BNY FINANCIAL CORPORATION
1290 Avenue of the Americas
New York, NY 10104
November 16, 1998
SIGNAL APPAREL COMPANY, INC.
THE SHIRT SHED, INC.
P.O. Box 4296
200-A Manufacturers Road
Chattanooga, TN 37405
BIG BALL SPORTS, INC.
5708 North Shepherd, #B6
Houston, TX 77091
Re: Waiver
Gentlemen:
Reference is made to the (i) Amended and Restated Factoring Agreement dated
as of October 31, 1997 (the "Signal Factoring Agreement") by and between Signal
Apparel Company, Inc. ("Signal") and BNY Financial Corporation ("BNYFC"),
Amended and Restated Factoring Agreement dated as of October 31, 1997 (the
"Shirt Factoring Agreement") by and between The Shirt Shed, Inc. ("Shirt") and
BNYFC, and the Factoring Agreement dated January 30, 1998 by and between Big
Ball Sports, Inc. ("Big Ball") and BNYFC (the "Big Ball Factoring Agreement";
and together with the Signal Factoring Agreement and the Shirt Factoring
Agreement, as heretofore amended and as amended from time to time hereafter, the
"Factoring Agreements") and ("Big Ball"; together with Signal and Shirt, shall
hereinafter be collectively referred to as the "Clients"); and (ii) the Guaranty
dated February 27, 1996 (as heretofore amended and as amended from time to time
hereafter, the "Guaranty") by an affiliate of the Client's in favor of BNYFC.
All initially capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed to them in the Factoring Agreements.
1. The Clients have advised BNYFC that, for the fiscal period commencing
January 1, 1998 and ending October 3, 1998 that: (a) their Cumulative Pre-Tax
Operating Earnings is less than ($7,000,000), the minimum Cumulative Pre-Tax
Operating Earnings permitted for the fiscal period commencing January 1, 1998
and ending on October 3, 1998 under Paragraph 11(a)(iv) of the Factoring
Agreements, (b) their Tangible Net Worth on a combined basis is less than (i)
($58,600,000) plus (ii) 65% of additional equity as required by Paragraph
11(a)(ii) of the Factoring Agreement, and (c) the Working Capital is less than
(i) ($45,000,000) plus (ii) 80% of the aggregate of any capital contributions as
required by Paragraph 11(a)(iii) of the Factoring Agreement (collectively, the
foregoing Events of Termination shall be referred to as the "Subject Termination
Event"). As a result of such Subject Termination Event, BNYFC is entitled, as of
the date hereof, to terminate the Factoring Agreements and to exercise its
rights and remedies under the Factoring Agreements, applicable law or otherwise
to realize upon its collateral and to collect the Obligations. The Clients have
requested BNYFC to waive the Subject Termination Event only for the specific
periods stated above, and BNYFC hereby agrees to do so.
2. The Clients hereby acknowledges, confirm and agree that the waiver by
BNYFC of the Subject Termination Event is solely for the benefit of the Clients
under the Factoring Agreements, that for the purposes of the Guaranty, BNYFC
shall be deemed not to have waived the Subject Event of Termination, and that
conditions precedent to the "First Reduction Date" and/or the "Second Reduction
Date", under and as said quoted terms are defined in the Guaranty, have not been
satisfied and such First Reduction Date and/or Second Reduction Date have not
occurred.
3. Except as specifically set forth herein, no other changes, modifications
or waivers to the Factoring Agreements are intended or implied, and, in all
other respects, the Factoring Agreements 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 amendment by BNYFC of any other provision of the Factoring Agreements nor
shall anything contained herein be construed as a consent by BNYFC to any
transaction other than those specifically consented to herein. The waivers made
hereinabove are only made for the specific periods stated in paragraph 1 hereof
and for no other period.
4. 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,
firm, entity or corporation shall have any right, benefit or interest under this
agreement.
5. The waivers provided above shall be effective retroactively as of
October 3, 1998.
6. This agreement may be signed in counterparts, each of which shall be an
original and all of which taken together constitute one amendment. 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 writing executed by the party
to be charged.
Very truly yours,
BNY FINANCIAL CORPORATION
By: /s/ Wayne Miller
----------------------
Vice President
ACKNOWLEDGED AND AGREED:
SIGNAL APPAREL COMPANY, INC.
/s/ Howard Weinberg
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By: Howard Weinberg
Title: Chief Financial Officer
THE SHIRT SHED, INC.
/s/ Howard Weinberg
- - -------------------------------
By: Howard Weinberg
Title: Chief Financial Officer