EXHIBIT 10.94.14
GMAC COMMERCIAL FINANCE LLC
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
May 9, 2003
TARRANT APPAREL GROUP
TAG MEX, INC.
FASHION RESOURCE (TCL), INC.
UNITED APPAREL VENTURES, LLC
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Re: AMENDMENT TO CREDIT AGREEMENT
Gentlemen:
Reference is made to the Revolving Credit, Factoring and Security
Agreement, dated as of January 21, 2000, by and among Tarrant Apparel Group
("Tarrant"), Tag Mex, Inc. ("Tag"), Fashion Resource (TCL), Inc. ("Fashion"),
United Apparel Ventures, LLC ("United", and together with Tarrant, Tag and
Fashion, each, individually, a "Borrower" and collectively, the "Borrowers") and
GMAC Commercial Finance LLC, as successor by merger with GMAC Commercial Credit
LLC, as agent (as a lender and as successor in interest to Finova Capital
Corporation and Sanwa Bank California, the "Agent" or "Factor"), and the Lenders
from time to time parties thereto (as heretofore amended, and as the same now
exists or may hereafter be amended, restated, renewed, replaced, substituted,
supplemented, extended, or otherwise modified, the "Credit Agreement").
Borrowers have requested that Agent make certain amendments to the
Credit Agreement and Agent has agreed to do so, subject to the terms and
provisions set forth herein, all as more particularly set forth below.
1. DEFINITIONS. All capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. Effective as of the date
hereof, the Credit Agreement is hereby amended as follows:
(a) Subsection (a) of the definition of "Borrowing Base"
as set forth in Section 1.2 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
"(a) up to ninety percent (90%) of the Factor Payments Due in
respect of Factored Receivables for which Agent has assumed
and retained the Credit Risk, LESS reserves established by
Agent from time to time in its
sole and absolute discretion (in addition to, and not in limitation of
the reserves established by Agent pursuant to subsection (g) of this
definition); PLUS"
(b) The first (1st) clause of the definition of "Eligible
Receivables" as set forth in Section 1.2 of the Credit Agreement is
hereby amended and restated in its entirety as follows:
""Eligible Receivables" shall mean each Receivable (other than
Factored Receivables for which Factor has assumed and retained
the Credit Risk and Factored Receivables which have at any
time been charged back by Factor under Section 3.6 hereof)
arising in the ordinary course of Borrowers' business, except
that no Receivable shall be an Eligible Receivable if."
(c) The definition of "Factored Receivables" as set forth
in Section 1.2 of the Credit Agreement is hereby amended and restated
in its entirety as follows:
""Factored Receivables" means all Receivables of Borrowers
that are acceptable to Factor in Factor's sole and absolute
discretion."
(d) The definition of "Tangible Net Worth" as set forth
in Section 1.2 of the Credit Agreement is hereby amended and restated
in its entirety as follows:
""Tangible Net Worth" means the gross book value of Borrowers'
assets (excluding any minority equity interest in any entity
owned or controlled by any Borrower, goodwill, patents,
trademarks, trade names, organization expense, unamortized
debt discount and expense, capitalized or deferred research
and development costs, deferred marketing expenses, deferred
receivables, and other like intangibles, and monies due from
Affiliates, officers, directors, employees, or shareholders of
Borrower) LESS Total Liabilities, including, but not limited
to, accrued and deferred income taxes, and any reserves
against assets. For purposes of calculating Borrowers'
Tangible Net Worth, the value of Borrowers' assets located in
Mexico shall be calculated using the value of the Mexican
Peso, determined for any fiscal quarter as of the applicable
date of each consolidated and consolidating balance sheet
submitted to Agent by Borrowers at the end of each fiscal
quarter in accordance with Section 10.8 of the Credit
Agreement."
(e) Section 3.2 of the Credit Agreement is hereby amended
by addition the following sentence at the end thereof as follows:
"Notwithstanding anything to the contrary contained herein,
Factor shall not be deemed to have assumed the Credit Risk on
any Factored Receivable unless and until Factor has assumed
the Credit Risk in writing in accordance with the terms and
provisions of this Agreement."
(f) The first sentence of Section 3.3 of the Credit
Agreement is hereby amended and restated in its entirety as follows:
"The purchase price of Factored Receivables is the net face
amount thereof, LESS Factor's commission; it being
acknowledged that prior to the occurrence of an Event of
Default, the commission on Factored Receivables for which
Factor has not assumed the Credit Risk in writing in
accordance with the terms and provisions of this Agreement
shall be zero (0) basis points, PROVIDED, HOWEVER, THAT upon
the occurrence of an Event of Default, the commission on
Factored Receivables for which Factor has not assumed the
Credit Risk in writing in accordance with the terms and
provisions of this Agreement shall be not less than forty-five
(45) basis points."
(g) Section 7.5 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
"7.5 FINANCIAL COVENANTS. Borrowers shall maintain on a
consolidated basis:
(a) Commencing with the Borrowers' fiscal quarter ending
June 30, 2003, and as at the last day of each fiscal
quarter thereafter, maintain at all times a Tangible
Net Worth in an amount not less than the minimum
amounts set forth below in respect to the
corresponding dates noted below:
DATE TANGIBLE NET WORTH
---- ------------------
June 30, 2003 $75,000,000
September 30, 2003 $75,000,000
December 31, 2003 $80,000,000
(b) Commencing with the Borrowers' fiscal quarter ending
June 30, 2003, and as at the last day of each fiscal
quarter thereafter, maintain at all times a Fixed
Charge Coverage in a ratio of not less than the
minimum ratios set forth below in respect to the
corresponding dates noted below:
MINIMUM FIXED
DATE CHARGE COVERAGE
---- ---------------
June 30, 2003 0.7 to 1.0
September 30, 2003 1.1 to 1.0
December 31, 2003 1.1 to 1.0
(c) [INTENTIONALLY OMITTED]
(d) Commencing with the Borrower's fiscal quarter ending
June 30, 2003, and as at the last day of each fiscal
quarter thereafter, maintain at all times a Total
Leverage Ratio in a ratio of not greater than the
maximum ratios set forth below in respect to the
corresponding dates noted below:
DATE TOTAL LEVERAGE RATIO
---- --------------------
June 30, 2003 2.50 to 1.0
September 30, 2003 2.25 to 1.0
December 31, 2003 2.00 to 1.0"
(h) Section 8.6 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
"8.6 Capital Expenditures. Contract for, purchase or make any
expenditure for commitment for fixed or capital assets
(including capitalized leases) in any fiscal quarter in an
aggregate amount in excess of Eight Hundred Thousand
($800,000) Dollars."
3. FINANCIAL COVENANTS. Each of the Borrowers hereby agrees to
provide Agent with such financial information and reports so as to permit Agent
and Borrowers to establish the financial covenants set forth in Section 7.5 and
Section 8.6 of the Credit Agreement for periods subsequent to December 31, 2003
on mutually agreeable terms on or before December 31, 2003. In the event that
the financial covenants are not timely established on terms acceptable to Agent
in its sole discretion on or prior to December 31, 2003, such failure shall be
deemed to be an Event of Default under the Credit Agreement and the Other
Documents.
4. AMENDMENT FEE. In consideration of the amendments set forth
herein, Borrowers acknowledge, confirm and agree that Agent may charge and
Borrowers shall pay an amendment fee in the amount of Twenty-Five Thousand
($25,000) Dollars, which amendment fee shall be fully earned as of the date
hereof, shall not be subject to refund, rebate or proration for any reason
whatsoever, and may be charged by Agent to Borrowers as of the date hereof.
5. PURCHASE OF FACTORED RECEIVABLES. Borrowers have requested
that Agent commence the purchase of all Receivables of Borrowers. Effective as
of the date hereof, Borrowers and Agent hereby acknowledge, confirm and agree
that Agent shall commence the purchase of all existing and future Receivables of
Borrowers, such that, within sixty (60) days of the date hereof, Agent shall
have purchased from Borrowers and Borrowers shall have assigned to Agent all
Receivables.
6. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
amendment and the agreement of Agent to the modifications and amendments set
forth in this amendment are subject to the fulfillment of the following
conditions precedent:
(a) Agent shall have received all fees and other amounts due
and payable to Agent upon or prior to the effectiveness of this amendment;
(b) Each of the representations and warranties made by
Borrowers in the Credit Agreement shall be true and correct in all material
respects on and as of the date of this amendment; and
(c) No Event of Default shall have occurred and be continuing
on the date of this amendment, or would exist after giving effect to the
transactions contemplated under this amendment.
7. RELEASE. Each of the Borrowers forever releases and discharges
Agent, its affiliates, officers, directors, and employees, and its successors
and assigns (collectively the "Released Parties") from any and all actions,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extent, executions, claims
and demands whatsoever, in law, admiralty or equity, without defense, offset or
counterclaim, which any of the Borrowers ever had or now or hereafter can, shall
or may, have against any of the Released Parties for, upon, or by reason of any
matter, cause or thing whatsoever solely arising under or in any way connected
with the Credit Agreement, the Other Documents, this amendment, any other
agreements, instruments, or documents contemplated or required under this
amendment, or the transactions arising under or in connection therewith.
8. NO OTHER MODIFICATIONS. Except as specifically set forth
herein, no other amendments, changes or modifications to the Credit Agreement or
the Other Documents are intended or implied, and, in all other respects, the
Credit Agreement and the Other Documents shall continue to remain in full force
and effect in accordance with their terms as of the date hereof. Except as
specifically set forth herein, nothing contained herein shall evidence a waiver
or amendment by the Agent of any other provision of the Credit Agreement or
Other Documents nor shall anything contained herein be construed as a consent by
the Agent to any transaction other than those specifically consented to herein.
9. NO THIRD PARTY BENEFICIARIES. The terms and provisions of this
amendment shall be for the benefit of the parties hereto and their respective
successors and assigns; no other person, firm, entity or corporation shall have
any right, benefit or interest under this amendment.
10. COUNTERPARTS. This amendment may be signed in counterparts,
each of which shall be an original and all of which taken together constitute
one amendment. In making proof of this amendment, it shall not be necessary to
produce or account for more than one counterpart signed by the party to be
charged.
11. MERGER. This amendment sets forth the entire agreement and
understanding of the parties with respect to matters set forth herein. This
amendment cannot be changed, modified, amended or terminated except in a writing
executed by the party to be charged.
12. GOVERNING LAW. This amendment shall be governed and construed
in accordance with the laws of the state of New York.
Very Truly Yours,
GMAC COMMERCIAL FINANCE LLC
By: /S/ ILLEGIBLE
-----------------------
Title: Vice President
ACKNOWLEDGED AND AGREED:
TARRANT APPAREL GROUP
By: /S/ XXXXXXX XXXX
--------------------------
Xxxxxxx Xxxx
Title: Chief Financial Officer
TAG MEX, INC.
By: /S/ XXXXXXX XXXX
--------------------------
Xxxxxxx Xxxx
Title: Chief Financial Officer
FASHION RESOURCE (TCL), INC.
By: /S/ XXXXXXX XXXX
--------------------------
Xxxxxxx Xxxx
Title: Chief Financial Officer
UNITED APPAREL VENTURES, LLC
By: /S/ XXXXXXX XXXX
--------------------------
Xxxxxxx Xxxx
Title: Manager
