EXHIBIT 10.9
FTC
COMMERCIAL CORP.
As of October 31, 2005
Blue Holdings, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
This Amendment "2" to Inventory Loan Facility Agreement (this
"Amendment") is entered into as of October 31, 2005 by and between FTC
COMMERCIAL CORP. ("FTC", "we" or "us") and BLUE HOLDINGS, INC. ("Client" or
"you"), with reference to the following:
A. FTC and Client are parties to an Inventory Loan Facility
Agreement dated as of July 25, 2005 (as amended, the "Facility
Agreement"), the provisions of which are incorporated into
this Amendment.
B. FTC and Client desire to amend the Facility Agreement,
effective as of the date hereof, as set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. Initially capitalized terms used herein which are not
otherwise defined shall have the meanings assigned to them in
the Facility Agreement.
2. The first paragraph which follows the definition of
"Obligations" is amended in its entirety to read as follows:
This Agreement shall confirm our mutual understanding and
agreement that, subject to the terms and conditions of the
Company Agreements, and provided that no default or Event of
Default under any of the Company Agreements and no termination
of the Factoring Agreement has occurred, FTC may, in its sole
and absolute discretion, extend an inventory loan facility to
the Company in an aggregate principal amount outstanding at
any time not to exceed the lesser of (a) the Inventory Base or
(b) up to $1,500,000 minus (i) the aggregate amount of then
outstanding inventory loans made to Taverniti So Jeans, LLC
("Taverniti") under the Inventory Loan Facility between
Taverniti and FTC dated as of October 31, 2005 (as amended,
the "Taverniti Facility Agreement") and MINUS (ii) the
aggregate amount of then outstanding inventory loans made to
Antik Denim, LLC ("Antik") under the Inventory Loan Facility
between Antik and FTC dated July 25, 2005 (as amended, the
"Antik Facility Agreement"). The interest rate charged on
outstanding inventory loans under this Agreement will be the
same rate charged in Section 23 of the Factoring Agreement and
will be calculated, computed and payable in accordance with
the provisions of Section 23.
3. The following paragraph is added after the paragraph
referenced in subpart 2 above of this Amendment:
This Agreement shall terminate, at FTC's discretion, on the
date which is the earlier to occur of: (a) the date on which a
default or Event of Default occurs under this Agreement, the
Company Agreements, the Factoring Agreement between FTC and
Taverniti dated November 22, 2004 (as amended, the "Taverniti
Factoring Agreement"), the Taverniti Facility Agreement or any
of the other agreements between Taverniti and FTC
(collectively, the "Taverniti Agreements"), or the Factoring
Agreement between FTC and Antik dated October 18, 2004 (as
amended, the "Antik Factoring Agreement"), the Antik Facility
Agreement or any of the other agreements between Antik and FTC
(collectively, the "Antik Agreements"); or (b) the date on
which the Factoring Agreement, the Antik Factoring Agreement
or the Taverniti Factoring Agreement is terminated in
accordance with the notice provisions thereof.
4. Subpart (i) of the paragraph which begins "In order to induce
FTC to extend the foregoing inventory loan facility to the
Company" is amended in its entirety to read as follows:
i. The Company shall, no later than twenty-one (21) days after
the end of each month, provide to FTC: (a) an Inventory
Certification or designation in the form attached hereto as
"Attachment A" or in such other form as is acceptable to FTC;
(b) an aging of all Inventory as of the end of such month, in
form and substance acceptable to FTC; and (c) a report
detailing the fabrics, the finished goods Inventory available
for sale, and the finished goods Inventory sold, in each case
as of the end of such month, in form and substance acceptable
to FTC.
5. Subpart (ii) of the paragraph which begins "The inventory loan
facility outlined in this Agreement shall be subject to" is
amended in its entirety to read as follows:
ii. No default or Event of Default under this Agreement,
the Company Agreements, the Taverniti Agreements or
the Antik Agreements shall have occurred or would
occur as a result of any extension of credit under
the facility described herein.
6. The third sentence of the paragraph which begins "Nothing
herein shall be construed as limiting or modifying in any way
any of FTC's rights" is amended to read as follows:
The failure of the Company to perform any of the terms and
conditions of this Agreement or the breach of any of the
representations or warranties contained in this Agreement
shall constitute a default or an Event of Default under the
Company Agreements, the Taverniti Agreements and the Antik
Agreements and the failure to perform any of the terms and
conditions of, or the breach of any of the representations or
warranties contained in, the Company Agreements, the Taverniti
Agreements or the Antik Agreements the shall constitute a
default under this Agreement.
7. The following sentence is added at the end of the paragraph
which begins "Nothing herein shall be construed as limiting or
modifying in any way any of FTC's rights":
Without limiting any of FTC's rights under the Factoring
Agreement, the Antik Factoring Agreement and the Taverniti
Factoring Agreement (collectively, the "Related Factoring
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Agreements") to establish such reserves as FTC deems
necessary, including reserves for concentration accounts,
recourse accounts, disputed accounts, and non-disputed
accounts, a default shall occur under this Agreement and the
Company Agreements if (i) at the end of any fiscal quarter
thirty percent (30%) or more of the aggregate outstanding
unpaid accounts assigned to FTC under the Related Factoring
Agreements are sixty (60) or more days past due and/or (ii) at
the end of any fiscal quarter the aggregate amount of accounts
charged back by FTC under the Related Factoring Agreements
during such fiscal quarter is equal to or greater than thirty
percent (30%) or more of the aggregate amount of accounts
assigned to FTC under the Related Factoring Agreements during
such fiscal quarter.
