EXHIBIT 10.23.12
GMAC COMMERCIAL FINANCE LLC
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April 7, 2004
TARRANT APPAREL GROUP
TAG MEX, INC.
FASHION RESOURCE (TCL), INC.
UNITED APPAREL VENTURES, LLC
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Re: EXTENSION AND FEE AGREEMENT
Gentlemen:
Reference is made (i) to the Letter re: Amendment to Credit Agreement,
dated October 28, 2003 (the "October 2003 Amendment"), 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"); and (ii) to
the Letter Agreement, dated March, 2002 by and among Borrowers and Agent (the
"Fourth Amendment"). Reference is also made to certain financing arrangements by
and among Borrowers, Agent and the Lenders from time to time parties thereto,
pursuant to certain financing agreements, including, without limitation, that
certain Revolving Credit, Factoring and Security Agreement, dated as of January
21, 2000 (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"), and the other agreements, documents
and instruments referred to therein or any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the
Credit Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Other Documents").
Borrowers have requested that Agent make certain modifications to the
October 2003 Amendment and Agent has agreed to do so, subject to the terms and
provisions set forth in this Letter re: Extension and Fee Agreement ("Extension
Letter"), all as more particularly set forth below.
1. EXTENSION. Pursuant to the October 2003 Amendment, Borrowers have
agreed 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 (the "Default Date").
At the request of Borrowers, as a one-time accommodation and subject to the
terms and conditions contained herein, Agent agrees that the Default Date shall
be extended to May 15, 2004. In the event that the financial covenants are not
timely established on terms acceptable to Agent in its sole discretion by no
later than May 15, 2004, such failure shall be deemed to be an Event of Default
under the Credit Agreement and the Other Documents.
2. RECONCILIATION OF UNUSED LINE AND FACILITY FEES. Agent has not
charged the Unused Line Fee and the Facility Fee to Borrowers' account for
certain periods of time, as it is authorized to do pursuant to the Credit
Agreement and the Fourth Amendment, and has determined to make certain
adjustments to such fees that were previously charged by Agent. Agent and
Borrower agree that Agent has not waived any of the Unused Line Fees or the
Facility Fee and that, as of March 31, 2004, the aggregate amount of the unpaid
Unused Line Fee and Facility Fee due and owing by the Borrowers, after
reconciliation and adjustments to certain fees previously charged by Agent, is
$104,713.71 (the "Outstanding Fee Amount"). The Outstanding Fee Amount is
immediately due and payable and Borrower authorizes and consents to the Agent
immediately charging the Outstanding Fee Amount to the Obligations.
3. AMENDMENT FEE. In consideration of the amendment set forth herein,
Borrowers acknowledge, confirm and agree that Agent may charge and Borrowers
shall pay an amendment fee in the amount of Fifty Thousand Dollars ($50,000),
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.
4. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Extension
Letter and the agreement of Agent to the modifications set forth in this
Extension Letter are subject to the fulfillment of the following conditions
precedent:
(a) 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 Extension Letter; and
(b) No Event of Default shall have occurred and be continuing
on the date of this Extension Letter, or would exist after giving effect to the
transactions contemplated under this Extension Letter.
5. RELEASE. In consideration of this agreement and the performance
thereof and other good and valuable consideration, each Borrower forever
releases and discharges Agent, its affiliates, officers, directors, consultants,
agents, and employees, and their respective 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
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any Borrower, directly or indirectly, ever had or now or can, shall or may, have
against any of the Released Parties for, upon, or by reason of any matter, cause
or thing whatsoever. Each Borrower expressly and explicitly acknowledges that it
is aware of and is knowingly waiving any rights that he, she, or it may have
against the Released Parties under the provisions of California Civil Code
Section 1542 (and any similar principle of law under any other applicable
jurisdiction), which section reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
In addition to the foregoing, each of the Borrowers agrees to forever refrain
and forbear from commencing, assisting, instituting, prosecuting or encouraging
others to institute or prosecute any litigation, action, arbitration,
administrative or other proceeding of any kind against any of the Released
Parties directly or indirectly arising out of, resulting from or relating in any
way to the subject matter of or the fact and course of conduct underlying the
releases granted herein.
6. NO OTHER MODIFICATIONS. Except as specifically set forth herein, no
other amendments, changes or modifications to the October 2003 Amendment, the
Credit Agreement or the Other Documents are intended or implied, and, in all
other respects, the October 2003 Amendment, 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 October 2003 Amendment, the Credit Agreement or the
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.
7. NO THIRD PARTY BENEFICIARIES. The terms and provisions of this
Extension Letter 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 Extension Letter.
8. COUNTERPARTS. This Extension Letter may be signed in counterparts,
each of which shall be an original and all of which taken together constitute
one Extension Letter. In making proof of this Extension Letter, it shall not be
necessary to produce or account for more than one counterpart signed by the
party to be charged. This Extension Letter may be executed and delivered via
telecopier with the same force and effect as if it were a manually executed and
delivered counterpart.
9. MERGER. This Extension Letter sets forth the entire agreement and
understanding of the parties with respect to the matters set forth herein. This
Extension Letter cannot be changed, modified, amended or terminated except in a
writing executed by the party to be charged.
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10. GOVERNING LAW. 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, but excluding any principles of
conflicts of law or other rule of law that would result in the application of
the law of any jurisdiction other than the laws of the State of New York.
Very truly yours,
GMAC COMMERCIAL FINANCE LLC,
as Agent
By: /S/ ILLEGIBLE
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Title: Senior Vice President
ACKNOWLEDGED AND AGREED:
TARRANT APPAREL GROUP
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Title: CFO
TAG MEX, INC.
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Title: CFO
FASHION RESOURCE (TCL), INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Title: CFO
UNITED APPAREL VENTURES, LLC
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Title: Manager
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