Exhibit 10.7
CIT Commerical Services T: 000 000-0000
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
April 23, 2003
Innovo Azteca Apparel, Inc.
0000 Xxxx Xxxxxxx Xxx.
Commerce, CA 90040
Ladies and Gentlemen:
Reference is made to the Factoring Agreement between us, dated
September 10, 2001, as supplemented and amended (herein the
"Agreement").
Pursuant to mutual understanding, effective April 11, 2003, the
Agreement shall be amended as follows:
1. Delete sub-section 14.1 in its entirety and substitute with
the following new sub-section:
"14.1 Interest is charged as of the last day of each month based
on the daily debit balances in your Funds In Use account for that
month, at a rate equal to the sum of one-quarter of one percent
(.25%) plus the Chase Prime Rate (as hereinafter defined). The
Chase Prime Rate is the per annum rate of interest publicly
announced by JPMorgan Chase Bank (or its successor) in New York,
New York from time to time as its prime rate, and is not intended
to be the lowest rate of interest charged by JPMorgan Chase Bank
to its borrowers. Any change in the rate of interest hereunder due
to a change in the Chase Prime Rate will take effect as of the
first of the month following such change in the Chase Prime Rate.
Interest will be credited as of the last day of each month based
on the daily credit balances in your Funds in use account for that
month, at a rate four percent (4%) per annum below the Chase
Prime Rate being used to calculate interest for the period. All
interest is calculated on a 360 day year."
2. Delete sub-section 15.1 in its entirety and substitute with the
following new sub-section:
"15.1 For our services hereunder, you will pay us a factoring fee
or charge of six-tenths of one percent (.60%) of the gross face
amount of all Factor Risk Accounts factored with us; and a
factoring fee or charge of forty-tenths of one percent (.40%) of
the gross face amount of all Client Risk Accounts factored with
us. In addition, you will pay a fee of one-quarter of one percent
(1/4 of 1%) of the gross face amount of each Account for each
thirty (30) day period or part thereof by which the longest terms
of sale applicable to such Account exceed ninety (90) days
(whether as originally stated or as a result of a change of terms
requested by you or the customer). For Accounts arising from sales
to customers located outside the fifty states of the United States
of America, you will pay us an additional factoring fee of one
percent (1%) of the gross face amount of all such Accounts. All
factoring fees or charges are due and charged to your account upon
our purchase of the underlying Account. Commencing April 1, 2003,
in no event shall the aggregate of the factoring fees or
commissions payable to us hereunder for each year, or part thereof
("Period"), by you, Xxx's Jeans, Inc. and Innovo, Inc.
each under separate factoring agreements with us (the
"Agreements"), be less than $200,000.00. The amount, if any, by
which $200,000.00 exceeds commissions earned on accounts
receivable factored with us by you, Innovo, Inc. and Innovo Azteca
Apparel, Inc. for any Period, shall be charged to either of the
aforementioned accounts, at our discretion, pursuant to the
respective Agreements with us as of the end of such Period."
3. The second sentence of sub-section 16.1 of the Agreement shall
be deleted in its entirety and replaced with the following new
sentence:
"Anniversary Date" shall mean June 30, 2005, and the same date in
each year thereafter."
The amendment proposal set forth in this letter will expire at 5:00
p.m. Pacific Daylight time on May 14, 2003, unless you execute this
letter and return it to CIT prior to that time (which may be by
facsimile transmission).
If the foregoing is in accordance with your understanding of our
agreement, please so indicate by signing in the place and manner
provided below.
Sincerely yours, Agreed and Accepted:
THE CIT GROUP/ INNOVO AZTECA APPAREL, INC.
COMMERCIAL SERVICES, INC.
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxxx Xxxxxx Xxxxxx, Xx.
Title: Account Executive Title:CEO
