EXHIBIT 10.23.15
[COLLECTION W/ADVANCES]
GMAC COMMERCIAL FINANCE LLC
FACTORING AGREEMENT
September 29, 2004
TARRANT APPAREL GROUP
FASHION RESOURCE (TCL), INC.
TAG MEX, INC.
UNITED APPAREL VENTURES, LLC
PRIVATE BRANDS, INC.
NO! JEANS, INC.
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Effective as of September 29, 2004 GMAC COMMERCIAL FINANCE LLC and
TARRANT APPAREL GROUP, FASHION RESOURCE (TCL), INC., TAG MEX, INC., UNITED
APPAREL VENTURES, LLC, PRIVATE BRANDS, INC. and NO! JEANS, INC. agree that
Factor shall act as Client's sole factor upon the following terms and
conditions:
1. DEFINITIONS
All initially capitalized terms used in this agreement are defined in
Rider I attached hereto. All other terms used herein, unless otherwise defined
herein, shall have the meanings given such terms in the UCC.
2. COVERED SALES; SECURITY INTEREST
(a) Client hereby assigns and sells to Factor, as absolute owner, and
Factor hereby purchases from Client, all Accounts, created on or after the
Effective Date, which arise from Client's sale of merchandise or rendition of
services. Factor's purchase of and acquisition of title to each Account will be
effective as of the date of its creation and will be entered on Factor's books
when Client furnishes Factor with a copy of the invoice evidencing such Account
or electronically transmits to Factor the details of the invoice in accordance
with Paragraph 9(a) hereof.
(b) Client hereby grants to Factor a continuing security interest in all of
the Collateral as security for all Obligations.
3. CUSTOMER CREDIT APPROVAL
Client shall submit to Factor the principal terms of each of Client's
Customers' orders for Factor's written credit approval. Factor may, in Factor's
discretion, approve in writing all or a portion of Client's Customers' orders,
either by establishing a credit line limited to a specific amount for a specific
Customer, or by approving all or a portion of a proposed purchase order
submitted by Client. No credit approval shall be effective (a) unless in writing
or transmitted by Factor electronically; (b) unless the goods are shipped or the
services rendered within the time specified in Factor's written credit approval
or within forty-five (45) days after the approval is given, if no time is
specified and (c) unless the assignment of the invoice evidencing the applicable
Account is received by Factor within ten (10) business days from the date of
such invoice. After the Customer has accepted delivery of the goods or
performance of the services, Factor shall then have the Credit Risk (but not the
risk of non-payment for any other reason), to the extent of the dollar amount
specified in the credit approval, on all Accounts evidenced by invoices which
arise from orders approved by Factor in writing except for those Accounts
evidenced by invoices less than Two Hundred Fifty Dollars ($250.00) and invoices
evidencing charges for samples supplied to Client's Customers. Factor shall have
neither the Credit Risk nor the risk of non-payment for any other reason on
Accounts arising from orders not approved by Factor in writing. Factor may
withdraw Factor's credit approval or withdraw or adjust a credit line at any
time before Client delivers the goods or renders the services.
4. PURCHASE PRICE OF ACCOUNTS; RESERVES
The purchase price of Accounts is the Net Face Amount thereof less
Factor's commission. The purchase price will be credited to Client's account on
the Settlement Date. Factor may deduct Reserves from the amount payable to
Client on any Settlement Date.
5. ADVANCES
If Client requests, Factor may, in its discretion, make Advances to
Client, subject to Factor's right to withhold Reserves. All amounts which Factor
pays or makes available to Client or for Client's account in excess of the
purchase price of Accounts are loans and shall be chargeable to Client's account
when paid or made available to Client. In no event, however, shall the aggregate
amount of all outstanding Obligations at any time exceed the Borrowing Base. The
Obligations hereunder shall be the joint and several Obligations of Client. The
Client agrees to use the Advances and loans, if any, and the proceeds thereof,
only for working capital purposes in the ordinary course of business or as
otherwise permitted herein.
