EXHIBIT 10.11.1
GMAC COMMERCIAL FINANCE LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
May 9, 2005
TARRANT APPAREL GROUP
FASHION RESOURCE (TCL), INC.
TAG MEX, INC.
UNITED APPAREL VENTURES, LLC
PRIVATE BRANDS, INC.
NO! JEANS, INC.
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Re: FIRST AMENDMENT TO FACTORING AGREEMENT
Ladies and Gentlemen:
Reference is made to the Factoring Agreement (as amended, supplemented
or modified from time to time, the "Factoring Agreement") effective as of
September 29, 2004 by and among TARRANT APPAREL GROUP, FASHION RESOURCE (TCL),
INC., TAG MEX, INC., UNITED APPAREL VENTURES, LLC, PRIVATE BRANDS, INC., and NO!
JEANS, INC. (individually and collectively, "Client") and GMAC Commercial
Finance LLC ("Factor"), and to all of the instruments, agreements and other
documents executed and/or delivered in connection therewith (all of the
foregoing, together with the Factoring Agreement, as the same now exist, or may
hereafter be amended, restated, renewed, extended, supplemented, substituted,
replaced or otherwise modified, collectively, the "Agreements"). Capitalized
terms used in this letter agreement (this "Amendment") and not otherwise defined
shall have the meanings attributed to them in the Factoring Agreement.
Client has requested that Factor amend and modify certain provisions of
the Factoring Agreement. Factor is willing to do so subject to the terms and
conditions set forth herein.
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
A. AMENDMENT. Factor and Client acknowledge, confirm and agree
that, effective on the date hereof, the Agreements shall be amended as follows:
1. The definition of "BORROWING BASE" appearing in Rider 1 to the
Factoring Agreement is hereby amended and restated in its entirety as follows:
""BORROWING BASE" shall mean up to the lesser of (a)
$40,000,000 or (b) the sum of (i) up to ninety percent (90%)
of Accounts on which Factor has
the Credit Risk PLUS (ii) up to the lesser of (A) $3,000,000,
or (B) fifty percent (50%) of the value of Eligible Inventory
(as determined by Factor at the lower of cost or market, on a
first-in first-out basis), MINUS, in each case, Reserves."
2. The definition of "COLLATERAL" appearing in Rider 1 to the
Factoring Agreement is hereby amended to include within the definition thereof
the "Collateral" as said quoted term is defined in that certain Inventory
Security Agreement dated of even date hereof between Client and Factor.
3. Section 1 of Schedule 8(a) to the Factoring Agreement is
hereby amended and restated in its entirety as follows:
"1. Lien of UPS Capital Global Trade Finance Corporation
(which lien is subject to that certain Amended and Restated
Intercreditor Agreement dated as of December 13, 2004 among
Factor, UPS Capital Global Trade Finance Corporation and
Client, as amended by that certain First Amendment to Amended
and Restated Intercreditor Agreement dated as of March 16,
2005 among Factor, UPS Capital Global Trade Finance
Corporation and client, and that certain Second Amendment to
Amended and Restated Intercreditor Agreement dated of May ,
2005 among Factor, UPS Global Trade Finance Corporation and
Client, and as otherwise amended, supplemented, restated,
replaced or otherwise modified from time to time."
4. A new defined term, "ELIGIBLE INVENTORY" is hereby added to
Rider 1 of the Factoring Agreement in proper alphabetical order, as follows:
""ELIGIBLE INVENTORY" shall mean all of Client's finished
goods Inventory that is in good condition, readily saleable at
prices not less than cost, is not, in Factor's opinion,
obsolete, slow moving or unmerchantable, and which Factor, in
its sole discretion, shall not deem ineligible Inventory based
on such considerations as Factor may, from time to time deem
appropriate, including, without limitation, whether the
Inventory is subject to a perfected, first priority security
interest in Factor's favor, whether the Inventory conforms to
all standards imposed by any governmental agency, division or
department thereof which has regulatory authority over such
goods or the use or sale thereof, and whether the Inventory is
currently useable in the course of Client's business.
Inventory that is located at any leased location shall not be
deemed to be Eligible Inventory unless the owner or operator
of such leased location has executed and delivered a
landlord's waiver or warehouse waiver in favor of Factor that
is satisfactory to Factor in its sole and absolute
discretion."
B. GENERAL PROVISIONS.
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1. Except as specifically set forth herein, no other changes or
modifications to the Factoring Agreement are intended or implied, and in all
other respects the Factoring Agreement remains in full force and effect in
accordance with its terms as of the date hereof. To the extent that any term or
provision of this Amendment conflicts with any term or provision of the
Factoring Agreement, the term or provision of this Amendment shall control.
2. This Amendment shall become effective as of the date first
written above upon Factor's receipt of an original of this Amendment duly
executed by Client.
3. This Amendment shall be binding upon and inure to the benefit
of each of the parties hereto and their respective successors and assigns.
4. This Amendment may be executed in any number of counterparts,
all of which counterparts when taken together shall constitute one and the same
agreement.
5. This Amendment and the rights and obligations hereunder of
each of the parties hereto shall be governed by and interpreted and determined
in accordance with the laws of the State of New York, without giving effect to
conflicts of laws principles.
6. TO THE EXTENT LEGALLY PERMISSIBLE, EACH CLIENT AND FACTOR
WAIVE ALL RIGHT TO TRIAL BY JURY AND ANY LITIGATION RELATING TO TRANSACTIONS
UNDER THIS AMENDMENT, THE FACTORING AGREEMENT, AND THE OTHER AGREEMENTS, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE.
Very truly yours,
GMAC COMMERCIAL FINANCE LLC
By: /S/ ILLEGIBLE
-----------------------------------
Title: SR. VICE PRESIDENT
--------------------------------
Read and Agreed to:
TARRANT APPAREL GROUP
By: /S/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
FASHION RESOURCE (TCL), INC.
By: /S/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
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TAG MEX, INC.
By: /S/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
UNITED APPAREL VENTURES, LLC
By: /S/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Manager
PRIVATE BRANDS, INC.
By: /S/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
NO! JEANS, INC.
By: /S/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
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