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
June 1, 1998
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
SALANT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-2433 13-3402444
(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) INDENTIFICATION NO.)
INCORPORATION)
1114 Avenue of the Americas, New York, New York 10036
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(212) 221-7500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
ITEM 5. OTHER EVENTS
Salant Corporation ("Salant") entered into the Thirteenth
Amendment and Forbearance Agreement (the "Thirteenth Amendment"), dated as
of June 1, 1998, with respect to the Revolving Credit, Factoring and
Security Agreement, dated as of September 20, 1993, as amended and modified
from time to time (the "Credit Agreement"), with its working capital
lender, The CIT Group/Commercial Services, Inc. ("CIT"), pursuant to which
CIT has agreed to continue to extend financing under the existing Credit
Agreement until the earlier to occur of the consummation of Salant's
previously announced restructuring (the "Restructuring") and November 30,
1998, subject to the terms and conditions of the Thirteenth Amendment. The
Thirteenth Amendment also amends certain terms and provisions of the Credit
Agreement. Salant also entered into a commitment letter, dated June 1,
1998, with CIT (the "CIT Commitment Letter"), pursuant to which CIT agreed
to provide Salant with a new $140 million secured working capital facility
to replace the existing secured facility under the Credit Agreement,
effective upon consummation of the Restructuring. On June 5, 1998, Salant
issued a press release regarding the Thirteenth Amendment and the CIT
Commitment Letter.
Salant also entered into a letter agreement, dated June 1, 1998
(the "Restructuring Agreement Amendment"), amending the agreement, dated
March 2, 1998 ("March 2 Agreement"), among Salant and its major note and
equity holders regarding the Restructuring. The Restructuring Agreement
Amendment, among other things, extends the dates for certain of the trigger
events upon which Magten Asset Management Corp., as agent on behalf of
certain of its accounts ("Magten"), and/or Apollo Apparel Partners, L.P.
("Apollo") may terminate the March 2 Agreement as follows: (i) Salant must
have obtained the requisite shareholder consent of the Restructuring by
November 30, 1998; (ii) the exchange offer in connection with the
Restructuring must have been commenced by July 15, 1998; and (iii) the
Restructuring must have been consummated by November 30, 1998.
The foregoing summary does not purport to be complete and is
qualified in its entirety by reference to (i) the press release, dated June
5, 1998, (ii) the Thirteenth Amendment and Forbearance Agreement, dated as
of June 1, 1998, by and between Salant and CIT, (iii) the commitment
letter, dated June 1, 1998, by and between Salant and CIT, and (iv) the
letter agreement, dated June 1, 1998, by and among Salant, Magten and
Apollo, and filed as Exhibits 99, 10.53, 10.54, and 10.55, respectively, to
this Current Report on Form 8-K, which items are incorporated by reference
herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits.
The following exhibits are filed as part of this report:
Exhibit
Number Description
- ------ -----------
99 Press Release, dated June 5, 1998.
10.53 Thirteenth Amendment and Forbearance Agreement, dated as of June
1, 1998, by and between Salant Corporation and The CIT
Group/Commercial Services, Inc.
10.54 Commitment Letter, dated June 1, 1998, by and between Salant
Corporation and The CIT Group/Commercial Services, Inc.
10.55 Letter Agreement, dated June 1, 1998, by and among Salant
Corporation, Magten Asset Management Corp., as agent on behalf of
certain of its accounts, and Apollo Apparel Partners, L.P.
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.
SALANT CORPORATION
Dated: June 5, 1998 By: /s/ Todd Kahn
-------------------------
Executive Vice President
and General Counsel
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
99 Press Release, dated June 5, 1998.
10.53 Thirteenth Amendment and Forbearance Agreement, dated as of June
1, 1998, by and between Salant Corporation and The CIT
Group/Commercial Services, Inc.
10.54 Commitment Letter, dated June 1, 1998, by and between Salant
Corporation and The CIT Group/Commercial Services, Inc.
10.55 Letter Agreement, dated June 1, 1998, by and among Salant
Corporation, Magten Asset Management Corp., as agent on behalf of
certain of its accounts, and Apollo Apparel Partners, L.P.
CONTACT: Kekst and Company
Wendi Kopsick
(212) 521-4867
James Fingeroth
(212) 521-4819
FOR IMMEDIATE RELEASE
- ---------------------
SALANT CORPORATION RECEIVES NEW $140 MILLION
FINANCING COMMITMENT AND EXTENSION OF EXISTING CREDIT
FACILITY
New York, NY, June 5, 1998 -- Salant Corporation (NYSE:SLT) today
announced that it has received a $140 million commitment from The CIT
Group/Commercial Services, Inc., Salant's existing working capital lender,
for a new secured credit facility on terms and conditions significantly
more favorable than under the existing CIT facility, that will become
effective upon completion of Salant's previously announced restructuring of
its 10 1/2% Senior Secured Notes due December 31, 1998. CIT has also
extended Salant's existing credit facility.
Under the terms of the new CIT financing commitment, the new $140
million credit facility will be used to fund Salant's working capital
requirements through December 31, 2001 and will replace Salant's existing
secured credit facility with CIT, upon completion of Salant's previously
announced restructuring. The new credit facility is comprised of a $125
million revolving credit facility and a $15 million term loan facility. The
closing of the new credit facility with CIT is subject to the satisfaction
of a number of conditions.
In conjunction with the new CIT financing commitment, CIT agreed to
further support Salant's restructuring efforts by continuing to extend
financing to Salant under the existing credit agreement through the earlier
of the consummation of the restructuring and November 30, 1998. Under the
extension agreement, CIT has also agreed to conform immediately certain of
the financial terms under the existing CIT agreement with the more
favorable terms to be provided by CIT under the new secured credit
facility, including, among other things, a reduction in the interest rate
charged on revolving credit loans, an increase in the advance rates for
revolving credit loans, and the elimination of the factoring of any of
Salant's accounts receivable. The CIT extension agreement also includes an
agreement by CIT to continue to forbear from exercising any of its rights
by virtue of the non-payment of interest under Salant's Senior Notes,
subject to the terms and conditions of such agreement.
Jerald Politzer, Chairman of the Board of Directors and CEO of Salant,
stated that, "We believe that the commitment by CIT, our existing working
capital lender, to continue to support Salant during the restructuring
process and to provide Salant with such a favorable financing commitment
demonstrates CIT's confidence in our management team and our vision for the
growth of the business under our business plan. The additional liquidity
provided to Salant as a result of the amendment of the existing credit
facility will, we believe, enable us to fund our business during the
pendency of the restructuring."
Consummation of the proposed restructuring is subject to the
satisfaction of a number of conditions, and there can be no assurance that
Salant will successfully consummate the transaction. This announcement does
not constitute an offer to sell or to buy any security or the solicitation
of any consents or proxies, which offers and consent or proxy solicitation
shall only be made by means of a prospectus filed by Salant with the
Securities and Exchange Commission. Salant intends to commence the exchange
offer and proxy solicitation immediately following the effectiveness of a
post-effective amendment to its Form S-4 Registration Statement.
