BNY Financial Corporation
1290 Avenue of the Americas
New York, NY 10104
May 21, 1999
Signal Apparel Company, Inc.
The Shirt Shed, Inc.
P.O. Box 4296
200-A Manufacturers Road
Chattanooga, TN 37405
RE: Waiver
Gentlemen:
Reference is made to the (i) Amended and Restated Factoring Agreement dated
March __, 1999 (the "Signal Factoring Agreement") by and between Signal Apparel
Company, Inc. ("Signal"), The Shirt Shed, Inc. ("Shirt"), Big Ball Sports, Inc.
("Big Ball") and BNY Financial Corporation ("BNYFC"), as heretofore amended and
as amended from time to time hereafter, the "Factoring Agreement") and ("Big
Ball"; together with Signal and Shirt, shall hereinafter be collectively
referred to as the "Clients"; and (ii) the Guaranty dated March ___, 1999 (as
heretofore amended 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 Agreement.
1. The Clients have advised BNYFC that, for the fiscal period commencing
January 1, 1999 and ending April 2, 1999 that: (a) their Cumulative Pre-Tax
Operating Earnings is less than ($1,000,000), the minimum Cumulative Pre-Tax
Operating Earnings permitted for the fiscal period commencing January 1, 1999
and ending on April 2, 1999 under Paragraph __ of the Factoring Agreement. (b)
their Tangible Net Worth on a combined basis is less than (i) ($65,000,000) plus
(ii) ___ of additional equity as required by Paragraph __ of the Factoring
Agreement, (c) the Working Capital is less than (i) ___ plus (ii) __% of the
aggregate of any capital contributions as required by Paragraph ___ of the
Factoring Agreement and (d) The Current Ratio (as adjusted for the Restructuring
Reserve) is less than 0.7 :1.0 as required by Paragraph ___ 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 period stated above, and BNYFC hereby
agrees to do so.
2. The Clients hereby acknowledge, 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.
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. Excepts 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.
4. The waivers provided above shall be effective retroactively as of April
2, 1999.
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 part
to be charged.
Very truly yours,
BNY FINANCIAL CORPORATION
By:
------------------------
Wayne Miller
Vice President
ACKNOWLEDGED AND AGREED:
SIGNAL APPAREL COMPANY, INC.
- - - - ---------------------------------
By: Howard Weinberg
Title: Chief Financial Officer
THE SHIRT SHED, INC.
- - - - ---------------------------------
By: Howard Weinberg
Title: Chief Financial Officer
BIG BALL SPORTS, INC.
- - - - ---------------------------------
By: Howard Weinberg
Title: Chief Financial Officer