6. COMMISSIONS; INTEREST
For Factor's services, Factor shall charge to Client's account monthly:
(a) as of the 15th day of each month, a commission at the rate of (i) for
all Accounts for which Factor has assumed the Credit Risk, four tenths of one
percent (0.40%) of the gross face amount of each invoice evidencing each such
Account created during
such month on terms not exceeding sixty (60) days including dating, and (ii) for
all Accounts for which Factor has not assumed the Credit Risk, thirty-five one
hundredths of one percent (0.35%) of the gross face amount of each invoice
evidencing each such Account created during such month on terms not exceeding
sixty (60) days including dating, in each case, plus an additional one quarter
of one percent (1/4%) for each additional thirty (30) days or portion thereof of
selling terms; provided, however, that if Client changes the terms of any
invoice whether or not Factor consents to such change (it being understood that
nothing in this provision diminishes Factor's rights or Client's obligations
under any other provision hereof including but not limited to Paragraph 9), then
the commission on the gross face amount of that invoice shall be the commission
hereinabove set forth plus one quarter of one percent (1/4%) for each thirty
(30) days or portion thereof of such change. During the ninety (90) day period
commencing on the Effective Date, Factor's commission on any invoice evidencing
an Account shall not be less than One Dollar and Fifty Cents ($1.50). However,
the aggregate amount of commissions which Client is obligated to pay hereunder
shall not be less than the Minimum Commission in each Contract Year during which
this agreement is in effect. If the Actual Commission is less than the Minimum
Commission in any Contract Year, Factor shall charge to Client's account the
Minimum Commission Charge for such Contract Year. Factor shall compute the
Minimum Commission Charge, if any, on a calendar quarterly basis and charge
Client's account therefor for each calendar quarter in the month following the
end of such calendar quarter; and
(b) as of the last day of each month, interest on the average daily balance
of all Interest Bearing Obligations which are outstanding during such month at
the Borrowing Rate; provided, however, that if an Overadvance exists at any
time, then the aggregate amount of the Interest Bearing Obligations in excess of
the Borrowing Base shall be immediately due and payable without further notice
or demand, and the average daily balance of the Interest Bearing Obligations in
that month shall bear interest at the Overadvance Rate. Interest shall be
calculated on the basis of the actual number of days elapsed over a year of
three hundred sixty (360) days. Upon and after the occurrence of an Event of
Default, and during the continuance thereof, all Interest Bearing Obligations
shall bear interest at the Default Rate.
7. CHARGES; BALANCES
Factor may charge to Client's account all Obligations. Unless otherwise
specified, all Obligations shall be payable on demand. All credit balances or
other sums at any time standing to Client's credit and all Reserves on Factor's
books, and all of Client's property in Factor's possession at any time or in the
possession of any parent, affiliate or subsidiary of Factor or on or in which
Factor or any of them have a lien or security interest, may be held and reserved
by Factor as security for all Obligations. Factor will account to Client monthly
and each monthly accounting statement will be fully binding on Client and will
constitute an account stated, unless, within thirty (30) days after such
statement is mailed to Client or within thirty (30) days after the mailing of
any adjustment thereof Factor may make, Client gives Factor specific written
notice of exceptions.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS
Client hereby represents, warrants and covenants that:
(a) Client has good title to the Collateral, including without limitation,
the Accounts, free of any encumbrance except in Factor's favor; each Accunt is a
bona fide, enforceable obligation created by the absolute sale and delivery of
goods or the rendition of services in the ordinary course of business; each
Account is due from a Customer located in the United States, Puerto Rico or
Canada and is payable in United States dollars; the selling terms of each
Account shall not exceed sixty (60) days without the prior written consent of
Factor; Client's Customer is unconditionally obligated to pay at maturity the
full amount of each Account without defense, counterclaim or offset (regardless
of merit); all documents in connection therewith are genuine; and the Customer
will accept the goods or services. In addition to and not in limitation of
anything to the contrary contained herein, Client shall not, without the prior
written consent of Factor which consent shall be in Factor's sole and absolute
discretion, directly or indirectly grant, or permit to exist either by contract,
applicable law or otherwise, any security interest in or lien upon any of
Client's inventory, other than the liens permitted set forth on Schedule 8(a).
(b) Client's exact legal name is as set forth on the signature page of this
agreement. Client shall not change Client's legal name unless Factor shall have
received not less than forty-five (45) days prior written notice of such
proposed change. Client has not, during the past five years, been known by or
used any Trade Names or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any entity, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
on Schedule 8(b).
(c) Client is an organization of the type and organized in the jurisdiction
set forth on SCHEDULE 8(C). SCHEDULE 8(C) accurately sets forth Client's
organizational identification number or accurately states that Client has none
and accurately sets forth Client's federal employer identification number.
Client shall not change Client's organizational identification number (or if
Client does not have an organizational identification number, Client shall not
acquire one), or change Client's type of organization, jurisdiction of
organization or other legal structure unless Factor shall have received not less
than forty-five (45) days prior written notice of such proposed change.
(d) Client's chief executive office and mailing address and Client's
Records concerning Accounts are located only at the address identified as such
on Schedule 8(d), and Client's only other places of business and the only other
locations of Collateral, if any, are the addresses set forth on Schedule 8(d).
Schedule 8(d) correctly identifies any of such locations which are not owned by
Client and sets forth the owners and/or operators thereof. Client shall not
change Client's chief executive office, mailing address or any location of
Collateral unless Factor shall have received not less than forty-five (45) days
prior written notice of such proposed change.
