EXHIBIT 10.6
FTC
COMMERCIAL CORP.
July 25, 2005
Antik Denim, LLC
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxx
Re: Inventory Facility
Dear Xxxx:
Reference is made to (i) the Factoring Agreement between FTC Commercial Corp.
("FTC") and Antik Denim, LLC (the "Company") dated October 18, 2004 (as
supplemented or amended from time to time, the "Factoring Agreement") and (ii)
the Continuing Security Agreement between FTC and the Company of even date
herewith (as supplemented or amended from time to time, the "Security
Agreement"). The Factoring Agreement, the Security Agreement, and all agreements
now or hereafter entered into between FTC and the Company shall be referred to
herein collectively as the "Company Agreements."
Except as otherwise provided in this letter agreement (this "Agreement"), any
capitalized terms used herein but and not defined in this Agreement shall have
the meanings assigned to such terms in the Factoring Agreement.
For purposes of this Agreement:
"Inventory" as used herein shall have the meaning set forth in the
Security Agreement.
"Inventory Base" means the up to thirty-three and one third percent
(33.33%) of the value (the lesser of cost or market) of the Company's
raw material and finished goods Inventory which FTC determines, in its
sole discretion, to be eligible for inclusion in the Inventory Base.
Without limiting the generality of the foregoing, the following
Inventory shall NOT be eligible for inclusion in the Inventory Base IF
(i) such Inventory is over one hundred eighty (180) days old; (ii) such
Inventory is defective or damaged; (iii) such Inventory is not located
at the Company's premises at 0000 X. Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000; (iv) such Inventory is located at any real property
leased by the Company or at any contract warehouse, unless such
Inventory is subject to a collateral access agreement acceptable to FTC
and executed by the lessor or warehouseman, as the case may be, and
unless such Inventory is separately identifiable from the goods of
others, if any, stored on the premises; (v) the Company does not have
good, valid, and marketable title to such Inventory; (vi) such
Inventory is not subject to a valid and perfected first priority
security interest in favor of FTC; (vii) such Inventory consists of
xxxx and hold goods or goods acquired on consignment or (viii) such
Inventory consists of work in process.
"Obligations" means the any and all obligations of the Company under
this Agreement and the Company Agreements.
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 credit facility to the Company in an
aggregate principal amount outstanding at any time not to exceed the lesser of
(a) up to $1,500,000 or (b) the Inventory Base.
In order to induce FTC to extend the foregoing inventory credit facility to the
Company, the Company agrees that, so long as the Factoring Agreement remains in
effect and any of the Obligations have not been paid and performed in full:
i. The Company shall, no later than ten (10) 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 piece goods, the work-in-process, the
finished goods Inventory available for sale, and the
finished goods Inventory sold as of the end of such
month, in form and substance acceptable to FTC.
ii. The Company shall not sell, lease, transfer, assign,
abandon or otherwise dispose of any of the Company's
assets in which FTC has been granted a security
interest under any of the Company Agreements,
excluding sales of Inventory to the Company's
customers in the ordinary course of business.
iii. The Company shall not become a guarantor, a surety,
or otherwise liable for the debts or other
obligations of any other person or firm, including,
without limitation, any affiliate of the Company
excluding debts or other obligations of any affiliate
of the Company to FTC.
The inventory credit facility outlined in this Agreement shall be subject to the
satisfaction of each of the following conditions precedent in a manner
satisfactory to FTC:
i. The representations and warranties contained herein
and in each other Company Agreements shall be true
and correct as of the date of any extension of credit
under the facility described herein.
ii. No default or Event of Default shall have occurred or
would occur as a result of any extension of credit
under the facility described herein.
iii. FTC shall have received duly executed originals of
this Agreement and the Security Agreement.
Nothing herein shall be construed as limiting or modifying in any way any of
FTC's rights under the Company Agreements, including without limitation, FTC's
rights, to be exercised in its sole and absolute discretion, to hold any reserve
FTC deems necessary as security for payment and performance of the Obligations,
change any advance rates, cease making advances or other financial
accommodations to the Company and determine standards of eligibility. The
Obligations shall be secured by a first lien on and security interest in all of
the assets of the Company in which the Company has granted FTC a security
2
interest under the Company Agreements. The failure 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 and the failure to perform any of the terms
and conditions of any of the Company Agreements or the breach of any of the
representations or warranties contained in the Company Agreements shall
constitute a default under this Agreement.
The foregoing is based upon the financial condition of the Company as
represented in the financial statement dated ___________________________, which
the Company has represented and warranted completely and correctly reflects the
Company's financial condition. In addition, by its signature below, the Company
further represents and warrants that there has been no material adverse change
in the Company's financial condition since such statement was prepared.
Please sign below to acknowledge that the Company is in agreement with all of
the foregoing.
Very truly yours, ACKNOWLEDGED AND AGREED TO:
FTC COMMERCIAL CORP. ANTIK DENIM, LLC
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxx Xxxx
---------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxx, President Xxxx Xxxx
Title: Manager and Member
AGREEMENT AND REAFFIRMATION BY GUARANTOR:
The undersigned has executed a Guaranty dated October 18, 0000 (xxx "Xxxx
Guaranty") in connection with the Factoring Agreement between ANTIK DENIM, LLC
("ANTIK") and FTC COMMERCIAL CORP ("FTC") dated October 18, 2004 (the "Factoring
Agreement") and various related instruments and documents. The undersigned
agrees that the Guez Guaranty shall apply to all obligations of ANTIK under the
above inventory facility agreement (the "Agreement").
The undersigned hereby reaffirms the Guez Guaranty and agrees that no provisions
of the Agreement 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 (the "BCL Guaranty") in connection with
the Factoring Agreement between ANTIK DENIM, LLC ("ANTIK") and FTC COMMERCIAL
CORP ("FTC") dated October 18, 2004 (the "Factoring Agreement") and various
related instruments and documents. The undersigned agrees that the BCL Guaranty
shall apply to all obligations of ANTIK under the above inventory facility
agreement (the "Agreement").
The undersigned hereby reaffirms the BCL Guaranty and agrees that no provisions
of the Agreement shall in any way limit any of the terms or provisions of the
BCL Guaranty or any other documents executed by the undersigned in favor of FTC,
3
all of which are hereby ratified and affirmed and the same shall continue in
full force and effect in accordance with the provisions hereof.
BLUE CONCEPT, LLC
By: /s/ Xxxx Xxxx
-------------------------
Xxxx Xxxx
Title:_______________________
The undersigned hereby ratify and affirm the Guaranty dated August 14, 2003 (the
"Trust Guaranty") executed in connection with the Factoring Agreement between
BLUE CONCEPT, LLC ("BCL") and FTC COMMERCIAL CORP. ("FTC") dated June 11, 2003
(the "Factoring Agreement") and various related instruments and documents and
agree that the Trust Guaranty shall apply to all obligations of BCL under the
BCL Guaranty and that no provisions of the BCL Guaranty 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.
The Xxxx and Xxxxxxxxx Xxxx Living Trust dated
February 13, 1998
/s/ Xxxx Xxxx
----------------------------
Xxxx Xxxx, Trustee
/s/ Xxxxxxxxx Xxxx
----------------------------
Xxxxxxxxx Xxxx, Trustee
4