Salant is a diversified apparel company, which markets a broad line of
men's apparel under well-known brand names, including Perry Ellis,
Manhattan and John Henry. Salant also markets children's sleepwear,
underwear and sportswear. Salant's products are sold in department and
specialty stores, national chains and mass volume retailers throughout the
United States.
# # #
EXHIBIT 10.53
THIRTEENTH AMENDMENT AND FORBEARANCE AGREEMENT
THIRTEENTH AMENDMENT AND FORBEARANCE AGREEMENT, dated as of June
1, 1998 (this "Amendment"), with respect to the Revolving Credit, Factoring
and Security Agreement, dated as of September 20, 1993, as amended by
letter agreement Re: Amendment to Credit Agreement with respect to the
Mississippi Property, dated June 14, 1994 (the "First Amendment") and by
letter agreement Re: Amendment to Credit Agreement with respect to
Additional Guarantors, dated August 24, 1994 (the "Second Amendment"), and
by the Third Amendment to Credit Agreement, dated as of February 28, 1995
(the "Third Amendment"), and by the Fourth Amendment to Credit Agreement,
dated as of March 1, 1995 (the "Fourth Amendment"), and by the Fifth
Amendment to Credit Agreement, dated as of June 28, 1995 (the "Fifth
Amendment"), and by the Sixth Amendment to Credit Agreement, dated as of
August 15, 1995 (the "Sixth Amendment"), and by the Seventh Amendment to
Credit Agreement, dated as of March 27, 1996 (the "Seventh Amendment"), and
by the Eighth Amendment to Credit Agreement, dated as of June 1, 1996 (the
"Eighth Amendment"), and by the Ninth Amendment to Credit Agreement, dated
as of August 16, 1996 (the "Ninth Amendment"), and by the Tenth Amendment
to Credit Agreement, dated as of February 20, 1997 (the "Tenth Amendment"),
and by the Eleventh Amendment to Credit Agreement, dated as of August 8,
1997 (the "Eleventh Amendment"), and by the Twelfth Amendment and
Forbearance Agreement, dated as of March 2, 1998 (the "Twelfth Amendment")
(as so amended, and as further amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), between THE CIT
GROUP/COMMERCIAL SERVICES, INC. ("Lender") and SALANT CORPORATION
("Borrower").
W I T N E S S E T H:
WHEREAS, Lender and Borrower are parties to the Credit Agreement;
WHEREAS, an Event of Default (sometimes referred to herein as the
Payment Default, as defined below) has occurred and is continuing under the
Credit Agreement;
WHEREAS, pursuant to the Twelfth Amendment and subject to the
terms and conditions thereof, Lender agreed to forbear through July 1, 1998
from exercising any of its right and remedies with respect to the Payment
Default;
WHEREAS, Borrower has requested that Lender (a) continue such
forbearance with respect to the Payment Default, (b) agree to continue
making loans, advances and other financial accommodations to Borrower all
on and subject to the terms and conditions set forth in the Credit
Agreement, as amended by this Amendment, and (c) amend certain provisions
of the Credit Agreement; and
WHEREAS, Lender is willing to agree to the foregoing requests of
Borrower upon the terms and subject to the conditions set forth in this
Amendment;
NOW, THEREFORE, in consideration of the premises, the parties
hereto hereby agree, effective as of the Effective Date, as defined below,
as follows:
1. Defined Terms. Initially capitalized terms used and not
otherwise defined herein shall have their respective meanings as defined in
the Credit Agreement.
2. Event of Default. Borrower acknowledges and confirms that an
Event of Default occurred and is continuing by reason of Borrower's
election not to pay the interest which was due and payable on March 2, 1998
on the New Public Secured Notes, exclusive of any grace period provided
with respect thereto in the New Public Secured Notes or in the New Public
Secured Notes Indenture (the "Payment Default") in contemplation of the
Restructuring (as defined in Post-Effective Amendment No. 1 to the
Registration Statement on Form S-4 of Borrower filed with the Securities
and Exchange Commission on May 26, 1998).
3. Forbearance. In response to Borrower's request for Lender to
continue to forbear with respect to the Payment Default which is
continuing, Lender agrees, subject to the terms and conditions set forth
below, (a) to continue to forbear from exercising any of its rights and
remedies arising from the Payment Default or from an Event of Default
arising from the failure of Borrower to make the scheduled payment of
interest due and payable under the New Public Secured Notes on August 31,
1998 ("Additional Payment Default") (whether such rights and remedies arise
under the Credit Agreement, any other Financing Agreement or applicable
law) for the purpose of collecting any of the Obligations, and (b) to
continue making loans, advances and other financial accommodations to
Borrower, all on and subject to the terms and conditions set forth in the
Credit Agreement, as amended by this Amendment. Such forbearance shall
terminate on November 30, 1998, or earlier upon the happening of:
(i) the occurrence of any Event of Default other than
the Payment Default, Additional Payment Default or any Case Event
of Default (as defined below); or
(ii) the exercise of any right or remedy with respect
to any of the Collateral by any holder of any New Public Secured
Note or by the Trustee under the New Public Secured Notes
Indenture; or
(iii) the payment of any interest on the New Public
Secured Notes in respect of which the Payment Default arose, the
Additional Payment Default will arise, or otherwise; or
(iv) the occurrence of an Agreement Termination Event
under and as defined in the letter agreement dated March 2, 1998
(the "Magten Letter Agreement") among Borrower, Apollo Apparel
Partners, L.P. and Magten Asset Management Corp. ("Magten")
attached to the Twelfth Amendment as part of Exhibit A thereto,
other than the occurrence of an Agreement Termination Event under
Section 4(g) of the Magten Letter Agreement.
4. Amendment to Section 1. Section 1 of the Credit Agreement is
hereby amended as follows:
(a) Section 1.5A of the Credit Agreement is amended and
restated in its entirety to read as follows:
"1.5A 'Applicable Margin' shall mean (a)(i) in the case of
Prime Rate Loans, one-quarter (.25%) percent, and (ii) in
the case of Eurodollar Loans, two and one-quarter (2.25%)
percent, and (b) from after the occurrence of (i) a
declaration by Lender of any Event of Default (so long as
such Event of Default is continuing and unwaived), other
than the Payment Default, Additional Payment Default or a
Case Event of Default, or (ii) termination of this
Agreement, the amount described in clause (a)(i) and clause
(a)(ii) of this definition plus one (1%) percent."
(b) Sections 1.21A, 1.26A, 1.46A and 1.46B of the
Credit Agreement are hereby deleted in their entirety.
(c) The following defined terms are hereby added to
Section 1 of the Credit Agreement:
"'Additional Payment Default' shall mean the Event of
Default arising as a result of the failure of Borrower to
make the scheduled payment of interest due and payable under
the New Public Secured Notes on August 31, 1998."
"'Case' shall mean any case commenced by Borrower under
chapter 11 of the Bankruptcy Code in order to effectuate the
plan of reorganization attached to the Registration
Statement.
"'Case Event of Default' shall mean any Event of Default
arising solely by reason of the commencement or continuation
of the Case, provided that the Financing Order has been
entered and has not been reversed, modified, amended or
stayed, unless otherwise agreed to by Lender."
"'Financing Order' shall have the meaning ascribed to such
term in Section 7.25 hereof."
"'Payment Default' shall mean the Event of Default arising
from the failure to make the scheduled payment of interest
which was due and payable under the New Public Secured Notes
on March 2, 1998."
"'Registration Statement' shall mean Post-Effective
Amendment No. 1 to the Registration Statement on Form S-4 of
Borrower filed with the Securities and Exchange Commission
on May 26, 1998."
"'Thirteenth Amendment' shall mean the Thirteenth Amendment
and Forbearance Agreement, dated as of June 1, 1998,
executed between Lender and Borrower."
5. Amendment of Section 3.1(a)(iii). Section 3.1(a)(iii) of the
Credit Agreement is amended in its entirety to read as follows:
"(iii) Sixty percent (60%) of the value of Eligible
Inventory, provided, however, that solely for, and at all
times during the period from the Effective Date of, and as
defined in, the Thirteenth Amendment through and including
September 20, 1998, such advance rate shall be sixty-five
percent (65%) of the value of Eligible Inventory."
6. Amendment of Section 3.1(e). Section 3.1(e) of the Credit
Agreement is amended in its entirety to read as follows:
"(e) Notwithstanding anything to the contrary contained in
this Agreement or in any of the other Financing Agreements,
during the period from June 1, 1998 through November 30,
1998, at the request of Borrower, Lender may, in its sole
discretion, subject to the Maximum Credit, make Revolving
Loans and Letter of Credit Accommodations to Borrower in
excess of the aggregate amount available under the Advance
Formulas repayable on demand."
7. Amendment of Schedule 3.2(e). Schedule 3.2(e) to the Credit
Agreement is hereby amended by deleting "2% P.A." set forth under the
heading "STANDBY L/C" on said Schedule 3.2(e) and substituting "1% P.A."
therefor.
8. Amendment of Section 3.6(i). Section 3.6(i) of the Credit
Agreement is hereby deleted in its entirety and replaced with the
following:
"[Intentionally Deleted]"
9. Addition of Section 3.6A. The Credit Agreement is hereby
amended by adding thereto a new Section 3.6A as follows:
"3.6A Termination of Factoring Arrangements for Accounts
Arising on and after the Effective Date of the Thirteenth
Amendment. Notwithstanding anything to the contrary
contained in this Agreement, no Accounts arising on and
after the Effective Date of, and as defined in, the
Thirteenth Amendment shall be factored, provided, that any
and all Factored Accounts existing on said Effective Date
shall remain Factored Accounts and subject to all provisions
of this Agreement applicable thereto."
10. Section 3 of the Credit Agreement is hereby amended to add
the following section at the end thereof:
"3.13. Debtor-in-Possession Financing. Notwithstanding
anything contained herein or in any other Financing
Agreement to the contrary, if the Borrower commences the
Case, subject to the entry and the terms and conditions of
the Financing Order (which shall not have been reversed,
modified, amended or stayed, unless otherwise agreed to by
Lender), this Agreement shall remain in full force and
effect upon the commencement of and during the continuation
of the Case (subject to earlier termination as provided for
in this Agreement) and Lender will continue to make loans,
advances and other financial accommodations to the Borrower
during the Case on the same terms and conditions as set
forth herein. Without limiting the foregoing, Lender shall
not be entitled to receive any commitment, closing, or
facility fees in respect of the provision of such loans,
advances and other financial accommodations provided to
Borrower during the Case."
11. Amendment of Section 7.22. Section 7.22 of the Credit
Agreement is hereby deleted in its entirety and replaced with the
following:
"7.22 'Maximum Net Loss'. If on the last day of June, July
or August 1998, the Borrower fails to maintain Excess
Availability of at least an amount equal to five percent
(5%) of the value of Eligible Inventory, then the aggregate
cumulative net loss (exclusive of costs and expenses of
Borrower incurred in connection with the negotiation,
execution and performance of the Twelfth Amendment, the
Thirteenth Amendment and the negotiation, execution and
consummation of the transactions contemplated by the letter
agreement dated March 2, 1998 among Borrower, Apollo Apparel
Partners, L.P. and Magten Asset Management Corp.) incurred
by Borrower during its 1998 fiscal year through the end of
any such month on which the Borrower so fails to maintain at
least such amount of Excess Availability shall not exceed
$8,850,000."
12. Section 7 of the Credit Agreement is hereby amended to add
the following section at the end thereof:
"7.25 Financing Order. Immediately upon commencement of the
Case, Borrower and Lender shall jointly file with the
Bankruptcy Court an application for authority for Lender to
extend post-petition financing to the Borrower on the same
terms and conditions as set forth herein pursuant to an
order of the Bankruptcy Court (the "Financing Order") in
form and substance reasonably acceptable to Lender
containing the provisions set forth in Annex I to the
Thirteenth Amendment and Forbearance Agreement, dated as of
June 1, 1998, executed between Borrower and Lender. Borrower
agrees to request a hearing in respect of the relief to be
provided by the Financing Order immediately upon the filing
of the application in respect thereof and agrees to support
vigorously and in good faith such application and the entry
of the Financing Order. So long as no Event of Default
(other than a Payment Default, an Additional Payment Default
or a Case Event of Default) has occurred and is continuing,
Lender agrees to support vigorously and in good faith such
application and the entry of the Financing Order."
13. Amendment of Section 7.17. Section 7.17 of the Credit
Agreement is hereby amended to add the following subsection at the end
thereof:
"(e) Borrower will deliver to Lender on or before September
11, 1998 a business plan for the balance of Borrower's 1998
fiscal year, in form and substance reasonably satisfactory
to Lender."
14. Amendment of Section 8.1. (a) Section 8.1 of the Credit
Agreement is hereby amended to add the following proviso after the word
"hereunder" in the second line thereof: "provided, however, that no Event
of Default shall be deemed to have occurred solely as a result of the
occurrence and continuation of a Case Event of Default".
(b) Section 8.1(n) is amended by adding the phrase ",
other than any such event giving rise to a Case Event of Default"
at the end of such section.
(c) Section 8.1(o) is amended by adding the phrase ",
other than any such event giving rise to a Case Event of Default"
at the end of clause (i) thereof.
(d) Section 8.1(p)(i) is amended by adding the phrase
"(other than if such involuntary case is converted to a voluntary
case in respect of the Case and provided that the Financing Order
has been entered and has not been reversed, modified, amended or
stayed, unless otherwise agreed to by Lender)" immediately
following the phrase "in effect for 60 days".
(e) Section 8.1(q) is amended by adding the phrase
"(other than if such involuntary case is converted to a voluntary
case in respect of the Case and provided that the Financing Order
has been entered and has not been reversed, modified, amended or
stayed, unless otherwise agreed to by Lender)" immediately
following the phrase "a petition for relief under the Bankruptcy
Code".
15. Additional Events of Default. Section 8.1 of the Credit
Agreement is hereby amended by deleting the period at the end of Section
8.1(t) and substituting a semicolon followed by the word "or" therefor and
by adding the following Sections 8.1(u) and 8.1(v) as follows:
"(u) Violation of Financing Order. Any violation of the
Financing Order (other than as a result of a modification
thereof as approved by the Bankruptcy Court, which
modification, if initiated or supported by Borrower, shall
have been approved by Lender) occurs during the pendency of
the Case; or
"(v) Case Status. The Case, if commenced, is converted to a
proceeding under chapter 7 of the Bankruptcy Code, or is
terminated or dismissed prior to the consummation of the
transactions contemplated by the Restructuring (as defined
in the Registration Statement), or confirmation of a plan of
reorganization other than the proposed plan of
reorganization attached to the Registration Statement."
16. Amendment to Sections 4.13, 6.18(b), 7.5(c), 7.7, 7.13(b),
7.14, 7.16, 7.17(a), 8.2, 9.1(c), 9.2, 9.5, 10.1(c), 10.1(d) and 10.2.
Sections 4.13, 6.18(b), 7.5(c), 7.7, 7.13(b), 7.14, 7.16, 7.17(a), 8.2,
9.1(c), 9.2, 9.5, 10.1(c), 10.1(d) and 10.2 are hereby amended to add the
phrase "(other than a Case Event of Default)" immediately after the phrase
"Event of Default" and the phrase "Events of Default" in each place that
each such phrase appears in such sections.
17. Amendment to Section 10.1(a). Section 10.1(a) of the Credit
Agreement is amended in its entirety to read as follows:
"10.1 Term.
(a) This Agreement and the other Financing Agreements
shall become effective as of the date hereof and
shall continue in full force and effect for a term
ending on the earlier to occur of (i) November 30,
1998 and (ii) the consummation of the transactions
contemplated by the Restructuring (as defined in the
Registration Statement), unless sooner terminated
pursuant to the terms hereof."
18. Representations and Warranties. Borrower hereby represents
and warrants to Lender that the representations and warranties set forth in
Section 6 of the Credit Agreement are true on and as of the date hereof as
if made on and as of the date hereof after giving effect to this Amendment,
except to the extent any such representation or warranty expressly relates
to a prior date, and breach of any of the representations and warranties
made in this paragraph 18 shall constitute an Event of Default under
Section 8.1(b) or 8.1(c) of the Credit Agreement, as applicable. Borrower
further represents and warrants that, after giving effect to this
Amendment, other than the Payment Default, no Event of Default or event
which, with the lapse of time or the giving of notice or both, would become
an Event of Default has occurred and is continuing.
19. Effectiveness. This Amendment shall become effective on the
date (the "Effective Date") Lender shall have received each of the
following:
(a) The written acceptance by Borrower on terms
satisfactory to Lender and delivery to Lender as of
June 1, 1998 of Lender's commitment to Borrower to
provide Borrower with a $140,000,000 credit facility in
the form attached hereto as Exhibit A (it being agreed
that such acceptance and delivery shall satisfy the
condition set forth in subparagraph (ii) of Section 3
of the Twelfth Amendment).
(b) An amendment to the Magten Letter Agreement (the
"Magten Amendment"), in form and substance satisfactory
to Lender, duly executed by the parties to the Magten
Letter Agreement, pursuant to which (i) subparagraph
(d) of Section 2 of the Magten Letter Agreement shall
have been amended to provide that, promptly following
August 31, 1998, Magten shall cause to be provided
written instructions to the trustee (the "Indenture
Trustee") under Section 6.05 of the New Public Secured
Notes Indenture directing the Indenture Trustee to
forbear during the term of the Magten Letter Agreement
from taking any action in connection with the failure
by Salant to make the scheduled interest payment due
and payable under the New Public Secured Notes on
August 31, 1998, including, without limitation, the
exercise of any of the Indenture Trustee's rights under
the New Public Secured Notes Indenture arising by
virtue of any such failure, (ii) subparagraphs (a) and
(c) of Section 4 of the Magten Letter Agreement shall
have been amended by changing the date of July 31, 1998
therein to a date no earlier than November 30, 1998 and
subparagraph (b) of Section 4 of the Magten Letter
shall have been amended by changing the date June 15,
1998 therein to a date no earlier than July 15, 1998,
and (iii) Section 4 of the Magten Letter Agreement
shall have been amended to replace the proviso at the
end of Section 4(g) thereof with the following:
"provided, that, an Agreement Termination
Event arising pursuant to this Section 4(g)
shall apply only to, and shall result in the
termination of Magten's obligations hereunder
solely with respect to, those Senior Notes as
to which Magten's engagement has been
terminated or as to which such a disposal
direction has been issued and further,
provided, that such Agreement Termination
Event shall have no effect whatsoever on any
of Magten's other obligations hereunder."
(c) The written consent of all Participants to the
execution and delivery of this Amendment by Lender.
(d) Counterparts of this Amendment, duly executed and
delivered by Borrower and Lender.
(e) A duly executed copy of the Consent of Guarantors
substantially in the form of Exhibit B hereto.
20. Effect of this Agreement. This Amendment shall not constitute
a waiver or amendment of any provision of the Credit Agreement not
expressly referred to herein and shall not be construed as a consent to any
further or future action on the part of Borrower that would require consent
of Lender. Except as expressly amended herein, the provisions of the Credit
Agreement are and shall remain in full force and effect. Nothing herein
shall constitute a waiver of the Payment Default or of Additional Payment
Default or limit, impair or affect any of Lender's rights and remedies with
respect thereto (subject, however, to the terms of the forbearance provided
for in paragraph 3 of this Amendment), all of which Borrower acknowledges
and agrees have been heretofore and are hereby further expressly reserved
by Lender.
21. Counterparts. This Amendment may be executed in counterparts,
and all of such counterparts taken together shall be deemed to constitute
one and the same instrument.
22. Governing Law. This Amendment shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered in New York, New York by their proper and
duly authorized officers as of the day and year first above written.
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By: /s/ Charles M. Carbone
-----------------------------
Title: Vice President
SALANT CORPORATION
By: /s/ Todd Kahn
-----------------------------
Title: EVP & General Counsel
EXHIBIT A
FORM OF COMMITMENT LETTER
EXHIBIT B
CONSENT OF GUARANTORS
Each of the undersigned, CLANTEXPORT, INC., DENTON MILLS, INC.,
FROST BROS. ENTERPRISES, INC., SLT SOURCING, INC., each a Guarantor under
its respective Guarantee, each dated as of September 20, 1993, and SALANT
CANADA INC. and J.J. FARMER CLOTHING INC., each a guarantor under its
respective Guaranty (Unlimited Liability), each dated as of September 20,
1994 (individually, in the case of each of the foregoing Guarantors, its
"Guarantee"), made in favor of The CIT Group/Commercial Services, Inc.
("Lender"), pursuant to the Credit Agreement as defined in the Thirteenth
Amendment and Forbearance Agreement, dated as of June 1, 1998 between
Lender and Salant Corporation (the "Amendment"), to which this Consent is
attached, hereby consents to the Amendment and the matters contemplated
thereby, and hereby confirms and agrees that its Guarantee is, and shall
continue to be, in full force and effect and is hereby ratified and
confirmed in all respects except that, on and after the effective date of
the Amendment, each reference in its Guarantee to "the Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Credit Agreement as amended
by the Amendment.
IN WITNESS WHEREOF, each of the undersigned has caused this
Consent of Guarantors to be duly executed and delivered by its authorized
officer this 4th day of June, 1998.
CLANTEXPORT, INC. FROST BROS. ENTERPRISES, INC.
By: /s/ Todd Kahn By: /s/ Todd Kahn
---------------------- -----------------------------
Title: EVP & General Counsel Title: EVP & General Counsel
DENTON MILLS, INC. SLT SOURCING, INC.
By: /s/ Todd Kahn By: /s/ Todd Kahn
---------------------- -----------------------------
Title: EVP & General Counsel Title: EVP & General Counsel
VERA LICENSING, INC. SALANT CANADA INC.
By: /s/ Todd Kahn By: /s/ Todd Kahn
---------------------- -----------------------------
Title: EVP & General Counsel Title: EVP & General Counsel
J.J. FARMER CLOTHING, INC.
By: /s/ Todd Kahn
----------------------
Title: EVP & General Counsel
Annex I
to
Thirteenth Amendment
and
Forbearance Agreement
The Financing Order shall provide, among other things, for the
following: (i) the payment to Lender of all of principal, interest, fees,
and other Obligations owed under the Credit Agreement at the time of
commencement of the Case ("Pre-Petition Obligations"); (ii) approval of
Borrower's application to borrow from Lender on the same terms and
conditions set forth in the Credit Agreement; (iii) the grant of first
priority liens (subject to permitted liens under the Credit Agreement) to
Lender on the Collateral and on all assets and properties of Borrower, as
debtor and debtor-in-possession, acquired or arising during the pendency of
the Case, as security for all Pre-Petition Obligations and all Obligations
to Lender arising during the pendency of the Case, and the enforceability
and automatic perfection of such liens; (iv) appropriate findings to ensure
that the benefits and protections of Section 364(e) of the Bankruptcy Code
would be available to Lender if an appeal of the Order is taken; and (v)
the provision of a super-priority administrative claim to Lender pursuant
to Section 364(c)(1) in the amount of any post-petition advances.
EXHIBIT 10.54
June 1, 1998
Salant Corporation
1114 Avenue of the Americas
New York, New York 10036
ATTN: Mr. Gerald S. Politzer
Chairman of the Board and
Chief Executive Officer
Gentlemen:
In connection with the proposed conversion to equity of your 10
1/2% Senior Secured Notes due December 31, 1998 (the "Senior Notes") and
the restructuring of Salant Corporation (the "Company") attendant thereto
(the "Restructuring"), you have requested us to increase the amount of your
current secured credit facility with us (the "Current Facility") and to
make certain other modifications thereto.
Based upon the information you have furnished to us, The CIT
Group/Commercial Services, Inc. ("CIT") is pleased to confirm its
commitment to provide the Company with a secured credit facility of up to
$140,000,000 (the "Credit Facility") to replace in its entirety the Current
Facility, subject to the terms and conditions set forth below.
We contemplate that the Credit Facility will be structured as
follows:
1. REVOLVING CREDIT FACILITY
(a) Amount: A revolving line of credit for loans and letters
of credit in a maximum principal amount equal to the lesser of
(i) $125,000,000 (the "Maximum Revolving Credit") and (ii) the
sum of (A) eighty-five percent (85%) of the net amount of
eligible accounts and (B) the lesser of (x) sixty percent (60%)
of the value (at the lower of cost or market determined on a
first-in-first-out basis) of eligible inventory, provided, that
for each period from May 1 through August 31 during the term of
the Credit Facility, such advance rate shall be sixty-five (65%)
percent of the value of eligible inventory, and (y) $[to be
determined]. Standards of eligibility for accounts and inventory
shall be the same as provided for in the Current Facility, except
as may be modified by agreement between the Company and CIT.
CIT's ability to reserve against loan availability under the
lending formulas set forth above shall be the same as provided in
the Current Facility, except as may be modified by agreement
between the Company and CIT.
(b) Seasonal Overadvances: Subject to the Company's cash
flow needs, CIT may in its sole discretion make loans to the
Company in excess of the lending formulas set forth above not to
exceed the Maximum Revolving Credit and repayable on demand.
(c) Letter of Credit Subfacility:
(i) Amount: Within the Revolving Credit Facility,
letters of credit ("L/Cs") arranged through CIT up
to an aggregate undrawn amount at any time
outstanding of $55,000,000.
(ii) L/C Reserve Against Availability: A reserve
against the line of credit under the Revolving
Credit Facility will be required to the extent of
(A) one hundred percent (100%) of the undrawn
amount of outstanding letters of credit opened for
the purpose of acquiring eligible inventory minus
(B) the percentage equal to the then current
percentage rate of advance against eligible
inventory. Standby letters of credit opened by CIT
will require a reserve against the line of credit
under the Revolving Credit Facility of one hundred
percent (100%) of the undrawn amount of such
letters of credit.
(iii) Handling of Documents Under Letters of Credit:
The Company will not be required to consign to CIT
any of the documents relating to inventory
purchased under letters of credit arranged through
CIT under the Credit Facility ("L/C Documents"),
provided, however, that upon the occurrence and
during the continuance of (i) an event of default
under the Credit Facility or (ii) any act, event
or condition which with notice or passage of time
or both would constitute an event of default,
then, and in any such event, without notice in the
case of an Event of Default and upon written
notice from CIT in any other case, all L/C
documents shall be consigned to CIT.
(d) No Factoring: The Credit Facility will not provide for
any factoring of accounts through CIT or otherwise.
2. TERM LOAN
(a) Amount: The Credit Facility shall include a term loan
(the "Term Loan") in the amount of $15,000,000.
(b) Amortization: The Term Loan shall be repaid based upon a
five (5) year amortization schedule in consecutive monthly
installments commencing on the first day of the month immediately
following the date six (6) months after the closing and
continuing on the first day of each month thereafter with the
final installment in the amount of the then remaining balance of
the Term Loan, together with all unpaid and accrued interest
thereon, due and payable on December 31, 2001.
(c) Cross-Collateralization, Cross-Default and
Cross-Termination with Revolving Credit Facility: The Revolving
Credit Facility and the Term Loan shall be cross-collateralized,
cross-defaulted and cross-terminated.
3. INTEREST RATES
(a) Revolving Credit Facility: (i) Reference Rate + .25% or
(ii) LIBOR + 2.25%
(b) Term Loan: (i) Reference Rate + .25% or
(ii) LIBOR + 2.25%
The Reference Rate is the rate of interest publicly announced by The Chase
Manhattan Bank, New York, New York from time to time as its prime rate.
Such prime rate is not intended by Chase to be the lowest rate of interest
charged by Chase to its commercial borrowers. LIBOR will be available for
1, 2 or 3 months periods and will be based upon CIT's customary terms and
procedures applicable to interest on loans payable by reference to LIBOR.
All interest rates are per annum. All interest shall be payable monthly in
arrears calculated on the basis of a 360-day year. Collections shall be
credited to the loan account of the Company upon our receipt of a wire
transfer of federal funds into our payment account designated for such
purpose.
4. FEES
All fees set forth below are in addition to interest and other
charges provided for herein and may, at our option, be charged directly to
any loan account of the Company maintained with us:
(a) Facility Fee: We shall receive a facility fee of
$1,050,000 for providing the Credit Facility outlined herein,
provided, however, that the aggregate amount of the "Allocated
Replacement Facility Fee" paid by the Company to CIT pursuant to,
and as defined in, the Twelfth Amendment (the "Twelfth
Amendment") to the Revolving Credit, Factoring and Security
Agreement between CIT and the Company, dated as of September 20,
1993, as amended, shall be credited to the payment of such
facility fee. As of the date of this Letter, CIT has received the
aggregate amount of $700,000 of the Allocated Replacement
Facility Fee, with the final installment of the Allocated
Replacement Facility Fee in the amount of $350,000 being due on
June 1, 1998 pursuant to the Twelfth Amendment.
(b) Administrative Fee: We shall receive an administrative
fee of $100,000 payable on each of the first and second
anniversary dates of the closing date for administering the
Credit Facility for the Company and for each of the lenders who
purchase a portion of, or a participation in, the Credit
Facility.
(c) Collateral Management Fee: We shall receive a collateral
management fee of $8,333.33 for each month or part thereof during
the term of the Credit Facility for monitoring the collateral,
payable monthly in advance with the first such fee payable at
closing.
(d) Unused Line Fee: We shall receive an unused line fee of
.25% per annum on the average monthly unused portion of the
Revolving Credit Facility, payable monthly in arrears.
(e) Letter of Credit and Related Fees: We shall receive
letter of credit and related fees as set forth on Schedule 3.2(e)
to the Revolving Credit, Factoring and Security Agreement between
CIT and the Company dated as of September 20, 1993, as amended,
provided, that with respect to standby letters of credit the
daily outstanding balance charge shall be 1% per annum rather
than 2% per annum.
5. GUARANTEES
All obligations of the Company to CIT under the Credit Facility
shall be guaranteed by each of the Company's subsidiaries.
6. COLLATERAL
First and only security interests in and liens upon all present
and future assets of the Company and each of its subsidiaries, including,
without limitation, all accounts, contract rights, general intangibles
(including, without limitation, all trademarks, patents, licenses of
trademarks or patents, other intellectual property, tax refunds and choses
in action), chattel paper, documents, instruments, stock in subsidiaries,
inventory, machinery, equipment, fixtures and real property, and all
products and proceeds of the foregoing.
7. USE OF PROCEEDS
All of the loans and other credit accommodations provided to the
Company under the Credit Facility shall be used exclusively for the working
capital of the Company provided, that, the proceeds of the initial loans
provided by us under the Credit Facility shall be used for the costs,
expenses and fees incurred in connection with the Credit Facility and the
transactions contemplated in connection therewith.
8. CONTRACT TERM
The Credit Facility shall have an initial term commencing on the
closing date and continuing through and including December 31, 2001 (the
"Renewal Date") and shall be automatically renewed from year to year
thereafter unless terminated by either party upon at least sixty (60) days
written notice prior to the Renewal Date or any anniversary of the Renewal
Date.
9. EXPENSES
(a) The Company agrees to pay all reasonable legal and
closing costs and expenses, including attorneys' fees,
appraisers' fees, filing fees, search charges, recording taxes
and field examination charges and expenses (including a charge of
$750 per person per day of CIT's examiners in the field and in
the office, plus travel, hotel and all other out-of-pocket
expenses), in each case whether or not this transaction closes.
All such expenses shall be paid to us on demand and may be
charged to the loan account of the Company under the Current
Facility. We shall have the right to offset such expenses against
any fees or sums received from or on behalf of the Company.
(b) If this transactions closes, the Company further agrees
to pay all of our out-of-pocket expenses and customary
administrative charges incurred from time to time during the
course of our financing arrangements.
(c) This paragraph 9 shall survive the expiration or
termination of this letter.
10. OTHER INFORMATION AND CONDITIONS
Compliance with all terms and requirements of this letter are
conditions precedent to the making of loans and providing other credit
accommodations under the Credit Facility. In addition, the extension of the
Credit Facility is subject to the satisfaction, in a manner satisfactory to
CIT, of the following additional terms and conditions:
(a) CIT shall have received at or prior to closing (i) the
Company's pro-forma opening balance sheet as of the date of
closing, reflecting consummation of the Restructuring and the
transactions contemplated thereby, prepared by Deloitte & Touche
LLP or another accounting firm acceptable to CIT (the "Company's
Accountants") evidencing a capital structure (including the
equity interest in the Company of the Company's management)
satisfactory to CIT, (ii) an analysis prepared by the Company's
Accountants of the tax consequences to the Company of the
Restructuring which analysis and consequences shall be
satisfactory to CIT and (iii) an explanation reasonably
satisfactory to CIT of the Company's 1998 projected Restructuring
charges.
(b) CIT shall have received current appraisals of the
Company's machinery and equipment and the Company's trademarks
satisfactory to CIT by appraisers acceptable to CIT using
methodology satisfactory to CIT.
(c) The Company shall continue to furnish, or cause to be
furnished, to us all financial information, projections, budgets,
business plans, cash flows and such other information as we shall
reasonably request from time to time. We shall have received
current perpetual inventory records and/or roll forwards of
inventory through the date of closing, together with supporting
documentation and other documents and information that will
enable us to accurately identify and verify the eligible
collateral at or immediately prior to closing in a manner
satisfactory to us and including documentation with respect to
inventory in transit, goods in bonded warehouses or at other
third party locations.
(d) Satisfactory legal review of the terms of the Credit
Facility and its structure by our counsel, execution of loan
documents, delivery of opinions of counsel and other agreements,
documents and instruments as may be necessary or desirable to
effectuate the financing arrangements described herein as may be
determined by us and our counsel.
(i) Such loan documents will include, among other
documents, an Amended and Restated Credit and
Security Agreement between the Company and CIT,
or, at CIT's option, between the Company and CIT,
as agent, for itself and any other lenders party
thereto, the guarantee of the obligations of the
Company under the Credit Facility by each of the
Company's subsidiaries, security agreements, UCC
financing statements and mortgage modification
agreements. The opinions of counsel will include,
among other things, the opinion that the financing
arrangements described herein do not violate any
of the terms of existing agreements of the Company
or any of its subsidiaries with any other party,
that the financing agreements create valid and
enforceable security interest in all of the
property of the Company and each of its
subsidiaries, that the financing agreements are
valid, enforceable and binding and that the
Company and each of its subsidiaries have been
duly incorporated and are in good standing under
the laws of their respective states or
jurisdictions of incorporation and each state or
jurisdiction where the Company and each of its
subsidiaries transact business, and such other
matters as we may reasonably request.
(ii) Such loan documents will contain such provisions,
representations, warranties, covenants, conditions
precedent, events of default and remedies, all as
customarily required by CIT for transactions of
this type and as may be deemed appropriate in view
of the nature of the business of the Company,
including, among other things: financial covenants
("Maintenance Covenants") as to minimum tangible
net worth, maximum net loss, minimum interest
coverage ratio and maximum capital expenditures;
prohibitions or limitations on the payment of
management fees or other fees or payments due to
affiliates; prohibitions or limitations on loans,
investments and guarantees in, to or in favor of
affiliates and any third parties; prohibitions or
limitations on the payments of dividends and
redemptions and other upstreaming or
cross-streaming of funds; limitations on
indebtedness and liens; cross-defaults based on
defaults under any material indebtedness to others
or under material leases, material licenses or
other material agreements, or for generally not
paying obligations to others. Other than the
Maintenance Covenants referred to above, the
Credit Facility shall have no other Maintenance
Covenants.
(e) At or prior to closing, we shall have received evidence
that the transactions contemplated under the Restructuring have
been consummated either by means of (i) the Exchange
Restructuring (as defined in Post-Effective Amendment No. 1 to
the Registration Statement on Form S-4 of the Company filed with
the Securities and Exchange Commission on May 26, 1998 (the
"Registration Statement")), including, without limitation, the
following documents and information, in form and substance
reasonably satisfactory to us, relating to the Restructuring: (A)
all documents executed between Salant and the holders of the
Senior Notes (the "Senior Note Holders") evidencing that all of
the Senior Notes have been satisfied in full in connection with
the exchange thereof for shares of capital stock of the Company
(the "Exchange"), (B) evidence reasonably satisfactory to CIT
that the current owners of the Company's issued and outstanding
shares of common stock (the "Existing Stockholders") have
approved at a special stockholders meeting a reverse split of the
common stock held by the Existing Stockholders pursuant to which,
and after giving effect thereto, the Senior Note Holders and the
Existing Stockholders will own, respectively, 92.5% and 7.5% of
the issued and outstanding shares of the Company's common stock,
and (C) a certified copy of an amendment to, or amendment and
restatement of, the Company's existing Certificate of
Incorporation filed with the Delaware Secretary of State, as
required by the Restructuring; or (ii) the consummation of the
plan of reorganization attached to the Registration Statement.
(f) Termination of the liens and security interests held by
the Senior Note Holders and the delivery to us of UCC-3
termination statements and such other release documents as we may
request, in form and substance reasonably satisfactory to us.
(g) The excess availability under the lending formulas
provided for above, and within all applicable sublimits and after
deducting all applicable reserves, in each case as reasonably
determined by us after the application of the proceeds of the
initial loans and after provision for payment of all fees and
expenses of the transaction, and provided that accounts payable
and other indebtedness of the Company are then at a level and in
a condition reasonably acceptable to us, shall not be less than
$5,000,000 at closing.
(h) We shall have received, in form and substance reasonably
satisfactory to us, all consents, waivers, acknowledgments and
other agreements from third persons which we may deem necessary
in order to permit, protect and perfect our security interests in
and liens upon the collateral, including, without limitation, (i)
waivers by lessors, owners and/or mortgagees of any security
interests, liens or other claims by such persons in and to assets
of the Company and each of its subsidiaries, and agreements by
such persons permitting us access to the premises to exercise our
rights and remedies and otherwise deal with the assets of the
Company and its subsidiaries and (ii) acknowledgments by
processors, consignees and warehousemen at any time in possession
of any of assets of the Company or its subsidiaries of our
security interests and liens, waivers by such persons of any
security interests, liens or other claims by such persons in and
to assets of the Company and its subsidiaries, and agreements by
such persons to follow our directions with respect to the release
and delivery of any assets of the Company and its subsidiaries at
any time in their possession and (iii) agreements from licensors
of trademarks and other intellectual property to the Company or
its subsidiaries, including, but not limited to, Perry Ellis
International, Inc., permitting us to use the marks, logos or
other intellectual property licensed by such parties to the
Company or its subsidiaries to exercise our rights and remedies
and otherwise deal with the assets of the Company and its
subsidiaries.
(i) We shall have received, in form and substance reasonably
satisfactory to us, guarantees, duly authorized, executed and
delivered by each of Clantexport, Inc., Denton Mills, Inc., Vera
Licensing, Inc., Frost Bros. Enterprises, Inc., SLT Sourcing,
Inc., Salant Canada Inc., J.J. Farmer Clothing, Inc. and any
other subsidiaries of the Company in our favor absolutely and
unconditionally guaranteeing all present and future obligations
of the Company to us under the Credit Facility, as well as such
security agreements and UCC financing statements as may be
necessary or desirable to effectuate the grant by such companies
in our favor of first and only security interests in and liens
upon all of their respective present and future assets.
(j) We shall have received, at the expense of the Company,
current environmental audits of its plants and real estate
conducted by an independent environmental engineering firm
reasonably acceptable to us, and in form, scope and methodology
satisfactory to us, confirming that (i) the Company is in
compliance with all significant applicable environmental use
laws, regulations, codes and ordinances in all material respects
and (ii) there is no material potential or actual liability of
the Company for any remedial action with respect to any
environmental condition or any other significant environmental
problems.
(k) We shall have received, in form and substance reasonably
satisfactory to us, evidence of insurance coverage, including (i)
mortgagee's and lender's loss payee endorsements in our favor as
to casualty and business interruption insurance and containing
all endorsements, assurances or affirmative coverage requested by
us for protection of our interests and (ii) mortgagee's title
insurance by a company and agent acceptable to us (A) insuring
the priority, amount and sufficiency of the mortgage, deed of
trust or deed to secure debt in our favor on each parcel of real
estate included in the collateral, (B) insuring against matters
that would be disclosed by surveys and (C) containing those
endorsements, assurances or affirmative coverage requested by us
for protection of our interests.
(l) CIT may from time to time, in its sole discretion,
assign, or sell participations in, the Credit Facility or any
portion thereof to another lender or lenders.
(m) The Company shall have established a blocked account or
lockbox for its collections and the transfer thereof to us, which
shall be in form and substance reasonably acceptable to us.
(n) All Uniform Commercial Code financing statements
relating to the collateral shall have been duly filed and
recorded and we shall have received UCC search results from the
various jurisdictions showing the financing statements in our
favor filed of record prior to the closing.
(o) No material adverse change in the business, operations
or prospects of the Company or in the condition of the assets of
the Company shall have occurred since the date of our latest
field examination, other than a payment default in respect of the
scheduled interest payment due under the Senior Notes on August
31, 1998 or the filing of a Chapter 11 case in order to
effectuate the transactions contemplated by the plan of
reorganization attached to the Registration Statement. We may
conduct additional or update field examinations, at your expense,
prior to extending the Credit Facility, the results of which must
be reasonably satisfactory to us. Without limiting the generality
of the foregoing, (i) except for the Payment Default (as defined
in the Twelfth Amendment), a payment default in respect of the
scheduled interest payment due under the Senior Notes on August
31, 1998 and the filing of a Chapter 11 case in order to
effectuate the Restructuring, no act, condition or event which
would constitute an Event of Default under the Current Facility
or the financing agreements to be executed between us shall exist
as of the closing, (ii) no material investigation, litigation,
bankruptcy or other proceedings shall be pending or threatened
against the Company or any affiliate as of the closing, and (iii)
the collateral shall not have materially declined in value from
the values set forth in any of the appraisals or field
examinations previously done.
(p) This transaction and the events contemplated herein must
close by November 30, 1998. After November 30, 1998 our
willingness to proceed shall require credit reapproval by CIT's
Executive Credit Committee even if we continue to work on the
transaction. Such reapproval, if obtained, may result in
different terms and conditions, or a determination not to
consummate the transaction.
This letter contains CIT's entire commitment for this transaction
and, upon acceptance by the Company, supersedes all prior proposals, term
sheets, negotiations, discussions and correspondence. This commitment may
not be contradicted by evidence of any alleged oral agreement. All prior
proposals, term sheets, negotiations, discussions and correspondence are
merged in the governing terms of this commitment, which may be amended only
in writing executed by the parties hereto. No condition of this commitment
may be waived, except in writing signed by CIT.
This letter shall be of no force and effect unless accepted by
you and as so accepted, received by us by the close of business on June 4,
1998.
This letter and the substance of the Credit Facility shall not be
disclosed by you to any third party other than attorneys, accountants and
financial advisors who are in a confidential relationship with you and
require knowledge thereof to perform their duties in connection herewith or
unless disclosure is required by law, other than in an amendment to the
Registration Statement, in a Form 8-K, in a press release, or in connection
with the Solicitation (as defined in the Registration Statement). This
commitment is not intended for the benefit of, and may not be relied upon
by, any third party.
This agreement shall be governed by and construed in accordance
with the laws of the State of New York. Each of the parties hereto waives
trial by jury in connection with any action or proceed relating to this
agreement.
We welcome the opportunity to be of continuing service to you
again and we look forward to working with you in closing this transaction.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By: /s/ Charles M. Carbone
--------------------------------
Title: Vice President
-----------------------------
ACCEPTED AS OF THIS 1st
DAY OF JUNE, 1998:
SALANT CORPORATION
By: /s/ Todd Kahn
-----------------------
Title: EVP & General Counsel
Salant Corporation
1114 Avenue of the Americas
New York, New York 10036
(212) 221-7500
June 1, 1998
Magten Asset Management Corp.
35 East 21st Street
New York, New York 10010
Attention: Mr. Talton R. Embry
Apollo Apparel Partners, L.P.
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, New York 10019
Attention: Mr. Robert Katz
Mr. Edward Yorke
Re: Salant Corporation ("Salant")
----------------------------------
Gentlemen:
Reference is made to that certain letter agreement, dated March 2,
1998, by and among Magten Asset Management Corp., as agent on behalf of
certain of its accounts ("Magten"), Apollo Apparel Partners, L. P.
("Apollo") and Salant (the "Letter Agreement"). Initially capitalized terms
not otherwise defined herein shall have their respective meanings as set
forth in the Letter Agreement.
Salant, Magten and Apollo hereby agree to amend the Letter Agreement
as follows:
1. Amendment to Section 2(d). Section 2(d) of the Letter Agreement is
hereby amended by adding "(i)" immediately prior to the phrase "promptly
following" in the third line thereof and adding the following language
immediately prior to the proviso contained in such section: ", and (ii)
promptly following August 31, 1998, directing the Indenture Trustee to
forbear during the term of this Letter Agreement from taking any action in
connection with the failure by Salant to make the interest payment on the
Senior Notes that is payable on August 31, 1998, including, without
limitation, the exercise of any of the Indenture Trustee's rights under the
Senior Note Indenture arising by virtue of such failure."
2. Amendment of Section 4. Section 4 of the Letter Agreement is hereby
amended by adding the phrase "(subject to the proviso in Section 4(g)
hereof)" immediately following the phrase "Magten's obligations hereunder
shall" in the first line thereof.
3. Amendment of Sections 4(a), 4(b) and 4(c). Sections 4(a), 4(b) and
4(c) of the Letter Agreement are hereby amended in their entirety to read
as follows:
"(a) Salant shall not have obtained the requisite shareholder
consent at the Special Meeting (as such term is defined in
the Term Sheet) on or before November 30, 1998;
(b) the Exchange Offer shall not have commenced on or before
July 15, 1998;
(c) the Effective Date (as such term is defined in the Term
Sheet) shall not have occurred on or before November 30,
1998;"
4. Amendment of Section 4(g). Section 4(g) of the Letter Agreement is
hereby amended by replacing the proviso at the end of such section in its
entirety with the following language: "provided, that, an Agreement
Termination Event arising pursuant to this Section 4(g) shall apply only
to, and shall result in the termination of Magten's obligations hereunder
solely with respect to, those Senior Notes as to which Magten's engagement
has been terminated or as to which such a disposal direction has been
issued, and further, provided, that such Agreement Termination Event shall
have no effect whatsoever on any of Magten's other obligations hereunder."
Except as hereinabove amended, the Letter Agreement remains in full
force and effect in accordance with its terms.
Please indicate your agreement to the foregoing by executing a copy of
this letter where indicated below and returning it to us.
Very truly yours,
SALANT CORPORATION
By: /s/ Todd Kahn
----------------------------
Name: Todd Kahn
Title: EVP & General Counsel
Accepted and Agreed as of
the date first written above
MAGTEN ASSET MANAGEMENT
CORP., as agent on behalf of certain
of its accounts
By: /s/ Talton R. Embry
---------------------------------
Name: Talton R. Embry
Title: Chairman
APOLLO APPAREL PARTNERS, L.P.
By: AIF II, L.P., its General Partner
By: /s/ Edward Yorke
---------------------------------
Name: Edward Yorke
Title:
