EXHIBIT 10.11.2
INVENTORY SECURITY AGREEMENT
GMAC COMMERCIAL FINANCE LLC
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1. SECURITY INTEREST
TARRANT APPAREL GROUP, FASHION RESOURCE (TCL), INC., TAG MEX,
INC., UNITED APPAREL VENTURES, LLC, PRIVATE BRANDS, INC. and NO! JEANS, INC.,
each whose principal place of business is at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (individually and collectively, the "Debtor"), hereby
grants to GMAC Commercial Finance LLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Secured Party"), a security interest in: (a) all Debtor's now
owned and hereafter acquired Inventory wherever located in the United States,
including but not limited to all merchandise, raw materials, parts, supplies,
work in process and finished goods, of every kind and description ("Inventory"),
(b) all Debtor's rights as a seller of goods, and all Inventory which may be
returned to Debtor by its customers or repossessed by Debtor, and (c) all
proceeds and products of all of the foregoing. All the collateral described in
(a), (b) and (c) above is hereinafter referred to as "Collateral". For purposes
hereof, Collateral shall not include the "UPS Collateral" (as such term is
defined in the Amended and Restated Intercreditor Agreement dated as of December
13, 2004 among Secured Party, UPS Capital Global Trade Finance Corporation and
Debtor, as amended by that certain First Amendment to Amended and Restated
Intercreditor Agreement dated as of March 16, 2005 among Secured Party, UPS
Capital Global Trade Finance Corporation and Debtor, that certain Second
Amendment to Amended and Restated Intercreditor Agreement dated as of even date
herewith among Secured Party, UPS Capital Global Trade Finance Corporation and
Debtor, and as otherwise amended, supplemented, restated, replaced or otherwise
modified from time to time).
2. OBLIGATIONS SECURED
The security interest granted in this Agreement shall secure
payment and performance of all Obligations of Debtor to Secured Party, as that
term is defined in the Factoring Agreement between Debtor and Secured Party or
its predecessor-in-interest, dated as of September 29, 2004, as supplemented and
amended (the "Factoring Agreement").
3. WARRANTIES AND COVENANTS
Debtor warrants and agrees that:
A. All of the existing Collateral is and will be owned
by Debtor free and clear of all tax liens and other liens and security interests
except the security interest granted hereunder and the security interests set
forth on Schedule 8(a) to the Factoring Agreement.
B. The Collateral shall be kept at the principal place
of business of Debtor as set forth above, or as listed on Schedule A attached
hereto, if any, and none of the Collateral will be removed from such location
without the prior written consent of Secured Party, except for deliveries to
buyers in the ordinary course of business.
C. Debtor will insure the Collateral at all times
against all hazards specified by Secured Party, including but not limited to,
fire, theft and risks covered by extended coverage insurance, and such policies
shall be payable to Secured Party as its interest may appear. Said policies of
insurance shall be satisfactory to Secured Party as to form, amount and insurer.
Debtor shall furnish certificates, policies or endorsements to Secured Party as
proof of such insurance, and if it fails to do so Secured Party is authorized
but not required to obtain such insurance at the Debtor's expense. All policies
shall provide for at least ten days prior written notice of cancellation to
Secured Party. Secured party may act as attorney-in-fact for Debtor in making,
adjusting and settling any claims under any such insurance policies. Debtor
assigns to Secured Party all of its right, title and interest to any insurance
policies insuring the Collateral, including all rights to receive the proceeds
of insurance, and directs all insurers to pay all such proceeds directly to
Secured Party and authorizes Secured Party to endorse Debtor's name on any
instrument for such payment.
D. Debtor will not sell any of the Inventory except to
buyers in the ordinary course of business.
E. Debtor will notify Secured Party of any destruction
of or any substantial damage to any of the Collateral.
F. Debtor will not permit any liens or security
interests to attach to any of the Collateral, except in favor of Secured Party
and the security interests set forth on Schedule 8(a) to the Factoring
Agreement.
G. Debtor will pay when due all taxes, license fees and
assessments relating to the Collateral.