(e) Client shall furnish to Factor monthly financial statements within
forty-five (45) days after the end of each month, quarterly reviewed financial
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statements within sixty (60) days after the end of each of Client's fiscal
quarters and annual audited financial statements within one hundred twenty (120)
days after the end of each fiscal year, all in form and substance acceptable to
Factor, certified by their respective president or chief financial officer and
reviewed or audited, as the case may be, by an independent certified public
accountant acceptable to Factor. Client shall also cause all individual
guarantors of the Obligations, if any, to furnish to Factor personal financial
statements in form and substance acceptable to Factor within thirty (30) days
after each anniversary of the Effective Date of this agreement. Client shall, at
Client's expense, furnish Factor (i) within fifteen (15) days after the end of
each calendar month, a certificate from the president or chief financial officer
of Client certifying that as of the end of the immediately preceding calendar
month, none of Client's property has become subject to any lien or attachment
(other than the lien in favor of Factor and any lien set forth on Schedule
8(a)), and (ii) with such other financial and operational information requested
by Factor from time to time. Factor may at all times have access to and inspect,
audit and make abstracts from all of Client's Records at Client's expense.
(f) Client shall maintain at all times a Tangible Net Worth of not less
than the minimum amounts indicated below in respect to the corresponding dates
noted below (each such date a "Calculation Date") and the immediately following
fiscal quarter:
CALCULATION DATE MINIMUM TANGIBLE
NET WORTH
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September 30, 2004 $20,000,000
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December, 31, 2004 $22,000,000
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March 31, 2005 $22,000,000
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June 30, 2005, and as at
the end of each fiscal $25,000,000
quarter thereafter
(g) Unless otherwise permitted hereunder, Client shall not, until
satisfaction in full of the Obligations and termination of this agreement,
contract for, purchase or make any net Capital Expenditures during any fiscal
quarter in an aggregate amount in excess of Eight Hundred Thousand ($800,000)
Dollars.
(h) Unless otherwise permitted hereunder, Client shall not, until
satisfaction in full of the Obligations and termination of this agreement,
become liable upon the obligations of any Person by assumption, endorsement or
guaranty thereof or otherwise (other than to Factor) except (i) from and after
the date hereof, with respect to guarantees made in the ordinary course of
business in support of the purchase by any Affiliate of fabric, trim or quota in
an aggregate amount not to exceed Two Million ($2,000,000) Dollars at any time
outstanding, (ii) the endorsement of checks in the ordinary course of business,
and (iii) as set forth on Schedule 8(h).
(i) Unless otherwise permitted hereunder, Client may make advances, loans
or extensions of credit to (i) certain Affiliates designated on Schedule 8(i) in
the ordinary course of Client's business as presently conducted, PROVIDED, THAT,
the aggregate amount owing from any such Affiliate shall at no time exceed the
amounts outstanding as of the date hereof as more particularly set forth on
Schedule 8(i); and (ii) all Affiliates not designated on Schedule 8(i) in the
ordinary course of Client's business as presently conducted, PROVIDED, THAT, the
aggregate amount of all such advances, loans or extensions of credit outstanding
at any given time shall not exceed Five Hundred Thousand ($500,000) Dollars in
the aggregate.
(j) Client shall immediately notify Factor in writing of any merchandise
returns or Disputes and promptly notify Factor in writing of any discounts,
anticipation reductions or other unilateral deductions taken by Customers,
credits and allowances to Customers. Client will settle all Disputes at no cost
or expense to Factor; Factor's practice is to allow Client sixty (60) days to do
so. Should Factor so elect, Factor may at any time in Factor's discretion (i)
withdraw Client's authority to issue credits to Client's Customers without
Factor's prior written consent; (ii) litigate Disputes or settle them directly
with the Customers on terms acceptable to Factor in the event that Obligations
are then outstanding or Factor has made payment to Client with respect to the
Accounts involved in such litigation or settlement; or (iii) direct Client to
set aside, identify as Factor's property and procure insurance satisfactory to
Factor on any Retained Goods. All Retained Goods (and the proceeds thereof)
shall be (A) held by Client in trust for Factor as Factor's property, (B)
subject to a security interest in Factor's favor as security for the
Obligations, and (C)disposed of only in accordance with Factor's express written
instructions.
(k) Factor's Credit Risk, if any, on an Account shall immediately terminate
without any action on Factor's part in the event that (i) Client's Customer
asserts a Dispute (regardless of merit) as a ground for non-payment of the
Account or returns or attempts to return the goods represented thereby; (ii) any
representation, warranty or covenant by Client as to the Account is breached; or
(iii) there is any change in the terms or dating on the Account without Factor's
prior written approval. Factor may charge to Client's account, at any time after
the Settlement Date, the gross face amount of any Account (or portion thereof)
on which Factor does not then have the Credit Risk, together with interest
thereon from the Settlement Date of such Account to the date of chargeback; such
action on Factor's part shall not be deemed a reassignment of such Account and
will not impair Factor's rights thereto or security interest therein, which will
continue to be effective until this agreement is terminated and all Obligations
are fully satisfied.
(l) CLIENT WILL NOT GRANT A SECURITY INTEREST OR TRANSFER ANY OTHER
INTEREST IN ANY OF THE COLLATERAL OR IN ANY OF CLIENT'S INVENTORY TO ANYONE
EXCEPT FACTOR WITHOUT (i) FACTOR'S PRIOR WRITTEN CONSENT OR (ii) THE DELIVERY TO
FACTOR OF AN INTERCREDITOR AGREEMENT, IN FORM AND SUBSTANCE ACCEPTABLE TO FACTOR
IN ITS SOLE DISCRETION, EXECUTED BY FACTOR AND THE PARTY RECEIVING SUCH SECURITY
INTEREST OR OTHER INTEREST. CLIENT SHALL IMMEDIATELY NOTIFY FACTOR IN THE EVENT
THAT ANY OF CLIENT'S PROPERTY HAS BECOME SUBJECT TO ANY LIEN OR ATTACHMENT
(OTHER THAN PERMITTED ENCUMBRANCES).
(m) Client is and shall remain in compliance with all applicable laws,
regulations and rules.
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(n) Client shall take all actions requested by Factor from time to time to
cause the attachment, perfection and first priority of, and Factor's ability to
enforce, Factor's security interest in any and all of the Collateral. Client
irrevocably and unconditionally authorizes Factor (or Factor's agent) to file
and ratifies the filing at any time and from time to time such financing
statements with respect to the Collateral naming Factor or Factor's designee as
the secured party and Client as debtor, as Factor may require, and including any
other information with respect to Client or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdictions as Factor may
determine, and setting forth a notice that any disposition of any of the
Collateral by Client without Factor's prior written consent violates the rights
of Factor, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Client agrees that the foregoing authorizations shall
be irrevocable while this agreement remains in effect and thereafter until
Factor has received final payment and satisfaction in full in immediately
available funds of all Obligations. In no event shall Client at any time file,
or permit or cause to be filed, any correction statement or termination
statement with respect to any financing statement (or amendment or continuation
with respect thereto) naming Factor or Factor's designee as secured party and
Client as debtor.
(o) Upon Factor's request, Client shall, at Client's expense, duly execute
and deliver, or shall cause to be duly executed and delivered, to Factor such
further instruments and do and cause to be done such further acts as may be
necessary or proper in the opinion of Factor to effectuate the provisions and
purposes of this agreement.
9. INVOICING; PAYMENTS; RETURNS; NOTIFICATION
(a) Each of Client's invoices and all copies thereof shall bear a notice
(in form and substance satisfactory to Factor) that it is owned by and payable
directly and only to Factor at locations designated by Factor. With respect to
each such invoice, Client shall either (i) furnish Factor with a legible
duplicate original of the invoice accompanied by a confirmatory assignment
thereof, or (ii) electronically transmit to Factor the invoice details and an
assignment schedule using a transmission format acceptable to Factor. Client's
failure to furnish such specific assignments shall not diminish Factor's rights.
Client shall procure and hold in trust for Factor and furnish to Factor at
Factor's request satisfactory evidence of each shipment and delivery or
rendition of services. For invoices electronically transmitted to Factor, Client
shall also (i) retain and furnish Factor at Factor's request legible copies of
sales schedules and registers, as well as duplicate originals of the invoices,
and (ii) reproduce for Factor at Factor's request any and all such electronic
transmissions. Each invoice shall bear the terms stated on the Customer's order,
as submitted to Factor, whether or not the order has been approved by Factor,
and no change from the original terms of the order shall be made without
Factor's prior written consent. Any such change not so approved by Factor shall
automatically terminate Factor's Credit Risk, if any, on the Account arising
from Client's performance of the order. Client will hold in trust for Factor and
deliver to Factor any payments received from Client's Customers in the form
received, and hereby irrevocably authorizes Factor to endorse Client's name on
all checks and other forms of payment. Each payment made by a Customer shall
first be applied to Accounts, if any, on which Factor has the Credit Risk, and
the balance, if any, of such payment shall be applied to other Accounts due from
such Customer. Client understands that Factor shall not be liable for any
selling expenses, orders, purchases, contracts or taxes of any kind resulting
from any of Client's transactions, and Client agrees to indemnify Factor and
hold Factor harmless with respect thereto, which indemnity shall survive
termination of this agreement.
(b) Factor shall have the right to communicate with and instruct the
Customers on Client's Accounts to make payments in respect thereof directly to
Factor.
10. TERMINATION
(a) This agreement shall remain in full force and effect for the Term or
until terminated as follows:
(i) Factor may terminate this agreement at any time upon ninety
(90) days prior written notice to Client. If not so terminated, this agreement
shall remain in full force and effect unless Client gives Factor written notice
of termination (by certified mail, return receipt requested) no less than ninety
(90) days prior to and effective as of the anniversary of the Effective Date in
any year; or
(ii) Upon the occurrence of an Event of Default, Factor may
terminate this agreement at any time without notice.
(b) On the effective date of termination all Obligations shall become
immediately due and payable in full without further notice or demand. Factor's
rights with respect to Obligations owing to Factor, or chargeable to Client's
account, arising out of transactions having their inception prior to the
effective date of termination, will not be affected by termination. Without
limiting the foregoing, all of Factor's security interests and other rights in
and to all Collateral shall continue to be operative until such Obligations have
been fully and finally satisfied or Client has given Factor an indemnity
satisfactory to Factor.
