-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D+uNAwJ6aHhFe3+EXgf8Z1z1pVqpho9CUbEbGMnsAh905IzZUbwRrPYLlsxGXR4n fX3w2mCrBvkXwe6bpTlYpg== 0000895345-98-000112.txt : 19980305 0000895345-98-000112.hdr.sgml : 19980305 ACCESSION NUMBER: 0000895345-98-000112 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980302 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980304 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SALANT CORP CENTRAL INDEX KEY: 0000086346 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 133402444 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06666 FILM NUMBER: 98557279 BUSINESS ADDRESS: STREET 1: 1114 AVE OF THE AMERICAS STREET 2: 36TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2122217500 MAIL ADDRESS: STREET 1: 1058 CLAUSSEN RDSTE 101 CITY: AUGUSTA STATE: GA ZIP: 30907 8-K 1 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 March 2, 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 On March 2, 1998, Salant Corporation ("Salant") entered into an agreement in principle (the "Restructuring Agreement") with its major note and equity holders to restructure its existing indebtedness under Salant's 10 1/2% Senior Secured Notes due December 31, 1998. Salant also entered into an agreement (the "CIT 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 current credit agreement until the proposed restructuring plan is implemented. On March 3, 1998, Salant issued a press release regarding the Restructuring Agreement and the CIT Agreement. Salant is exploring with its advisors the alternatives for implementing the proposed restructuring and expects to formulate definitive plans in the near term. The foregoing summary does not purport to be complete and is qualified in its entirety by reference to (i) the press release, dated March 2, 1998, (ii) the letter agreement, dated March 2, 1998, by and among Salant, Magten Asset Management Corp., as agent on behalf of certain of its accounts, and Apollo Apparel Partners, L.P., and (iii) the Twelfth Amendment and Forbearance Agreement, dated as of March 2, 1998, by and between Salant and CIT, filed as Exhibits 99, 10.48, and 10.49, 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 March 2, 1998. 10.48 Letter Agreement, dated March 2, 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. 10.49 Twelfth Amendment and Forbearance Agreement, dated as of March 2, 1998, by and between Salant Corporation and The CIT Group/Commercial Services, Inc. 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: March 4, 1998 By: /s/ Todd Kahn ----------------------- Executive Vice President and General Counsel EXHIBIT INDEX Exhibit Number Description - ------ ----------- 99 Press Release, dated March 2, 1998. 10.48 Letter Agreement, dated March 2, 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. 10.49 Twelfth Amendment and Forbearance Agreement, dated as of March 2, 1998, by and between Salant Corporation and The CIT Group/Commercial Services, Inc. EX-99 2 [LETTERHEAD OF SALANT CORPORATION] FOR: SALANT CORPORATION CONTACT: Todd Kahn Executive Vice President- Corporate Affairs and General Counsel (212) 221-5379 FOR IMMEDIATE RELEASE - --------------------- SALANT CORPORATION REACHES AGREEMENT WITH ITS MAJOR NOTE AND EQUITY HOLDERS AND EXTENSION AGREEMENT WITH CIT New York, NY, March 2, 1998 -- Salant Corporation ("Salant") (NYSE: SLT), today announced that it has reached an agreement in principle with its major note and equity holders to restructure its existing indebtedness under Salant's 10 1/2% Senior Secured Notes due December 31, 1998 (the "Senior Notes"). Under the restructuring, Salant will convert the entire $104.9 million outstanding aggregate principal amount of, and all accrued and unpaid interest on, its Senior Notes into common equity. Salant also announced today that it has reached an agreement with its working capital lender, The CIT Group/Commercial Services, Inc. ("CIT"), to support Salant's restructuring efforts. CIT has agreed to continue to extend financing under the current credit agreement until the proposed restructuring plan is implemented. The restructuring agreement was entered into by Salant and Magten Asset Management Corp., the beneficial owner of, or the representative of the beneficial owners of, approximately 67% of the aggregate principal amount of the Senior Notes ("Magten"). Apollo Apparel Partners, L.P., the beneficial owner of approximately 40.1% of Salant's issued and outstanding common stock, is also a party to the restructuring agreement and has agreed to vote all of its shares of Salant common stock in favor of the restructuring. The restructuring agreement provides that (1) the entire principal amount of the Senior Notes, plus all accrued and unpaid interest thereon, will be converted into 92.5% of Salant's issued and outstanding common stock, and (2) Salant's existing stockholders will retain 7.5% of Salant's issued and outstanding common stock and will receive seven-year warrants to purchase up to 10% of Salant's common stock on a fully diluted basis. Stockholder and noteholder approval will be requied in order to consummate the restructuring agreement. The restructuring agreement also provides for a reverse stock split which will require the approval of Salant's stockholders. Because of the treatment of accrued interest on the Senior Notes under the proposed restructuring agreement, Salant will not pay the $5.5 million of interest on the Senior Notes that became payable on March 2, 1998. In connection with the restructuring agreement, CIT and Salant have entered into an agreement under which CIT has agreed to forbear from exercising any of its rights under its working capital loan by virtue of the non-payment of the March 2, 1998 interest payment on the Senior Notes, subject to the terms and conditions of such agreement. CIT has also agreed to continue to extend financing to Salant under the current credit agreement until the proposed restructuring plan is implemented. The agreement with CIT also provides for the waiver by CIT of Salant's failure to meet certain financial covenants under the CIT credit agreement. Salant currently anticipates that, upon consummation of the restructuring, Salant will be able to enter into a more favorable financing package that CIT has proposed in connection with the restructuring. Consummation of the proposed restructuring is subject to the satisfaction of a number of conditions precedent, including the negotiation and execution of definitive documentation. Jerald Politzer, Chairman of the Board and CEO of Salant, commented that, "This restructuring is in the best interest of all of Salant's stakeholders - vendors, employees, customers and investors. This restructuring will reduce our annual interest cost by approximately $11 million. In addition, once the restructuring is implemented, the more favorable financing package proposed by our lender, CIT, should result in future interest and cost savings. A deleveraged Salant without the Senior Notes will be well positioned to compete successfully and achieve its strategic objectives." Mr. Politzer added, "We believe that the commitment by our major noteholders to convert its debt into equity demonstrates strong confidence in, and commitment to, our management team and our vision for the growth of the business. In addition, we expect that our trading partners will be pleased by the strengthening of our balance sheet that will result from these transactions." 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. Statements in this press release that are not strictly historical are "forward-looking" statements within the meaning of the Safe Harbor provisions of the federal securities laws. Investors are cautioned that such statements are solely predictions and speak only as of the date of this release. Actual results may differ materially due to risks and uncertainties that are described in Salant's Form 10-K for 1996, the 1996 Annual Report to shareholders, and Form 10-Q for the first, second and third quarters of 1997. These risks include, without limitation, competition from competitors, the seasonality of Salant's products and risks associated with Salant's foreign sourcing operations. EX-10.48 3 Salant Corporation 1114 Avenue of the Americas New York, New York 10036 (212) 221-7500 March 2, 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. Ed Yorke Mr. Robert Katz Re: Salant Corporation ("Salant") ----------------------------- Gentlemen: The purpose of this letter agreement (this "Letter Agreement") is to set forth the agreement among Magten Asset Management Corp. ("Magten"), in its capacity as holder of those certain 10-1/2% Senior Secured Notes due December 31, 1998 (the "Senior Notes") of Salant that were issued pursuant to an Indenture, dated September 20, 1993, as amended (the "Senior Note Indenture"), Salant and Apollo Apparel Partners, L.P. ("Apollo", and together with Magten and Salant, the "Parties"), in its capacity as the holder of approximately 40.1% of Salant's issued and outstanding shares of common stock, regarding the basic terms and conditions of a restructuring (the "Restructuring") of Salant pursuant to a comprehensive consensual plan. 1. Restructuring. ------------- The basic terms and conditions of the Restructuring as agreed among the Parties are set forth in the Summary of Terms and Conditions (the "Term Sheet") attached hereto as Exhibit A (including Annex I attached hereto), which is incorporated herein and made a part of this Letter Agreement (it being agreed that neither Magten nor Apollo expresses any opinion as to the accuracy of any of the information set forth on Annex I to the Term Sheet, including, without limitation, the enterprise value of Salant). 2. Magten Agreements. ----------------- Magten represents to Salant that it is (i) the beneficial owner of no less than $70 million in aggregate face amount of the Senior Notes (the "Relevant Notes") and/or the investment adviser or manager for the beneficial owners of the Relevant Notes having the power to vote and dispose of Relevant Notes on behalf of such beneficial owners, and (ii) entitled (for its own account or the account of other persons claiming through it) to all of the rights and economic benefits of the Relevant Notes. Magten agrees and represents to Salant that, subject to Sections 4 and 5 hereof and subject to its receipt of solicitation materials in respect of the Restructuring that are consistent with the terms of this Letter Agreement (it being recognized that, until such solicitation materials have been received and Magten has reviewed them, this Letter Agreement shall not constitute an agreement by Magten to take any step or action that would violate any provision of applicable federal or state securities laws, and to the extent any provision hereof shall be construed as constituting such a violation, such provision shall be deemed stricken herefrom and of no force and effect without liability to any of the Parties): (a) in connection with the component of the Restructuring consisting of an exchange offer (the "Exchange Offer") for the Senior Notes, Magten will, as promptly as practicable, tender (or, with respect to managed accounts, use its reasonable best efforts to cause to be tendered) the Relevant Notes in acceptance of the Exchange Offer, provided that (i) all applicable federal and state securities laws have been complied with and (ii) the terms of the Exchange Offer and the remaining components of the Restructuring are consistent with the terms of the Exchange Offer and the Restructuring described on the Term Sheet, unless revised terms have been previously agreed to in writing by Magten, it being recognized and agreed by the Parties that the Term Sheet does not purport to include all of the material terms with respect to the Restructuring; (b) so long as it is the beneficial owner of, and/or investment adviser or manager with respect to, the Relevant Notes, Magten will not at any time prior to the termination of this Letter Agreement support or encourage, directly or indirectly, any financial restructuring concerning Salant other than the Restructuring; (c) Magten will not sell, transfer or assign any of the Relevant Notes or any voting interest therein during the term of this Letter Agreement, except to a purchaser who agrees prior to such acquisition to be bound by all the terms of this Letter Agreement as if such purchaser had originally executed this Letter Agreement with respect to the Relevant Notes being acquired by such purchaser, which agreement shall subsequently be confirmed in writing (which writing may include a trade confirmation issued by a broker or dealer, acting as principal or agent for the purchaser, stating that such agreement to be bound hereby is a term of such transfer), in which event, Salant shall be deemed to have acknowledged that each of its obligations to Magten hereunder shall be deemed to constitute obligations in favor of such purchaser, and Salant shall confirm that acknowledgment in writing. At Salant's request, Magten shall use reasonable efforts to cause such purchaser to acknowledge in writing its obligations to Salant and Apollo hereunder; and (d) Magten shall cause to be provided written instructions to the trustee (the "Indenture Trustee") under Section 6.05 of the Senior Note Indenture, promptly following the date of the Letter Agreement, 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 March 2, 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; provided, that, Magten shall not be required to provide any indemnities to the Indenture Trustee in connection therewith and shall not be liable for any failure by the Indenture Trustee to comply with such instructions. 3. Apollo Agreements. ----------------- Apollo represents to Salant that it is (i) the beneficial owner of approximately 40.1% of Salant's issued and outstanding shares of common stock (the "Relevant Common Stock"), and (ii) entitled to all of the rights and economic benefits of the Relevant Common Stock. Apollo agrees and represents to Salant that, subject to Sections 4 and 5 hereof and subject to its receipt of proxy or other solicitation materials in respect of the Restructuring that are consistent with the terms of this Letter Agreement, in connection with the component of the Restructuring requiring the vote of the holders of Salant's issued and outstanding common stock (the "Existing Common Stock") with respect to certain of the transactions contemplated by the Restructuring, Apollo will enter into a voting agreement with Salant which will provide that (i) Apollo will vote all of its shares of Relevant Common Stock in favor of each of such transactions; (ii) so long as it is the beneficial owner of the Relevant Common Stock, Apollo will not at any time prior to the termination of this Letter Agreement, support or encourage, directly or indirectly, any financial restructuring concerning Salant other than the Restructuring; and (iii) Apollo will not sell, transfer or assign any of the Relevant Common Stock or any voting interest therein during the term of this Letter Agreement except to a purchaser who agrees in writing prior to such acquisition to be bound by the terms of the voting agreement with Apollo and by all the terms of this Letter Agreement with respect to the Relevant Common Stock being acquired by such purchaser. 4. Termination of Agreement. ------------------------ Magten's obligations hereunder shall terminate upon the occurrence of any Agreement Termination Event, unless the occurrence of such Agreement Termination Event is waived in writing by Magten. Apollo's obligations hereunder shall terminate upon the occurrence of any Agreement Termination Event set forth in subparagraphs (c), (e) and (f) of this Section 4, unless the occurrence of such Agreement Termination Event is waived in writing by Apollo. For the purposes hereof an "Agreement Termination Event" shall mean any of the following: (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 July 31, 1998; (b) the Exchange Offer shall not have commenced on or before June 15, 1998; (c) the Effective Date (as such term is defined in the Term Sheet) shall not have occurred on or before July 31, 1998; (d) Salant or Apollo shall have disclaimed publicly in writing (or in a writing sent to Magten) its intention to pursue the Restructuring; (e) there occurs any material change in the terms or the feasibility of the Restructuring that materially and adversely affects the holders of the Senior Notes, in the case of Magten, or the holders of the Existing Common Stock, in the case of Apollo, not previously consented to by Magten; (f) Salant shall be the subject of a voluntary or involuntary petition under title 11 of the Untied States Code (the "Bankruptcy Code") prior to the occurrence of the Effective Date, other than a voluntary petition filed in connection with a prepackaged or prenegotiated chapter 11 case to effectuate the Restructuring; provided, however, that the filing of an involuntary petition under the Bankruptcy Code will only be deemed to constitute an Agreement Termination Event when and if such involuntary petition for relief has continued undismissed for 60 days or an order or decree approving the involuntary petition has continued unstayed and in effect for 60 days; (g) to the extent the right of Magten to vote or direct the disposition of the Relevant Notes results from an arrangement in existence on the date hereof under which Magten has been engaged to perform investment management services on behalf of a beneficial owner of the Relevant Notes, (i) such engagement shall be terminated by such beneficial owner or as the result of any statutory, regulatory or bona fide business requirement or condition not related to the subject matter of this Letter Agreement, or (ii) such beneficial holder on its own (without any direct or indirect influence from Magten) directs Magten to dispose of some or all of the Relevant Notes beneficially owned by such beneficial owner; provided that, in any case, the Agreement Termination Event shall only apply to Senior Notes held by the beneficial owner as to which the engagement has been terminated or as to which such disposal direction has been issued. Neither Magten nor Apollo shall have any liability to Salant or to any other person in respect of any termination of this Letter Agreement in accordance with the terms hereof. 5. Conditions. ---------- In addition to the provisions of paragraph 4 above with respect to the Agreement Termination Events, the respective obligations of Magten, Salant and Apollo to consummate each of the transactions contemplated by the Restructuring are also subject to the satisfaction of each of the following conditions: (a) neither Magten, Salant nor Apollo has failed to comply with any of its obligations set forth in this Letter Agreement; (b) negotiation, preparation and execution of mutually satisfactory definitive transaction agreements and other documents incorporating the terms and conditions of each of the transactions contemplated by the Restructuring set forth herein and such other terms and conditions as the parties may reasonably require; (c) all authorizations, consents and regulatory approvals required, if any, in connection with the consummation of the transactions contemplated by the Restructuring and the continuation of Salant's businesses as currently constituted shall have been obtained; and (d) the holders of 100% (or such lesser percentage as agreed upon by Magten) of the Senior Notes shall have tendered their Senior Notes in connection with the Exchange Offer. 6. Further Acquisition of Securities. --------------------------------- This Letter Agreement shall in no way be construed to preclude (i) Magten from acquiring additional Senior Notes or (ii) Apollo from acquiring additional shares of Existing Common Stock. However, any such additional Senior Notes so acquired by Magten or additional shares of Existing Common Stock so acquired by Apollo shall automatically be deemed to be Relevant Notes or shares of Relevant Common Stock, as the case may be, and to be subject to all of the terms of this Letter Agreement. This Letter Agreement shall in no way be construed to preclude Magten or Apollo from acquiring any other securities of Salant. However, Magten agrees that it will vote or exercise (or cause to be voted or exercised) any such additional securities in favor of the Restructuring for so long as this Letter Agreement remains in effect, and Apollo agrees that it will exercise or vote (or cause to be exercised or voted) any additional securities in favor of the Restructuring for so long as this Letter Agreement remains in effect. 7. Amendments. ---------- This Letter Agreement may not be modified, amended or supplemented except in writing signed by each of the Parties. 8. Indemnification Obligations. --------------------------- Salant agrees that it shall fully indemnify (i) Magten, (ii) each and every other person by reason of the fact that such person is or was a director, officer, employee, agent, shareholder, professional (including, without limitation, Hebb & Gitlin and Allen & Company) or other authorized representative of Magten, (iii) Apollo, and (iv) each and every other person by reason of the fact that such person is or was a director, officer, employee, agent, partner, professional or other authorized representative of Apollo (all of the foregoing persons and the entities in (i) through (iv) above, the "Indemnitees") against any claims, liabilities, actions, suits, damages, fines, judgments or expenses (including reasonable attorney's fees), brought or asserted by anyone (other than Salant or any successor with respect to asserted violations of this Letter Agreement or any other agreement with Salant entered into by such Indemnitee in connection with the Restructuring) arising during the course of, or otherwise in connection with or in any way related to, the negotiation, preparation, formulation, solicitation, dissemination, implementation, confirmation and consummation of the Restructuring, including the Exchange Offer and the transactions contemplated thereby; provided, however, that this indemnity shall not extend to any claims asserted by Magten or Apollo against any other Indemnitee, and provided, further, that the foregoing indemnification shall not apply to any liabilities arising from the gross negligence or willful misconduct of any Indemnitee. If any claim, action or proceeding is brought or asserted against an Indemnitee in respect of which indemnity may be sought from Salant, the Indemnitee shall promptly notify Salant in writing, and Salant shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnitee, and the payment of all expenses. The Indemnitee shall have the right to employ separate counsel in any such claim, action or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Indemnitee unless and until (a) Salant has agreed to pay the fees and expenses of such counsel, or (b) Salant shall have failed promptly to assume the defense of such claim, action or proceeding and employ counsel reasonably satisfactory to the Indemnitee in any such claim, action or proceeding or (c) the named parties to any such claim, action or proceeding (including any impleaded parties) include both the Indemnitee and Salant, and the Indemnitee believes, in the exercise of its business judgment and in the opinion of its outside legal counsel, reasonably satisfactory to Salant, that the joint representation of Salant and the Indemnitee will likely result in a conflict of interest (in which case, if the Indemnitee notifies Salant in writing that it elects to employ separate counsel at the expense of Salant, Salant shall not have the right to assume the defense of such action or proceeding on behalf of the Indemnitee). In addition, Salant shall not effect any settlement or release from liability in connection with any matter for which the Indemnitee would have the right to indemnification from Salant, unless such settlement contains a full and unconditional release of the Indemnitee, or a release of the Indemnitee reasonably satisfactory in form and substance to the Indemnitee. Notwithstanding anything contained herein to the contrary, the provisions of this Section 8 shall not be deemed to limit any other indemnification obligation of Salant in effect to any Indemnitee whether by agreement or in accordance with Salant's bylaws. 9. Publicity. --------- This Letter Agreement and each of the transactions contemplated by the Restructuring shall be kept confidential until the Parties agree upon the language and timing of a press release to be issued by Salant. 10. No Third Party Beneficiaries; Separate Responsibilities. ------------------------------------------------------- This Letter Agreement is only for the benefit of the undersigned parties and nothing herein, expressed or implied, is intended or shall be construed to confer upon any person or entity, other than such persons or entities, any rights or remedies under or by reason of, and no person or entity, other than such persons or entities, is entitled to rely in any way upon, this Letter Agreement. Magten shall not have or acquire any liability or responsibility for Apollo's performance or non-performance under this Letter Agreement, and Apollo shall not have or acquire any liability or responsibility for Magten's performance or non-performance under this Letter Agreement 11. Governing Law; Jurisdiction. --------------------------- This Letter Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any conflicts of law provision which would require the application of the law of any other jurisdiction. By its execution and delivery of this Letter Agreement, each of the Parties hereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding against it with respect to any matter under or arising out of or in connection with this Letter Agreement or for the recognition or enforcement of any judgment rendered in any such action, suit or proceeding, may be brought in any Federal or State court in the Borough of Manhattan, the City of New York, but for that purpose only, and, by execution and delivery of this Letter Agreement, each of the Parties hereby irrevocably accepts and submits itself to the nonexclusive jurisdiction of each such court, generally and unconditionally, with respect to any such action, suit or proceeding. 12. Specific Performance. -------------------- It is understood and agreed by the Parties that money damages would not be a sufficient remedy for any breach of this Letter Agreement by any of the Parties and the non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief as a remedy of any such breach. 13. Survival. -------- Notwithstanding (i) the sale of the Relevant Notes in accordance with Section 2(c) hereof, (ii) the sale of the Relevant Common Stock in accordance with Section 3(c) hereof, or (iii) the termination of Magten's and Apollo's obligations hereunder in accordance with Section 4 hereof, the agreements and obligations of Salant in Sections 8 and 11-13 shall survive such termination and shall continue in full force and effect for the benefit of Magten and Apollo in accordance with the terms hereof. 14. Headings. -------- The headings of the Sections, paragraphs and subsections of this Letter Agreement are inserted for convenience only and shall not affect the interpretation hereof. 15. Successors and Assigns. ---------------------- This Letter Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators and representatives. 16. Prior Negotiations. ------------------ This Letter Agreement and the Term Sheet supersede all prior negotiations with respect to the subject matter hereof; provided however, that the terms and conditions set forth in (i) the confidentiality agreement, dated January 15, 1998, between Salant and Magten; (ii) the fee agreement, dated January 7, 1998, between Salant and Hebb & Gitlin; and (iii) the fee agreement, dated as of January 1, 1998, between Salant and Allen & Company, shall remain in full force and effect. 17. Counterparts. ------------ This Letter Agreement (and any modifications, amendments, supplements or waivers in respect hereof) may be executed in counterparts by manual or facsimile signature of each undersigned party, and all such counterparts shall be deemed to constitute one and the same instrument. If the foregoing accurately reflects the agreement among the parties regarding the matters referred to herein, Salant requests that you execute the enclosed copy of this Letter Agreement and return it to the undersigned. Very truly yours, SALANT CORPORATION By:/s/ Jerald S. Politzer --------------------------------- Name: Jerald S. Politzer Title: Chairman 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/ Robert Katz --------------------------- Name: Robert Katz Title: Vice President Exhibit A --------- Summary of Terms and Conditions Salant Corporation ("Salant") ----------------------------- This Summary of Terms and Conditions is part of the Letter Agreement, dated March 2, 1998 (the "Letter Agreement"), addressed to Magten Asset Management Corp., as agent on behalf of certain of its accounts ("Magten"), and Apollo Apparel Partners, L.P. ("Apollo") by Salant, and is subject to the terms and conditions of the Letter Agreement. Capitalized terms used herein, which are not otherwise defined herein, shall have the respective meanings assigned to them in the Letter Agreement. I. Overview of Restructuring Plan -- The 10-1/2% Senior Secured Notes due December 31, 1998 of Salant (the "Senior Notes") and all outstanding shares of Common Stock of Salant (the "Existing Common Stock") will be restructured pursuant to a comprehensive consensual plan (the "Restructuring Plan"). The material economic terms and assumptions for the agreed Restructuring Plan are set forth on Annex I hereto: . Pursuant to the Restructuring Plan, the holders of the Senior Notes will receive that number of shares of Existing Common Stock on the date that the restructuring of Salant is consummated (the "Effective Date") which represents 92.5% of the issued and outstanding shares of Existing Common Stock immediately following the Effective Date, subject to dilution for new employee stock incentive and/or option plans (as set forth in paragraph III.B. below) and the Warrants (as defined below). As set forth on Annex I hereto, assuming that 15.3 million shares of Existing Common Stock are outstanding as of the Effective Date, the number of shares of Existing Common Stock that would be issued to the holders of the Senior Notes would be approximately 188.7 million shares. . In order to implement the Restructuring Plan, Salant will hold a meeting of stockholders to obtain the approval of the holders of Existing Common Stock (the "Existing Equity") as more fully described below. . Pursuant to the Restructuring Plan, Existing Equity will (i) retain 7.5% of the issued and outstanding shares of Existing Common Stock immediately following the Effective Date (approximately 15.3 million shares of Existing Common Stock), subject to dilution for new employee stock incentive and/or option plans of Salant (as described below) and the Warrants; and (ii) receive warrants (the "Warrants") representing the right to purchase up to 10% of the issued and outstanding shares of Existing Common Stock on a fully diluted basis (approximately 22.7 million shares of Existing Common Stock), on the terms described in paragraph III.D. below. II. Capitalization of Reorganized Salant ------------------------------------ . Pursuant to the Restructuring Plan, as of the Effective Date, the capital structure of reorganized Salant ("Reorganized Salant") will consist of: (i) the New Senior Credit Facility (as discussed in paragraph III.G. below); (ii) the Existing Common Stock; and (iii) the Warrants. III. Implementation and Basic Terms of Restructuring Plan ---------------------------------------------------- A. Stockholder Approval -------------------- . To effectuate the Restructuring Plan, Salant will hold a special meeting (the "Special Meeting") of shareholders at which the Existing Equity will vote upon the following matters (a majority vote of the Existing Equity would be required): - (i) the issuance of shares of Existing Common Stock to effectuate the Restructuring Plan as described below; and - (ii) as described below, an amendment to Salant's Certificate of Incorporation to effectuate the reverse stock split. . In order to ensure that stockholder approval of the Restructuring Plan is obtained, Apollo Apparel Partners, L.P. ("Apollo"), the holder of 40.1% of the Existing Common Stock, has agreed to enter into a voting agreement with Salant pursuant to which Apollo will agree with Salant to vote their shares of Existing Common Stock at the Special Meeting in favor of the proposed reverse stock split and issuance of shares of Existing Common Stock in accordance with the terms hereof. In addition, Salant and Apollo will attempt to obtain the agreement of DDJ Capital Management, LLC, the holder of 12.2% of the Existing Common Stock, to enter into a similar voting agreement, and Magten will cooperate with Salant and Apollo in such effort. B. Existing Common Stock --------------------- Issuer: Reorganized Salant. - ------- Holders of the Senior Notes: Pursuant to the Exchange Offer (as defined below), - ------------- on the Effective Date, holders of the Senior Notes will receive 92.5% of the issued and outstanding shares of Existing Common Stock immediately following the Effective Date (approximately 188.7 million shares of Existing Common Stock), subject to dilution for new employee stock incentive and/or option plans of Salant (as described below) and the Warrants. The allocation of the distributions of the Existing Common Stock under the Restructuring Plan to the holders of the Senior Notes will be pro rata based on the amount of their respective claims relating to the Senior Notes held by them. Under the Restructuring Plan, the aggregate allowed amount of the claim in respect of the Senior Notes will be $104.9 million, plus accrued and unpaid interest through the Effective Date (including the aggregate amount of $5.5 million of interest payable on March 2, 1998). Holders of the Pursuant to the Restructuring Plan, on the Effective Common Stock: Date, holders of the Existing Common Stock will - -------------- retain 7.5% of the issued and outstanding shares of Existing Common Stock immediately following the Effective Date (approximately 15.3 million shares of Existing Common Stock), subject to dilution for new employee stock incentive and/or option plans of Salant (as described below) and the Warrants. Employee Stock Pursuant to the Restructuring Plan, Reorganized and Stock Option Salant will reserve 10% of the outstanding Existing Plans: Common Stock, on a fully diluted basis, as of the - ---------------- Effective Date, in order to create new employee stock and stock option plans for the benefit of the members of management and the other employees of Reorganized Salant. On the Effective Date, a management stock option plan will be authorized pursuant to which options to acquire a certain percentage of such 10% reserve will be granted to (1) the directors of Reorganized Salant and (2) those members of management of the Salant selected by management and approved by the non-management members of the board of directors of Reorganized Salant. The decision to grant any additional stock options from the balance of the 10% reserve referred to above and the administration of the stock option plans will be in the discretion of the non-management members of the board of directors of Reorganized Salant. In addition, by agreement between Salant and its employees, all existing employee stock options and other equity based plans will be adjusted so that such options and equity based plans will be part of the above-referenced new employee stock and/or stock option plans (i.e., subsumed within the 10%) as agreed upon between Apollo and Salant, subject to consultation with Magten. Existing Pursuant to the Restructuring Plan, as of the Shareholders' Effective Date, Salant's existing shareholders' Rights Plan: rights plan will be amended to permit the - ------------- transactions contemplated by the Restructuring Plan. C. The Exchange Offer ------------------ . Pursuant to an exchange offer (the "Exchange Offer") by Salant, the holders of the Senior Notes will receive 92.5% of the issued and outstanding shares of Existing Common Stock immediately following the Effective Date (approximately 188.7 shares of Existing Common Stock), subject to dilution for new employee stock incentive and/or option plans of Salant (as described below) and the Warrants. . The shares of Existing Common Stock to be issued pursuant to the Exchange Offer will be registered pursuant to a Form S-4 registration statement under the Securities Act of 1933 (the "'33 Act"). . Salant will enter into a registration rights agreement for the benefit of holders of 10% or more of the Existing Common Stock as of the Effective Date upon terms and conditions reasonably acceptable to Magten and Salant. D. Warrants -------- Issuer: Reorganized Salant. - ------- Exercisable For: 10% of the issued and outstanding shares of - ---------------- Existing Common Stock on a fully diluted basis (approximately 22.7 million shares of Existing Common Stock). Warrants will be entitled to standard anti-dilution protection. Exercise Price: $0.6127 per share of Existing Common Stock. - --------------- Exercise Period: From and including the Effective Date until the - ---------------- seventh anniversary of the Effective Date. Holders of Pursuant to the Restructuring Plan, the Existing Existing Common Equity will receive all of the Warrants. The Stock: allocation of the distributions of the Warrants - --------------- under the Restructuring Plan to the Existing Equity will be pro rata based on the number of shares of Existing Common Stock held by them. Warrant Agreement: On the Effective Date, Salant will enter into - ------------------ a warrant agreement for the Warrants on terms and conditions reasonably satisfactory to Magten, Apollo and Salant. E. Reverse Stock Split ------------------- In order to effect the Restructuring Plan, Salant is required to issue a significant number of shares of Existing Common Stock. Absent any corporate action, such as a reverse stock split, the shares of Existing Common Stock would have a value of less than $1.00 per share. In order to "normalize" the post-restructuring trading of the Existing Common Stock by reducing the float and thereby increasing the per share stock price, under the Restructuring Plan, a reverse stock split would be effectuated. In order to effect the reverse stock split, Existing Equity would be asked to approve the split at the Special Meeting described above. The numbers used in this Term Sheet are prior to giving effect to a reverse stock split. F. Corporate Governance -------------------- . The certificate of incorporation and the by-laws of Reorganized Salant will contain those terms and conditions that are reasonably satisfactory to the holders of the Senior Notes, the holders of the Existing Common Stock and Salant. Under the certificate of incorporation for Reorganized Salant, all shares of Existing Common Stock will have equal rights on voting and distributions. . Pursuant to the Restructuring Plan, on the Effective Date, the board of directors of Reorganized Salant will be reconstituted and will have between five and seven members. The composition of the initial reconstituted board will be as follows: (i) Jerald Politzer (Chairman); (ii) between three and five members nominated by Magten, subject to consultation with Salant and with other holders of Senior Notes who may come forward; and (iii) one member designated by the current board of directors of Salant. G. New Senior Credit Facility -------------------------- . The terms of the new senior secured credit facility in effect as of the Effective Date (the "New Senior Credit Facility") will be on terms and conditions that are reasonably satisfactory to Magten, Apollo and Salant. H. Additional Assumptions ---------------------- . As of the Effective Date, the minimum availability under the New Senior Credit Facility will be at a level that is satisfactory to Magten, Apollo and Salant. . No payments will be made to the members of management under existing severance, employment and/or change of control agreements or arrangements solely by reason of the transactions contemplated under the Restructuring Plan. . Salant and Apollo recognize that Magten and its professional advisors (including Allen & Company and Hebb & Gitlin) are acting solely in the interest of Magten and that they have not consulted with, and do not and will not acquire any duties, responsibilities or liabilities to, any other holder of Senior Notes. . If 100% of the holders of the Senior Notes do not consent to the Restructuring, Salant shall take such actions as are necessary to bind such holders to the terms of the Restructuring and the Effective Date shall not occur unless such action by Salant has been taken. EX-10.49 4 TWELFTH AMENDMENT AND FORBEARANCE AGREEMENT -------------------------------------------- TWELFTH AMENDMENT AND FORBEARANCE AGREEMENT, dated as of March 2, 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") (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, certain Events of Default described below have occurred and are continuing under the Credit Agreement; WHEREAS, Borrower has requested that Lender (a) waive, as of January 3, 1998, the Covenant Defaults (as defined below) and, with respect to the Payment Default (as defined below), forbear for a limited period of time from exercising any of its rights and remedies with respect to such existing Event of Default under the Credit Agreement; (b) agree to continue (i) making loans, advances and other financial accommodations to Borrower and (ii) factoring the Factored Accounts, 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, including increasing the advance rate for Revolving Loans in respect of Eligible Inventory; 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. Events of Default. Borrower acknowledges, confirms and agrees that (a) as of January 3, 1998, Borrower defaulted under the financial covenants set forth in Section 7.19 (Stockholders' Equity) and Section 7.22 (Maximum Loss) of the Credit Agreement (the "Covenant Defaults") and (b) Borrower elected not to pay the interest 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 proposed conversion into equity of the Public Secured Notes on the terms set forth in the letter agreement and term sheet appended thereto, a copy of which is attached hereto as Exhibit A (the "Notes Agreement"). 3. Waiver and Forbearance. In response to Borrower's request for a waiver of the Covenant Defaults as recited above, Lender hereby waives the Covenant Defaults as of January 3, 1998. In addition, in response to Borrower's request for Lender to forbear with respect to the Payment Default which is continuing, Lender agrees, subject to the terms and conditions set forth below, (a) to forebear from exercising any of its rights and remedies arising from the 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 and to factor the Factored Accounts, 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 July 1, 1998, or earlier upon the happening of: (i) the occurrence of any Event of Default other than the Payment Default; or (ii) the failure of Borrower on or before June 1, 1998, to (A) execute and deliver to Lender, a commitment letter executed by Lender providing for the agreement between Lender (as Agent for itself and other lenders) and Borrower to enter into a new $135 million syndicated credit facility (in replacement of the financing and factoring arrangements provided by Lender pursuant to the Credit Agreement) on terms and conditions satisfactory to Lender or (B) deliver to Lender a copy of a commitment letter executed between another lender and Borrower providing for a credit facility to Borrower which by its terms provides for closing and funding thereof on or before July 1, 1998, and enables Borrower upon such closing and funding to simultaneously terminate the Credit Agreement and all other Financing Agreements and to satisfy in full all of its then existing Obligations to Lender (either such credit facility, the "Replacement Credit Facility"); or (iii) 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 (iv) the payment of any interest on the New Public Secured Notes in respect of which the Payment Default arose or otherwise. 4. Continuation of Eurodollar Loans. Notwithstanding the certification by Borrower contained in each Notice of Borrowing with respect to a Eurodollar Loan requested by Borrower, provided no Event of Default other than the Payment Default shall have occurred, Lender agrees to continue making Eurodollar Loans to Borrower on and subject to all the terms and conditions applicable to Eurodollar Loans set forth in the Credit Agreement. 5. Addition of Defined Terms. Section 1 of the Credit Agreement is hereby amended to add the following defined terms thereto: (a) "1.21A 'Covenant Trigger Date' shall mean the last day of any fiscal month of Borrower on which Borrower first fails to maintain Excess Availability of at least $5,000,000, except that for Borrower's June fiscal month, such amount shall be at least $4,500,000." (b) "1.26A 'EBITDA' shall mean, for any period, the sum (without duplication) of (i) net income, (ii) provision for taxes based on income, (iii) Interest Expense, and (iv) to the extent net income has been reduced thereby, amortization expense, depreciation expense and other non-cash expenses, less extraordinary items (including, without limitation, all costs and expenses of Borrower and its Subsidiaries in connection with the negotiation, execution and performance of the Twelfth Amendment and in connection with the negotiation, execution and consummation of the transactions contemplated by the Notes Agreement), all as determined on a consolidated basis for Borrower and its Subsidiaries in accordance with GAAP." (c) "1.34A 'Excess Availability' shall mean at any time, the amount by which Revolving Loans and Letter of Credit Accommodations available to Borrower under the Advance Formulas, within applicable sublimits and after deducting all applicable reserves, exceed the aggregate amount of Revolving Loans, Letter of Credit Accommodations and all other Obligations then outstanding." (d) "1.46A 'Interest Coverage Ratio' shall mean, with respect to any period, the ratio of (i) EBITDA to (ii) Interest Expense." (e) "1.46B 'Interest Expense' shall mean, for any period, interest expense with respect to all outstanding Indebtedness of Borrower and its Subsidiaries for such period, exclusive of interest with respect to the New Public Secured Notes." (f) "1.78A 'Twelfth Amendment' shall mean the Twelfth Amendment and Forbearance Agreement, dated as of March 2, 1998, executed between Lender and Borrower. 6. 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" 7. 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 the second day through and including the day immediately prior to the last day of each of Borrower's March, April, May, and June, 1998 fiscal months, 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 of up to $3,000,000 at any time outstanding (the "Seasonal Overadvance Subfacility"); provided, that, any amount outstanding under the Seasonal Overadvance Subfacility in excess of the Advance Formulas shall be repaid in full on the last day of each fiscal month during said period, provided further, that, no Revolving Loans shall be made under the Seasonal Overadvance Subfacility in any fiscal month unless (i) any amount outstanding under the Seasonal Overadvance Subfacility in the immediately preceding calendar month has been repaid in full when due, and (ii) there is some Excess Availability on the last day of the fiscal month in which such repayment in full is made. If Borrower fails to pay any amounts outstanding under the Seasonal Overadvance Subfacility when due, Borrower shall pay to Lender a non-refundable fee of $12,500 on each occasion on which it fails to make such payment when due." 8. Amendment of Section 3.3. Section 3.3 of the Credit Agreement is amended in its entirety to read as follows: "3.3 Maximum Credit The aggregate principal amount of the Revolving Loans and Letter of Credit Accommodations at any time outstanding shall not exceed $120,000,000 (the "Maximum Credit")." 9. Amendment of Section 7.19.Section 7.19 of the Credit Agreement is hereby deleted in its entirety and replaced with the following: "[Intentionally Deleted]" 10. Amendment of Section 7.22. Section 7.22 of the Credit Agreement is deleted in its entirety and replaced with the following: "7.22 Monthly Loss Covenant; Interest Coverage Ratio. If Borrower fails to maintain Excess Availability of at least $5,000,000 on the last day of any fiscal month of Borrower other than Borrower's June fiscal month, for which month such amount shall be at least $4,500,000, then, from and after the Covenant Trigger Date, Borrower shall at all times be in compliance with the financial covenants set forth below: (a) Maximum Net Loss. The aggregate net loss (exclusive of costs and expenses of Borrower incurred in connection with the negotiation, execution and performance of the Twelfth Amendment and the negotiation, execution and consummation of the transactions contemplated by the Notes Agreement incurred by Borrower in (i) any fiscal month set forth below plus (ii) the immediately preceding eleven (11) months shall not exceed the amount set forth below opposite each such month: Fiscal Month Maximum Net Loss ------------ ---------------- March, 1998 $19,000,000 April, 1998 $18,100,000 May, 1998 $15,000,000 June, 1998 $ 7,000,000 (b) Minimum Interest Coverage Ratio. Borrower shall at all times cause to be maintained as of the end of each fiscal period set forth below an Interest Coverage Ratio of not less than the Interest Coverage Ratio set forth opposite such fiscal period end set forth below: Fiscal Month Minimum Interest Coverage Ratio ------------ ------------------------------- March, 1998 1.60 to 1.00 April, 1998 1.20 to 1.00 May, 1998 1.32 to 1.00 June, 1998 0.60 to 1.00" 11. Additional Events of Default. Section 8.1 of the Credit Agreement is amended by deleting the period at the end of Section 8.1(r) and substituting a semicolon followed by the word "or" therefor and by adding thereto the following Sections 8.1(s) and 8.1(t) as follows: "(s) Ernst & Young LLP ceases to be business consultant to the Company and is not replaced within 5 days by a business consultant satisfactory to Lender; or (t) Any event or circumstance occurs from and after March 2, 1998 that materially and adversely affects the business, properties, operations or condition, financial or otherwise, of Borrower." 12. Amendment of Section 8.2(iii). Section 8.2(iii) of the Credit Agreement is amended by deleting therefrom the defined term "Interest Rate" and substituting therefor the defined term "Effective Prime Rate." 13. Waiver, Forbearance and Amendment Fee. In consideration of Lender's waiver of the Covenant Defaults and forbearance with respect to the Payment Default and other agreements set forth in this Amendment and for other valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged by Borrower, Borrower shall pay Lender a forbearance and amendment fee in the amount of $150,000, which shall be paid and fully earned upon execution of this Amendment. In addition, in consideration of the Replacement Credit Facility proposed by Lender to Borrower, Borrower agrees to pay Lender $1,050,000 as a non-refundable and fully earned fee as of the date hereof, payable in three (3) equal installments of $350,000 each on April 1, May 1, and June 1, 1998. Such fee shall not be refundable in whole or in part for any reason whatsoever, and may be charged, at Lender's sole option, to any account of Borrower maintained by Lender. Notwithstanding the foregoing, Lender and Borrower agree that, (a) if and when the Replacement Credit Facility extended by Lender becomes effective, such $1,050,000 fee shall thereupon be deemed paid and shall be applied by Lender on account of the closing fee that will be due and payable by Borrower to Lender upon closing of the Replacement Credit Facility (such portion of the fee allocated by Lender to the payment of such closing fee under the Replacement Credit Facility being hereinafter referred to as the "Allocated Replacement Facility Fee"), and no other closing fee or facility fee shall be due or payable in connection with any Replacement Credit Facility extended by Lender or in connection with any debtor-in-possession financing provided by Lender to Debtor in connection with a case commenced with respect to Debtor under Chapter 11 of Title 11 of the United States Code, and (b) if (and only if) Lender does not extend a Replacement Credit Facility because Lender's Executive Credit Committee fails to give credit approval for such Replacement Credit Facility, then a portion of the Allocated Replacement Facility Fee in the amount of $600,000 shall be refunded, without interest, to Borrower. 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 14 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, (a) 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, and (b) the terms and conditions pursuant to which Borrower proposes that the New Public Secured Notes shall be converted into equity interests in Borrower, as outlined in the Term Sheet therefor delivered by Borrower to Lender, have been agreed to in principle by a majority of the holders of the New Public Secured Notes. 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 B hereto. (d) The agreement in principle attached hereto as Exhibit A shall have been executed by Borrower, Apollo Apparel Partners, L.P. and Magten Asset Management Corp. and Lender shall have received a fully executed copy thereof. 16. 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 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 Agreement), all of which Borrower acknowledges and agrees have been heretofore and are hereby further expressly reserved by Lender. 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: /s/ Anthony Lombardi ----------------------------------- Title: /s/ Senior Vice President -------------------------------- SALANT CORPORATION By: /s/ Todd Kahn ----------------------------------- Title: Executive Vice President & General Counsel -------------------------------- EXHIBIT A --------- Filed as Exhibit 10.48 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 Twelfth Amendment and Forbearance Agreement, dated as of March 2, 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 ___ day of March, 1998. CLANTEXPORT, INC. FROST BROS. ENTERPRISES, INC. By: /s/ Todd Kahn By: /s/ Todd Kahn -------------------------- -------------------------- Title: Executive Vice President Title: Executive Vice President & General Counsel & General Counsel -------------------------- -------------------------- DENTON MILLS, INC. SLT SOURCING, INC. By: /s/ Todd Kahn By: /s/ Todd Kahn -------------------------- -------------------------- Title: Executive Vice President Title: Executive Vice President & General Counsel & General Counsel -------------------------- -------------------------- VERA LICENSING, INC. SALANT CANADA INC.. By: /s/ Todd Kahn By: /s/ Todd Kahn -------------------------- -------------------------- Title: Executive Vice President Title: Executive Vice President & General Counsel & General Counsel -------------------------- -------------------------- J.J. FARMER CLOTHING, INC. By: /s/ Todd Kahn -------------------------- Title: Executive Vice President & General Counsel -------------------------- -----END PRIVACY-ENHANCED MESSAGE-----