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 XXXXXX 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 Xxxxxx 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/ Xxxxxxx X. Xxxxxxx
-----------------------------
Title: Vice President
XXXXXX CORPORATION
By: /s/ Xxxx Xxxx
-----------------------------
Title: EVP & General Counsel
EXHIBIT A
FORM OF COMMITMENT LETTER
EXHIBIT B
CONSENT OF GUARANTORS
Each of the undersigned, CLANTEXPORT, INC., XXXXXX XXXXX, INC.,
FROST BROS. ENTERPRISES, INC., SLT SOURCING, INC., each a Guarantor under
its respective Guarantee, each dated as of September 20, 1993, and XXXXXX
CANADA INC. and X.X. XXXXXX 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 Xxxxxx 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/ Xxxx Xxxx By: /s/ Xxxx Xxxx
---------------------- -----------------------------
Title: EVP & General Counsel Title: EVP & General Counsel
XXXXXX XXXXX, INC. SLT SOURCING, INC.
By: /s/ Xxxx Xxxx By: /s/ Xxxx Xxxx
---------------------- -----------------------------
Title: EVP & General Counsel Title: EVP & General Counsel
XXXX LICENSING, INC. XXXXXX CANADA INC.
By: /s/ Xxxx Xxxx By: /s/ Xxxx Xxxx
---------------------- -----------------------------
Title: EVP & General Counsel Title: EVP & General Counsel
X.X. XXXXXX CLOTHING, INC.
By: /s/ Xxxx Xxxx
----------------------
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.