(c) Notwithstanding anything to the contrary set forth herein, in the event
this agreement is terminated prior to the end of the Term, other than a
termination pursuant to the first sentence of Paragraph 10(a)(i), Client shall
pay to Factor, in addition to all other Obligations, an amount equal to (i)
Seven Hundred Fifty Thousand ($750,000) Dollars if the termination occurs on or
after the Effective Date to and including the date immediately preceding the
first anniversary of the Effective Date, (ii) Five Hundred Thousand ($500,000)
Dollars if the termination occurs on or after the Effective Date to and
including the date immediately preceding the second anniversary of the Effective
Date, and (iii) Two Hundred Fifty Thousand ($250,000) Dollars if the termination
occurs on or after the Effective Date to and including the date immediately
preceding the third anniversary of the Effective Date. Such amount shall be
conclusively presumed to be the amount of Factor's damages sustained by reason
of such termination, which Client agrees is fair and proper.
11. PLACE OF PAYMENT; NEW YORK LAW; FORUM SELECTION; WAIVER OF JURY TRIAL
(a) All Obligations shall be paid at Factor's office in New York, New York.
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(b) This agreement shall be governed by and construed according to the laws
of the State of New York (without giving effect to its choice of law
principles).
(c) Client agrees that all actions and proceedings arising out of or
relating directly or indirectly to this agreement or any ancillary agreement or
any other obligations shall be litigated in the United States District Court for
the Southern District of New York or, at Factor's option, in any other courts
located in New York State or elsewhere as Factor may select, that such courts
are convenient forums, and that Client submits to the personal jurisdiction of
such courts. Client hereby consents to the service of process therein by
registered or certified mail, return receipt requested, directed to Client at
Client's address set forth above, and Client agrees that service so made shall
be deemed complete five (5) days after the date of mailing.
(d) TO THE EXTENT LEGALLY PERMISSIBLE, BOTH CLIENT AND FACTOR WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY LITIGATION RELATING TO TRANSACTIONS UNDER THIS
AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
12. REMEDIES; WAIVERS; LIMITATION OF LIABILITY
(a) Factor's rights and remedies under this agreement will be cumulative
and not exclusive of any other right or remedy Factor may have hereunder or
under the UCC or otherwise. Without limiting the foregoing, if Factor exercises
Factor's rights as a secured party Factor may, at any time or times, without
demand, advertisement or notice, all of which Client hereby waives, sell the
Collateral, or any part of it, at public or private sale, for cash, upon credit,
or otherwise, at Factor's sole option and discretion, and Factor may bid or
become purchaser at any such sale, free of any right of redemption which Client
hereby waives. After application of all Collateral to Client's Obligations (in
such order and manner as Factor in Factor's sole discretion shall determine),
Client shall remain liable to Factor for any deficiency.
(b) Factor shall have the right, in Factor's sole discretion, to determine
which rights, liens, security interests or remedies Factor may at any time
pursue, relinquish, subordinate, or modify or to take any other action and incur
any costs or expenses with respect thereto and such determination will not in
any way modify or affect any of Factor's rights hereunder. Failure by Factor to
exercise any right, remedy or option under this agreement or delay by Factor in
exercising the same will not operate as a waiver; no waiver by Factor will be
effective unless Factor confirms it in writing and then only to the extent
specifically stated.
(c) Factor shall have no liability hereunder (i) for any losses or damages
(including, without limitation, incidental, special, exemplary, punitive or
consequential damages) resulting from Factor's refusal to assume, or delay in
assuming, the Credit Risk, or any malfunction, failure or interruption of
communication facilities, or labor difficulties, or other causes beyond Factor's
control; or (ii) for indirect, special or consequential damages arising from
accounting errors with respect to Client's account with Factor. Factor's
liability for any default by Factor hereunder shall be limited to a refund to
Client of any commission paid by Client during the period starting on the
occurrence of the default and ending when it is cured or waived, or when this
agreement is terminated, whichever is earlier. Except as prohibited by law,
Client waives any right which it may have to claim or recover in any litigation
with Factor any incidental, special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages. Client:
(A) certifies that neither Factor nor any representative, agent or attorney
acting for or on behalf of Factor has represented, expressly or otherwise, that
Factor would not, in the event of litigation, seek to enforce any of the waivers
provided for in this agreement or any of the Other Documents and (B)
acknowledges that in entering into this agreement and the Other Documents,
Factor is relying upon, among other things, the waivers and certifications set
forth in this Paragraph 12(c) and elsewhere herein and in the Other Documents.
13. GENERAL
(a) Factor may charge to Client's account the amount of reasonable legal
fees (including, without limitation, fees, expenses and costs payable or
allocable to attorneys retained or employed by Factor) and other costs, fees and
expenses incurred by Factor in negotiating or preparing this agreement and any
legal documentation required by Factor or requested by Client in connection with
this agreement or any amendments or supplements thereof, or in enforcing
Factor's rights hereunder or in connection with the litigation of any
controversy arising out of this agreement, or in protecting, preserving or
perfecting Factor's interest in, any Collateral, including without limitation
all costs incurred or payable with respect to any Collateral, and the costs of
all public record filings, appraisals and searches relating to any Collateral.
Factor may also charge to Client's account all charges for wire transfers and
Factor's then standard price for furnishing to Client or Client's designees
copies of any statements, records, files or other data requested by Client or
them other than statements and reports of the kind furnished to Client and
Factor's other clients on a regular, periodic basis in the ordinary course of
Factor's business.
(b) This agreement cannot be changed or terminated orally and is for the
benefit of and binding upon the parties and their respective successors and
assigns except that Client may not assign or transfer any of Client's rights or
obligations under this Agreement without Factor's prior written consent, and no
such assignment or transfer of any such obligation shall relieve Client thereof
unless Factor has consented to such release in a writing specifically referring
to the obligation from which Client is to be released. This agreement, and any
concurrent or subsequent written supplements thereto or amendments thereof
signed by both of Factor and Client, represent the entire understanding of the
parties and supersede all inconsistent agreements and communications, written or
oral, between Client's and Factor's officers, employees, agents and other
representatives.
(c) As of the date hereof, the terms, conditions, agreements, covenants,
representations and warranties set forth in the Revolving Credit, Factoring and
Security Agreement by and among Tarrant Apparel Group, Tag Mex, Inc., Fashion
Resource (TCL), Inc., United Apparel Ventures, LLC and GMAC Commercial Finance
LLC, as successor by merger with GMAC Commercial Credit LLC, as the lender and
as agent ("GMAC CF") dated as of January 21, 2000 (as
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heretofore amended, and as the same now exists or may hereafter be amended,
restated, renewed, replaced, substituted, supplemented, extended, or otherwise
modified, the "Existing Factoring Agreement") are hereby amended and restated in
their entirety by the terms, conditions, agreements, representations and
warranties set forth in this agreement and the Other Documents. Without in any
way limiting the foregoing, all affirmative and negative covenants and other
obligations as set forth in the Existing Factoring Agreement are hereby amended
and restated in their entirety by the covenants and other obligations set forth
in this agreement and all affirmative and negative covenants and other
obligations as set forth in the Existing Factoring Agreement shall be of no
further force and effect after the Effective Date. The amendment and restatement
contained herein shall not, in any manner, be construed to constitute payment
of, or impair, limit, cancel or extinguish, or constitute a novation in respect
of, the indebtedness and other obligations and liabilities of, evidenced by or
arising under the Existing Factoring Agreement (which obligations and
liabilities shall be repaid in accordance with this agreement), and the liens
and security interests of GMAC CF securing such indebtedness and other
obligations and liabilities, which shall not in any manner be impaired, limited,
terminated, waived or released, but shall continue in full force and effect in
favor of Factor.
(d) This agreement shall not be effective unless signed by Client below,
and signed by Factor at the place for Factor's acceptance.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of Factor and Client has executed this
agreement as of the Effective Date.
Very truly yours,
GMAC COMMERCIAL FINANCE LLC
AGREED TO on this
29th day of September, 2004.
TARRANT APPAREL GROUP.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: CHIEF FINANCIAL OFFICER
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FASHION RESOURCE (TCL), INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: CHIEF FINANCIAL OFFICER
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TAG MEX, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: CHIEF FINANCIAL OFFICER
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
UNITED APPAREL VENTURES, LLC
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: MANAGER
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PRIVATE BRANDS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: CHIEF FINANCIAL OFFICER
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NO! JEANS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: CHIEF FINANCIAL OFFICER
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
ACCEPTED at New York, New York, as of the Effective Date.
GMAC COMMERCIAL FINANCE LLC
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: EXECUTIVE VICE PRESIDENT
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
9
RIDER I
FACTORING AGREEMENT
BETWEEN
GMAC COMMERCIAL FINANCE LLC
AND
TARRANT APPAREL GROUP,
FASHION RESOURCE (TCL), INC.,
TAG MEX, INC.,
UNITED APPAREL VENTURES, LLC,
PRIVATE BRANDS, INC., AND
NO! JEANS, INC.
DEFINITIONS
"ACCOUNT" shall have the meaning set forth in the UCC.
"ACTUAL COMMISSION" shall mean the aggregate amount of commissions
actually paid by Client or charged to Client's account.
"ADVANCE" shall mean a payment to Client of the purchase price of an
Account in advance of the Settlement Date thereof.
"AFFILIATE" of any Person shall mean (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 10% or
more of the securities having ordinary voting power for the election of
directors of such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"BORROWING BASE" shall mean the lesser of (a) up to ninety percent
(90%) of Accounts on which Factor has the Credit Risk, and (b) Forty Million
($40,000,000) Dollars, MINUS in each case, Reserves.
"BORROWING RATE" for each month shall mean an interest rate per annum
which is one-half of one percent (0.5%) in excess of the average Prime Rate in
effect during such month; provided, however, that said interest rate shall not
be less than six percent (6%) per annum and shall in no event be higher than the
highest rate permitted by New York law.
