UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 1, 2008
TARRANT APPAREL GROUP
(Exact Name of Registrant as Specified in Charter)
CALIFORNIA 0-26006 95-4181026
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
3151 EAST WASHINGTON BOULEVARD
LOS ANGELES, CALIFORNIA 90023
(Address of Principal Executive Offices) (Zip Code)
(323) 780-8250
(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01 OTHER EVENTS
On February 1, 2008, Tarrant Apparel Group and our wholly-owned
subsidiary, Private Brands, Inc., filed a cross-complaint for damages and
equitable relief against American Rag Cie, LLC (the "LLC") and American Rag Cie
II ("ARC II"), in the Superior Court of the State of California, County of Los
Angeles, Central District (AMERICAN RAG CIE V. PRIVATE BRANDS, INC., BC 384428)
(the "Action"). The LLC owns the trademark "American Rag Cie", which mark has
been licensed to Private Brands on an exclusive basis throughout the world
except for Japan and pursuant to which Private Brands sells American Rag Cie
branded apparel to Macy's Merchandising Group and has sub-licensed to Macy's
Merchandising Group the right to manufacture certain categories of American Rag
Cie branded apparel in the United States. The LLC is owned 55% by ARC II and 45%
by Tarrant Apparel Group.
In the Action it is alleged that the LLC and ARC II and its officers
and directors have attempted to improperly acquire for themselves the exclusive
rights to the "American Rag Cie" trademark by purporting to terminate Private
Brands' exclusive license to the trademark. On January 11, 2008, the LLC sent a
notice in which it contended that we failed to make timely payments of royalties
due to the LLC from sub-licensing activities, entitling the LLC to terminate our
exclusive license agreement and purporting to terminate the same. On January 28,
2008, the LLC filed the Action in which it seeks a declaratory judgment that we
have breached the license agreement and that the license agreement has been
terminated.
Our cross-complaint includes six causes of action, including two for
declaratory relief in which we seek a declaration that the termination notice
delivered by the LLC was invalid and of no force or effect, and in which we seek
to modify the license agreement to impose a method for calculating royalties due
on account of sub-licensing. In the Action, we have also asserted claims for:
o breach of contract by the LLC and ARC II arising from their
allegedly improper attempt to terminate the license agreement;
o involuntary dissolution of the LLC pursuant to California
Corporations Code ss. 17351(a) on several grounds, including
allegations of a management deadlock and pervasive fraud,
mismanagement, or abuse of authority by ARC II in its control
of the LLC;
o breach of fiduciary duties against ARC II in which we allege a
series of self-interested transactions involving use of the
LLC's cash and assets to further the businesses of Cafe Beau
Soleil and World Denim Bar, companies in which the officers,
directors, or shareholders of ARC II have an interest; and
o an accounting of the activities of Cafe Beau Soleil and World
Denim Bar.
We are seeking declaratory judgments, as well as compensatory damages,
punitive damages, a decree winding up and dissolving the LLC, the appointment of
a provisional manager of the LLC, the imposition of a constructive trust, an
accounting of the activities of Cafe Beau Soleil and World Denim Bar and other
assets, and an award of attorneys' fees and costs incurred in the litigation.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TARRANT APPAREL GROUP
Date: February 5, 2008 By: /S/ Gerard Guez
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Gerard Guez, Chief Executive Officer
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