Exhibit 10.90.4
[LOGO OF GMAC]
June 29, 2001
Tarrant Apparel Group
Tag Mex, Inc.
Fashion Resource (TCL), Inc.
0000 Xxxx Xxxxxxxxxx Xxxx.
Los Angeles, California 90023
Ladies/Gentlemen:
Reference is made to the Revolving Credit, Factoring and Security Agreement
between us dated as of January 21, 2000 (the "Agreement"). All capitalized
terms not otherwise defined herein shall have such meaning as are ascribed to
them under the Agreement.
You have advised us that you are in violation of certain provisions set
forth in Section 7.5 of the Agreement in that you did not achieve the required
levels of Tangible Net Worth as set forth in Section 7.5(a), meet the necessary
Fixed Charged Coverage Ratio required under Section 7.5(b), meet the necessary
Interest Coverage Ratio required in Section 7.5 (c) nor meet the Total Leverage
Ratio requirement set forth in Section 7.5(d) of the Agreement for the first
fiscal quarter of fiscal year 2001. Your failure to achieve the required levels
of financial performance for the sections referred to in the preceding section
would constitute an Event of Default under the Agreement.
This letter shall serve to confirm that we hereby waive your failure to
achieve the financial performance requirements of Sections 7.5(a), (b), (c), and
(d), for your first fiscal quarter for fiscal year 2001 as an Event of Default,
it being understood that such waiver is only with respect to the sections
described above and is only applicable for such specific time period and should
not be construed as a waiver of the requirements of any other section of the
Agreement nor of those specific sections for any other time period.
In consideration of providing the waiver set forth above, you agree to pay
us a covenant waiver fee of $10,000.00, which fee shall be an addition to any
other fees, charges or interest payable by you to us under the Agreement, and
payment of which fee may be effectuated by our charging your loan account with
us.
For your fiscal quarters ended June 30, 2001 and September 30, 2001 for
year ending December 31, 2001 only, those financial covenants set forth in
Section 7.5 of the Agreement which were heretofore measured on a rolling four
quarter basis shall for this one fiscal year be measured on a fiscal year to
date basis. After December 31, 2001 the rolling four quarter basis of
calculation for these financial covenants shall be reinstated.
This letter shall also serve to advise you that our recently completed
field examination of your company has identified that the Dilution of
Receivables calculated on a rolling twelve month basis was 10.9%. As a result
of this increase in Dilution of Receivables and in accordance with the Agreement
0000 XXXXXX XX XXX XXXXXXXX . NEW YORK, NY 10104 . 000-000-0000
as amended by the Third Amendment thereto, we have the right to increase our
dilution reserve from 10% to 11%. However, based upon your recent demonstration
to us that our examiner "double counted" one dilution component, we will delay
the implementation of the higher reserve pending the results of our next audit
or at such earlier time that we in our sole discretion determine such increase
is warranted.
Additionally this letter shall also serve to confirm the agreement between
us, that the Warrant from which you were to issue in our favor, as set forth in
paragraph 2(C) of the Third Amendment to the Agreement dated February 2001,
shall not be issued by you to us, and that in lieu thereof you hereby agree to
pay us a facility fee of $500,000, which fee shall be in addition to any fees
charges or interest otherwise payable to us under the Agreement. This
$500,000.00 fee shall be earned by us immediately upon the execution by you of
this letter agreement, and it shall be payable by you to us in installments of
$75,000.00 each paid on each of June 30, 2001, September 30, 2001, December 31,
2001, March 31, 2002, June 30, 2002 and September 30, 2002, and a final
installment of $50,000.00 paid on December 31, 2002. Payment of all such
installments may be effectuated by our charging your loan account with us. Upon
the occurrence of any Event of Default, or if the Agreement is terminated for
any reason whatsoever, then in any such event the balance of the $500,000.00
facility fee then unpaid shall be immediately due and payable without the
necessity of any demand therefor.
Except as hereby or heretofore modified or amended all of the provisions of
the Agreement shall continue to remain in full force and effect in accordance
with their original terms.
If the foregoing correctly sets forth the agreement between us, please
execute a copy of this letter in the space provided below and return the fully
executed copy to our offices.
Very truly yours,
GMAC Commerical Credit LLC
By: /s/ Xxxxx Xxxxxxx
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Title: Illegible
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READ AND AGREED TO:
TARRANT APPAREL GROUP
By: /s/ Xxxxx Xxxxxxx
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Title: CFO
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TAG MEX, INC.
By: /s/ Xxxxx Xxxxxxx
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Title: CFO
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FASHION RESOURCE (TCL), INC.
By: /s/ Xxxxx Xxxxxxx
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Title: CFO
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