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Blue
Holdings/Headgear
JV
Modifications Memo
I have
tried to incorporate all the items required, and already agreed to
in order to have this move forward. I have used the
February 3, 2009 memo from Stan as the base and where possible I
have repeated his language.
The
major difference between the new or amended agreement is that the
Joint Venture (“JV”) will now be the operating
company. Both parties to the JV will each own a 50.0%
interest. At no time will the Blue Holdings
(“BH”) interest be diluted, unless agreed to by the
Board of Directors of BH and Paul Guez.
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To
the extent that there is a savings in income taxes, to the JV, due
to the use of Blue Holdings Net Operating Losses, the dollar amount
of the tax benefit will be used to repay The Factor’s
(“FTC”) then existing loans. Such tax saving
will not be considered to be a loan to BH.
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The
international royalties that Caitec will pay to Yanuk, LLC or Paul
Guez, personally, under the existing royalty agreement for
Caitec-Japan will be paid into an escrow
account. Stanley Katz will open an escrow account for
the benefit of Yanuk, LLC, Paul Guez and the JV. The JV
and or Headgear (HG) will receive an accounting of these royalties
and recognize them as income. These royalty payments
shall immediately be disbursed to Yanuk, LLC or Paul Guez, at his
option, as an expense of the JV. Any new royalties
payable for products, that are not denim jeans, that are developed
by the JV shall belong to the JV.
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The
JV may use the Marina Del Ray facility rent free for one year from
the date of the signing of a new or amended
Agreement(s). If the JV will not be staying, they have
to give Paul 90 days notice and if they elect to stay for an
additional term, the rentals will be at the then prevailing
markets.
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All
new inventories will be sourced, acquired and financed exclusively
by the JV. Twenty percent of the cost of the newly
purchased inventories will be loaned by the JV to Blue but paid
directly to creditors of Blue as selected by the JV. All
loans will bear the same interest rate that the JV pays either to
its factor, FTC, or its other lenders. The loans will be
principally used to reduce the loan at FTC. (The trade
creditors and Gemini will need to receive some
payments).
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For
available-to-sell BH inventories, in process or in th
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