-----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, SOIKGgDjM2eyzIl9HjeW8Qk/FPnhzwxz3ASgswGC0PQNWAEZ3cvLvljxnBC37kMX vAa9CN1UF14zd7S1C/maaQ== 0000895345-98-000358.txt : 19980608 0000895345-98-000358.hdr.sgml : 19980608 ACCESSION NUMBER: 0000895345-98-000358 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980601 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980605 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: 98643133 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 June 1, 1998 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) SALANT CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) DELAWARE 0-2433 13-3402444 (STATE OR OTHER (COMMISSION (IRS EMPLOYER JURISDICTION OF FILE NUMBER) INDENTIFICATION NO.) INCORPORATION) 1114 Avenue of the Americas, New York, New York 10036 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (212) 221-7500 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ITEM 5. OTHER EVENTS Salant Corporation ("Salant") entered into the Thirteenth Amendment and Forbearance Agreement (the "Thirteenth Amendment"), dated as of June 1, 1998, with respect to the Revolving Credit, Factoring and Security Agreement, dated as of September 20, 1993, as amended and modified from time to time (the "Credit Agreement"), with its working capital lender, The CIT Group/Commercial Services, Inc. ("CIT"), pursuant to which CIT has agreed to continue to extend financing under the existing Credit Agreement until the earlier to occur of the consummation of Salant's previously announced restructuring (the "Restructuring") and November 30, 1998, subject to the terms and conditions of the Thirteenth Amendment. The Thirteenth Amendment also amends certain terms and provisions of the Credit Agreement. Salant also entered into a commitment letter, dated June 1, 1998, with CIT (the "CIT Commitment Letter"), pursuant to which CIT agreed to provide Salant with a new $140 million secured working capital facility to replace the existing secured facility under the Credit Agreement, effective upon consummation of the Restructuring. On June 5, 1998, Salant issued a press release regarding the Thirteenth Amendment and the CIT Commitment Letter. Salant also entered into a letter agreement, dated June 1, 1998 (the "Restructuring Agreement Amendment"), amending the agreement, dated March 2, 1998 ("March 2 Agreement"), among Salant and its major note and equity holders regarding the Restructuring. The Restructuring Agreement Amendment, among other things, extends the dates for certain of the trigger events upon which Magten Asset Management Corp., as agent on behalf of certain of its accounts ("Magten"), and/or Apollo Apparel Partners, L.P. ("Apollo") may terminate the March 2 Agreement as follows: (i) Salant must have obtained the requisite shareholder consent of the Restructuring by November 30, 1998; (ii) the exchange offer in connection with the Restructuring must have been commenced by July 15, 1998; and (iii) the Restructuring must have been consummated by November 30, 1998. The foregoing summary does not purport to be complete and is qualified in its entirety by reference to (i) the press release, dated June 5, 1998, (ii) the Thirteenth Amendment and Forbearance Agreement, dated as of June 1, 1998, by and between Salant and CIT, (iii) the commitment letter, dated June 1, 1998, by and between Salant and CIT, and (iv) the letter agreement, dated June 1, 1998, by and among Salant, Magten and Apollo, and filed as Exhibits 99, 10.53, 10.54, and 10.55, respectively, to this Current Report on Form 8-K, which items are incorporated by reference herein. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) Exhibits. The following exhibits are filed as part of this report: Exhibit Number Description - ------ ----------- 99 Press Release, dated June 5, 1998. 10.53 Thirteenth Amendment and Forbearance Agreement, dated as of June 1, 1998, by and between Salant Corporation and The CIT Group/Commercial Services, Inc. 10.54 Commitment Letter, dated June 1, 1998, by and between Salant Corporation and The CIT Group/Commercial Services, Inc. 10.55 Letter Agreement, dated June 1, 1998, by and among Salant Corporation, Magten Asset Management Corp., as agent on behalf of certain of its accounts, and Apollo Apparel Partners, L.P. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SALANT CORPORATION Dated: June 5, 1998 By: /s/ Todd Kahn ------------------------- Executive Vice President and General Counsel EXHIBIT INDEX Exhibit Number Description - ------ ----------- 99 Press Release, dated June 5, 1998. 10.53 Thirteenth Amendment and Forbearance Agreement, dated as of June 1, 1998, by and between Salant Corporation and The CIT Group/Commercial Services, Inc. 10.54 Commitment Letter, dated June 1, 1998, by and between Salant Corporation and The CIT Group/Commercial Services, Inc. 10.55 Letter Agreement, dated June 1, 1998, by and among Salant Corporation, Magten Asset Management Corp., as agent on behalf of certain of its accounts, and Apollo Apparel Partners, L.P. EX-99 2 CONTACT: Kekst and Company Wendi Kopsick (212) 521-4867 James Fingeroth (212) 521-4819 FOR IMMEDIATE RELEASE - --------------------- SALANT CORPORATION RECEIVES NEW $140 MILLION FINANCING COMMITMENT AND EXTENSION OF EXISTING CREDIT FACILITY New York, NY, June 5, 1998 -- Salant Corporation (NYSE:SLT) today announced that it has received a $140 million commitment from The CIT Group/Commercial Services, Inc., Salant's existing working capital lender, for a new secured credit facility on terms and conditions significantly more favorable than under the existing CIT facility, that will become effective upon completion of Salant's previously announced restructuring of its 10 1/2% Senior Secured Notes due December 31, 1998. CIT has also extended Salant's existing credit facility. Under the terms of the new CIT financing commitment, the new $140 million credit facility will be used to fund Salant's working capital requirements through December 31, 2001 and will replace Salant's existing secured credit facility with CIT, upon completion of Salant's previously announced restructuring. The new credit facility is comprised of a $125 million revolving credit facility and a $15 million term loan facility. The closing of the new credit facility with CIT is subject to the satisfaction of a number of conditions. In conjunction with the new CIT financing commitment, CIT agreed to further support Salant's restructuring efforts by continuing to extend financing to Salant under the existing credit agreement through the earlier of the consummation of the restructuring and November 30, 1998. Under the extension agreement, CIT has also agreed to conform immediately certain of the financial terms under the existing CIT agreement with the more favorable terms to be provided by CIT under the new secured credit facility, including, among other things, a reduction in the interest rate charged on revolving credit loans, an increase in the advance rates for revolving credit loans, and the elimination of the factoring of any of Salant's accounts receivable. The CIT extension agreement also includes an agreement by CIT to continue to forbear from exercising any of its rights by virtue of the non-payment of interest under Salant's Senior Notes, subject to the terms and conditions of such agreement. Jerald Politzer, Chairman of the Board of Directors and CEO of Salant, stated that, "We believe that the commitment by CIT, our existing working capital lender, to continue to support Salant during the restructuring process and to provide Salant with such a favorable financing commitment demonstrates CIT's confidence in our management team and our vision for the growth of the business under our business plan. The additional liquidity provided to Salant as a result of the amendment of the existing credit facility will, we believe, enable us to fund our business during the pendency of the restructuring." Consummation of the proposed restructuring is subject to the satisfaction of a number of conditions, and there can be no assurance that Salant will successfully consummate the transaction. This announcement does not constitute an offer to sell or to buy any security or the solicitation of any consents or proxies, which offers and consent or proxy solicitation shall only be made by means of a prospectus filed by Salant with the Securities and Exchange Commission. Salant intends to commence the exchange offer and proxy solicitation immediately following the effectiveness of a post-effective amendment to its Form S-4 Registration Statement. Salant is a diversified apparel company, which markets a broad line of men's apparel under well-known brand names, including Perry Ellis, Manhattan and John Henry. Salant also markets children's sleepwear, underwear and sportswear. Salant's products are sold in department and specialty stores, national chains and mass volume retailers throughout the United States. # # # EX-10.53 3 EXHIBIT 10.53 THIRTEENTH AMENDMENT AND FORBEARANCE AGREEMENT THIRTEENTH AMENDMENT AND FORBEARANCE AGREEMENT, dated as of June 1, 1998 (this "Amendment"), with respect to the Revolving Credit, Factoring and Security Agreement, dated as of September 20, 1993, as amended by letter agreement Re: Amendment to Credit Agreement with respect to the Mississippi Property, dated June 14, 1994 (the "First Amendment") and by letter agreement Re: Amendment to Credit Agreement with respect to Additional Guarantors, dated August 24, 1994 (the "Second Amendment"), and by the Third Amendment to Credit Agreement, dated as of February 28, 1995 (the "Third Amendment"), and by the Fourth Amendment to Credit Agreement, dated as of March 1, 1995 (the "Fourth Amendment"), and by the Fifth Amendment to Credit Agreement, dated as of June 28, 1995 (the "Fifth Amendment"), and by the Sixth Amendment to Credit Agreement, dated as of August 15, 1995 (the "Sixth Amendment"), and by the Seventh Amendment to Credit Agreement, dated as of March 27, 1996 (the "Seventh Amendment"), and by the Eighth Amendment to Credit Agreement, dated as of June 1, 1996 (the "Eighth Amendment"), and by the Ninth Amendment to Credit Agreement, dated as of August 16, 1996 (the "Ninth Amendment"), and by the Tenth Amendment to Credit Agreement, dated as of February 20, 1997 (the "Tenth Amendment"), and by the Eleventh Amendment to Credit Agreement, dated as of August 8, 1997 (the "Eleventh Amendment"), and by the Twelfth Amendment and Forbearance Agreement, dated as of March 2, 1998 (the "Twelfth Amendment") (as so amended, and as further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), between THE CIT GROUP/COMMERCIAL SERVICES, INC. ("Lender") and SALANT CORPORATION ("Borrower"). W I T N E S S E T H: WHEREAS, Lender and Borrower are parties to the Credit Agreement; WHEREAS, an Event of Default (sometimes referred to herein as the Payment Default, as defined below) has occurred and is continuing under the Credit Agreement; WHEREAS, pursuant to the Twelfth Amendment and subject to the terms and conditions thereof, Lender agreed to forbear through July 1, 1998 from exercising any of its right and remedies with respect to the Payment Default; WHEREAS, Borrower has requested that Lender (a) continue such forbearance with respect to the Payment Default, (b) agree to continue making loans, advances and other financial accommodations to Borrower all on and subject to the terms and conditions set forth in the Credit Agreement, as amended by this Amendment, and (c) amend certain provisions of the Credit Agreement; and WHEREAS, Lender is willing to agree to the foregoing requests of Borrower upon the terms and subject to the conditions set forth in this Amendment; NOW, THEREFORE, in consideration of the premises, the parties hereto hereby agree, effective as of the Effective Date, as defined below, as follows: 1. Defined Terms. Initially capitalized terms used and not otherwise defined herein shall have their respective meanings as defined in the Credit Agreement. 2. Event of Default. Borrower acknowledges and confirms that an Event of Default occurred and is continuing by reason of Borrower's election not to pay the interest which was due and payable on March 2, 1998 on the New Public Secured Notes, exclusive of any grace period provided with respect thereto in the New Public Secured Notes or in the New Public Secured Notes Indenture (the "Payment Default") in contemplation of the Restructuring (as defined in Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 of Borrower filed with the Securities and Exchange Commission on May 26, 1998). 3. Forbearance. In response to Borrower's request for Lender to continue to forbear with respect to the Payment Default which is continuing, Lender agrees, subject to the terms and conditions set forth below, (a) to continue to forbear from exercising any of its rights and remedies arising from the Payment Default or from an Event of Default arising from the failure of Borrower to make the scheduled payment of interest due and payable under the New Public Secured Notes on August 31, 1998 ("Additional Payment Default") (whether such rights and remedies arise under the Credit Agreement, any other Financing Agreement or applicable law) for the purpose of collecting any of the Obligations, and (b) to continue making loans, advances and other financial accommodations to Borrower, all on and subject to the terms and conditions set forth in the Credit Agreement, as amended by this Amendment. Such forbearance shall terminate on November 30, 1998, or earlier upon the happening of: (i) the occurrence of any Event of Default other than the Payment Default, Additional Payment Default or any Case Event of Default (as defined below); or (ii) the exercise of any right or remedy with respect to any of the Collateral by any holder of any New Public Secured Note or by the Trustee under the New Public Secured Notes Indenture; or (iii) the payment of any interest on the New Public Secured Notes in respect of which the Payment Default arose, the Additional Payment Default will arise, or otherwise; or (iv) the occurrence of an Agreement Termination Event under and as defined in the letter agreement dated March 2, 1998 (the "Magten Letter Agreement") among Borrower, Apollo Apparel Partners, L.P. and Magten Asset Management Corp. ("Magten") attached to the Twelfth Amendment as part of Exhibit A thereto, other than the occurrence of an Agreement Termination Event under Section 4(g) of the Magten Letter Agreement. 4. Amendment to Section 1. Section 1 of the Credit Agreement is hereby amended as follows: (a) Section 1.5A of the Credit Agreement is amended and restated in its entirety to read as follows: "1.5A 'Applicable Margin' shall mean (a)(i) in the case of Prime Rate Loans, one-quarter (.25%) percent, and (ii) in the case of Eurodollar Loans, two and one-quarter (2.25%) percent, and (b) from after the occurrence of (i) a declaration by Lender of any Event of Default (so long as such Event of Default is continuing and unwaived), other than the Payment Default, Additional Payment Default or a Case Event of Default, or (ii) termination of this Agreement, the amount described in clause (a)(i) and clause (a)(ii) of this definition plus one (1%) percent." (b) Sections 1.21A, 1.26A, 1.46A and 1.46B of the Credit Agreement are hereby deleted in their entirety. (c) The following defined terms are hereby added to Section 1 of the Credit Agreement: "'Additional Payment Default' shall mean the Event of Default arising as a result of the failure of Borrower to make the scheduled payment of interest due and payable under the New Public Secured Notes on August 31, 1998." "'Case' shall mean any case commenced by Borrower under chapter 11 of the Bankruptcy Code in order to effectuate the plan of reorganization attached to the Registration Statement. "'Case Event of Default' shall mean any Event of Default arising solely by reason of the commencement or continuation of the Case, provided that the Financing Order has been entered and has not been reversed, modified, amended or stayed, unless otherwise agreed to by Lender." "'Financing Order' shall have the meaning ascribed to such term in Section 7.25 hereof." "'Payment Default' shall mean the Event of Default arising from the failure to make the scheduled payment of interest which was due and payable under the New Public Secured Notes on March 2, 1998." "'Registration Statement' shall mean Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 of Borrower filed with the Securities and Exchange Commission on May 26, 1998." "'Thirteenth Amendment' shall mean the Thirteenth Amendment and Forbearance Agreement, dated as of June 1, 1998, executed between Lender and Borrower." 5. Amendment of Section 3.1(a)(iii). Section 3.1(a)(iii) of the Credit Agreement is amended in its entirety to read as follows: "(iii) Sixty percent (60%) of the value of Eligible Inventory, provided, however, that solely for, and at all times during the period from the Effective Date of, and as defined in, the Thirteenth Amendment through and including September 20, 1998, such advance rate shall be sixty-five percent (65%) of the value of Eligible Inventory." 6. Amendment of Section 3.1(e). Section 3.1(e) of the Credit Agreement is amended in its entirety to read as follows: "(e) Notwithstanding anything to the contrary contained in this Agreement or in any of the other Financing Agreements, during the period from June 1, 1998 through November 30, 1998, at the request of Borrower, Lender may, in its sole discretion, subject to the Maximum Credit, make Revolving Loans and Letter of Credit Accommodations to Borrower in excess of the aggregate amount available under the Advance Formulas repayable on demand." 7. Amendment of Schedule 3.2(e). Schedule 3.2(e) to the Credit Agreement is hereby amended by deleting "2% P.A." set forth under the heading "STANDBY L/C" on said Schedule 3.2(e) and substituting "1% P.A." therefor. 8. Amendment of Section 3.6(i). Section 3.6(i) of the Credit Agreement is hereby deleted in its entirety and replaced with the following: "[Intentionally Deleted]" 9. Addition of Section 3.6A. The Credit Agreement is hereby amended by adding thereto a new Section 3.6A as follows: "3.6A Termination of Factoring Arrangements for Accounts Arising on and after the Effective Date of the Thirteenth Amendment. Notwithstanding anything to the contrary contained in this Agreement, no Accounts arising on and after the Effective Date of, and as defined in, the Thirteenth Amendment shall be factored, provided, that any and all Factored Accounts existing on said Effective Date shall remain Factored Accounts and subject to all provisions of this Agreement applicable thereto." 10. Section 3 of the Credit Agreement is hereby amended to add the following section at the end thereof: "3.13. Debtor-in-Possession Financing. Notwithstanding anything contained herein or in any other Financing Agreement to the contrary, if the Borrower commences the Case, subject to the entry and the terms and conditions of the Financing Order (which shall not have been reversed, modified, amended or stayed, unless otherwise agreed to by Lender), this Agreement shall remain in full force and effect upon the commencement of and during the continuation of the Case (subject to earlier termination as provided for in this Agreement) and Lender will continue to make loans, advances and other financial accommodations to the Borrower during the Case on the same terms and conditions as set forth herein. Without limiting the foregoing, Lender shall not be entitled to receive any commitment, closing, or facility fees in respect of the provision of such loans, advances and other financial accommodations provided to Borrower during the Case." 11. Amendment of Section 7.22. Section 7.22 of the Credit Agreement is hereby deleted in its entirety and replaced with the following: "7.22 'Maximum Net Loss'. If on the last day of June, July or August 1998, the Borrower fails to maintain Excess Availability of at least an amount equal to five percent (5%) of the value of Eligible Inventory, then the aggregate cumulative net loss (exclusive of costs and expenses of Borrower incurred in connection with the negotiation, execution and performance of the Twelfth Amendment, the Thirteenth Amendment and the negotiation, execution and consummation of the transactions contemplated by the letter agreement dated March 2, 1998 among Borrower, Apollo Apparel Partners, L.P. and Magten Asset Management Corp.) incurred by Borrower during its 1998 fiscal year through the end of any such month on which the Borrower so fails to maintain at least such amount of Excess Availability shall not exceed $8,850,000." 12. Section 7 of the Credit Agreement is hereby amended to add the following section at the end thereof: "7.25 Financing Order. Immediately upon commencement of the Case, Borrower and Lender shall jointly file with the Bankruptcy Court an application for authority for Lender to extend post-petition financing to the Borrower on the same terms and conditions as set forth herein pursuant to an order of the Bankruptcy Court (the "Financing Order") in form and substance reasonably acceptable to Lender containing the provisions set forth in Annex I to the Thirteenth Amendment and Forbearance Agreement, dated as of June 1, 1998, executed between Borrower and Lender. Borrower agrees to request a hearing in respect of the relief to be provided by the Financing Order immediately upon the filing of the application in respect thereof and agrees to support vigorously and in good faith such application and the entry of the Financing Order. So long as no Event of Default (other than a Payment Default, an Additional Payment Default or a Case Event of Default) has occurred and is continuing, Lender agrees to support vigorously and in good faith such application and the entry of the Financing Order." 13. Amendment of Section 7.17. Section 7.17 of the Credit Agreement is hereby amended to add the following subsection at the end thereof: "(e) Borrower will deliver to Lender on or before September 11, 1998 a business plan for the balance of Borrower's 1998 fiscal year, in form and substance reasonably satisfactory to Lender." 14. Amendment of Section 8.1. (a) Section 8.1 of the Credit Agreement is hereby amended to add the following proviso after the word "hereunder" in the second line thereof: "provided, however, that no Event of Default shall be deemed to have occurred solely as a result of the occurrence and continuation of a Case Event of Default". (b) Section 8.1(n) is amended by adding the phrase ", other than any such event giving rise to a Case Event of Default" at the end of such section. (c) Section 8.1(o) is amended by adding the phrase ", other than any such event giving rise to a Case Event of Default" at the end of clause (i) thereof. (d) Section 8.1(p)(i) is amended by adding the phrase "(other than if such involuntary case is converted to a voluntary case in respect of the Case and provided that the Financing Order has been entered and has not been reversed, modified, amended or stayed, unless otherwise agreed to by Lender)" immediately following the phrase "in effect for 60 days". (e) Section 8.1(q) is amended by adding the phrase "(other than if such involuntary case is converted to a voluntary case in respect of the Case and provided that the Financing Order has been entered and has not been reversed, modified, amended or stayed, unless otherwise agreed to by Lender)" immediately following the phrase "a petition for relief under the Bankruptcy Code". 15. Additional Events of Default. Section 8.1 of the Credit Agreement is hereby amended by deleting the period at the end of Section 8.1(t) and substituting a semicolon followed by the word "or" therefor and by adding the following Sections 8.1(u) and 8.1(v) as follows: "(u) Violation of Financing Order. Any violation of the Financing Order (other than as a result of a modification thereof as approved by the Bankruptcy Court, which modification, if initiated or supported by Borrower, shall have been approved by Lender) occurs during the pendency of the Case; or "(v) Case Status. The Case, if commenced, is converted to a proceeding under chapter 7 of the Bankruptcy Code, or is terminated or dismissed prior to the consummation of the transactions contemplated by the Restructuring (as defined in the Registration Statement), or confirmation of a plan of reorganization other than the proposed plan of reorganization attached to the Registration Statement." 16. Amendment to Sections 4.13, 6.18(b), 7.5(c), 7.7, 7.13(b), 7.14, 7.16, 7.17(a), 8.2, 9.1(c), 9.2, 9.5, 10.1(c), 10.1(d) and 10.2. Sections 4.13, 6.18(b), 7.5(c), 7.7, 7.13(b), 7.14, 7.16, 7.17(a), 8.2, 9.1(c), 9.2, 9.5, 10.1(c), 10.1(d) and 10.2 are hereby amended to add the phrase "(other than a Case Event of Default)" immediately after the phrase "Event of Default" and the phrase "Events of Default" in each place that each such phrase appears in such sections. 17. Amendment to Section 10.1(a). Section 10.1(a) of the Credit Agreement is amended in its entirety to read as follows: "10.1 Term. (a) This Agreement and the other Financing Agreements shall become effective as of the date hereof and shall continue in full force and effect for a term ending on the earlier to occur of (i) November 30, 1998 and (ii) the consummation of the transactions contemplated by the Restructuring (as defined in the Registration Statement), unless sooner terminated pursuant to the terms hereof." 18. Representations and Warranties. Borrower hereby represents and warrants to Lender that the representations and warranties set forth in Section 6 of the Credit Agreement are true on and as of the date hereof as if made on and as of the date hereof after giving effect to this Amendment, except to the extent any such representation or warranty expressly relates to a prior date, and breach of any of the representations and warranties made in this paragraph 18 shall constitute an Event of Default under Section 8.1(b) or 8.1(c) of the Credit Agreement, as applicable. Borrower further represents and warrants that, after giving effect to this Amendment, other than the Payment Default, no Event of Default or event which, with the lapse of time or the giving of notice or both, would become an Event of Default has occurred and is continuing. 19. Effectiveness. This Amendment shall become effective on the date (the "Effective Date") Lender shall have received each of the following: (a) The written acceptance by Borrower on terms satisfactory to Lender and delivery to Lender as of June 1, 1998 of Lender's commitment to Borrower to provide Borrower with a $140,000,000 credit facility in the form attached hereto as Exhibit A (it being agreed that such acceptance and delivery shall satisfy the condition set forth in subparagraph (ii) of Section 3 of the Twelfth Amendment). (b) An amendment to the Magten Letter Agreement (the "Magten Amendment"), in form and substance satisfactory to Lender, duly executed by the parties to the Magten Letter Agreement, pursuant to which (i) subparagraph (d) of Section 2 of the Magten Letter Agreement shall have been amended to provide that, promptly following August 31, 1998, Magten shall cause to be provided written instructions to the trustee (the "Indenture Trustee") under Section 6.05 of the New Public Secured Notes Indenture directing the Indenture Trustee to forbear during the term of the Magten Letter Agreement from taking any action in connection with the failure by Salant to make the scheduled interest payment due and payable under the New Public Secured Notes on August 31, 1998, including, without limitation, the exercise of any of the Indenture Trustee's rights under the New Public Secured Notes Indenture arising by virtue of any such failure, (ii) subparagraphs (a) and (c) of Section 4 of the Magten Letter Agreement shall have been amended by changing the date of July 31, 1998 therein to a date no earlier than November 30, 1998 and subparagraph (b) of Section 4 of the Magten Letter shall have been amended by changing the date June 15, 1998 therein to a date no earlier than July 15, 1998, and (iii) Section 4 of the Magten Letter Agreement shall have been amended to replace the proviso at the end of Section 4(g) thereof with the following: "provided, that, an Agreement Termination Event arising pursuant to this Section 4(g) shall apply only to, and shall result in the termination of Magten's obligations hereunder solely with respect to, those Senior Notes as to which Magten's engagement has been terminated or as to which such a disposal direction has been issued and further, provided, that such Agreement Termination Event shall have no effect whatsoever on any of Magten's other obligations hereunder." (c) The written consent of all Participants to the execution and delivery of this Amendment by Lender. (d) Counterparts of this Amendment, duly executed and delivered by Borrower and Lender. (e) A duly executed copy of the Consent of Guarantors substantially in the form of Exhibit B hereto. 20. Effect of this Agreement. This Amendment shall not constitute a waiver or amendment of any provision of the Credit Agreement not expressly referred to herein and shall not be construed as a consent to any further or future action on the part of Borrower that would require consent of Lender. Except as expressly amended herein, the provisions of the Credit Agreement are and shall remain in full force and effect. Nothing herein shall constitute a waiver of the Payment Default or of Additional Payment Default or limit, impair or affect any of Lender's rights and remedies with respect thereto (subject, however, to the terms of the forbearance provided for in paragraph 3 of this Amendment), all of which Borrower acknowledges and agrees have been heretofore and are hereby further expressly reserved by Lender. 21. Counterparts. This Amendment may be executed in counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. 22. Governing Law. This Amendment shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered in New York, New York by their proper and duly authorized officers as of the day and year first above written. THE CIT GROUP/COMMERCIAL SERVICES, INC. By: /s/ Charles M. Carbone ----------------------------- Title: Vice President SALANT CORPORATION By: /s/ Todd Kahn ----------------------------- Title: EVP & General Counsel EXHIBIT A FORM OF COMMITMENT LETTER EXHIBIT B CONSENT OF GUARANTORS Each of the undersigned, CLANTEXPORT, INC., DENTON MILLS, INC., FROST BROS. ENTERPRISES, INC., SLT SOURCING, INC., each a Guarantor under its respective Guarantee, each dated as of September 20, 1993, and SALANT CANADA INC. and J.J. FARMER CLOTHING INC., each a guarantor under its respective Guaranty (Unlimited Liability), each dated as of September 20, 1994 (individually, in the case of each of the foregoing Guarantors, its "Guarantee"), made in favor of The CIT Group/Commercial Services, Inc. ("Lender"), pursuant to the Credit Agreement as defined in the Thirteenth Amendment and Forbearance Agreement, dated as of June 1, 1998 between Lender and Salant Corporation (the "Amendment"), to which this Consent is attached, hereby consents to the Amendment and the matters contemplated thereby, and hereby confirms and agrees that its Guarantee is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that, on and after the effective date of the Amendment, each reference in its Guarantee to "the Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended by the Amendment. IN WITNESS WHEREOF, each of the undersigned has caused this Consent of Guarantors to be duly executed and delivered by its authorized officer this 4th day of June, 1998. CLANTEXPORT, INC. FROST BROS. ENTERPRISES, INC. By: /s/ Todd Kahn By: /s/ Todd Kahn ---------------------- ----------------------------- Title: EVP & General Counsel Title: EVP & General Counsel DENTON MILLS, INC. SLT SOURCING, INC. By: /s/ Todd Kahn By: /s/ Todd Kahn ---------------------- ----------------------------- Title: EVP & General Counsel Title: EVP & General Counsel VERA LICENSING, INC. SALANT CANADA INC. By: /s/ Todd Kahn By: /s/ Todd Kahn ---------------------- ----------------------------- Title: EVP & General Counsel Title: EVP & General Counsel J.J. FARMER CLOTHING, INC. By: /s/ Todd Kahn ---------------------- Title: EVP & General Counsel Annex I to Thirteenth Amendment and Forbearance Agreement The Financing Order shall provide, among other things, for the following: (i) the payment to Lender of all of principal, interest, fees, and other Obligations owed under the Credit Agreement at the time of commencement of the Case ("Pre-Petition Obligations"); (ii) approval of Borrower's application to borrow from Lender on the same terms and conditions set forth in the Credit Agreement; (iii) the grant of first priority liens (subject to permitted liens under the Credit Agreement) to Lender on the Collateral and on all assets and properties of Borrower, as debtor and debtor-in-possession, acquired or arising during the pendency of the Case, as security for all Pre-Petition Obligations and all Obligations to Lender arising during the pendency of the Case, and the enforceability and automatic perfection of such liens; (iv) appropriate findings to ensure that the benefits and protections of Section 364(e) of the Bankruptcy Code would be available to Lender if an appeal of the Order is taken; and (v) the provision of a super-priority administrative claim to Lender pursuant to Section 364(c)(1) in the amount of any post-petition advances. EX-10.54 4 EXHIBIT 10.54 June 1, 1998 Salant Corporation 1114 Avenue of the Americas New York, New York 10036 ATTN: Mr. Gerald S. Politzer Chairman of the Board and Chief Executive Officer Gentlemen: In connection with the proposed conversion to equity of your 10 1/2% Senior Secured Notes due December 31, 1998 (the "Senior Notes") and the restructuring of Salant Corporation (the "Company") attendant thereto (the "Restructuring"), you have requested us to increase the amount of your current secured credit facility with us (the "Current Facility") and to make certain other modifications thereto. Based upon the information you have furnished to us, The CIT Group/Commercial Services, Inc. ("CIT") is pleased to confirm its commitment to provide the Company with a secured credit facility of up to $140,000,000 (the "Credit Facility") to replace in its entirety the Current Facility, subject to the terms and conditions set forth below. We contemplate that the Credit Facility will be structured as follows: 1. REVOLVING CREDIT FACILITY (a) Amount: A revolving line of credit for loans and letters of credit in a maximum principal amount equal to the lesser of (i) $125,000,000 (the "Maximum Revolving Credit") and (ii) the sum of (A) eighty-five percent (85%) of the net amount of eligible accounts and (B) the lesser of (x) sixty percent (60%) of the value (at the lower of cost or market determined on a first-in-first-out basis) of eligible inventory, provided, that for each period from May 1 through August 31 during the term of the Credit Facility, such advance rate shall be sixty-five (65%) percent of the value of eligible inventory, and (y) $[to be determined]. Standards of eligibility for accounts and inventory shall be the same as provided for in the Current Facility, except as may be modified by agreement between the Company and CIT. CIT's ability to reserve against loan availability under the lending formulas set forth above shall be the same as provided in the Current Facility, except as may be modified by agreement between the Company and CIT. (b) Seasonal Overadvances: Subject to the Company's cash flow needs, CIT may in its sole discretion make loans to the Company in excess of the lending formulas set forth above not to exceed the Maximum Revolving Credit and repayable on demand. (c) Letter of Credit Subfacility: (i) Amount: Within the Revolving Credit Facility, letters of credit ("L/Cs") arranged through CIT up to an aggregate undrawn amount at any time outstanding of $55,000,000. (ii) L/C Reserve Against Availability: A reserve against the line of credit under the Revolving Credit Facility will be required to the extent of (A) one hundred percent (100%) of the undrawn amount of outstanding letters of credit opened for the purpose of acquiring eligible inventory minus (B) the percentage equal to the then current percentage rate of advance against eligible inventory. Standby letters of credit opened by CIT will require a reserve against the line of credit under the Revolving Credit Facility of one hundred percent (100%) of the undrawn amount of such letters of credit. (iii) Handling of Documents Under Letters of Credit: The Company will not be required to consign to CIT any of the documents relating to inventory purchased under letters of credit arranged through CIT under the Credit Facility ("L/C Documents"), provided, however, that upon the occurrence and during the continuance of (i) an event of default under the Credit Facility or (ii) any act, event or condition which with notice or passage of time or both would constitute an event of default, then, and in any such event, without notice in the case of an Event of Default and upon written notice from CIT in any other case, all L/C documents shall be consigned to CIT. (d) No Factoring: The Credit Facility will not provide for any factoring of accounts through CIT or otherwise. 2. TERM LOAN (a) Amount: The Credit Facility shall include a term loan (the "Term Loan") in the amount of $15,000,000. (b) Amortization: The Term Loan shall be repaid based upon a five (5) year amortization schedule in consecutive monthly installments commencing on the first day of the month immediately following the date six (6) months after the closing and continuing on the first day of each month thereafter with the final installment in the amount of the then remaining balance of the Term Loan, together with all unpaid and accrued interest thereon, due and payable on December 31, 2001. (c) Cross-Collateralization, Cross-Default and Cross-Termination with Revolving Credit Facility: The Revolving Credit Facility and the Term Loan shall be cross-collateralized, cross-defaulted and cross-terminated. 3. INTEREST RATES (a) Revolving Credit Facility: (i) Reference Rate + .25% or (ii) LIBOR + 2.25% (b) Term Loan: (i) Reference Rate + .25% or (ii) LIBOR + 2.25% The Reference Rate is the rate of interest publicly announced by The Chase Manhattan Bank, New York, New York from time to time as its prime rate. Such prime rate is not intended by Chase to be the lowest rate of interest charged by Chase to its commercial borrowers. LIBOR will be available for 1, 2 or 3 months periods and will be based upon CIT's customary terms and procedures applicable to interest on loans payable by reference to LIBOR. All interest rates are per annum. All interest shall be payable monthly in arrears calculated on the basis of a 360-day year. Collections shall be credited to the loan account of the Company upon our receipt of a wire transfer of federal funds into our payment account designated for such purpose. 4. FEES All fees set forth below are in addition to interest and other charges provided for herein and may, at our option, be charged directly to any loan account of the Company maintained with us: (a) Facility Fee: We shall receive a facility fee of $1,050,000 for providing the Credit Facility outlined herein, provided, however, that the aggregate amount of the "Allocated Replacement Facility Fee" paid by the Company to CIT pursuant to, and as defined in, the Twelfth Amendment (the "Twelfth Amendment") to the Revolving Credit, Factoring and Security Agreement between CIT and the Company, dated as of September 20, 1993, as amended, shall be credited to the payment of such facility fee. As of the date of this Letter, CIT has received the aggregate amount of $700,000 of the Allocated Replacement Facility Fee, with the final installment of the Allocated Replacement Facility Fee in the amount of $350,000 being due on June 1, 1998 pursuant to the Twelfth Amendment. (b) Administrative Fee: We shall receive an administrative fee of $100,000 payable on each of the first and second anniversary dates of the closing date for administering the Credit Facility for the Company and for each of the lenders who purchase a portion of, or a participation in, the Credit Facility. (c) Collateral Management Fee: We shall receive a collateral management fee of $8,333.33 for each month or part thereof during the term of the Credit Facility for monitoring the collateral, payable monthly in advance with the first such fee payable at closing. (d) Unused Line Fee: We shall receive an unused line fee of .25% per annum on the average monthly unused portion of the Revolving Credit Facility, payable monthly in arrears. (e) Letter of Credit and Related Fees: We shall receive letter of credit and related fees as set forth on Schedule 3.2(e) to the Revolving Credit, Factoring and Security Agreement between CIT and the Company dated as of September 20, 1993, as amended, provided, that with respect to standby letters of credit the daily outstanding balance charge shall be 1% per annum rather than 2% per annum. 5. GUARANTEES All obligations of the Company to CIT under the Credit Facility shall be guaranteed by each of the Company's subsidiaries. 6. COLLATERAL First and only security interests in and liens upon all present and future assets of the Company and each of its subsidiaries, including, without limitation, all accounts, contract rights, general intangibles (including, without limitation, all trademarks, patents, licenses of trademarks or patents, other intellectual property, tax refunds and choses in action), chattel paper, documents, instruments, stock in subsidiaries, inventory, machinery, equipment, fixtures and real property, and all products and proceeds of the foregoing. 7. USE OF PROCEEDS All of the loans and other credit accommodations provided to the Company under the Credit Facility shall be used exclusively for the working capital of the Company provided, that, the proceeds of the initial loans provided by us under the Credit Facility shall be used for the costs, expenses and fees incurred in connection with the Credit Facility and the transactions contemplated in connection therewith. 8. CONTRACT TERM The Credit Facility shall have an initial term commencing on the closing date and continuing through and including December 31, 2001 (the "Renewal Date") and shall be automatically renewed from year to year thereafter unless terminated by either party upon at least sixty (60) days written notice prior to the Renewal Date or any anniversary of the Renewal Date. 9. EXPENSES (a) The Company agrees to pay all reasonable legal and closing costs and expenses, including attorneys' fees, appraisers' fees, filing fees, search charges, recording taxes and field examination charges and expenses (including a charge of $750 per person per day of CIT's examiners in the field and in the office, plus travel, hotel and all other out-of-pocket expenses), in each case whether or not this transaction closes. All such expenses shall be paid to us on demand and may be charged to the loan account of the Company under the Current Facility. We shall have the right to offset such expenses against any fees or sums received from or on behalf of the Company. (b) If this transactions closes, the Company further agrees to pay all of our out-of-pocket expenses and customary administrative charges incurred from time to time during the course of our financing arrangements. (c) This paragraph 9 shall survive the expiration or termination of this letter. 10. OTHER INFORMATION AND CONDITIONS Compliance with all terms and requirements of this letter are conditions precedent to the making of loans and providing other credit accommodations under the Credit Facility. In addition, the extension of the Credit Facility is subject to the satisfaction, in a manner satisfactory to CIT, of the following additional terms and conditions: (a) CIT shall have received at or prior to closing (i) the Company's pro-forma opening balance sheet as of the date of closing, reflecting consummation of the Restructuring and the transactions contemplated thereby, prepared by Deloitte & Touche LLP or another accounting firm acceptable to CIT (the "Company's Accountants") evidencing a capital structure (including the equity interest in the Company of the Company's management) satisfactory to CIT, (ii) an analysis prepared by the Company's Accountants of the tax consequences to the Company of the Restructuring which analysis and consequences shall be satisfactory to CIT and (iii) an explanation reasonably satisfactory to CIT of the Company's 1998 projected Restructuring charges. (b) CIT shall have received current appraisals of the Company's machinery and equipment and the Company's trademarks satisfactory to CIT by appraisers acceptable to CIT using methodology satisfactory to CIT. (c) The Company shall continue to furnish, or cause to be furnished, to us all financial information, projections, budgets, business plans, cash flows and such other information as we shall reasonably request from time to time. We shall have received current perpetual inventory records and/or roll forwards of inventory through the date of closing, together with supporting documentation and other documents and information that will enable us to accurately identify and verify the eligible collateral at or immediately prior to closing in a manner satisfactory to us and including documentation with respect to inventory in transit, goods in bonded warehouses or at other third party locations. (d) Satisfactory legal review of the terms of the Credit Facility and its structure by our counsel, execution of loan documents, delivery of opinions of counsel and other agreements, documents and instruments as may be necessary or desirable to effectuate the financing arrangements described herein as may be determined by us and our counsel. (i) Such loan documents will include, among other documents, an Amended and Restated Credit and Security Agreement between the Company and CIT, or, at CIT's option, between the Company and CIT, as agent, for itself and any other lenders party thereto, the guarantee of the obligations of the Company under the Credit Facility by each of the Company's subsidiaries, security agreements, UCC financing statements and mortgage modification agreements. The opinions of counsel will include, among other things, the opinion that the financing arrangements described herein do not violate any of the terms of existing agreements of the Company or any of its subsidiaries with any other party, that the financing agreements create valid and enforceable security interest in all of the property of the Company and each of its subsidiaries, that the financing agreements are valid, enforceable and binding and that the Company and each of its subsidiaries have been duly incorporated and are in good standing under the laws of their respective states or jurisdictions of incorporation and each state or jurisdiction where the Company and each of its subsidiaries transact business, and such other matters as we may reasonably request. (ii) Such loan documents will contain such provisions, representations, warranties, covenants, conditions precedent, events of default and remedies, all as customarily required by CIT for transactions of this type and as may be deemed appropriate in view of the nature of the business of the Company, including, among other things: financial covenants ("Maintenance Covenants") as to minimum tangible net worth, maximum net loss, minimum interest coverage ratio and maximum capital expenditures; prohibitions or limitations on the payment of management fees or other fees or payments due to affiliates; prohibitions or limitations on loans, investments and guarantees in, to or in favor of affiliates and any third parties; prohibitions or limitations on the payments of dividends and redemptions and other upstreaming or cross-streaming of funds; limitations on indebtedness and liens; cross-defaults based on defaults under any material indebtedness to others or under material leases, material licenses or other material agreements, or for generally not paying obligations to others. Other than the Maintenance Covenants referred to above, the Credit Facility shall have no other Maintenance Covenants. (e) At or prior to closing, we shall have received evidence that the transactions contemplated under the Restructuring have been consummated either by means of (i) the Exchange Restructuring (as defined in Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 of the Company filed with the Securities and Exchange Commission on May 26, 1998 (the "Registration Statement")), including, without limitation, the following documents and information, in form and substance reasonably satisfactory to us, relating to the Restructuring: (A) all documents executed between Salant and the holders of the Senior Notes (the "Senior Note Holders") evidencing that all of the Senior Notes have been satisfied in full in connection with the exchange thereof for shares of capital stock of the Company (the "Exchange"), (B) evidence reasonably satisfactory to CIT that the current owners of the Company's issued and outstanding shares of common stock (the "Existing Stockholders") have approved at a special stockholders meeting a reverse split of the common stock held by the Existing Stockholders pursuant to which, and after giving effect thereto, the Senior Note Holders and the Existing Stockholders will own, respectively, 92.5% and 7.5% of the issued and outstanding shares of the Company's common stock, and (C) a certified copy of an amendment to, or amendment and restatement of, the Company's existing Certificate of Incorporation filed with the Delaware Secretary of State, as required by the Restructuring; or (ii) the consummation of the plan of reorganization attached to the Registration Statement. (f) Termination of the liens and security interests held by the Senior Note Holders and the delivery to us of UCC-3 termination statements and such other release documents as we may request, in form and substance reasonably satisfactory to us. (g) The excess availability under the lending formulas provided for above, and within all applicable sublimits and after deducting all applicable reserves, in each case as reasonably determined by us after the application of the proceeds of the initial loans and after provision for payment of all fees and expenses of the transaction, and provided that accounts payable and other indebtedness of the Company are then at a level and in a condition reasonably acceptable to us, shall not be less than $5,000,000 at closing. (h) We shall have received, in form and substance reasonably satisfactory to us, all consents, waivers, acknowledgments and other agreements from third persons which we may deem necessary in order to permit, protect and perfect our security interests in and liens upon the collateral, including, without limitation, (i) waivers by lessors, owners and/or mortgagees of any security interests, liens or other claims by such persons in and to assets of the Company and each of its subsidiaries, and agreements by such persons permitting us access to the premises to exercise our rights and remedies and otherwise deal with the assets of the Company and its subsidiaries and (ii) acknowledgments by processors, consignees and warehousemen at any time in possession of any of assets of the Company or its subsidiaries of our security interests and liens, waivers by such persons of any security interests, liens or other claims by such persons in and to assets of the Company and its subsidiaries, and agreements by such persons to follow our directions with respect to the release and delivery of any assets of the Company and its subsidiaries at any time in their possession and (iii) agreements from licensors of trademarks and other intellectual property to the Company or its subsidiaries, including, but not limited to, Perry Ellis International, Inc., permitting us to use the marks, logos or other intellectual property licensed by such parties to the Company or its subsidiaries to exercise our rights and remedies and otherwise deal with the assets of the Company and its subsidiaries. (i) We shall have received, in form and substance reasonably satisfactory to us, guarantees, duly authorized, executed and delivered by each of Clantexport, Inc., Denton Mills, Inc., Vera Licensing, Inc., Frost Bros. Enterprises, Inc., SLT Sourcing, Inc., Salant Canada Inc., J.J. Farmer Clothing, Inc. and any other subsidiaries of the Company in our favor absolutely and unconditionally guaranteeing all present and future obligations of the Company to us under the Credit Facility, as well as such security agreements and UCC financing statements as may be necessary or desirable to effectuate the grant by such companies in our favor of first and only security interests in and liens upon all of their respective present and future assets. (j) We shall have received, at the expense of the Company, current environmental audits of its plants and real estate conducted by an independent environmental engineering firm reasonably acceptable to us, and in form, scope and methodology satisfactory to us, confirming that (i) the Company is in compliance with all significant applicable environmental use laws, regulations, codes and ordinances in all material respects and (ii) there is no material potential or actual liability of the Company for any remedial action with respect to any environmental condition or any other significant environmental problems. (k) We shall have received, in form and substance reasonably satisfactory to us, evidence of insurance coverage, including (i) mortgagee's and lender's loss payee endorsements in our favor as to casualty and business interruption insurance and containing all endorsements, assurances or affirmative coverage requested by us for protection of our interests and (ii) mortgagee's title insurance by a company and agent acceptable to us (A) insuring the priority, amount and sufficiency of the mortgage, deed of trust or deed to secure debt in our favor on each parcel of real estate included in the collateral, (B) insuring against matters that would be disclosed by surveys and (C) containing those endorsements, assurances or affirmative coverage requested by us for protection of our interests. (l) CIT may from time to time, in its sole discretion, assign, or sell participations in, the Credit Facility or any portion thereof to another lender or lenders. (m) The Company shall have established a blocked account or lockbox for its collections and the transfer thereof to us, which shall be in form and substance reasonably acceptable to us. (n) All Uniform Commercial Code financing statements relating to the collateral shall have been duly filed and recorded and we shall have received UCC search results from the various jurisdictions showing the financing statements in our favor filed of record prior to the closing. (o) No material adverse change in the business, operations or prospects of the Company or in the condition of the assets of the Company shall have occurred since the date of our latest field examination, other than a payment default in respect of the scheduled interest payment due under the Senior Notes on August 31, 1998 or the filing of a Chapter 11 case in order to effectuate the transactions contemplated by the plan of reorganization attached to the Registration Statement. We may conduct additional or update field examinations, at your expense, prior to extending the Credit Facility, the results of which must be reasonably satisfactory to us. Without limiting the generality of the foregoing, (i) except for the Payment Default (as defined in the Twelfth Amendment), a payment default in respect of the scheduled interest payment due under the Senior Notes on August 31, 1998 and the filing of a Chapter 11 case in order to effectuate the Restructuring, no act, condition or event which would constitute an Event of Default under the Current Facility or the financing agreements to be executed between us shall exist as of the closing, (ii) no material investigation, litigation, bankruptcy or other proceedings shall be pending or threatened against the Company or any affiliate as of the closing, and (iii) the collateral shall not have materially declined in value from the values set forth in any of the appraisals or field examinations previously done. (p) This transaction and the events contemplated herein must close by November 30, 1998. After November 30, 1998 our willingness to proceed shall require credit reapproval by CIT's Executive Credit Committee even if we continue to work on the transaction. Such reapproval, if obtained, may result in different terms and conditions, or a determination not to consummate the transaction. This letter contains CIT's entire commitment for this transaction and, upon acceptance by the Company, supersedes all prior proposals, term sheets, negotiations, discussions and correspondence. This commitment may not be contradicted by evidence of any alleged oral agreement. All prior proposals, term sheets, negotiations, discussions and correspondence are merged in the governing terms of this commitment, which may be amended only in writing executed by the parties hereto. No condition of this commitment may be waived, except in writing signed by CIT. This letter shall be of no force and effect unless accepted by you and as so accepted, received by us by the close of business on June 4, 1998. This letter and the substance of the Credit Facility shall not be disclosed by you to any third party other than attorneys, accountants and financial advisors who are in a confidential relationship with you and require knowledge thereof to perform their duties in connection herewith or unless disclosure is required by law, other than in an amendment to the Registration Statement, in a Form 8-K, in a press release, or in connection with the Solicitation (as defined in the Registration Statement). This commitment is not intended for the benefit of, and may not be relied upon by, any third party. This agreement shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties hereto waives trial by jury in connection with any action or proceed relating to this agreement. We welcome the opportunity to be of continuing service to you again and we look forward to working with you in closing this transaction. Very truly yours, THE CIT GROUP/COMMERCIAL SERVICES, INC. By: /s/ Charles M. Carbone -------------------------------- Title: Vice President ----------------------------- ACCEPTED AS OF THIS 1st DAY OF JUNE, 1998: SALANT CORPORATION By: /s/ Todd Kahn ----------------------- Title: EVP & General Counsel EX-10.55 5 Salant Corporation 1114 Avenue of the Americas New York, New York 10036 (212) 221-7500 June 1, 1998 Magten Asset Management Corp. 35 East 21st Street New York, New York 10010 Attention: Mr. Talton R. Embry Apollo Apparel Partners, L.P. c/o Apollo Management, L.P. 1301 Avenue of the Americas, 38th Floor New York, New York 10019 Attention: Mr. Robert Katz Mr. Edward Yorke Re: Salant Corporation ("Salant") ---------------------------------- Gentlemen: Reference is made to that certain letter agreement, dated March 2, 1998, by and among Magten Asset Management Corp., as agent on behalf of certain of its accounts ("Magten"), Apollo Apparel Partners, L. P. ("Apollo") and Salant (the "Letter Agreement"). Initially capitalized terms not otherwise defined herein shall have their respective meanings as set forth in the Letter Agreement. Salant, Magten and Apollo hereby agree to amend the Letter Agreement as follows: 1. Amendment to Section 2(d). Section 2(d) of the Letter Agreement is hereby amended by adding "(i)" immediately prior to the phrase "promptly following" in the third line thereof and adding the following language immediately prior to the proviso contained in such section: ", and (ii) promptly following August 31, 1998, directing the Indenture Trustee to forbear during the term of this Letter Agreement from taking any action in connection with the failure by Salant to make the interest payment on the Senior Notes that is payable on August 31, 1998, including, without limitation, the exercise of any of the Indenture Trustee's rights under the Senior Note Indenture arising by virtue of such failure." 2. Amendment of Section 4. Section 4 of the Letter Agreement is hereby amended by adding the phrase "(subject to the proviso in Section 4(g) hereof)" immediately following the phrase "Magten's obligations hereunder shall" in the first line thereof. 3. Amendment of Sections 4(a), 4(b) and 4(c). Sections 4(a), 4(b) and 4(c) of the Letter Agreement are hereby amended in their entirety to read as follows: "(a) Salant shall not have obtained the requisite shareholder consent at the Special Meeting (as such term is defined in the Term Sheet) on or before November 30, 1998; (b) the Exchange Offer shall not have commenced on or before July 15, 1998; (c) the Effective Date (as such term is defined in the Term Sheet) shall not have occurred on or before November 30, 1998;" 4. Amendment of Section 4(g). Section 4(g) of the Letter Agreement is hereby amended by replacing the proviso at the end of such section in its entirety with the following language: "provided, that, an Agreement Termination Event arising pursuant to this Section 4(g) shall apply only to, and shall result in the termination of Magten's obligations hereunder solely with respect to, those Senior Notes as to which Magten's engagement has been terminated or as to which such a disposal direction has been issued, and further, provided, that such Agreement Termination Event shall have no effect whatsoever on any of Magten's other obligations hereunder." Except as hereinabove amended, the Letter Agreement remains in full force and effect in accordance with its terms. Please indicate your agreement to the foregoing by executing a copy of this letter where indicated below and returning it to us. Very truly yours, SALANT CORPORATION By: /s/ Todd Kahn ---------------------------- Name: Todd Kahn Title: EVP & General Counsel Accepted and Agreed as of the date first written above MAGTEN ASSET MANAGEMENT CORP., as agent on behalf of certain of its accounts By: /s/ Talton R. Embry --------------------------------- Name: Talton R. Embry Title: Chairman APOLLO APPAREL PARTNERS, L.P. By: AIF II, L.P., its General Partner By: /s/ Edward Yorke --------------------------------- Name: Edward Yorke Title: -----END PRIVACY-ENHANCED MESSAGE-----