EXHIBIT 10.16.3
MODIFICATION AGREEMENT
THIS MQD1FICATION AGREEMENT ("AGREEMENT") is entered into as of
February 27, 2004, by and between General Electric Capital Corporation
("LENDER") and Tarrant Apparel Group ("BORROWER").
WHEREAS, Borrower and Lender entered into that certain Loan Agreement
dated as of September 1, 1999 (as amended or modified from time to time, the
"LOAN AGREEMENT") regarding a loan thereunder in the original principal amount
of US $12,500,000 (the "LOAN"); capitalized terms used but not defined herein
shall have the meanings given in the Loan Agreement, as applicable;
WHEREAS, on or about August 14, 2003, Lender delivered to Borrower a
letter waiving Borrower's compliance under Section 10(c) of the Loan Agreement
for its fiscal quarters ending March 31, 2003 and June 30, 2003 (a copy of which
letter is attached hereto as Exhibit A, and incorporated herein by this
reference and called, the "WAIVER LETTER");
WHEREAS, the waiver granted under the Waiver Letter terminated and
became ineffective on and after September 16, 2003 as a result of Borrower's
failure to provide Lender with a second priority mortgage lien on the real
property described in the Waiver Letter; and
WHEREAS, Borrower has requested that Lender again waive Borrower's
non-compliance with the financial covenant set forth in Section 10(c) of the
Loan Agreement as provided in the Waiver Letter and Lender has agreed to provide
such waiver on and subject to the terms of this Agreement and, in furtherance
thereof, the parties now desire to provide for modifications to the Loan
Agreement;
NOW THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Lender and Borrower agree as
follows:
1. CONDITIONS OF WAIVER, AGREEMENTS.
(a) The parties hereto reaffirm their respective
agreement to the terms and conditions of the Waiver Letter, subject to the
further provisions of this Agreement; provided, however, notwithstanding
anything in the Waiver Letter to the contrary, Borrower is not obligated to
provide to Lender a second lien on the real property described in the Waiver
Letter as a condition to Lender's waiver hereunder. As indicated therein, the
violations referred to in the above recitals constituted Events of Default,
which absent Lender's waiver thereof, would have entitled Lender to exercise all
of its rights and remedies under the Loan Agreement, the other Debt Documents
and law. Each of Lender and Borrower hereby agree that, subject to the terms and
conditions hereof and the Waiver Letter, Lender has only waived Borrower's
compliance with the financial covenant set forth in Section 10(c) of the Loan
Agreement with respect to Borrower's fiscal quarters ending March 31, 2003 and
June 30, 2003, and Lender has not waived, and has no present intention to
waive, Borrower's compliance with such financial covenant for any other fiscal
period or any other Event of Default whether now existing or hereafter arising.
Notwithstanding the foregoing, Lender's waiver hereunder and under the Waiver
Letter is subject, in all respects, to Borrower's execution and delivery of this
Agreement and the satisfaction of the terms and conditions hereof. The failure
of Borrower to satisfy and perform any and all of the terms and conditions
hereby will cause the waiver provided hereunder to terminate in all respects. In
accordance with the foregoing, Borrower hereby further agrees as follows:
(i) That Borrower shall pay to Lender an
immediate prepayment of the Loan described in the Loan Agreement, in the amount
of $500,000, in good funds (which amount Lender hereby confirms has been
received);
(ii) That Borrower shall pay to Lender, in good
funds, a waiver fee in the amount of $50,000 (which amount Lender hereby
confirms has been received);
(iii) That Borrower shall pay to Lender, in good
funds, accrued late charges for the month of August 2003 in the amount of
$9,930.56 (which amount Lender hereby confirms has been received);
(iv) On the date hereof, Borrower shall pay to
Lender an immediate prepayment of the Loan described in the Loan Agreement, in
the amount of $152,777.76, in good funds;
(v) On the date hereof, Borrower shall pay to
Lender, in good funds, a modification fee in the amount of $60,000;
(vi) That Borrower shall execute and deliver any
other certificates, instruments or other documents requested by Lender to
effectuate this Agreement and the transaction contemplated hereby and thereby;
(vii) To cause each guarantor and any other party
that may be obligated with respect to the indebtedness evidenced by the Loan
Agreement, to provide its written consent to the terms of the Waiver Letter and
this Agreement, in form and substance satisfactory to Lender; and
(viii) That Borrower reimburse Lender for all fees,
costs and expenses incurred by Lender in connection with the preparation,
negotiation, filing and closing of this Agreement and the transaction
contemplated hereby and thereby, including but not limited to, outside legal
fees, and any filing and recordation fees,
(b) From and after the date hereof, the Note is hereby
amended as follows:
(i) Borrower shall pay to Lender in lawful money
of the United States, the outstanding principal balance of the Loan in six (6)
consecutive installments of $275,000 each plus interest on the Loan at the
Interest Rate set forth in the Note and the final installment shall be in the
amount of the total outstanding unpaid principal, interest and any other amounts
due and owing under the Debt Documents. The first Periodic Installment due and
payable after the date hereof is due and payable on March 1, 2004, and the
following six
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(6) Periodic Installments (including the final installment) shall be due and
payable on the first day of each succeeding month. The final installment of
$221,639.61 plus interest on the Loan at the Interest Rate and any other amounts
due and owing under the Debt Documents is due and payable on September 1, 2004.
