Document:

Prepared by R.R. Donnelley Financial -- Employment Agreement (P. Chow)

 Exhibit 10.103 
  
  
 EMPLOYMENT AGREEMENT 
  
 1.  Parties.    The parties to
this Employment Agreement (the “Agreement”) effective as of January 7, 2002 are as follows: 
  
 a.  Patrick Chow (“Executive”); and 
  
 b.  Tarrant Apparel Group d.b.a.
Fashion Resource (including any successors, the “Company”). 
  
 2.  Employment and
Duties.    Executive will be employed in the position of Chief Financial Officer and Treasurer of the Company and shall report directly to the Chief Executive Officer of the Company. Executive agrees to perform all duties and
obligations of Chief Financial Officer, including, without limitation, responsibility for finance, accounting and treasury functions and the Company’s relationships with its banks, outside accountants, customers and investors or other related
duties. Executive hereby agrees to devote his full business time, interests and abilities exclusively to the business and interest of the Company and to the performance of his duties and obligations under this Agreement. Although executive shall be
based at the Company’s Los Angeles offices he will be required to travel extensively as part of his duties. 
  
 3.  Term of Agreement.    The term of this Agreement shall commence on the date set forth above and, subject to the provisions of Section 5, shall continue for one year from that date (the
“Term”). The Term hereof shall renew automatically thereafter for subsequent one (1) year terms unless written notice of termination is given by either party to the other not less than sixty (60) days before the end of the initial Term or
any subsequent one year renewal term. 
  
 4.  Compensation and Other Benefits.    The Company
shall provide the following compensation and other benefits to Executive during the Term as compensation for the performance by Executive of his obligations under this Agreement: 
  
 a.  Base Salary.    The Company shall pay to Executive an annual base salary (the “Base Salary”) at the rate of $220,000
per annum subject to increase in the Company’s sole discretion, payable over the course of each calendar year in equal installments every two weeks. 
  
 b.  Annual Bonus.    In addition to the Base Salary, Executive shall receive an annual bonus (the “Annual Bonus”) of
$30,000 for each year of the Term hereof payable in a lump sum prior to the end of the Term or any renewal term. In addition, Executive may receive an additional 

 bonus, if any, to be determined by the Board, in its sole discretion. Such additional bonus, if any, shall be payable in a lump sum in
cash as soon after January 1st of each year as is practicable. 
  
 c.  Employee Benefit
Plans.    During the Term Executive shall be entitled to participate in such pension, welfare, medical and life insurance plans and programs as are maintained by the Company from time to time for the general benefit of its
executive employees (with respect to each of the foregoing, a “Plan” and collectively, the “Plans”). 
  
 5.  Termination of Employment.    Subject to the provisions of this Section 5, the Company shall have the right to terminate Executive’s employment prior to the expiration of the Term 

 
 a.  Termination for Cause. 
  
 i.  Entitlement Upon Termination for Cause.    In the event Executive’s employment is terminated for “Cause” as
defined in subsection 5(a)(ii). Executive shall be entitled to receive (i) payment of the pro rata portion of Executive’s then current Base Salary through and including the date of termination, plus a pro rata portion of Executive’s Annual
Bonus for the current year and (ii) payment for all accrued and unused vacation time existing as of the date of termination as reflected in the Company’s personnel records, payment of which will be made at a rate calculated in accordance with
Executive’s then current Base Salary. Executive shall not be eligible to receive Base Salary, Annual Bonus, or to participate in any plans or to receive any fringe benefits with respect to future periods after the date of such termination,
except for the right to receive benefits under any Plan in which Executive participates in accordance with the terms of such Plan, provided nothing in this subsection shall require the Company to make any contribution or payment to any such Plan
after termination of Executive’s employment. 
  
 ii.  Cause
Defined.    For the purposes of this Agreement, “Cause” shall mean: 
  
 (1)  Executive’s continual and material failure or refusal (whether intentional, reckless or negligent) to perform his duties under this Agreement; 
 

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 (2)  A material breach by Executive of his fiduciary duties to the Company resulting in financial damage to
the Company; or 
  
 (3)  Executive’s indictment of a crime constituting a felony or the commission
of any acts which involve dishonesty or moral turpitude and which impact adversely upon the reputation or business of the Company. 
  
 iii.  Termination Date: Notice.    If acts giving rise to the Company’s right to terminate under subsection 5(a) exists, Company shall provide specific details of such acts in
a written notice of termination delivered by Company to Executive. Executive shall have a reasonable period of time (not more than 10 days) to cure such acts if they are curable. If Executive fails to cure within such period, or if the acts
themselves are not curable, Executive shall be terminated effective the date written notice of failure to cure is given by Company to Executive, or, in the event the acts are inherently not curable, Executive shall be terminated at the end of the
ten day period. 
  
 b.  Death.    If Executive dies prior to the expiration
of the Term, his beneficiary or estate shall be entitled to receive such amount of the then current Base Salary, Annual Bonus and other compensation and disbursement of benefits as would have been payable to Executive under a termination for cause
under subsection 5(a) as of the date of death. Executive’s beneficiary or estate shall also be entitled to receive such amounts, if any, as are payable to Executive under any applicable insurance policies. 
  
 c.  Disability.    Company shall maintain on behalf of Executive a policy of disability insurance
providing benefits to the Executive in the event Executive becomes Permanently Disabled as defined below. Benefits under such disability policy may be offset by any disability payments to which Executive is entitled in accordance with any government
programs or other disability insurance maintained by the Company for its employees other than the disability insurance purchased on behalf of Executive. If Executive becomes Permanently Disabled (as defined below) prior to the expiration of the
Term, this Agreement shall be terminated as of the date of such disability. In the event of such termination, Executive shall be entitled to receive such amounts of Base Salary, Annual Bonus and other compensation and disbursement of benefits as
would have been payable to Executive under a termination for Cause under subsection 5(a) as of the date on which Executive became Permanently Disabled as defined below. 
 

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 Executive shall also be entitled to receive such amounts, if any, as are payable to Executive under any applicable insurance policies.
For the purposes of this subsection, “Permanently Disabled” shall mean the incapacity of Executive due to illness, accident, or other incapacity to perform his duties for a period of ninety consecutive days as determined by the Board.

  
 d.  Termination Without Cause.    If Executive is terminated by the
Company without Cause as Cause is defined at 5(a)(2) hereof, the Company shall continue to pay the compensation and bonuses provided for in Section 4 at the rate then being paid to Executive through the end of the Term. Executives participation in
various benefit programs sponsored by the Company shall depend upon the specific terms of those programs. 
  
 e.  Termination of Relationship.    In the event of the termination of the employment relationship between the Company and Executive, Executive shall be deemed to have resigned any and all positions then
held by Executive including, without limitation, officerships, directorships or governing body membership in subsidiary corporations of the Company, if any. 
  
 6.  Trade Secrets.    The Executive shall not, without the prior written consent of the Company’s Board of Directors in each instance, disclose or use in any way, either
during his employment by the Company or thereafter, except as required in the course of such employment, any confidential business or technical information or trade secret of the Company acquired in the course of such employment, whether or not
patentable, copyrightable or otherwise protected by law, and whether or not conceived of or prepared by him (collectively, the “Trade Secrets”), including, without limitation, any confidential information concerning customer lists,
products, procedures, operations, investments, financing, costs, employees, purchasing, accounting marketing, merchandising, sales, salaries, pricing, profits and plans for future development, the identity requirements, preferences, practices and
methods of doing business of specific parties with whom the Company transacts business, and all other information which is related to any product, service or business of the Company, other than information which is generally known in the industry in
which the Company transacts business or is acquired from public sources or was known to the Executive prior to the date hereof; all of which Trade Secrets are the exclusive and valuable property of the Company. 
  
 7.  Books and Records.    All files, accounts, records, documents, books, forms, notes, reports, memoranda,
studies, compilations of information, correspondence and all copies, abstracts and summaries of the foregoing, 
 

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 and all other physical items and intellectual property related to the Company, other than a merely personal item, whether of a public nature or not, and whether
prepared by the Executive or not, and are shall remain the exclusive property of the Company and shall not be removed from the premises of the Company, except as required in the course of employment the Company, without the prior written consent of
the Company’s Board of Directors in each instance, and the same shall be promptly returned to the Company by the Executive on the expiration or termination of his employment by the Company or at any time prior thereto upon the request of the
Company. 
  
 8.  Solicitation of Executive.    During his employment by the Company and for
one year thereafter (such period not to include any period violation hereof by the Executive or period which is required for litigation to enforce this paragraph and during which the Executive is in violation hereof), the Executive shall not,
directly or indirectly, either for his own benefit purposes or the benefit of purposes of any other person employ or offer to employ, call on, solicit, interfere with or attempt to divert or entice away any Executive or independent contractor of the
Company (or any person whose employment or status as an independent contractor has terminated within the twelve months preceding the date of such solicitation) in any capacity if that person possesses or has knowledge of any Trade Secrets of the
Company. 
  
 9.  Injunctive Relief.    The Executive hereby acknowledges and agrees that it
would be difficult to fully compensate the Company for damages resulting from the breach or threatened breach of Sections 6, 7 and 8, and accordingly, that the Company shall be entitled to temporary and injunctive relief, including temporary
restraining orders, preliminary injunctions and permanent injunctions, to enforce such provisions without the necessity of proving actual damages and without the necessity of posting any bond or other undertaking in connection therewith. This
provisions with respect to injunctive relief shall not, however, diminish the Company’s rights to claim and recover damages. 
  
 10.  Consent to Jurisdiction.    Each party hereto, to the fullest extent it may effectively do so under applicable law, irrevocable (i) submits to the exclusive jurisdiction of any court of the State of
California or the United States of America sitting in the City of Los Angeles over any suit, action or proceeding arising out of or relating to this Agreement, (ii) waives and agrees not to assert, by way of motion, as a defense or otherwise, any
claim that is not subject to the jurisdiction of any such court, any objection that is may now or hereafter have to the establishment of the venue of any suit, action or proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient forum, (iii) agrees that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding 
 

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 upon such party and may be enforced in the courts of the United States of America or the State of California (or any other courts to the jurisdiction of which
such party is or served in any such suit, action or proceeding by mailing a copy thereof by registered or certified air mail, postage prepaid, return receipt requested, to the address of such party specified in or designated pursuant to Section 15.
Each party agrees that such service (i) shall be deemed in every respect effective service of process upon such party in any such suit, action proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid personal
service upon and personal delivery to such party. 
  
 11.  Arbitration.    Any controversy
arising out of or relating to this agreement or the transactions contemplated hereby shall be referred to arbitration before the American Arbitration Association strictly in accordance with the terms of this Agreement and the substantive law of the
State of California. The board of arbitrators shall convene at a place mutually acceptable to the parties in the State of California and, if the place arbitration cannot be agreed upon, arbitration shall be conducted in Los Angeles. The parties
hereto agree to accept the decision of the board of arbitrators, and judgment upon any award rendered hereunder may be entered in any court having jurisdiction thereof. Neither party shall institute a proceeding hereunder until that party has
furnished to the other party, by registered mail, at least 30 days prior written notice of its intent to do so. 
  
 12.  Assignment.    This Agreement shall inure to the benefit of the Company’s successors, assigns, grantees and its associated, affiliated, subsidiary and parent companies as may now or hereafter
exist. This Agreement shall be binding on Executive, his heirs, executives or administrators, and legal representatives but shall not be assignable by Executive and the obligations of Executive may not be delegated. 
  
 13.  Indemnification of Executive.    The Company shall indemnify Executive for all necessary expenditures or
losses incurred by Executive in direct consequence of the discharge of his duties on behalf of Company. Company shall maintain directors and officers liability coverage insuring Executive for any loss caused by his wrongful acts or omissions as such
may be defined in the said policy. 
  
 14.  Severability.    In the event that any provision
of this Agreement should be held to be void, voidable, unlawful or for any reason unenforceable, the remaining provision or portions of this Agreement shall remain in full force and effect. 
  
 15.  Notices.    Any notice, request, demand, or other communication required or permitted to be given under this Agreement shall be sufficient if in
writing and 
 

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 delivered personally or sent by certified or registered mail to the Company at its principal executive offices and to Executive at his residence as shown on the
records of the Company. 
  
 16.  Amendment; Waiver.    This Agreement may not be modified,
amended or waived in any manner except by an instrument in writing signed by both Executive and the Company. The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as waiver
of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement. 
  
 17.  Applicable Law.    This Agreement, Executive’s employment relationship with the Company, and any and all matters or claims arising out of or related to this Agreement or Executive’s
employment relationship with the Company, shall be governed by, and construed in accordance with, the laws of the State of California regardless of the choice of laws provisions of California or any other jurisdiction. 
  
 18.  Supersedes Previous Agreements.    This Agreement constitutes the entire agreement and understanding between
the parties to this Agreement and supersedes all prior and contemporaneous negotiations and understandings between the parties whether oral or written, expressed or implied. 
  
 19.  Counterparts.    This Agreement may be executed by the parties in counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument. 
  
 20.  Headings.    The
headings of sections and subsections of this Agreement are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 
  
 21.  Attorney’s Fees.    In the event of any dispute or controversy arising out of this Agreement, the
prevailing party shall be entitled to reimburse of its reasonable costs, including court are arbitration costs and attorneys’ fees and costs. 
  
 22.  Legal Advice.    The parties to this Agreement represent that each has received prior independent legal advice from legal counsel of such party’s choice with respect to
the advisability of executing this Agreement. Each party and each party’s attorney have reviewed this Agreement at length and have made any desired changes to its form and substance. 
  
 IN WITNESS WHEREOF, the Company has caused its duly authorized representative to execute, and Executive has executed, this Agreement as of the date first above written. 

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	 TARRANT APPAREL
 
	 
	 By:
 	 	 /s/    Todd Kay
 

	  	 	 Todd Kay, Vice Chairman and President
 
	 
	 Date:
 	 	 1/7/2002
 

 
  
  
 
	 
	 By:
 	 	 /s/    Patrick Chow
 
Patrick Chow
 
	 
	 Date:
 	 	 1/7/2002
 

	  	 	  

 
 

 8Prepared by R.R. Donnelley Financial -- Security Agreement dated 4/9/01

 Exhibit 10.104 
  
 Date:  April 9, 2001 
  
 Title for: 
  
 Banco Nacional de Comercio Exterior (National Foreign Trade Bank), Sociedad Nacional de Crédito (National Credit Company).

  
 Certified Copy: 
  
 Of the deed on the Loan Agreement executed between Banco Nacional de Comercio Exterior, represented herein by S.B. Márquez & J.A. Pérez Pastrana (hereinafter, “Creditor”), Industrial Exportadora
Famián S.A., represented herein by C.Razón Reyes (hereinafter, “Debtor”) and Tarrant Apparel Group, Inc., represented by H.J.Marín Ruíz (hereinafter, “Obligee”. 

 Date:  April 9, 2001 
  
 Agreement: 
  
 I.  Debtor has requested the Opening of a Loan to Creditor. 
  
 II.  Debtor is the
legitimate owner of the machinery and equipment consisting in seven units located at F-3 13 Oriente No. 326 Int. “A” Colonia Guadalupe Hidalgo Tehuacán, Puebla; F-4 L1 13 Oriente No. 326 Interior “B” Colonia Guadalupe
Hidalgo Tehuacán, Puebla; F-4 L2 13 Oriente No. 326 Interior “C” Colonia Guadalupe Hidalgo Tehuacán, Puebla; F-2 Av. Pastor Rouaix No. 1306 Colonia Guadalupe Hidalgo Tehuacán, Puebla; F-6 B Av. Independencia Poniente
625 Colonia La Arcadia Tehuacán Puebla; F-6 A Av. Independencia Poniente 625 Colonia La Arcadia Tehuacán Puebla [illegible]. 
 

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 Camacho Pte. 75 Ajalpan Puebla; F-5 Av. Veracruz No. 501 Vicente Guerrero, Puebla; Balseca Av. Adolfo López Mateos No. 3622
Tehuacán Puebla. There are no liens on either company or company assets. 
  
 III.  Tarrant
Apparel Group, Inc. is Obligee, jointly and severally. 
  
 IV.  Holding true the foregoing, Creditor
grants the loan pursuant to the following articles: 
  
  
 ARTICLES 
  
 LOAN AMOUNT 
  
 First.    Creditor grants Debtor a Loan for a total amount of TEN MILLION U.S. DOLLARS. No interests, costs, or fees are therein included. 
  
  
 PURPOSE 
  
 Second:    Debtor shall invest Loan to finance its working capital in the pre-export stage and for export sales, pursuant to the list of goods to be purchased attached herein as Exhibit A, and for up to 70 % of
contracts and/or orders. 
 

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 Third:    Loan shall be at the disposal of Debtor for a five-year
term as of the date of the signing of this Agreement, by disbursement and for up to 70 % of the total amount of this Agreement, according to the export orders submitted to the Creditor three business days in advance, including in the request the
following documents: 
  

	 	•
	 
	Delivery Notice 
 

  

	 	•
	 
	Note requesting assignment of funds. 
 

  

	 	•
	 
	Copy of order, or direct export contracts. 
 

  
 Creditor may restrict the term of provision and the amount of the Loan available by written notice to Debtor. 
  
  
 LOAN DISPOSAL 
  
 Debtor may not dispose of the Loan unless the following takes place:

  
 1.  Debtor has delivered all the necessary documents. 
  
 2.  Debtor has submitted the bank card with authorized signatures. 
  

3.  This agreement has been submitted to the Public Registry of Property and Trade. 
  
 4.  Debtor capitalizes the reported liability amounting to $59,563,000 Mexican pesos and 
 

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 reported profits of $30,700,000 Mexican Pesos, both recorded on September 30, 2000. 
  
 Creditor may cancel the granting of the Loan out of any infringement by Debtor of this Agreement and any contract infringement between Debtor and:

  
 1.  Shareholders of Debtor. 
  
 2.  Any company in which Debtor has at least a 49 % share participation. 
  
 3.  Any company in which shareholders are shareholders of Debtor. 
  
 Shareholder is understood to be any shareholder with at least a 49 % participation. 
  
  
 TERMS AND CONDITIONS OF PAYMENT 
  
 Fourth.    The term for each
assignment of funds shall be the sum of the time necessary to produce the goods financed by the Loan, the term granted by Debtor to its customers in the sale of the said goods according to the records submitted by Debtor for each assignment of
funds. In any case, the term shall be no more than 180 days as of the date of assignment of funds. 
  
 Debtor shall pay Creditor
the amount, interests, and fees of the Loan as follows: 
 

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 in U.S. Dollars or in the agreed upon currency, to the Citibank account Creditor has in N.Y., and, whenever payment is due on a holiday
or non-business day, payment shall be due on the following business day. 
  
 Debtor may choose another place of payment prior
written notice to Creditor. 
  
  
 ADVANCE PAYMENT 
  
 Creditor reserves the right to accept advance payments from Debtor whenever such advance payments are not made due to an obligation by Debtor in favor
of Creditor, and if Creditor accepts such voluntary payments by Debtor, Creditor reserves the right to point out the terms and conditions in which such payments shall be accepted and applied. 
  

 
 CLAIMS 
  
 Both Creditor
and Debtor may file a claim prior a 15-day written notice to the other party. 
  
  
 INTERESTS

  
 Fifth.    The applicable interest rate for each assignment of funds shall be agreed by both
Creditor and Debtor, prior to the specific assignment of funds and, if parties fail to agree, Creditor shall be entitled to deny the granting of the pertinent assignment of funds. 
  
  
 BACK PAYMENTS 
  
 Sixth.    If any payment in U.S. Dollars is not met at its due date, as of that date Debtor shall pay to Creditor the back payment interest at a rate equal to 
 

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 two [illegible] agreed under the terms of this Agreement, this rate may be revised and adjusted biannually. 
  
  
 COMMISSIONS 
  
 Seventh.    Debtor shall pay Creditor the following commissions: 
  
 1.  For the handling of the Letters of Credit or Direct Supplier Payments. 
  
 2.  For bank services as agreed. 
  
 3.  For the opening of the Loan, calculated as
a 0.2 % of the total Loan amount, payable at the signing of this Agreement. 
  
  
 OBLIGATIONS TO
PERFORM OR AVOID 
  
 Eighth.    Debtor shall fulfill the following obligations: 

 
 a)  Provide the necessary records to substantiate the use of the funds. 
  
 b)  Submit in the last week of the months of February, May, August, and November of each year, the in-house Financial
Statements, including Assessment Reports of its main joint accounts, with information on the closing of the months of December, March, June, and September. 
  
 c)  Submit Financial Statements with the Annual Reports during the term of the Loan, including the text of the report and explanatory notes, beginning with
the ones pertaining to the Business Year in which the funding started. Such Financial Statements 
 

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 shall be submitted within 120 days subsequent to the closing of the Business Year. 
  
 d)  Submit any information requested by Creditor due to Loan. 
  
 e)  During the term of the Loan, there should be a favorable report from Dun Bradstreet on each company previously authorized by Creditor and whose orders
shall be financed: The Limited, Express, Lerner NY, Lane Bryant, Henri Bendel, Liz Clayborn [sic], Donna Karan, [illegible], & Tommy Hilfiger, effective for not more than six months. Debtor shall pay the costs arising from the investigation into
such companies. 
  
 f)  Debtor shall submit “Use of Proceeds” at least five days after the
due date of each assignment of funds. 
  
 g)  Debtor shall submit invoices of the orders financed by
Creditor within at least 120 days as of the date of each assignment of funds. 
  
 h)  During the term
of the Loan, the level of indebtedness of Debtor shall be less than 60 %, understood as the quotient of the total liability divided by the total assets of the Debtor. 
  
 i)  The Loan shall not exceed 60 % of the total short-term liabilities of Debtor. 
  
  
 SECURITIES 
  
 Nineth.    Debtor guaranties compliance with the provisions of this Loan Agreement with the assets purchased by means of the Loan as well as 
 

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 with the output, products, or goods obtained from such Loan, even when such goods are prospective or outstanding. 
  
 Debtor shall not lease out nor license the assets that constitute the collateral security for this Agreement, nor shall Debtor encumber such assets to
third parties. 
  
  
 ASSIGNMENT OF RIGHTS 
  

Debtor assigns to Creditor the Debtor’s rights arising from all agreements with Debtor’s customers, as well as the pertinent records attesting to such rights, such as
invoices and other similar business records. 
  
 Debtor shall submit to Creditor such records, duly assigned, with a note included
therein that gives notice of such assignment to customer, attached herein as Exhibit B, as well as obtain from these customers who are debtors in relation to the rights assigned to Creditor proof of such notice of assignment, i.e., a document signed
by the said debtors in which they acknowledge receipt of the notice, pursuant to the standard form attached herein as Exhibit C. 
  
 If Debtor receives payment on the assigned rights, Debtor shall deliver such payment to Creditor within 24 hours of its receipt, and if Debtor fails to do so, Debtor shall pay to Creditor an interest rate on such amount equal to the back
payment interest set forth in this Agreement. [illegible] 
 

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 BAILEE 
  
 Debtor
holds the assets provided as collateral security in the locations indicated on page 2 of this summarized translation and shall not move them unless authorized in writing by the Creditor. To all legal effects Debtor shall be the Bailee. 

 
 As of the signing of this Agreement, Creditor is entitled to remove such assets from the care of the Bailee prior written notice to Debtor
and to Bailee. Bailee is not entitled to any fees while serving as such. 
  
  
 MORTGAGE ON THE WHOLE
UNIT 
  
 Debtor guaranties compliance with the obligations stemming from this Agreement and the use of the Loan, constituting a
mortgage in favor of Creditor on the whole business unit of which 
 

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 Debtor is the proprietor, such unit made up of the assets detailed in the Exhibit D attached herein. 
  
 In the case of a mortgage foreclosure, the appraisal of assets shall be determined by a bank, authorized by mutual consent within 15 running days of such event or the Banco Nacional
de México shall perform the appraisal. 
  
 The mortgage shall last until Debtor has paid in full the debt and its costs
and fees. 
  
 If Debtor fails to comply with such payment, Creditor may auction off the mortgaged assets, in part or in whole, at
its own choice and without any prior written consent by Debtor. 
  
 Debtor agrees that, in the event of a dispute, it shall no
longer be the Bailee of the mortgaged 
 

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 or foreclosed assets, except whenever Creditor consents to having a Bailee and in that case, the Bailee appointed by Creditor, other than Debtor, shall take
immediate possession of the mortgaged or foreclosed assets without having to post bail. 
  
 The total worth of the assets shall not
be less than 143 % of the liabilities taken on by Debtor plus additional costs. 
  
 Without prior written consent by Creditor,
Debtor shall not lease nor license the assets that serve as collateral security nor shall Debtor encumber such assets on third parties. 
  
 The collateral secured in the Article herein shall last as long as the capital, its interests, and further additional costs are unpaid even if in excess of 5 years. Parties agree there will be no decrease in collateral due to a decrease in
the Loan. 
  
 If Debtor enters into any of the advance cancellations of this Agreement mentioned herein, Debtor commits to selling
off the mortgaged assets and to deliver the money from the sale to Creditor to partly pay the Loan. 
  
 Debtor grants Creditor an
irrevocable mandate to dispose of the sale of the mortgaged assets and to direct such funds to pay the Loan and its additional costs, with no other obligation than to ensure a fair market price on the sale of the mortgaged assets. Creditor shall
meet such 
 

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 obligation if Creditor: orders the appraisal of assets by a banking institution, bases the first bid on such amount appraised and the selling price in such case
is never less than 75 % of such amount. 
  
 Creditor is mandated to perform as an agent for any lawsuits and debt collection.

  
 Creditor and Debtor agree that should Debtor incur any grounds for advance termination pursuant to Articles 11.A and 11. G of
this Agreement, Creditor grants Debtor a 3-month period as of the date of this event to fulfill such obligations before executing its mandate pursuant to the previous paragraph. 
  
  
 OBLIGEE, JOINTLY AND SEVERALLY 
  
 TARRANT APPAREL GROUP, INC. is the Obligee, jointly and severally, pursuant to this Agreement. 
  
 Likewise, Obligee, as a
guaranty, subscribes the negotiable instruments subscribed pursuant to the Loan. 
  
  
 INSURANCE

  
 Tenth.    Debtor shall hire an insurance to pay for the assets under financing and for the
assets that constitute the collateral security, including the risk inherent in the transportation of such 
 

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 assets and the regular course of business, up to 100 % of the Loan amount plus additional costs, or to endorse any existing insurance policies, with the
Creditor as preferential beneficiary. 
  
 Debtor shall submit a copy of the insurance policy with the pertinent endorsement to
Creditor within 30 days subsequent to the original endorsement and copies of the premium payments as soon as they are paid, such policy being effective as long as the Loan remains unpaid. 
  
 If Debtor fails to do so, Creditor may hire an insurance, payable by Debtor, with an annual interest rate of 50 %. Debtor shall pay Creditor this amount plus additional costs within 3
days subsequent to receipt of such notice from Creditor. 
  
  
 GROUNDS FOR ADVANCE TERMINATION

  
 Eleventh.    There shall be advance termination of the Loan if Debtor: 
  
 a)  Fails to pay on schedule one or more payments, be they of capital, interests, or commissions. 
  
 b)  Uses the Loan, in part or in full, for purposes other than the ones mentioned herein, without prior authorization by
Creditor. 
  
 c)  Or if the assets secured as collateral are sold, seized, encumbered, leased, if a
substantial part of the assets of Debtors are sold or encumbered, or if Debtor changes its business address or the location of the collateral security, or Debtor changes the company without the prior written consent of the Creditor, or if the
encumbered assets are no longer destined for the normal course of business. 
 

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 or the collateral is not recorded in the place and extent agreed upon owing to Debtor. 
  
 d)  Taxes or any other fiscal debt are left unpaid, including social security contributions. 
  
 e)  Neglects the administration of the company or fails to provide due care according to Creditor. 
  
 f)  If for whatever reason, including strikes, lack of supplies, etc., work is cancelled. 
  
 g)  Any other breach of contract as provided herein, or if compliance with this Agreement brings on a breach of contract in
some other agreement between Debtor and another bank, or if another company holding or any shareholder of the company fail to comply with Creditor. 
  
 Such grounds for advance termination are not restrictive pursuant to the Law. 
  
  
 PAYMENT OF COSTS AND FEES 
  
 Twelveth.    Debtor shall pay all
costs and fees pursuant to this Agreement. Debtor shall submit to Creditor all and any proof of such costs and payments. 
 

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 ENFORCEMENT OF THIS AGREEMENT 
  
 Thirteenth.    Creditor is entitled to demand payment from Debtor through the usual legal business proceedings, and may determine the assets subject to foreclosure and appoint the Bailee who
will take possession of such assets with no need for bail. In such case, Debtor shall not be appointed Bailee. 
  
  
 JURISDICTION 
  
 Fourteenth.    Parties subject themselves to the
jurisdiction of the Federal District of Mexico or Puebla, Puebla, waiving the jurisdiction that might apply pursuant to their current or future domiciles. 
 

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 DOMICILES 
  
 Creditor: 
  
 Av. [illegible] Sur No. 5, Col. La Paz, Puebla, Puebla, 72160, México. 
  
 Debtor: 
  
 Av. Pastor Rouaix No. 1306,
Col. Guadalupe Hidalgo, Tehuacán, Puebla. 
  
 The Debtor’s domicile shall persist for any notice until it notifies Creditor in writing of a
change of address. 
  
  
 NEW TERMS ON SUPPLIES 
  
 Sixteenth.    The terms and conditions of this Agreement must be modified by Parties if such change stems from the provision
of supplies pursuant to this Agreement 
  
  
 TAXES 
  
 Seventeenth.    Debtor shall pay to Creditor without any withholding or compensation. 
 

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 DISCLOSURE OF INFORMATION 
  
 Eighteenth.    Debtor authorizes Creditor to supply Debtor’s suppliers with pertinent information pertaining to this Agreement if such information is
requested for the provision of supplies to Debtor. 
  
  
 REPRESENTATION 
  
 S.B. Márquez states he is the existing representative and offers records to prove such representation. 
  
 J. A. Pérez Pastrana does likewise. 
  
 C. Razón Reyes ditto. 
  
 H. J. Marín Ruíz, ditto. 
  
 There follows a detailed statement on the personal info of the aforementioned
representatives. 
  
 Likewise, the subsequent text is standard legal phrasing stating legal certification by the public notary as
to the validity of this Public Instrument and the pertinent official seals. 
 

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