"CAPITAL EXPENDITURES" means, without duplication, all cash
expenditures (including deposits) for, or contracts for expenditures with
respect to any fixed assets or improvements, or for replacements, substitutions
or additions thereto, which have a useful life of more than one year.
"CHATTEL PAPER" shall have the meaning set forth in the UCC.
"CLIENT" shall mean, individually and collectively, Tarrant Apparel
Group, Fashion Resource (TCL), Inc., Tag Mex, Inc., United Apparel Ventures,
LLC, Private Brands, Inc. and No! Jeans, Inc., together with their respective
successors and assigns.
"COLLATERAL" shall mean and include all of Client's present and future
Accounts, Chattel Paper and Instruments, and all Supporting Obligations, General
Intangibles and Documents arising out of or relating to the foregoing; Retained
Goods; credit balances and other property of Client held or received by Factor;
rights of stoppage in transit, replevin, repossession, reclamation and other
rights and remedies of an unpaid vendor; and all of Client's Records relating to
and all proceeds of the foregoing property and rights.
"CONTRACT YEAR" shall mean the twelve-month period starting on
September ___ of each year.
"CREDIT RISK" shall mean the risk of loss resulting solely and
exclusively from the financial inability of Client's Customer to pay an Account
at maturity. Credit Risk shall not include such Customer's inability, financial
or otherwise, to pay an Account at maturity due to war, civil strife, currency
restrictions or foreign political impediments.
"CUSTOMER" shall mean and include the account debtor with respect to
any Account and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with Client, pursuant
to which Client is to deliver any personal property or perform any services.
"DISPUTE" shall mean any cause for nonpayment of an Account, including,
without limitation, any alleged defense, counterclaim, offset, dispute or other
claim whether arising from or relating to the sale of goods or rendition of
services or arising from or relating to any other transaction or occurrence,
except for financial inability of Client's Customer to pay an Account at
maturity.
"DEFAULT RATE" shall mean an interest rate per annum which is two
percent (2%) in excess of the Borrowing Rate or the Overadvance Rate, as the
case may be.
"DOCUMENT" shall have the meaning set forth in the UCC.
"EFFECTIVE DATE" shall mean the date set forth in the introductory
paragraph of this agreement.
"EVENT OF DEFAULT" shall mean the occurrence of any of the following
events: if Client shall suspend business, sell all or substantially all of
Client's assets, become insolvent or unable to pay debts as they mature, make an
assignment for the benefit of creditors, or apply for an extension from
creditors generally; or if a creditors' committee is formed
2
following a meeting of Client's creditors; or if a receiver or trustee shall be
appointed for Client or Client's property; or if Client's property shall become
subject to any lien or attachment (other than a lien set forth on Schedule
8(a)); or if a petition under the United States Bankruptcy Code shall be filed
by or against Client; or if Client shall seek relief under any insolvency
statute, federal, state or other; or if a custodian shall be appointed for all
or substantially all of Client's property; or if Client shall breach this
agreement or any other agreement between Factor and Client or between Client and
any affiliate of Factor after giving effect to any applicable cure period; or if
Client shall breach any agreement between UPS Capital Global Trade Finance
Corporation (or any of its successors or assigns) and Client after giving effect
to any applicable cure period; or if Client shall fail to pay any Obligation
when due; or if any guaranty of the Obligations shall be terminated; or if
ownership or control of fifty percent (50%) or more of Client's aggregate
outstanding stock, stock equivalents and any other equity changes after the
Effective Date; or if any other significant change in the identity of those in
control of Client (whether or not qualifying under the preceding "50%"
provision); or if, after the Effective Date, ▇▇▇▇▇▇ ▇▇▇▇ is not a member of
Client's Board of Directors or is not involved in Client's management; or the
occurrence of an Event of Default under the PBG7 Factoring Agreement.
"FACTOR" shall mean GMAC Commercial Finance LLC.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GENERAL INTANGIBLE" shall have the meaning set forth in the UCC.
"INSTRUMENT" shall have the meaning set forth in the UCC.
"INTEREST BEARING OBLIGATIONS" shall mean all Advances and all other
loans and amounts charged and chargeable to Client's account under this
agreement.
"INVENTORY" shall have the meaning set forth in the UCC.
"MINIMUM COMMISSION" shall mean $0.
"MINIMUM COMMISSION CHARGE" shall mean the difference between the
Minimum Commission and the Actual Commission if the Actual Commission is less
than the Minimum Commission.
"NET FACE AMOUNT" shall mean the gross face amount of the invoice
evidencing an Account, less returns, discounts (which shall be determined by
Factor where optional terms are given), anticipation reductions or any other
unilateral deductions taken by Customers, and credits, and allowances to
Customers of any nature.
"OBLIGATIONS" shall mean and include all debts, liabilities,
obligations, covenants, duties and amounts of any nature whatsoever, for which
Client is now or hereafter obligated to Factor (or to any corporation that
directly or indirectly controls or is controlled by or is under common control
with Factor, including without limitation any parent, subsidiary and affiliate
of Factor), of every kind and description (whether or not evidenced by any note
or other instrument and whether or not for the payment of money or the
performance or non-performance of any act), direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, whether arising under this or any other present or future
agreement or other documentation, or by operation of law or otherwise, now
existing or hereafter arising (whether before or after the filing of any
petition in bankruptcy by or against Client or the commencement of any other
insolvency proceeding, including but not limited to an assignment for the
benefit of creditors), including, without limitation, any debt, liability or
obligation now or hereafter owing from Client to others, including without
limitation any other present or future client(s) of Factor, which Factor may
have obtained or may obtain, by purchase, assignment, participation or
otherwise, and further including without limitation, all interest, charges or
any other payments Client is required to make to Factor, together with all
expenses and attorneys' fees and costs chargeable to Client's account or
incurred by Factor in connection with Client's account, whether provided for
herein or in any such other agreement or documentation. Without limiting the
foregoing, Obligations shall include the amounts of all interest, commissions,
customer late payment charges and bank related charges, costs, fees, expenses,
taxes and all Accounts charged or chargeable to Client's account hereunder.
"OTHER DOCUMENTS" shall mean, collectively, all notes, guarantees,
security agreements and other agreements, documents and instruments now or at
any time hereafter executed and/or delivered by Client or any third party in
connection with this agreement.
"OVERADVANCE" shall mean that the aggregate amount of Interest Bearing
Obligations outstanding on each of five (5) or more days in any month exceeds
the Borrowing Base on such days.
"OVERADVANCE RATE" for each month shall mean an interest rate per annum
which is one percent (1%) in excess of the Borrowing Rate in effect during such
month.
"PBG7 FACTORING AGREEMENT" shall mean that certain Factoring Agreement
effective as of the date hereof between Factor and PBG7, Inc.
"PERMITTED ENCUMBRANCES" shall mean (a) liens in favor of Factor,
which, in each case, secure Obligations; (b) liens disclosed in the financial
statements referred to in paragraph 8(e), the existence of which Factor has
consented to in writing; (c) deposits or pledges to secure obligations under
worker's compensation, social security or similar laws, or under unemployment
insurance; (d) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the ordinary
course of Client's business; (e) mechanics', workers', material men's or other
like liens arising in the ordinary course of Client's business with respect to
obligations which are not due or which are being contested in good faith by
Client; and (f) liens disclosed on Schedule 8(a).
"PERSON" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether ▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇,
▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇ or otherwise, including any instrumentality, division, agency,
body or department thereof).
"PRIME RATE" shall mean the "Prime Rate" as reported in THE WALL STREET
JOURNAL, such rate to be adjusted automatically, without notice, on the
effective date of any change in such rate.
"RECORDS" shall mean all of Client's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, ledger sheets, bills of lading and other shipping evidence, statements,
files, correspondence, memoranda, documents, credit files, business papers and
other data relating to the Collateral or any Customer, together with the
computer software (whether owned by Client or in which it has an interest),
computer programs, tapes, disks, diskettes and other data and software storage
media and devices, computers, file cabinets or containers in or on which the
foregoing are stored (including, without limitation, any of Client's rights with
respect to the foregoing maintained with or by any other person).
"RESERVES" shall mean all Obligations then chargeable to any of
Client's accounts, as well as Obligations which may, in Factor's sole
discretion, be chargeable to Client's accounts thereafter.
"RETAINED GOODS" shall mean all merchandise returned or rejected by
Customers or repossessed from Customers relating to or securing any of the
Accounts.
"SETTLEMENT DATE" shall mean (a) for each Account on which Factor has
the Credit Risk and which is not due from a department or chain store, two (2)
business days after the day on which the payment of the Account is posted to
Client's account by Factor (the "Collection Settlement Date") or the day on
which such payment becomes one hundred twenty (120) days past due, whichever is
earlier, (b) for each Account on which Factor has the Credit Risk and which is
due from a department or chain store, the Collection Settlement Date or twenty
(20) business days after the day on which Factor receives notice that the
Account has been allowed as a claim under the United States Bankruptcy Code,
whichever is earlier, and (c) for each Account on which Factor does not have the
Credit Risk, the Collection Settlement Date.
"SUBSIDIARY" shall mean a corporation or other entity of whose shares
of stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"SUPPORTING OBLIGATION" shall have the meaning set forth in the UCC.
"TANGIBLE NET WORTH" shall mean, at a particular date, (a) the
aggregate amount of all assets of Client as may be properly classified as such
in accordance with GAAP consistently applied excluding (i) such other assets as
are properly classified as intangible assets under GAAP, and (ii) moneys due and
payable by ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ to Client, LESS (b) the aggregate amount of all
liabilities of Client.
"TERM" shall mean the period from the Effective Date hereof through and
including the third (3rd) anniversary of the Effective Date hereof, unless
terminated pursuant to Paragraph 10(a)(i) hereof.
"TRADE NAMES" shall mean all trade names or styles, trademarks,
divisions or other names under which Client conducts business.
"UCC" shall mean the Uniform Commercial Code as in effect on the
Effective Date in the State of New York, as from time to time amended.
4