H. Debtor will be liable to Secured Party for any
expenditures by Secured Party for the maintenance and preservation of the
Collateral, including taxes, levies, insurance and repairs, and for the
repossession, holding, preparation for sale, and the sale of the Collateral
(including reasonable attorney's and accountants' fees and legal expenses), as
well as all damages for breach of warranty, misrepresentation, or breach of
covenant by Debtor, and all such liabilities shall be secured by the security
interest granted herein, and shall be payable upon demand.
I. Debtor irrevocably and unconditionally authorizes
Second Party to file and ratifies the filing at any time and from time to time
of Financing Statements pursuant to the Uniform Commercial Code, and any other
documents required by Secured Party to perfect the security interest granted
herein or to effectuate the purposes of this Agreement.
J. Debtor will at all times during normal business hours
allow Secured Party or its agents to examine and inspect the Collateral as well
as the Debtor's books and records, and to make extracts and copies of them.
K. Debtor will report, in form satisfactory to Secured
Party, such information as Secured Party may request regarding the Collateral;
such reports shall be for such periods, shall reflect Debtor's records as at
such time and shall be rendered with such frequency as Secured Party may
designate.
4. RIGHTS AND REMEDIES
Upon the occurrence of any default hereunder, under the
Factoring Agreement or under any other agreement between Debtor and Secured
Party or executed by Debtor in favor of Secured Party or evidencing,
guaranteeing or granting collateral security for any of the Obligations, or upon
the breach of any covenants, warranties or representations made to Secured Party
under any such agreements, or upon the occurrence of any event permitting
Secured Party to terminate the Factoring Agreement, and at any time thereafter,
Secured Party shall have all rights and remedies provided by law, including
those of a Secured Party under the Uniform Commercial Code, in addition to the
rights and remedies provided herein or in any other agreement executed by
Debtor. Secured Party may require Debtor to assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to Debtor and Secured Party. If notice to Debtor of
intended disposition of Collateral is required by law, ten (10) days notice
shall constitute reasonable notification. All Secured Party's rights and
remedies shall be cumulative and none are exclusive. Whether or not default has
occurred, all payments made by or on behalf of and all credits due Debtor under
this Security Agreement, and under any other agreement between Debtor and
Secured Party, may be applied to the Obligations in whatever order and amounts
Secured Party chooses.
5. MISCELLANEOUS
A. Any failure or delay by Secured Party to require
strict performance by Debtor of any of the provisions, warranties, terms and
conditions contained herein or in any other agreement, document or instrument,
shall not affect Secured Party's right to demand strict compliance and
performance therewith, and any waiver of any default shall not waive or affect
any other default, whether prior or subsequent thereto, and whether of the same
or of a different type. None of the warranties, conditions, provisions and terms
contained herein or in any other agreement, document or instrument shall be
deemed to have been waived by any act or knowledge of Secured Party, its agents,
officers or employees, but only by an instrument in writing, signed by an
officer of Secured Party and directed to Debtor specifying such waiver.
B. All terms used herein shall have the meanings given
in the Uniform Commercial Code, unless otherwise defined herein.
C. Any notice under this Agreement shall be addressed to
the parties at their respective addresses set forth in paragraph "1" hereof.
D. In the event that any provision hereof shall be
deemed to be invalid by any court, such invalidity shall not affect the
remainder of this Agreement.
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E. This Security Agreement shall be binding upon and for
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
F. The validity, interpretation, enforcement and effect
of this Security Agreement shall be governed by the laws of the State of New
York. Debtor hereby consents to the jurisdiction of all courts in said State.
IN WITNESS WHEREOF, the Debtor has executed and delivered this
Agreement on this 9th day of May, 2005.
TARRANT APPAREL GROUP
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: CHIEF FINANCIAL OFFICER
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FASHION RESOURCE (TCL), INC.
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Title: CHIEF FINANCIAL OFFICER
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TAG MEX, INC.
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Title: CHIEF FINANCIAL OFFICER
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UNITED APPAREL VENTURES, LLC
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Title: MANAGER
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PRIVATE BRANDS, INC.
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Title: CHIEF FINANCIAL OFFICER
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NO! JEANS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: CHIEF FINANCIAL OFFICER
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