XX. XXX XXX-XXXX
AND
XX. XXXXXXX XXXXX
c/o Wachtel & Masyr, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
August 21, 2000
VIA FACSIMILE (000) 000-0000
REGULAR MAIL
AND FEDERAL EXPRESS
Signal Apparel Company, Inc.
000-X Xxxxxxxxxxxx'x Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Re: Signal Apparel Company, Inc. ("Signal")
Dear Xxxxxx:
Please be advised that pursuant to Section 13.16 of that certain Asset
Purchase Agreement (the "Agreement") by and among Signal, Tahiti Apparel, Inc.
("Tahiti") and the undersigned, being the principal stockholders of Tahiti, the
undersigned hereby declare that a "Financing Default," as defined in Section
13.16 of the Agreement, has occurred, and as such, we hereby exercise our option
to repurchase the assets of the "Business," as defined in Section 13.16 of the
Agreement, for an amount equal to the purchase price, payable in shares of
Signal common stock, and the assumption of the liabilities of the Tahiti
business, which have been incurred in the ordinary course of business. The
Exercise of this option is conditioned upon the determination of the assets and
liabilities of the Tahiti division to the satisfaction and acceptance of the
undersigned. Although we believe the current liabilities to be de minimis, our
concern derives from the poor record-keeping associated with the financial
management of Signal.
In connection therewith, we would appreciate it if we could arrange a
meeting to discuss the existing business of the Tahiti division and the current
liabilities of such division. It would be productive if you could immediately
provide us with a schedule of the existing assets
Signal Apparel Company, Inc.
August 21, 2000
Page 2
and liabilities of the Tahiti division so that we can timely and efficiently
close this transaction. Moreover, it is a condition to the closing that the
assets, subject to this option, be transferred free and clear of all liens,
claims and encumbrances, except for the assumed liabilities.
Thank you for your cooperation.
Very truly yours,
/s/ Xxx Xxx-Xxxx
------------------------
Xxx Xxx-Xxxx
/s/ Xxxxxxx Xxxxxx
------------------------
Xxxxxxx Xxxxxx
cc: Xxxxxxx Xxxxxx, Esq. (via facsimile, regular mail and Federal Express)
Mr. Xxxxxxx Xxxxx, Chairman of the Board and acting Chief Executive
Officer (via facsimile, regular mail and Federal Express)
Xxxxxx Xxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
