GMAC Commercial Credit LLC
August 14, 2000
Signal Apparel Company, Inc.
34 Englehard Avenue
Avenel, New Jersey 07001
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
June 30, 2000, (i) its Tangible Net Worth was less than ($71,000,000),
the minimum Tangible Net Worth permitted as of June 30, 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 June 30, 2000 under Section 6.6 (Current Ratio) of the
Credit Agreement; (iii) Working Capital was less than ($6,000,000),
the minimum Working Capital permitted as of June 30, 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 $500,000 permitted as of June 30, 2000 under Section 6.13(a) of
the Credit Agreement (collectively, the "Covenant Default"). In
addition, Borrower is not in compliance with the provisions of Section
2.1(d)(ii) of the Credit Agreement for the
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period ending August 7, 2000 (the "Clean-Up Provision"). As a result
of such noncompliance, Events of Default have occurred under Sections
10.2 and 10.5 of Article X (Events of Default) and Section 2.1(d) of
Article II (Advances, Payments) of the Credit Agreement. Borrower has
requested Lenders to waive the Covenant Default, and extend the date
for compliance with the Clean-Up Provision from August 7, 2000 to
August 15, 2000. Lenders hereby waives the Covenant Default and
extends the date for payment of the Clean-Up Provision to August 15,
2000, at which time payment shall be due and payable to Lenders in an
amount equal to the amount which would have been due and payable had
such payment been made on August 7, 2000.
2. Borrower hereby acknowledges, confirms and agrees that all amounts
charged or credited to the Borrower's account as of July 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 July 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
modifications 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 Agent or Lenders of
any other provision of the Credit Agreement, including without
limitation, Section 2.6 of the Credit Agreement, nor of the specific
provisions referred to above for any other time period.
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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, entity or corporation shall have any right, benefit or
interest under this Agreement.
5. 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
6. 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 or terminated except in a
writing executed by the party to be charged.
Very truly yours,
GMAC COMMERCIAL CREDIT LLC,
As Agent
By: /s/ Frank Imperato
Frank Imperato
Senior Vice President
Acknowledge and Agreed:
Signal Apparel Company, Inc.
/s/ Michael Dervis
By: Michael Dervis
Title: Chief Financial Officer
