NINTH AMENDMENT TO CREDIT AGREEMENT
NINTH AMENDMENT TO CREDIT AGREEMENT, dated as of August 16,
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") and by the
Eighth Amendment to Credit Agreement, dated as of June 1, 1996 (the "Eighth
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, on or about the date hereof, Borrower has requested
that Lender (a) waive certain existing Events of Default under the Credit
Agreement and (b) amend the Credit Agreement to amend certain financial
covenants set forth therein; and
WHEREAS, Lender is willing to waive such existing Events of
Default and 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. Waiver of Events of Default: Borrower has defaulted under
Sections 7.18, 7.19 and 7.22 of the Credit Agreement, as a result of its breach
of the financial covenants set forth therein (collectively, the "Subject
Covenants"). As a result of the foregoing, Events of Default (collectively, the
"Subject Defaults") have occurred under Section 8.1(d) of the Credit Agreement
and are continuing. In response to Borrower's request on or about the date
hereof for a waiver of the Subject Defaults, Lender hereby waives the Subject
Defaults, provided, however, that nothing contained herein shall be construed to
limit, impair, or otherwise affect any rights of Lender in respect of any future
non-compliance with the Subject Covenants or with any other covenant, term or
provision of the Credit Agreement or any of the other Financing Agreements.
3. Amendment of Section 7.18. Section 7.18 of the
Credit Agreement is amended in its entirety to read as follows:
"7.18 Working Capital
Borrower shall not at the end of any fiscal month
permit its consolidated working
capital to be less than $80,000,000 during the period from the Consummation Date
through the day before the last day of its 1993 fiscal year, $85,000,000 during
the period from the last day of its 1993 fiscal year through June 28, 1996,
$75,000,000 during the period from June 29, 1996 through the day before the last
day of its 1996 fiscal year and $80,000,000 thereafter."
4. Amendment of Section 7.19. Section 7.19 of the
Credit Agreement is amended in its entirety to read as follows:
"7.19 Stockholders' Equity
Borrower shall not permit its consolidated
stockholders' equity to be less than
$55,000,000 at any time during the period from the Consummation Date through the
day before the last day of its 1993 fiscal year, $60,000,000 at any time during
the period from the last day of its 1993 fiscal year through June 28, 1996,
$45,000,000 during the period from June 29, 1996 through the day before the last
day of its 1996 fiscal year, and $52,000,000 thereafter."
5. Amendment of Section 7.22. Section 7.22 of the
Credit Agreement is amended in its entirety to read as follows:
"7.22 Maximum Loss
Borrower shall not incur, in any four consecutive
fiscal quarters, commencing after the date of this Agreement, on a
cumulative basis, a net loss of $10,000,000 or more, or in any period
of eight consecutive fiscal quarters, commencing after the date of this
Agreement on a cumulative basis, a net loss of $15,000,000 or more.
Notwithstanding anything to the contrary contained herein, (a)
write-offs for goodwill, restructuring expense or other unusual or
non-recurring expense arising during the first two fiscal quarters of
Borrower's 1996 fiscal year (ending June 29, 1996) in connection with
or pursuant to a restructuring and which Borrower would otherwise be
required to include in the determination of Borrower's net loss under
this Section 7.22, shall, in an aggregate amount not to exceed
$13,000,000, be excluded from such determination of such net loss of
Borrower, and (b) any write-off for goodwill in Borrower's 1994 fiscal
year shall not be included for purposes of calculating net loss under
this Section 7.22."
6. 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 6 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.
7. 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.
8. Miscellaneous.
a. 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 in this Amendment, the provisions of the Credit
Agreement are and shall remain in full force and effect.
b. 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.
c. 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:
S41\CIT\SALANT\9AMCRAGT.813:cc
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 Ninth Amendment
to Credit Agreement, dated as of August __, 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 this __ day of August, 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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J.J. FARMER CLOTHING, INC.
By:
Title: