisdiction over the location of Bank Gospodarki Żywnościowej S.A.’s Regional Branch in Poznań.
 

19

§ 14

The Debtor expresses his consent to the processing of his personal details by the Bank in accordance with the Personal Data Protection Act of 29/08/1997 (Journal of Laws No. 101, item 926).
 

§ 15

Two counterparts of the Composition have been prepared, one for each of the Parties.

§ 16

The Composition becomes effective on the date of its signature.
 

§ 17

The Composition was read, accepted and signed by the Parties.
 

	
...........................................

    for the Debtor  	

...........................................

    for the Bank 

I, Ewelina Ligocka-Kranik, domiciled at Krzyżanowo 7, Municipality of Śrem, holder of personal ID card series WL number 1599847 issued by the Mayor of the City of Konin on 08/06/1981, holder of PESEL statistical number 55061505906, express consent to my husband - Mirosław Kranik - executing this Composition.
 

I represent that I express consent to the processing of my personal details by the Bank in accordance with the Personal Data Protection Act of 29/08/1997 (Journal of Laws No. 101, item 926).
 

......................................

(signature) 

The document was signed in my presence.  

Specialist  

Malgorzata Dymaczewska 

 
...............................................

(signature of the Bank’s employee)  

20

Agreement on the establishment of a registered pledge on the right arising from the registration of a trademark
 

An agreement was executed on 15/05/2007 in Warsaw, by and between Bank Gospodarki Żywnościowej Spółka Akcyjna with its registered office in Warsaw, at ul. Kasprzaka 10/16, a company with fully paid up share capital of PLN 43,136,764 (the nominal value of the conditional increase in share capital is PLN 117,540), which is registered in the Register of Entrepreneurs in the National Court Register held by the District Court for the Capital City of Warsaw, 12th Commercial Department of the National Court Register in Warsaw, under the KRS number 0000011571, holder of tax ID number (NIP) 526-10-08-546, hereinafter referred to as the “Bank”,
 

represented by:  

1) Tadeusz Piela - proxy 

2) Janina Kiedrowicz - proxy  

and  

SUNSET SUITS Spółka Akcyjna with its registered office in Poznań, at ul. Garbary 57, a Company with share capital of PLN 60,120,000, paid up to the amount of PLN 59,995,000, registered in the Register of Entrepreneurs in the National Court Register held by the District Court in Poznań, 21st Commercial Department of the National Court Register under the KRS number 0000265620, holder of tax ID number (NIP) 778-143-92-59, hereinafter referred to as the “Pledger”,
 

represented by:  

1) Bogdan Zegar - President of the Management Board  

hereinafter referred to jointly as the Parties, of the following wording:
 

1.

The Bank represents that the following loans were granted to Mr. Mirosław Kranik, domiciled at ul. Garbary 57/1, 61-758 Poznań, holder of PESEL statistical number 54052510257, conducting business activities under the name of Sunset Suits Men’s Fashion - Moda Męska Mirosław Kranik with its registered office in Poznań (61-758) at ul. Garbary 57, on the basis of an entry into the register of sole proprietorships under the number 15097/94/S held by the Business Activity Records Department of the Mayor of the City of Poznań, tax ID number (NIP) 785-004-14-54 hereinafter referred to as the “Borrower”:
 

a)

a renewable loan on the terms and conditions specified in loan agreement no. 298/219/l/00/B/K/00 of 06/10/2000 and a medium-term business activity loan on the terms and conditions specified in loan agreement no. 290/219/I/00/B/K/00 of 03/10/2000, which were restructured under composition agreement no. 2 of 19/08/2005;
 

b)

a special overdraft facility on the terms and conditions specified in loan agreement no. 62/69/l/00/B/K/00 of 28/02/2000, which was restructured in accordance with composition agreement no. 3 of 19/08/2005.
 

The loan agreements and composition agreements referred to above are attached as Appendices 1 - 5 hereto.
 

21

2.

As at 15/05/2007, the Borrower’s debt from the Loans referred to in point 1 of this agreement amounts to:
 

a)

under loan no. 298/219/I/00/B/K/00 and loan no. 290/219/I/00/B/K/00, which were encompassed by composition no. 1 on 21/03/2002 and were later encompassed by composition agreement no. 2/CRW/2005 of 19/08/2005: USD 4,831,341.02, (in words: four million, eight hundred and thirty one thousand, three hundred and forty one 02/100 US dollars) and PLN 3,162,360.00 (in words: three million, one hundred and sixty two thousand, three hundred and sixty 00/100 zlotys), of which:
 

due principal:  USD 20,868.20 

principal not yet due:  USD 3,772,520.76 

current interest: USD 1,037,952.06 and PLN 3,162,360  

b)

under loan no. 62/69/I/00/B/K/00, which was encompassed by composition no. 2 on 21/03/2002 and was later encompassed by composition agreement no. 3/CRW/2005 of 19/08/2005: PLN 4,667,860.71, (in words: four million, six hundred and sixty seven thousand, eight hundred and sixty 71/100 zlotys), of which:
 

due principal:  PLN 271.60 

principal not yet due:  PLN 2,640,046.22 

current interest: PLN 2,027,542.89
 

3.

The Pledger represents that, under the Agreement on the entry into a loan debt executed with the Bank on 15/05/2007, he entered into the debt specified in points 1 and 2 of this agreement.
 

4.

The Pledger represents that he has the right arising from the registration of the “Sunset Suits" trademark registered in the register of trademarks of the Patent Office of the Republic of Poland - Protective Certificate No. 75309.  The “Sunset Suits" trademark is included within the organised part of the business of Sunset Suits Men's Fashion - Moda Męska Mirosław Kranik with its registered office in Poznań, which was contributed by the Borrower as a contribution in kind in exchange for the shares acquired in Sunset Suits S.A.  The Pledger represents that the protective right to the trademark registered under the number 75309 will last until 23 October 2011.
 

5.

The Pledger represents that the rights arising from the registration of the trademark, which was registered to the favour of the Borrower in the Patent Office of the Republic of Poland under no. 75309, encompass the rights arising from the registration of the mark with protective certificate no. 175241, which is a modified form of the verbal and figurative “Sunset Suits" trademark.
 

6.

In order to secure the repayment of the Bank’s claims, which include the principal amounts of the loans referred to in point 1, interest, enforcement costs and other costs of the Bank exercising its rights, the Pledger is establishing a registered pledge to the favour of the Bank on his rights arising from the registration of the trademark referred to in point 4, which is valued at PLN 31,263,000 (in words: thirty one million, two hundred and sixty three thousand zlotys), and the Bank accepts this pledge.
 

The Pledger undertakes to notify the Patent Office of the Republic of Poland in order to disclose the establishment of this pledge in the registers.

22

7.

The Pledger represents that the subject of the pledge belongs exclusively to him, that he is able to freely and exclusively use it and that it is not encumbered with any third party rights with the exception of the right to use the trademark and to gain benefits to the favour of the following entities:
 

a)

OU POSNANIA with its registered office in the Republic of Estonia, Tallinn 11411 Tuulemae 5-300;
 

b)

UAB SUNSET SUITS VILNIUS with its registered office in the Republic of Lithuania, Vilnius OZO g 25;
 

c)

SIA SUNSET RIGA with its registered office in the Republic of Latvia, Riga LA/-1005 Ganibus Dambis 36-302;
 

d)

SUNSET KALININGRAD with its registered office in the Russian Federation, in Kaliningrad, ul. Komsomolskaja 87.
 

8.

The Parties jointly agree that the rights arising from the registration of the verbal and figurative “Sunset Suits" trademarks, which are registered to the favour of the Pledger in the Patent Office of the Republic of Poland, are identical to the rights arising from the registration of the trademark having protective certificate no. 75309.
 

9.

The Pledger undertakes to:

a)

notify the Bank forthwith of the registration of every trademark with the Patent Office of the Republic of Poland which arises as a result of the modification of the verbal and figurative “SUNSET SUITS" trademark, which has protective certificate No. 75309; 

b)

issue a document - proof of registration of the rights arising from the registration of the trademark referred to in point 4 to his favour; 

c)

file and pay for applications to extend the protective rights from the registration of the trademark with protective certificate 75309 for the subsequent periods.  In the event of the failure of the Pledger to extend the protective period, the Bank may demand the immediate settlement of the claims secured by this pledge.

10.

The expiry of the claim secured by the pledge results in the expiry of this pledge.  In the event of the expiry of the claim referred to in point 1, the Bank shall immediately issue a representation on the Pledger’s demand declaring the expiry of the registered pledge on the right arising from the registration of the trademark described in point 4.
 

11.

In the event that the Borrower and Pledger fail to perform the obligations arising from the agreements referred to in point 1, the Bank’s claims shall be satisfied from the subject of the pledge at the Bank’s discretion:

23

a)

through court enforcement proceedings;  

b)

by assuming ownership of the subject of the pledge;  

c)

by selling the subject of the pledge through a public tender conducted by a notary public or bailiff.
 

12.

If the Bank sells the Subject of the Pledge through a public tender, on the date of receipt of the amount from the sale, it shall treat this as payment towards the repayment of the principal amount of the loan and interest after deducting the costs incurred related to the storage, valuation and sale of the Subject of the Pledge.  The Bank shall split the amount obtained as a result of the sale of the Subject of the Pledge among the loans covered by composition agreement no. 2 in the proportions which it will choose at its own discretion.
 

13.

The Pledger undertakes to notify the Bank of a change in the trade name or registered address and of all changes related to its legal status.  The failure to notify the Bank of these changes shall result in representations, notices and other correspondence sent by the Bank to the Pledger to the last known address being considered effectively delivered, whereby the date of delivery is considered the date of the first post office notice of registered post sent to the Pledger’s last known address.
 

14.

The Pledger represents that in the event of activities being initiated which have the intention of the Bank satisfying its claims from the subject of the pledge through court enforcement proceedings, he surrenders to enforcement for payment to the amount of PLN 12,000,000.00 (in words: twelve million zlotys) and in the event that the Bank files for satisfying its claims by assuming ownership of the subject of the pledge or sale - to enforcement in handing over the item which is the subject of the registered pledge conducted in accordance with the provisions of the Civil Procedures Code on the basis of a bank enforcement title issued by the Bank.
 
 

The Bank may issue a bank enforcement title no later than by 30/12/2015.
 

15.

All costs related to the establishment of the pledge shall be borne by the Pledger.
 

16.

The Parties agree that the pledge shall remain effective until the full repayment of the principal amounts of the loans described in point 1, with interest, commissions and possible costs.
 

17.

The Bank undertakes to notify the Pledger forthwith by registered post of the Borrower’s non-performance of the obligations arising from the loan agreements covered by the composition agreements described in point 1.
 

18.

The Agreement is subject to entry into the register of pledges held by the District Court for Poznań, Commercial Department - Register of Pledges.
 

19.

The Bank shall file the application to make an entry into the register of pledges with the court.
 

20.

All costs related to the establishment and deletion of the registered pledge from the register of pledges shall be borne by the Pledger.

24

20.

Matters not governed by this agreement are subject to the provisions of the Civil Code on pledges and rights on chattels.
 

21.

All amendments to this agreement must be made in writing under the sanction of invalidity.
 

22.

This agreement is exempt from transfer tax.  

23.

3 (three) counterparts of this agreement have been prepared, one for each of the Parties and one for the registration court.
 

..........................................................

(seal and signature of the pledger) 

..........................................................

(seal and signatures of the persons acting on behalf of the Bank) 

I represent that the rights arising from the registration of the
“SUNSET SUITS" trademarks, which are the subject of this agreement, which are
included in the organised part of the business of Sunset Suits Men's Fashion -
Moda Męska Mirosław Kranik, have been contributed in kind to Sunset Suits SA in
Poznań.
 

I am not filing any reservations on the content of this agreement
on the establishment of a registered pledge on the rights arising from the
registration of the “SUNSET SUITS” trademark which has Protective Certificate
No. 75309.
 

	
Date .....................................

 	
    
.....................................

    (Borrower) 

 

 25

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