EIGHTH AMENDMENT TO CREDIT AGREEMENT
EIGHTH AMENDMENT TO CREDIT AGREEMENT, dated as of June 1, 1996
(this "Amendment"), 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") (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, Borrower has requested Lender to amend the Credit
Agreement (i) to finance rather than factor, as is now the case, Borrower's
uunts arising from sales through its Perry Ellis division, and (ii) to factor
on a non-notification basis rather than on a notification basis, as is now the
case, Borrower's Accounts arising from sales through its Fashion Shirt Group
division and its Salant Accessories division; and
WHEREAS, Lender is willing to make such amendments to the
Credit Agreement 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. Amendment of Section 1.35. Section 1.35 of the
Credit Agreement is amended in its
entirety to read as follows:
"1.35 'Factored Accounts' shall mean all Notification
Accounts and all
Non-Notification Accounts.
3. Addition of Sections 1.62A and 1.62B.
Section 1.62A and Section 1.62B are added to
the Credit Agreement as follows:
"1.62A 'Non-Notification Accounts' shall mean Accounts of
Borrower arising from sales through its Fashion Shirt Group division
and Salant Accessories division."
"1.62B 'Notification Accounts' shall mean Accounts of Borrower
arising from sales through its Made in the Shade/West Dallas division."
4. Amendment of Section 3.6(c). The first sentence of
Section 3.6(c) of the Credit
Agreement is amended in its entirety to read
as follows:
"(c) Each invoice of Borrower evidencing a Notification
Account shall bear a notice that such Account has been assigned to, is
owned by, and is payable to Lender in United States Dollars; no invoice
of Borrower evidencing a Non-Notification Account shall be required to
bear such a notice."
5. Amendment of Section 3.6(d). Section 3.6(d) of the
Credit Agreement is amended in its
entirety to read as follows:
"(d) Lender shall purchase the Factored Accounts at the gross
amount of the respective invoices therefor, less any trade and cash
discounts (based on the longest or shortest terms allowable to
Borrower's customers, as Lender elects), and less credits and
allowances ("Net Sales"). Net Sales factored with Lender each month
shall be posted to Borrower's account (i) in respect of Notification
Accounts, as of the date Lender receives confirmatory assignment
schedules thereof, and (ii) in respect of Non-Notification Accounts,
when and as Lender receives from Borrower accountings of Borrower's
sales in respect of Non-Notification Accounts as hereinafter provided
for in this Section 3.6(d). Until otherwise requested by Lender,
Borrower agrees to furnish to Lender the following information and
reports with respect to Non-Notification Accounts. Borrower shall
provide Lender with a confirmatory assignment schedule of assigned
Non-Notification Accounts on a daily basis in respect of the preceding
day's sales, which confirmatory assignment schedule shall be in the
form attached as Exhibit N. Within five (5) business days after the end
of each month, Borrower shall render to Lender an accounting of all of
Borrower's sales in respect of Non-Notification Accounts for such
month, showing gross sales and Net Sales and an aged accounts
receivable trial balance as of the close of such month, including the
names and addresses of all Account Debtors obligated on such
Non-Notification Accounts. All checks and other amounts received by
Lender in respect of Notification Accounts in the form of remittances
which are not immediately available will be credited to Borrower's
account three (3) business days after such remittances have been
received. All amounts received by Lender in respect of Non-Notification
Accounts shall be credited to Borrower's account as provided for in
Section 9.1(b) hereof. Borrower agrees to submit to Lender written
requests for adjustment of past due Non-Notification Accounts at
Lender's Credit Risk asking Lender to mature invoices evidencing such
Accounts no later than ninety (90) days after the longest maturity date
of such invoices. The Net Sales amount of (x) any Non-Notification
Account with respect to which Borrower has duly made such a written
request, and (y) any Notification Account, shipped, in each case, at
Lender's Credit Risk, which remains unpaid due solely to Credit Risk,
will be credited to Borrower's account:
(i) as of the date of the Factored Account's longest maturity,
if such customer: makes an assignment for the benefit of
creditors; files or has filed against it a petition under any
bankruptcy or insolvency act; calls a meeting of its
creditors; institutes any proceeding to compromise or adjust
its debts; or if any proceeding is instituted by or against
such customer for relief under any state or federal bankruptcy
or insolvency law; or if a receiver or trustee is appointed
for the customer; or
(ii) if requested by Borrower and if agreed to by Lender in
the exercise of its discretion, as of the 90th day following
the Factored Account's maturity date, if such Factored Account
remains unpaid as of said date without the happening of any of
the events specified in clause (i) hereinabove.