8. Except as amended hereby, the Facility Agreement shall remain
in full force and effect and unmodified. Client hereby
reaffirms each and every one of Client's representations,
warranties and covenants under the Facility Agreement.
9. Any reference in the Facility Agreement to "this Agreement",
"herein", "hereunder" or words of similar meaning shall mean
the Facility Agreement as amended by this Amendment.
10. Client hereby represents and warrants to FTC that this
Amendment has been duly authorized by all necessary action on
the part of Client and constitutes a valid and legally binding
obligation of Client, enforceable against Client in accordance
with its terms.
11. This Amendment shall be governed by the laws of the State of
California without regard to the conflicts of law principles
thereof.
12. The Facility Agreement, as amended by this Amendment,
constitutes the entire agreement between Client and FTC as to
the subject matter hereof and may not be altered or amended
except by written agreement signed by Client and FTC. No
provision hereof may be waived by FTC except upon written
waiver executed by FTC.
13. This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
Sincerely, AGREED:
FTC COMMERCIAL CORP. BLUE HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx Xxxx
-------------------------- ----------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxxx Xxxx
Title: President Title: CFO
AGREEMENT AND REAFFIRMATION BY GUARANTOR
The undersigned has executed a Guaranty dated July 25, 0000 (xxx "Xxxx
Guaranty") in connection with the Factoring Agreement between BLUE HOLDINGS,
INC. (the "Company") and FTC COMMERCIAL CORP. ("FTC") dated July 25, 2005, the
Inventory Loan Facility Agreement between the Company and FTC dated July 25,
2005 and various related instruments and documents (collectively, the "Company
Agreements"). The undersigned agrees that the Guez Guaranty shall apply to all
obligations of the Company under the above Amendment and the Company Agreements.
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The undersigned hereby reaffirms the Guez Guaranty and agrees that no provisions
of the above Amendment shall in any way limit any of the terms or provisions of
the Guez Guaranty or any other documents executed by the undersigned in favor of
FTC, all of which are hereby ratified and affirmed and the same shall continue
in full force and effect in accordance with the provisions hereof.
/s/ Xxxx Xxxx
----------------------------
Xxxx Xxxx
AGREEMENT AND REAFFIRMATION BY GUARANTOR
The undersigned has executed a Guaranty dated July 25, 2005 (the "Trust
Guaranty") in connection with the Factoring Agreement between BLUE HOLDINGS,
INC. (the "Company") and FTC COMMERCIAL CORP. ("FTC") dated July 25, 2005, the
Inventory Loan Facility Agreement between the Company and FTC dated July 25,
2005 and various related instruments and documents (collectively, the "Company
Agreements"). The undersigned agrees that the Trust Guaranty shall apply to all
obligations of the Company under the above Amendment and the Company Agreements.
The undersigned hereby reaffirms the Trust Guaranty and agrees that no
provisions of the above Amendment shall in any way limit any of the terms or
provisions of the Trust Guaranty or any other documents executed by the
undersigned in favor of FTC, all of which are hereby ratified and affirmed and
the same shall continue in full force and effect in accordance with the
provisions hereof.
The Xxxx and Xxxxxxxxx Xxxx Living Trust dated
February 13, 1998
/s/ Xxxx Xxxx
----------------------------
Xxxx Xxxx, Trustee
/s/ Xxxxxxxxx Xxxx
----------------------------
Xxxxxxxxx Xxxx, Trustee
AGREEMENT AND REAFFIRMATION BY GUARANTOR
The undersigned has executed a Guaranty dated July 25, 2005 (the "Antik
Guaranty") in connection with the Factoring Agreement between BLUE HOLDINGS,
INC. (the "Company") and FTC COMMERCIAL CORP. ("FTC") dated July 25, 2005, the
Inventory Loan Facility Agreement between the Company and FTC dated July 25,
2005 and various related instruments and documents (collectively, the "Company
Agreements"). The undersigned agrees that the Antik Guaranty shall apply to all
obligations of the Company under the above Amendment and the Company Agreements
and that such obligations shall be secured by a first lien on and security
interest in all of the assets of the undersigned in which the undersigned has
granted FTC a security interest.
The undersigned hereby reaffirms the Antik Guaranty and agrees that no
provisions of the above Amendment shall in any way limit any of the terms or
provisions of the Antik Guaranty or any other documents executed by the
undersigned in favor of FTC, all of which are hereby ratified and affirmed and
the same shall continue in full force and effect in accordance with the
provisions hereof.
ANTIK DENIM, LLC
By: /s/ Xxxxxxx Xxxx
----------------------------
Print Name: Xxxxxxx Xxxx
Title: CFO
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