GMAC
COMMERCIAL CREDIT LLC
1290 AVENUE OF THE AMERICAS o NEW YORK, NY 10104
212-408-7000
May 5, 2000
SIGNAL APPAREL COMPANY, INC.
500 7th Avenue, 7th Floor
New York, New York 10018
Gentlemen:
Reference is made to the Revolving Credit, Term Loan and Security
Agreement, dated March 12, 1999 (as amended from time to time, the "Credit
Agreement") by and among SIGNAL APPAREL COMPANY, INC. ("Borrower") and GMAC
COMMERCIAL CREDIT LLC, as Agent (in such capacity, "Agent") for the Lenders
("Lenders") parties from time to time to the Credit Agreement. All capitalized
terms used and not otherwise defined herein shall have the respective meanings
ascribed to them in the Credit Agreement.
1. The Borrower has advised Lenders that for the fiscal quarter ending
March 31, 2000, its Tangible Net Worth was less than ($71,500,000), the minimum
Tangible Net Worth permitted as of March 31, 2000 under Section 6.5 (Tangible
Net Worth) of the Credit Agreement; (ii) the Current Ratio was less than
0.70:1.00, the minimum Current Ratio permitted as of March 31, 2000 under
Section 6.6 (Current Ratio) of the Credit Agreement; (iii) Working Capital was
less than ($5,500,000), the minimum Working Capital permitted as of March 31,
2000 under Section 6.7 (Working Capital) of the Credit Agreement; and (iv) net
loss, excluding any extraordinary or non-recurring items was greater than the $0
permitted as of March 31, 2000 under Section 6.13(a) of the Credit Agreement. As
a result of such noncompliance, Events of Default have occurred under Section
10.2 of Article X (Events of Default) of the Credit Agreement ("Subject Events
of Default"). Borrowers have requested Lender to waive the Subject Events of
Default, and Lenders hereby waives the Subject Events of Default.
2. Borrower hereby acknowledges, confirms and agrees that all amounts
charged or credited to the Borrower's account as of April 15, 2000 are correct
and binding upon the Borrower and that all amounts reflected to be due and owing
in the Borrower's account as of April 15, 2000 are due and owing without
defense, setoff, offset, recoupment, claim or counterclaim. Furthermore,
Borrower hereby also irrevocably releases and forever discharges Agent and
Lenders and each of Agent's and Lenders' respective affiliated concerns, as well
as all of Agent's and Lenders' respective directors, officers, employees,
shareholders and agents from any and all liabilities, demands, obligations,
causes of action and other claims, of every kind, nature and description, known
and unknown, which Borrower now has or may hereafter have, by reason of any
matter, cause or thing occurred, done, omitted or suffered to be done prior to
the date hereof.
3. Except as specifically set forth herein, no other changes or
modification to the Credit Agreement are intended or implied and, in all other
respects the Credit Agreement shall continue to remain in full force and effect
in accordance with its terms as of the date hereof. Except as specifically set
forth herein, nothing contained herein shall evidence a waiver or an amendment
by Agents or Lenders of any other provision of the Credit Agreement nor of the
specific provisions referred to above for any other time period.
4. In consideration of the waiver given by Agent and Lenders herein,
Borrower agrees to pay a non-refundable waiver fee to Agent, for the benefit of
Lenders in the amount of $40,000, which fee shall be in addition to any fees,
charges or interest otherwise payable by borrower under the Credit Agreement,
and which fee shall be fully earned as of the date hereof and payment of which
may be effectuated by charging Borrower's loan account.
5. The terms and provisions of this Agreement shall be for the benefit of
the parties hereto and their respective successors and assigns; no other person,
entity or corporation shall have any right, benefit or interest under this
agreement.
6. This Agreement may be signed in counterparts, each of which shall be an
original and all of which taken together constitute one agreement. In making
proof of this Agreement, it shall not be necessary to produce or account for
more than one counterpart signed by the party to be charged.
7. This Agreement sets forth the entire agreement and understanding of the
parties with respect to the matters set forth herein. This agreement cannot be
changed, modified, amended or terminated except in a writing executed by the
party to be changed.
Very truly yours,
GMAC COMMERCIAL CREDIT LLC, as Agent
By: /s/ Wayne Miller VP
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Acknowledge and Agreed:
Signal Apparel Company, Inc.
By: /s/ Kenneth L. Larsen
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Title: Controller
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