Exhibit 10.1

 

[salus.jpg] 

 

May 2, 2016

 

VIA ELECTRONIC MAIL

AND FACSIMILE

 

Hampshire Group, Limited

114 West 41st Street

New York, NY 10036

 

Re:     Further Temporary Extension of Forbearance Termination Date

 

Ladies and Gentlemen:

 

Reference is made to (i) that certain Credit Agreement, dated as of September
26, 2013 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among Hampshire Group,
Limited, a Delaware corporation, Hampshire Brands, Inc., a Delaware corporation,
Hampshire International, LLC, a Delaware limited liability company and Scott
James, LLC, a Delaware limited liability company (collectively, the
“Borrowers”), Salus CLO 2012-1, LTD. (“Salus CLO”) and Salus Capital Partners,
LLC (collectively, the “Lenders”) and Salus Capital Partners, LLC, as
Administrative Agent and Collateral Agent for the Lenders (in such capacity, the
“Agent”), (ii) that certain Forbearance Agreement and Fifth Amendment to Credit
Agreement, dated as of November 20, 2015 (the “Forbearance Agreement”), by and
among the Borrowers, Lenders and Agent, (iii) that certain letter agreement,
dated as of March 7, 2016 (the “March 7 Letter Agreement”), by and among the
Borrowers, Lender and Agent, (iv) that certain letter agreement, dated as of
April 4, 2016 (the “April 4 Letter Agreement”) by and among the Borrowers,
Lender and Agent, and (iv) that certain letter agreement, dated as of April 18,
2016 (the “April 18 Letter Agreement”, together with the March 7 Letter
Agreement and the April 4 Letter Agreement, collectively, the “Letter
Agreements”), by and among the Borrowers, Lenders and Agent. Capitalized terms
used herein without definition shall have the meanings ascribed to such terms in
the Credit Agreement, the Forbearance Agreement or the Letter Agreements, as
applicable.

 

As detailed in the Letter Agreements, (i) the Borrowers are attempting to close
the New Credit Facilities, and upon such closing the proceeds and fundings
thereunder will be used to pay off in full the Obligations under the Credit
Agreement, and (ii) in order to afford time to finalize the definitive loan
documentation under the New Credit Facilities, the Agent and Lenders have agreed
pursuant to the Letter Agreements to extend the Forbearance Termination Date
under the Forbearance Agreement and the Maturity Date under the Credit Agreement
from February 29, 2016 until May 2, 2016.

 

 
 

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As of the date hereof, the Borrowers have been unable to close the New Credit
Facilities and are requesting a further temporary extension of the Forbearance
Termination Date under the Forbearance Agreement and the Maturity Date under the
Credit Agreement.

 

The Agent and Lenders hereby agree to extend each of the Forbearance Termination
Date under the Forbearance Agreement and the Maturity Date under the Credit
Agreement from May 2, 2016 until June 3, 2016; provided, however, if the Agent
and Lenders are notified by any of the Borrowers, Accord Capital or any other
prospective lender for the Senior Credit Facility or the providers of junior
capital under the Subordinated Credit Facility that the Senior Credit Facility
and/or Subordinated Credit Facility will not be completed by such lenders as
currently contemplated then, in Agent’s sole discretion, the Forbearance
Termination Date and Maturity Date shall automatically occur as of the date of
such notification. The Borrowers hereby agree to notify Agent immediately (i) if
any of the prospective lenders under the Senior Credit Facility or Subordinated
Credit Facility notify the Borrowers that they do not intend to consummate the
financings under the Senior Credit Facility or Subordinated Credit Facility, or
require any closing conditions not customary for transactions of this type, or
(ii) if the management of the Borrowers determine that it is unlikely that the
Senior Credit Facility or Subordinated Credit Facility will close and fund by
June 3, 2016.

 

Borrowers hereby acknowledge, confirm and agree that (a) the aggregate
outstanding principal amount of the Obligations as of May 2, 2016 is
$12,848,226.88, (b) such amounts, together with all interest accrued and
accruing thereon, and all fees, costs, expenses and other charges now or
hereafter payable by Borrowers to Agent and Lenders under the Loan Documents,
are unconditionally owing by the Borrowers to Agent and Lenders without offset,
defense or counterclaim of any kind, nature or description whatsoever, (c) their
obligation and liability for the payment and performance of the Obligations
pursuant to the Loan Documents is unconditionally owing to Agent and Lenders
without offset, defense or counterclaim of any kind, nature or description
whatsoever, and (d) the amount set forth in the preceding clause (a) includes
the accommodation fees paid in connection with the Letter Agreements, which fees
have been fully earned pursuant to the terms of the Letter Agreements, and are
not subject to refund or reduction in whole or in part.

 

In consideration of the agreement of the Agent and Lenders to further extend the
Maturity Date and Forbearance Termination Date hereunder and in recognition that
the New Credit Facilities may not close by June 3, 2016, or may not close at
all, the Borrowers hereby agree to the following additional terms and
conditions:

 

(i)     The Borrowers acknowledge that the Agent has or will engage 360 Merchant
Solutions, LLC (the “Consultant”) to analyze and provide a valuation of the
Borrowers’ various assets. The Borrowers shall, and shall cause their management
and other personnel to cooperate with the Consultant and afford the Consultant
access to all relevant financial and other information relative to the
Borrower’s assets and businesses. All fees and expenses of the Consultant
incurred by the Agent shall constitute Credit Party Expenses under the Credit
Agreement and shall be paid or reimbursed to Agent by Borrowers pursuant to the
terms of the Credit Agreement.

 

 
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(ii)     On the earlier of (a) May 30, 2016 or (b) the date that any prospective
lender for the Senior Credit Facility informs the Borrowers that such lender
does not intend to consummate the financings under the Senior Credit Facility,
the Borrowers hereby agree, at the Agent’s request, to engage a chief
restructuring officer (a “CRO”). The Agent shall recommend three candidates to
be the CRO (with one of which being GRL Capital Advisors) and Borrowers shall
choose one of such candidates. The terms, conditions and scope of the CRO’s
engagement shall be satisfactory to the Agent in all respects.

 

(iii)     The Borrowers shall deliver to Agent certified copies of resolutions
of the boards of directors or managers of each of the Borrowers or unanimous
written consent of the directors or managers of each of the Borrowers evidencing
the approval of the foregoing.

 

Except as expressly amended hereby, all terms and conditions of the Letter
Agreements, the Forbearance Agreement and Credit Agreement, and any and all
exhibits annexed thereto and all other writings submitted by the Borrowers to
the Agent and Lenders pursuant thereto, shall remain unchanged and in full force
and effect. This letter agreement (and each of the other Letter Agreements)
shall be deemed to be a Loan Document under and as defined in the Credit
Agreement. The failure of the Borrowers to comply with any of the provisions of
this agreement shall be deemed an immediate Event of Default under the Loan
Agreement without the requirement of written notice by the Agent or further
notice or cure period.

 

The Borrowers hereby acknowledge and reaffirm their obligations under the Loan
Documents, in each case as amended, restated, supplemented or otherwise modified
prior to or as of the date hereof. The Borrowers hereby confirm the security
interests and liens granted by the Borrowers to the Agent, in and to the
Collateral in accordance with the Credit Agreement and other Loan Documents as
security for the Obligations.

 

EACH BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET,
CROSS COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE
ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY THE
OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM
THE AGENT OR LENDERS. EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES
AND FOREVER DISCHARGES AGENT, EACH LENDER, THEIR AGENTS, EMPLOYEES, SUCCESSORS
AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION,
DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, ASSERTED OR UNASSERTED,
FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR
IN PART ON OR BEFORE THE DATE THIS LETTER AGREEMENT IS EXECUTED, WHICH SUCH
BORROWER MAY NOW OR HEREAFTER (WHETHER OR NOT PRESENTLY SUSPECTED, CONTEMPLATED
OR ANTICIPATED) HAS AGAINST AGENT, ANY LENDER, AND THEIR AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM THE CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE CREDIT AGREEMENT
OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS LETTER
AGREEMENT.

 

 
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Kindly acknowledge your acknowledgment and agreement to the foregoing by signing
and returning a copy of this Letter Agreement to the attention of the
undersigned. Thank you.

 

[Signature Page Follows]

 

 
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Very truly yours,

 

 

 

SALUS CLO 2012-1, LTD.

as a Lender

     

By:  Salus Capital Partners II, LLC,

Its:  Collateral Manager

          By:  /s/ Kyle Shonak                 

        Name: Kyle Shonak

        Title: President

         

SALUS CAPITAL PARTNERS, LLC

as a Lender, Administrative Agent

and Collateral Agent

         

By:  /s/ Kyle Shonak               

        Name: Kyle Shonak

        Title: President

 

 

Letter Agreement Re: Further Temporary Extension of Forbearance Termination Date

 

 

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Acknowledged and Agreed:

 

HAMPSHIRE GROUP, LIMITED

as Lead Borrower

 

 

By: /s/ William Drozdowski                      

Name: William Drozdowski                       

Title:     Interim CFO                                   

 

HAMPSHIRE BRANDS, INC.

as a Borrower

 

 

By: /s/ William Drozdowski                       

Name: William Drozdowski                       

Title:     Interim CFO                                   

 

HAMPSHIRE INTERNATIONAL, LLC

as a Borrower

 

 

By: /s/ William Drozdowski                       

Name: William Drozdowski                       

Title:     Interim CFO                                   

 

SCOTT JAMES, LLC

as a Borrower

 

 

By: /s/ William Drozdowski                       

Name: William Drozdowski                       

Title:     Interim CFO                                   

 

 

Letter Agreement Re: Further Temporary Extension of Forbearance Termination Date