(ii) Other than as expressly modified above, the
Note is unmodified and remains in full force and effect.
(c) The parties hereto agree that the outstanding
principal balance of the Loan (prior to the payment to Lender of the amount. set
forth in Section 1 (a)(iv) above) is $2,024,417.37 as of the date hereof.
2. CREDIT SUPPORT DOCUMENTS. It is hereby agreed that any
security agreement, chattel mortgage, guaranty, letter of credit, letter of
credit agreement, recourse arrangement, or other agreement given as security for
the Indebtedness evidenced by the Loan Agreement and the other Debt Documents
shall remain in full force and effect, and unmodified, except to the extent
provided herein.
3. CONDITIONS UNSATISFIED. Failure of Borrower to satisfy the
terms and conditions of this Agreement shall constitute an Event of Default
under the Loan Agreement.
4. NO CLAIMS. Borrower and each guarantor by their signature
hereto where indicated, each acknowledges that there are no existing claims,
defenses (personal or otherwise) or rights of setoff or recoupment whatsoever
with respect to any Loan Agreement or any other Debt Document. Borrower and each
guarantor by their signature hereto where indicated, each agrees that this
Agreement in no way acts as a release or relinquishment of any liens or other
rights in favor of Lender.
5. INDEMNIFICATIONS; REAFFIRMATIONS. Borrower hereby agrees to
and does indemnify and hold the Lender and each of its directors, shareholders,
officers, employees, affiliates, attorneys and agents harmless from and against
any and all liabilities which may be imposed on, incurred by or asserted against
the same in any manner relating to or arising out of the Loan Agreement, this
Agreement, any Debt Document or any act, event or transaction related to,
attendant to or preceding the execution of this Agreement. The Borrower hereby
agrees with, reaffirms and acknowledges the representations and warranties
contained in the Loan Agreement and any other Debt Documents. Furthermore, the
Borrower represents that, as of the date hereof, all representations and
warranties contained in the Loan Agreement and any other Debt Documents continue
to be true and in full force and effect. This Agreement is given to the Lender
by the Borrower without defenses, set-offs, claims or counterclaims of any kind.
To the extent that any defenses, set-offs, claims or counterclaims against the
Lender may exist, the Borrower waives and releases the Lender from same. The
Borrower ratifies and reaffirms all terms, covenants, conditions and agreements
contained in the Loan Agreement.
6. MISCELLANEOUS. THIS AGREEMENT MERELY MODIFIES THE LOAN
AGREEMENT AND CERTAIN DEBT DOCUMENTS; IT DOES NOT IN ANY WAY DISCHARGE THE
INDEBTEDNESS EVIDENCED THEREBY. EXCEPT AS OTHERWISE MODIFIED BY THIS AGREEMENT,
ALL TERMS OF THE DEBT
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DOCUMENTS REMAIN IN FULL FORCE AND EFFECT. This Agreement shall not be effective
unless and until Lender receives a written consent, in form and substance
satisfactory to Lender, from each guarantor and all other parties that may be
obligated with respect to the Indebtedness evidenced by the Debt Documents.
Lender's waivers herein are expressly conditioned upon the accuracy of the
financial statements and other information submitted by Borrower and the
existence of no other Event of Default, other than the ones specifically
addressed herein or in the Waiver Letter. This Agreement will not, and shall not
be construed to, give Borrower any right to any future waiver or modification of
any terms of the Debt Documents. The waivers of Lender herein are only for the
time period and the matters addressed hereby. Lender's waivers are not intended
to apply to any other time period or any other event. All amounts due or
becoming due under the Loan Agreement or otherwise to Lender, are not, and will
not be, subject to any defense, setoff, recoupment, abatement or counterclaim
for any reason whatsoever. To the extent that any defenses, set-offs,
recoupments, abatements, claims or counterclaims may exist, the Borrower waives
and releases the Lender from the same. The terms of this Agreement are
incorporated into and made a part of the Debt Documents. Lender reserves all of
its rights and remedies under the Loan Agreement and the other Debt Documents.
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to
be executed by their duly authorized representatives as of the date first above
written.
Tarrant Apparel Group, General Electric Capital Corporation
By: /S/ XXXXXXX XXXX By: /S/ XXXXXX XXXXXXXXXX
------------------------------- ---------------------------------
Name: XXXXXXX XXXX Name: XXXXXX XXXXXXXXXX
Title: CHIEF FINANCIAL OFFICER Title: RISK ANALYST
ACCEPTED AND AGREED TO BY:
Siemens Financial Services, Inc.,
fka Siemens Credit Corporation
By: /S/ XXXXX XXXXXXXXX
---------------------------------
Name: XXXXX XXXXXXXXX
Title: VP CREDIT & OPERATIONS
Date:
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CONSENT OF GUARANTOR
The undersigned Guarantor has received a copy of and read the above Modification
Agreement and the Waiver Letter attached thereto (collectively, the
"MODIFICATION DOCUMENTS"), executed by Tarrant Apparel Group ("BORROWER") and
General Electric Capital Corporation ("LENDER") The undersigned hereby consents
to the terms and conditions of the Modification Documents. The undersigned
executed and delivered to Lender, a Corporate Guaranty dated September 1, 1999
along with a Master Security Agreement dated as of September 1, 1999 and the
Trust Agreement ("Contrato de Fideicomiso Irrevocable en Garantia numero F/172)
and certain other documents, instruments, security and other and agreements
executed in connection therewith (collectively, the "GUARANTY DOCUMENTS"). The
undersigned hereby further agrees and affirms, in all respects, for good and
valuable consideration, tite receipt of which is hereby acknowledged, that the
Guaranty Documents are hereby reaffirmed and remain and shall remain in full
force and effect without variance, qualification, discharge, or diminution, and
that pursuant to each such Guaranty Document, the undersigned guarantees, among
other things, the obligations of Borrower under the Modification Documents and
all other Debt Documents.
The undersigned Guarantor further agrees to sign a Trust Modification document,
acceptable in form and substance to GE Capital Bank, S.A., to acknowledge under
the Trust Agreement ("Contrato de Fideicomiso Irrevocable en Garantia numero
F/172") signed with GE Capital Bank, S.A., that a modification has occurred
under the Loan Agreement.
Tarrant Mexico, S de X.X. de C.V.
By: /S/ XXXXXXX XXXXX
---------------------------
Name: XXXXXXX XXXXX
Title: CHIEF OPERATING OFFICER
Date: 2/25/04
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EXHIBIT A
[GE LOGO OMITTED] GE CAPITAL
Commercial Equipment Financing
0 Xxxxx Xxxx Xxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
(000) 000-0000 /
Fax: (000) 000-0000
VIA FAX (000-000-0000) AND REGULAR MAIL
AUGUST 14, 2003 (REVISED)
Xxxxxx Xxxx, CEO
Xxxxxxx Apparel Group
0000 Xxxx Xxxxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Re: Loan Agreement between General Electric Capital Corporation
("Lender") and Tarrant Apparel Group ("Borrower") dated September 1,
1999 (the "September Loan Agreement"); capitalized terms used herein
have the same meaning as in the Loan Agreement, unless otherwise
defined herein
Dear Xx. Xxxx:
This will confirm our agreement regarding the financial covenant in Section
10(c) of the September Loan Agreement. Borrower is not in compliance with this
financial covenant, however Lender will at this time waive Borrower's compliance
with this financial covenant for the two consecutive fiscal quarters ended March
31, 2003 and June 30, 2003 so long as Lender receives the following: (a) on or
before August 18, 2003, a prepayment of the Note in the amount of $500,000, to
be applied against payments under the Note in the inverse order of maturity; (b)
on or before September 15, 2003, a second priority mortgage lien on the real
property located at 0000 Xxxx Xxxxxxxxxx Xxxx., Xxx Xxxxxxx, Xxxxxxxxxx, such
lien to be evidenced by documentation satisfactory to Lender and Lender's costs
(including reasonable attorneys fees) associated with the preparation and
recording of such documentation to be borne by Borrower; (c) on or before August
18, 2003, a waiver fee in the amount of $50,000.00 wire transferred to our bank
and (d) on or before August 18, 2003, receipt of accrued late charges for the
month of August 2003, receipt of accrued late charges for the month of August
2003, in the amount of $9,930.56 wire transferred to our bank. The
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wire instructions are as follows:
Deutsche Trust Company Americas
00 Xxxx Xxxxxx
XX, XX 00000
ABA# 000-000-000
for account of General Electric Capital Corporation Acct# 00-000-000
Lender agrees to release the second lien described in (b) above if Borrower has
net income of at least $1.00 in each of the fiscal quarters ended September 30,
2003 and December 31, 2003 and no Event of Default, or event that with the
passing of time or giving of notice would be an Event of Default, has occurred.
For purposes of clarification, if Borrower has net losses for the fiscal quarter
ended September 30, 2003, Lender does not waive Borrower's compliance with the
financial covenant in Section 10(c) for the two consecutive fiscal quarters
ended June 30, 2003 and September 30, 2003.
This letter shall not constitute a waiver, release or modification of or
limitation upon any of Lender's rights and remedies under the September Loan
Agreement and related documents and instruments.
Sincerely,
Xxxxxx X. Xxxxxxxxxx
Fiscal Agent
cc: Xxxxx Grubryn, Risk Analyst
Xxxx Clemrn, Siemens Financial
Xxxxxxx Xxxx, CFO
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