As to all such Non-Notification Accounts which Lender is maturing, Borrower
shall, together with its request that such Accounts be matured, furnish Lender
with true copies of the invoices therefor, the original proofs of delivery, a
written report of the efforts made by Borrower to effect collection thereof, and
confirmation of Borrower's prior notification to Lender pursuant to Section
3.6(e) hereof of a collectability problem. Should it subsequently be determined
that any such Factored Account credited to Borrower's account pursuant to this
Section 3.6(d) remained unpaid due to any reason other than Credit Risk, Lender
shall have the right to reverse the credit, and debit Borrower's account
accordingly."
6. Amendment of Section 3.6(h). Section 3.6(h) of
the Credit Agreement is amended in its entirety to read as follows:
"(h) For providing factoring services hereunder, Borrower
shall pay to Lender a factoring commission on the Factored Accounts
created in each calendar month during the term of this Agreement in the
amount of (i) with respect to Notification Accounts sixty hundredths of
one percent (.60%) of the gross face amount of such Notification
Accounts, less trade and cash discounts thereon, and (ii) with respect
to Non-Notification Accounts, twenty hundredths of one percent (.20%)
of the gross face amount of such Non-Notification Accounts, less trade
and cash discounts thereon. Factoring commissions with respect to any
calendar month shall be due and payable by Borrower and shall be
charged to Borrower's account on each day that sales are assigned to
Lender."
7. Amendment of Section 3.6(i). Section 3.6(i) of
the Credit Agreement is amended in its entirety to read as follows:
"(i) Borrower shall sell and assign to Lender in each calendar
year Non-Notification Accounts in an aggregate gross face amount of not
less than $100,000,000, pro rated, however, in respect of the 1996
calendar year for the period June 1, 1996 through and including
December 31, 1996. If in any calendar year the aggregate gross face
amount of Non-Notification Accounts actually sold and assigned to
Lender is less than $100,000,000, then an amount equal to ten
hundredths of one percent (.10%) of the amount of such deficiency shall
be charged to Borrower's account after the end of such calendar year.
In the event this Agreement is terminated by Borrower or Lender
pursuant to Section 10.1(b) hereof before the end of any calendar year,
then, and in such event, Borrower's obligation to Lender under this
Section 3.6(i) shall be pro-rated based upon the period of time which
has elapsed from the beginning of such calendar year to the effective
date of termination of this Agreement."
8. Amendment of Section 3.6(k). Section 3.6(k) of the
Credit Agreement is hereby amended
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in its entirety to read as follows:
"(k) If pursuant to Section 10.1(b) hereof, Borrower
terminates this Agreement on March 31, 1997, then Borrower shall
continue to factor the Non-Notification Accounts with Lender through
September 30, 1998 on the same terms as are contained in this
Agreement."
9. Addition of Section 3.6(l). Section 3.6(l) is
added to the Credit Agreement as follows:
"(l) Notwithstanding anything to the contrary contained in
this Agreement, Borrower shall incur in each calendar year the first
$100,000 of credit losses (as hereinafter defined) in respect of
Non-Notification Accounts for which Lender has the Credit Risk. As used
herein, "credit losses" in each calendar year means the aggregate
amount of Non-Notification Accounts for which Lender has the Credit
Risk which are unpaid in each calendar year due to Credit Risk."
10. Amendment of Section 9.1(a). Section 9.1(a) of the
Credit Agreement is hereby amended
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in its entirety to read as follows:
"(a) All invoices relating to Non-Notification Accounts and
Non-Factored Accounts shall indicate that remittances with respect
thereto are to be made to: SALANT CORPORATION, P.O. BOX 4076, CHURCH
STREET STATION, NEW YORK, NEW YORK 10261-4076, a lock box opened by
Lender pursuant to a Lock Box Deposit Service Agreement dated June 25,
1990 with Manufacturers Hanover Trust Company, immediate
predecessor-in-interest to Chemical Bank, (the "Lock Box Agreement").
All such remittances shall be deposited in Lender's account with
Chemical Bank pursuant to the Lock Box Agreement (the "CIT Account")."
11. Amendment of Section 9.1(b). The first three
sentences of Section 9.1(b) of the
Credit Agreement are amended in their entirety to read as follows:
"(b) Any checks or other forms of remittance which may be
received directly by Borrower in respect of the Non-Notification
Accounts, the Non-Factored Accounts and other Collateral shall not be
commingled with Borrower's property, but shall be segregated, held by
Borrower in trust for Lender as Lender's exclusive property and
immediately deposited by Borrower, in the identical form received, with
proper endorsements, into such account or accounts as Lender may
designate from time to time. All amounts received by Lender in respect
of Non-Notification Accounts, Non-Factored Accounts or other Collateral
in immediately available funds will be credited to any account or
accounts maintained by Lender pursuant to this Agreement after adding
one (1) business day. All amounts received by Lender in respect of
Non-Notification Accounts, Non-Factored Accounts or other Collateral in
remittances which are not immediately available, will be credited to
any account or accounts maintained by Lender pursuant to this Agreement
one (1) business day after such remittances have been collected."
12. Amendment of clauses (d) and (e) of Section 9.5.
Clauses (d) and (e) of Section 9.5
of the Credit Agreement are amended in their entirety to read as
follows:
"...(d) with respect to Non-Notification Accounts and
Non-Factored Accounts, on or after the occurrence of an Event of
Default, or an event which with notice, passage of time or both would
constitute an Event of Default, to notify Account Debtors to make
payment directly to Lender; (e) (i) with respect to Non-Notification
Accounts, at any time after the earlier of (A) sixty (60) days after
the respective due dates thereof and (B) the occurrence of an Event of
Default or an event which with notice of passage of time or both would
constitute an Event of Default, and (ii) with respect to Non-Factored
Accounts, on or after the occurrence of an Event of Default, or an
event which with notice, passage of time or both would constitute an
Event of Default, to take or bring, in the name of Lender or Borrower,
all steps, actions, suits or proceedings deemed by Lender necessary or
desirable to effect collection of the Non-Notification Accounts, the
Non-Factored Accounts or the other Collateral, as the case may be;..."
13. Additional Exhibit. The attached "Salant Accounts
Receivable Schedule" is hereby
added to the Credit Agreement as "Exhibit N" thereto
14. 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 13 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, 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.
15. Effectiveness. This Amendment shall become
effective on the date (the "Effective
Date") Lender shall have received each of the following:
a. The written consent of all
Participants to the execution and delivery of this Amendment by Lender.
b. Counterparts of this Amendment,
duly executed and delivered by Borrower and Lender.
c. A duly executed copy of the Consent
of Guarantors substantially in the form of Exhibit A hereto.
16. Continuing Effect of Credit 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, the provisions of the
Credit Agreement are and shall remain in full force and effect.
17. 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.
18. 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:
Title:
SALANT CORPORATION
By:
Title:
EXHIBIT A
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 Eighth Amendment
to Credit Agreement, dated as of June 1, 1996 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 as of the 1st day of June, 1996.
CLANTEXPORT, INC. FROST BROS. ENTERPRISES, INC.
By: By:
Title: Title:
DENTON MILLS, INC. SLT SOURCING, INC.
By: By:
Title: Title:
VERA LICENSING, INC. SALANT CANADA INC.
By: By:
Title: Title:
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
J.J. FARMER CLOTHING, INC.
By:
Title: