TARRANT APPAREL GROUP
EX-10.107.3 FOURTH DEED OF VARIATION
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>ex10-107_3.txt
<DESCRIPTION>EX-10.107.3 FOURTH DEED OF VARIATION
<TEXT>
                                                                EXHIBIT 10.107.3



                              Dated 18th June, 2003




                           TARRANT COMPANY LIMITED (1)
                                       AND
                               MARBLE LIMITED (2)
                                       AND
                         TRADE LINK HOLDINGS LIMITED (3)
                                 (as Borrowers)


                                       AND


                        UPS CAPITAL GLOBAL TRADE FINANCE
                                 CORPORATION (4)
                                   (AS AGENT)




                            FOURTH DEED OF VARIATION
                                       TO
                      SYNDICATED LETTER OF CREDIT FACILITY




                              BARLOW LYDE & GILBERT
                                   24TH FLOOR
                            NINE QUEEN'S ROAD CENTRAL
                                    HONG KONG


<PAGE>


THIS DEED is made the 18th June, 2003

BETWEEN:

1)       TARRANT  COMPANY  LIMITED a  company  incorporated  in Hong Kong  under
         company number 163310 with its registered office at 13th Floor,  Lladro
         Centre, 72-80 Hoi Yuen Road, Kwun Tong, Kowloon, Honk Kong ("TARRANT");

2)       MARBLE LIMITED a company incorporated in Hong Kong under company number
         399753 with its registered office at 13th Floor,  Lladro Centre,  72-80
         Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong ("MARBLE");

3)       TRADE LINK HOLDINGS  LIMITED a company  incorporated in Hong Kong under
         company number 592076 with its registered office at 13th Floor,  Lladro
         Centre,  72-80 Hoi Yuen Road,  Kwun Tong,  Kowloon,  Hong Kong  ("TRADE
         LINK"); and

4)       UPS CAPITAL GLOBAL TRADE FINANCE CORPORATION (the "AGENT").

WHEREAS:

A)       Under the terms of a  syndicated  letter of credit  facility  agreement
         (the "FACILITY  AGREEMENT"  such  expression  shall include the same as
         from time to time amended,  supplemented  or modified)  entered into on
         13th June, 2002 by and between the Borrowers and the Beneficiaries, the
         Agent (in its  capacity as the  Issuer)  agreed,  inter  alia,  to make
         available  to the  Borrowers  a  facility  for the issue of  letters if
         credit, upon the terms and subject to the conditions set out therein.

B)       Under a Deed of Variation to the Facility Agreement (the "FIRST DEED OF
         VARIATION")  entered  into on 26th  February,  2003 by and  between the
         Borrowers and the Agent,  the parties  thereto agreed to vary the terms
         of the Facility Agreement as set out in the First Deed of Variation.

C)       Under a  further  Deed of  Variation  to the  Facility  Agreement  (the
         "SECOND  DEED OF  VARIATION")  entered  into on 19th  May,  2003 by and
         between the Borrowers and the Agent, the parties thereto agreed to vary
         the terms of the  Facility  Agreement  as set out in the Second Deed of
         Variation.

D)       Under a further Deed of Variation to the Facility Agreement (the "Third
         Deed of Variation")  entered into on 2nd June,  2003 by and between the
         Borrowers and the Agent,  the parties  thereto agreed to vary the terms
         of the Facility Agreement as set out in the Third Deed of Variation.

E)       The Borrowers have requested the Agent,  and the Agent (in its capacity
         as the Issuer) has agreed in principle,  to waive  certain  breaches of
         the  financial  covenants  set  out in  Clause  10.5  of  the  Facility
         Agreement. In consideration,  inter alia, of such waiver, the Borrowers
         have  agreed  to  the   amendment  of  the   financial   covenants  and
         undertakings as hereinafter set out.


<PAGE>


F)       The parties hereto have therefore agreed,  pursuant to Clause 23 of the
         Facility Agreement,  to vary the terms of the Facility Agreement as set
         out in this Deed of Variation.

NOW THIS DEED HEREBY WITNESSETH as follows:

1.       DEFINITIONS AND INTERPRETATION

         Words and phrases  which are not defined or  construed  in this Deed of
         Variation but which are defined of construed in the Facility Agreement,
         the Companies Ordinance or the Bankruptcy  Ordinance shall be construed
         as having the  meanings  ascribed to them  therein.  To the extent that
         there is any inconsistency  between the terms of this Deed of Variation
         and the Facility  Agreement,  the terms of this Deed of Variation shall
         prevail.  References  to clause  numbers  are to those  clauses  in the
         Facility Agreement, unless indicated as otherwise.

2.       VARIATION

2.1      The parties  hereto hereby agree that the Facility  Agreement  shall be
         varied in the following manner:

         2.1.1    By the deletion in its entirety of the definition of "ADJUSTED
                  NET WORTH" in Clause 1.1 of the Facility Agreement.

         2.1.2    By  the  deletion  in  its  entirety  of  the   definition  of
                  "BORROWINGS" in Clause 1.1 of the Facility Agreement.

         2.1.3    By  the  deletion  in  its  entirety  of  the   definition  of
                  "BORROWING COSTS" in Clause 1.1 of the Facility Agreement.

         2.1.4    By  the  insertion  of a  new  definition  of  "CASH  INTEREST
                  EXPENSE" in Clause 1.1 of the Facility Agreement as follows"

                  "'CASH INTEREST EXPENSE'   THE MEANING  GIVEN TO IT IN  CLAUSE
                                             10.5;"

         2.1.5    By the deletion in its entirety of a new  definition  of "CASH
                  OUTFLOW" in Clause 1.1 of the Facility Agreement.

         2.1.6    By the insertion of a new  definition  of "Fiscal  Quarter" in
                  Clause 1.1 of the Facility Agreement as follows:

                  "'FISCAL QUARTER'          EACH  AND  EVERY  PERIOD  OF  THREE
                                             CALENDAR  MONTHS DURING THE TERM OF
                                             THIS AGREEMENT, COMPRISING:

                                             (a)      1ST  JANUARY TO 31ST MARCH
                                                      (BOTH DATES INCLUSIVE);

                                             (b)      1ST  APRIL  TO  30TH  JUNE
                                                      (BOTH DATES INCLUSIVE);

                                             (c)      1ST JULY TO 30TH SEPTEMBER
                                                      (BOTH DATES INCLUSIVE); OR

                                             (d)      1ST    OCTOBER   TO   31ST
                                                      DECEMBER    (BOTH    DATED
                                                      INCLUSIVE);"


<PAGE>


         2.1.7    By the deletion in its entirety of the definition of "GAAP" in
                  Clause 1.1 of the  Facility  Agreement,  and the  substitution
                  therefor of the following:

                  "'GAAP'                    (a)      IN RESPECT  OF  PROVISIONS
                                                      IN  THIS   AGREEMENT  THAT
                                                      APPLY    ONLY    TO    THE
                                                      BORROWERS,       GENERALLY
                                                      ACCEPTED        ACCOUNTING
                                                      PRINCIPLES AND POLICIES IN
                                                      HONG   KONG   CONSISTENTLY
                                                      APPLIED; AND

                                             (b)      IN RESPECT  OF  PROVISIONS
                                                      IN  THIS   AGREEMENT  THAT
                                                      APPLY  EITHER  TO (i) TAG;
                                                      OR (ii) TAG AND ALL  OTHER
                                                      MEMBERS  OF THE GROUP ON A
                                                      CONSOLIDATED        BASIS,
                                                      GENERALLY         ACCEPTED
                                                      ACCOUNTING  PRINCIPLES AND
                                                      POLICIES   IN  THE  UNITED
                                                      STATES     OF      AMERICA
                                                      CONSISTENTLY APPLIED;"

         2.1.8    By the  insertion of a new  definition of "TANGIBLE NET WORTH"
                  in Clause 1.1 if the Facility Agreement as follows:

                  "'TANGIBLE NET WORTH'      THE  MEANING GIVEN TO IT  IN CLAUSE
                                             10.5;"

         2.1.9    By the insertion of a new definition of "TOTAL LIABILITIES" in
                  Clause 1.1 of the Facility Agreement as follows:

                  "'TOTAL LIABILITIES'       THE  MEANING GIVEN TO IT  IN CLAUSE
                                             10.5;"

         2.1.10   By the deletion in its entirety of Clause 10.4 of the Facility
                  Agreement, and the substitution therefor with the following:

                  "10.4    FINANCIAL RATIOS

                           EACH  OF THE  BORROWERS  SHALL  ENSURE  THAT,  AT ALL
                           TIMES,  THE FINANCIAL  CONDITION OF TAG AND THE GROUP
                           (ON A  CONSOLIDATED  BASIS),  MEASURED ON A QUARTERLY
                           BASIS, SHALL BE SUCH THAT:

                           10.4.1   TANGIBLE NET WORTH: TANGIBLE NET WORTH SHALL
                                    BE NOT LESS THAN THE  FOLLOWING  AMOUNTS  ON
                                    THE FOLLOWING DATES:

                                    DATE                     TANGIBLE NET WORTH
                                    30TH JUNE, 2003          US$75,000,000
                                    30TH SEPTEMBER, 2003     US$75,000,000
                                    31ST DECEMBER, 2003      US$80,000,000

                           10.4.2   FIXED  CHARGE  COVERAGE:  THE  RATIO  OF (i)
                                    EBITDA TO (ii) CASH  INTEREST  EXPENSE AS AT
                                    THE FOLLOWING DATES, CALCULATED ON EACH SUCH
                                    DATE  USING THE  RESULTS  ON THE DATE OF THE
                                    FISCAL QUARTER  SPECIFIED BELOW AND THE LAST
                                    DAY  OF  EACH  OF  THE   THREE   IMMEDIATELY
                                    PRECEDING FISCAL QUARTERS,  SHALL EXCEED THE
                                    RATIO SPECIFIED BELOW:


<PAGE>


                                    DATE                     RATIO
                                    --------------------     -----
                                    30TH JUNE, 2003          0.7:1
                                    30TH SEPTEMBER, 2003     1.1:1
                                    31ST DECEMBER, 2003      1.1:1

                           10.4.3   TOTAL LEVERAGE RATIO: THE RATIO OF (i) TOTAL
                                    LIABILITIES  TO (ii)  TANGIBLE  NET WORTH ON
                                    THE DATES  SPECIFIED  BELOW SHALL NOT EXCEED
                                    THE CORRESPONDING RATIO SPECIFIED BELOW:

                                    DATE                     RATIO
                                    --------------------     -----
                                    30TH JUNE, 2003          2.5:1
                                    30TH SEPTEMBER, 2003     2.25:1
                                    31ST DECEMBER, 2003      2:1

                           ALL AS  CALCULATED  BY  REFERENCE  TO THE  ACCOUNTING
                           INFORMATION (THE "RELEVANT  ACCOUNTING  INFORMATION")
                           MOST RECENTLY  DELIVERED  UNDER THIS AGREEMENT  BEING
                           (i) THE ANNUAL AUDITED FINANCIAL STATEMENTS DELIVERED
                           UNDER CLAUSE  10.2.1 AND (ii) EACH SET OF  MANAGEMENT
                           ACCOUNTS (AS  CONSOLIDATED  FOR THE  RELEVANT  FISCAL
                           QUARTER) DELIVERED UNDER CLAUSE 10.2.2."

         2.1.11   By the deletion in its entirety of Clause 10.5 of the Facility
                  Agreement, and the substitution therefor with the following:

                  "10.5    FINANCIAL RATIOS - DEFINITION OF TERMS

                           10.5.1   CASH INTEREST EXPENSE: MEANS, IN RELATION TO
                                    ANY FINANCIAL  PERIOD,  THE AGGREGATE AMOUNT
                                    OF ALL CASH INTEREST EXPENSE PAID OR PAYABLE
                                    BY TAG OR ANY OTHER  MEMBER OF THE GROUP (ON
                                    A  CONSOLIDATED  BASIS) IN  RESPECT  OF SUCH
                                    PERIOD (AND WHETHER PAID OR NOT).

                           10.5.2   EBITDA:  MEANS, IN RELATION TO ANY FINANCIAL
                                    PERIOD,  THE AGGREGATE AMOUNT OF ALL THE NET
                                    INCOME BEFORE TAXES PLUS  INTEREST  EXPENSE,
                                    DEPRECIATION,  DEPLETION,  AMORTIZATION  AND
                                    OTHER NON-CASH  CHARGES OF TAG AND ALL OTHER
                                    MEMBERS OF GROUP (ON A CONSOLIDATED BASIS).

                           10.5.3   TANGIBLE NET WORTH: MEANS A SUM EQUAL TO THE
                                    AGGREGATE    AMOUNT   AT   THE   DATE   (THE
                                    "ACCOUNTING  INFORMATION  DATE") AS OF WHICH
                                    THE RELEVANT  ACCOUNTING  INFORMATION  SHALL
                                    HAVE  BEEN   PREPARED  AND   CALCULATED   BY
                                    REFERENCE   TO   THE   RELEVANT   ACCOUNTING
                                    INFORMATION,  OF THE GROSS BOOK VALUE OF THE
                                    ASSETS   OF  TAG   AND  THE   GROUP   (ON  A
                                    CONSOLIDATED BASIS) LESS:

                                    (a)      ANY MINORITY EQUITY INTEREST IN ANY
                                             ENTITY OWNED OR  CONTROLLED  BY TAG
                                             OR  ANY   MEMBER   OF  THE   GROUP,
                                             GOODWILL,   PATENTS,    TRADEMARKS,
                                             TRADE NAMES,  ORGANIZATION EXPENSE,
                                             UNAMORTIZED   DEBT   DISCOUNT   AND
                                             EXPENSE,  CAPITALIZED  OR  DEFERRED
                                             RESEARCH  AND  DEVELOPMENT   COSTS,
                                             DEFERRED    MARKETING     EXPENSES,
                                             DEFERRED  RECEIVABLES,   AND  OTHER
                                             LIKE


<PAGE>


                                             INTANGIBLES,  AND  MONIES  DUE FROM
                                             ANY  MEMBER  OF THE  GROUP TO OTHER
                                             MEMBERS  OF  THE  GROUP,  OFFICERS,
                                             DIRECTORS,       EMPLOYEES,      OR
                                             SHAREHOLDERS  OF ANY  MEMBER OF THE
                                             GROUP); AND

                                    (b)     TOTAL LIABILITIES; AND

                                    (c)     ANY  ACCRUED  AND  DEFERRED   INCOME
                                            TAXES,   AND  ANY  RESERVES  AGAINST
                                            ASSETS; AND

                                    FOR THE PURPOSES OF CALCULATING TANGIBLE NET
                                    WORTH,  THE VALUE OF ANY ASSETS OF THE GROUP
                                    LOCATED IN MEXICO SHALL BE CALCULATED  USING
                                    THE VALUE OF THE MEXICAN PESO, DETERMINED AS
                                    OF THE ACCOUNTING INFORMATION DATE.

                           10.5.4   TOTAL LIABILITIES:  MEANS THE SUM OF CURRENT
                                    LIABILITIES PLUS LONG-TERM LIABILITIES.

         2.1.12   By the insertion of a new  Sub-Clause  11.3.12 of the Facility
                  Agreement as follows:

                  "11.3.12 CAPITAL EXPENDITURE: WITHOUT THE PRIOR CONSENT OF THE
                           AGENT, IT WILL NOT  (WHETHER BY A SINGLE  TRANSACTION
                           OR A NUMBER OF RELATED OF UNRELATED  TRANSACTIONS AND
                           WHETHER AT ONE TIME OR OVER A PERIOD OF TIME),  INCUR
                           ANY CAPITAL  EXPENDITURE  WITH AN AGGREGATE  VALUE IN
                           EXCESS OF US$800,000 IN ANY ONE FISCAL QUARTER."

3.       GENERAL

3.1      The parties hereto hereby acknowledge and confirm that:

         3.1.1    the terms of the  Facility  Agreement as varied and amended in
                  accordance  with this Deed of  Variation  shall remain in full
                  force and effect; and

         3.1.2    neither the  obligations  of any  Borrower  nor the rights and
                  remedies  of the  Agent  under  the  Facility  Agreement,  any
                  Security  Document or any other Finance  Document or otherwise
                  conferred by law shall be  discharged,  prejudiced or impaired
                  by reason of the  execution  of this Deed of  Variation or the
                  variation  of  the  terms  and   conditions  of  the  Facility
                  Agreement in accordance with this Deed of Variation.

3.2      This Deed of  Variation  may be executed in any number of  counterparts
         and by the different  parties hereto on separate  counterparts  each of
         which when so executed  and  delivered  shall be  original  but all the
         counterparts together shall constitute one and the same instrument.

3.3      This Deed of Variation  shall be governed and  construed in  accordance
         with the laws of the Hong  Kong  Special  Administrative  Region of the
         People's  Republic of China and the parties  hereto  agree to submit to
         the  non-exclusive  jurisdiction of the Courts of the Hong Kong Special
         Administrative Region of the People's Republic or China.


<PAGE>


IN WITNESS WHEREOF this Deed of Variation has been entered into the day and year
first written above.

THE BORROWERS
-------------

THE COMMON SEAL OF                                [TARRANT SEAL]
TARRANT COMPANY LIMITED
WAS HEREUNTO AFFIXED
IN THE PRESENCE OF:


------------------------------
DIRECTOR


------------------------------
DIRECTOR/SECRETARY


THE COMMON SEAL OF                                [MARBLE SEAL]
MARBLE LIMITED
WAS HEREUNTO AFFIXED
IN THE PRESENCE OF:


------------------------------
DIRECTOR


------------------------------
DIRECTOR/SECRETARY


THE COMMON SEAL OF                                [TRADE LINK HOLDINGS SEAL]
TRADE LINK HOLDINGS LIMITED
WAS HEREUNTO AFFIXED
IN THE PRESENCE OF:


------------------------------
DIRECTOR


------------------------------
DIRECTOR/SECRETARY


<PAGE>


THE AGENT
---------

SIGNED FOR AND ON BEHALF OF
UPS CAPITAL GLOBAL
TRADE FINANCE CORPORATION
BY:  ROBIN C. NIX                                      /s/ Robin C. Nix
IN THE PRESENCE OF:                                    -------------------------
                                                       SIGNATURE
/s/ illegible
------------------------------
WITNESS

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