Exhibit 10.55
FIRST AMENDMENT TO GUARANTY
FIRST AMENDMENT TO GUARANTY entered into as of August 25, 1995, between BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with an ▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessor"), and FARAH
INCORPORATED, VALUE SLACKS, INC. and FARAH INTERNATIONAL, INC. (collectively
referred to as "Guarantors"), with their principal offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, with reference to the following:
A. Lessor and FARAH U.S.A., INC. ("Lessee") have entered into a Lease
Intended as Security dated as of December 8, 1994 (the "Lease"); and
▇. ▇▇▇▇▇ Incorporated, Value Slacks, Inc. and Farah International, Inc.
have executed that certain Guaranty dated as of December 8, 1994 ("the
Guaranty") guarantying Lessee's obligations under the Lease; and
▇. ▇▇▇▇▇▇ and Lessee have agreed to enter into a FIRST AMENDMENT TO LEASE
dated as of August 25, 1995, to which Guarantors consent; and
D. Insofar as any consent is required of Lessee to this FIRST AMENDMENT TO
GUARANTY, Lessee provides its consent; and
▇. ▇▇▇▇▇▇ and Guarantors now desire to amend the Guaranty as hereinafter
set forth. NOW, THEREFORE, the parties hereto agree as follows:
MAXIMUM SENIOR DEBT TO CASH FLOW COVENANT:
Lessor agrees to waive application of the Senior Debt to Cash Flow
covenant contained in subparagraph (4) on page 3 of the Guaranty through the
Fourth Quarter of Fiscal 1996. Thereafter, Guarantor Farah Incorporated must be
in compliance with the covenant (maximum ratio of 5:1) starting with the first
Quarter end of fiscal 1997.
MINIMUM EARNINGS
BEFORE INTEREST AND TAXES (EBIT) COVENANT:
The Fixed Charge Covenant contained in subparagraph (5) on page 3 of
the Guaranty is deleted. Lessor and Guarantors agree to substitute an EBIT
Covenant applicable to Guarantor, Farah Incorporated, in the following amounts
during the specified periods:
- No EBIT requirement for the Third and Fourth Quarters of Fiscal 1995.
- $200,000.00 for the First Quarter of 1996.
- $1,100,000.00 for the Second Quarter of 1996.
- $1,900,000.00 for the Third Quarter of 1996.
- $2,000,000.00 for the Fourth Quarter of 1996.
Thereafter, Lessor and Guarantor Farah Incorporated agree to negotiate
the EBIT requirements for subsequent fiscal years after review by Lessor of
Farah Incorporated's most current financial projections.
BALANCE SHEET CASH PLUS
LINE OF CREDIT AVAILABILITY:
Guarantor, Farah Incorporated, agrees to maintain, so long as this
Guaranty and the Lease remain in effect, $2,500,000.00 of available cash either
on its balance sheet or under its line of credit with Congress Financial and to
report compliance with this covenant on the quarterly covenant calculation
certificate provided to Lessor.
NO SECOND LIENS:
Congress Financial holds a first lien on the inventory of Guarantor
Farah Incorporated's consolidated subsidiaries. Guarantor, Farah Incorporated,
agrees on behalf of itself and its consolidated subsidiaries not to grant second
liens on the inventory of any of the consolidated subsidiaries. Nothing in this
paragraph shall prohibit Farah Incorporated or any of its consolidated
subsidiaries from granting a first lien on their respective inventories.
GENERAL PROVISIONS
GOVERNING LAW:
This FIRST AMENDMENT TO GUARANTY shall be governed by and construed
under the laws of California. The parties submit to the jurisdiction of the
appropriate state or federal court in California as to any dispute arising out
of or related to either the FIRST AMENDMENT TO GUARANTY or the Guaranty.
SEVERABILITY:
Each provision of this FIRST AMENDMENT TO GUARANTY and the Guaranty
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. Nevertheless, should any provision be
prohibited by or invalid under any such law or regulation in any jurisdiction,
such provision shall be deemed modified to conform to the minimum requirements
of such law or regulation. If such provision cannot be modified to conform to
the requirements of the law or regulation, such provision shall be ineffective
and invalid only to the extent of the prohibition or invalidity without
affecting the remaining provisions of the FIRST AMENDMENT TO GUARANTY.
Furthermore, the prohibition or invalidity of a provision in one jurisdiction
shall not affect the provision's validity or effectiveness in any other
jurisdiction.
INTERPRETATION:
This FIRST AMENDMENT TO GUARANTY is the result of negotiations between
Lessor and Guarantors, and has either been reviewed by each party's counsel or
such party has knowingly and voluntarily chosen not to have its counsel review
the terms. Lessor and Guarantors therefore agree that this FIRST AMENDMENT TO
GUARANTY shall not be construed against either merely because of the involvement
of either party's representatives or counsel in the negotiation, drafting or
revision of the terms contained herein.
HEADINGS:
The headings to the FIRST AMENDMENT TO GUARANTY are for convenience
only. The headings do not define, limit or describe the scope or intent of the
provisions.
FURTHER AMENDMENTS:
Any further amendments or modifications to either this FIRST
AMENDMENT TO GUARANTY, the Guaranty or any related agreements may only be
accomplished by a writing signed by the party or parties to whom the amendment
applies.
RIGHTS AND OBLIGATIONS:
The rights and obligations contained in this FIRST AMENDMENT TO
GUARANTY inure to the benefit of and bind Lessor, Guarantors, their respective
representatives, officers, directors, affiliated entities,
successors-in-interest and assigns. Lessor and Guarantors do not intend to
confer any rights or impose any obligations on persons not specifically
mentioned in this FIRST AMENDMENT TO GUARANTY.
ENTIRE AGREEMENT AS TO AMENDED TERMS:
The FIRST AMENDMENT TO GUARANTY contains the full and complete
agreement of Lessor and Guarantors as to the subjects covered by it. The FIRST
AMENDMENT TO GUARANTY supersedes all prior discussions, understandings,
agreements or proposals regarding the subjects covered by it, regardless whether
written or oral. Neither Lessor nor Guarantors have made any representation,
promise, inducement or statement of intention which is not contained in the
FIRST AMENDMENT TO GUARANTY. Neither Lessor nor Guarantors shall be bound or
liable for any alleged misrepresentation, promise, inducement or statement of
intention not contained in the FIRST AMENDMENT TO GUARANTY, the Guaranty and
related agreements.
ATTORNEY'S FEES AND COSTS:
The prevailing party in any proceeding to construe or enforce the FIRST
AMENDMENT TO GUARANTY shall recover its reasonable attorney's fees, costs and
expenses, including fees, costs and expenses of internal counsel.
APPLICABILITY OF UNAFFECTED TERMS OF GUARANTY AND RELATED AGREEMENTS:
Except as is herein specifically amended, all of the terms, covenants, and
provisions of the Guaranty and related agreements remain in full force and
effect, and the provisions of the Guaranty, where appropriate, are applicable to
this FIRST AMENDMENT TO GUARANTY.
IN WITNESS WHEREOF, the parties hereto have executed this FIRST
AMENDMENT TO GUARANTY as of the day and year written above.
FARAH INCORPORATED BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer Title: Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
CONSENTED TO BY:
FARAH INTERNATIONAL, INC. VALUE SLACKS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer Title: Treasurer
FARAH U.S.A., INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
