[SIGNAL]
BNY FINANCIAL CORPORATION
AMENDED AND RESTATED FACTORING AGREEMENT
As of October 31, 1997
SIGNAL APPAREL COMPANY, INC.
P.O. Box 4296
200A Manufacturers Road
Chattanooga, TN 37405
This agreement amends, restates, replaces and supersedes,
without a break in continuity, that certain Factoring Agreement
between us bearing the effective date May 23, 1991 ("Effective
Date") as heretofore amended, supplemented or otherwise modified
("Existing Factoring Agreement), PROVIDED, HOWEVER, that all
defaults under the Existing Factoring Agreement as of the date
hereof are preserved as provided in that certain Forbearance
Agreement dated the date hereof among BNY Financial Corporation,
Signal Apparel Company, Inc. and The Shirt Shed, Inc.
("Forbearance Agreement").
This agreement states the terms and conditions upon which we
will act as your sole factor.
1. COVERED SALES; SECURITY INTEREST
(a) You hereby assign and sell to us, as absolute
owner, and we hereby purchase from you, all "Receivables" (as
hereinafter defined), created before, on or after the Effective
Date, which arose or arise from your sale of merchandise or
rendition of services. Our purchase of and acquisition of title
to each Receivable will be effective as of the date of its
creation and will be entered on our books when you furnish us
with a copy of the respective invoice.
(b) You hereby grant to us a continuing security
interest in all of your present and future Receivables, as
security for all "Obligations" (as hereinafter defined).
2. CUSTOMER CREDIT APPROVAL
You shall submit to us the principal terms of each of your
customers' orders for our written credit approval. We may, in
our discretion, approve in writing all or a portion of your
customers' orders, either by establishing a credit line limited
to a specific amount for a specific customer, or by approving all
or a portion of a proposed purchase order submitted by you. No
credit approval shall be effective unless in writing and unless
the goods are shipped or the services rendered within the time
specified in our written credit approval or within 45 days after
the approval is given, if no time is specified. Upon the earlier
to occur of (i) the customer
having accepted delivery of the goods or performance of the
services or (ii) the goods have been deposited by you with a
common carrier for delivery to such customer on "f.o.b. point of
origin" terms, we shall then have the "Credit Risk" as
hereinafter defined (but not the risk of non-payment for any
other reason), to the extent of the dollar amount specified in
the credit approval, on all Receivables evidenced by invoices
which arise from orders approved by us in writing except for
those Receivables evidenced by invoices less than $150.00 and
invoices evidencing charges for samples supplied to your
customers. We shall have neither the Credit Risk nor the risk of
non-payment for any other reason on Receivables arising from
orders not approved by us in writing. We may withdraw our credit
approval or withdraw or adjust a credit line at any time before
the earliest to occur of (a) your delivery or deposit of the
goods with a common carrier on "f.o.b. point of origin" terms, as
contemplated above, or (b) rendition of the services, as the case
may be.
3. PURCHASE PRICE OF RECEIVABLES
(a) The purchase price of Receivables is the net face
amount thereof less our commission. The term "net face amount"
means the gross face amount of the invoice, less returns,
discounts (which shall be determined by us where optional terms
are given), anticipation reductions or any other unilateral
deductions taken by customers, and credits, and allowances to
customers of any nature. The purchase price will be payable on
the "Maturity Date" (hereinafter described). At the close of
each month, we will compute the average due date of all
Receivables purchased by us during the month. In computing the
average due date we will take into account all credits issued to
customers. The Maturity Date for all such Receivables will be
five (5) business days after the average due date. We may
deduct, from the amount payable to you on any Maturity Date,
reserves for all Obligations then chargeable to your account and
Obligations which, in our sole judgment, may be chargeable to
your account thereafter including, but not limited to, ineligible
Receivables, Receivables which are not credit approved, disputes,
deductions, allowances, credits, bill and hold and consignment
sales, other offsets asserted or granted, ineligible Inventory
and such additional amounts as we in our sole judgment deem
appropriate (collectively, "Reserves").
(b) Notwithstanding anything to the contrary contained
in this agreement, if, when you submit to us (for our prior
written approval), the amount, terms and delivery date of a
proposed sale of goods, (i) you identify such proposed sale with
the special number that we give you for this purpose, and (ii)
you advise us in writing and if we concur that the order for the
goods is a special order by the customer which will require you
to have the goods manufactured according to the customer's
specifications and that the goods cannot be sold readily to
buyers other than such customer at a price reasonably close to
the contract price for such goods (such goods being hereinafter
referred to as the "Special Goods"), and (iii) our approval,
having been given by us, is thereafter withdrawn by us pursuant
to the terms hereof after the Special Goods have been
manufactured but prior to completion of your delivery thereof,
then
- 2 -
you shall have the following options, provided that the Special
Goods are available for delivery by you on or before the delivery
date specified in our approval, free and clear of all liens and
encumbrances: (a) you may complete your sale of the Special
Goods to the customer at your own risk; or (b) you may use your
best efforts promptly to re-sell the Special Goods, at the best
price available, after first obtaining our written consent to any
such re-sale (the "Re-sale"). If you proceed under option (b),
we shall, upon consummation of the Re-sale, or upon the original
invoice due date under the selling terms specified in the credit
approval (whichever is later), credit your account with a sum
equal to the amount by which your "Standard Cost" for the Special
Goods as published by you and approved by us (hereinafter, the
"Manufacturing Cost") exceeds the proceeds of the Re-sale. We
may at our option elect to purchase the Special Goods from you
for a purchase price equal to the Manufacturing Cost. However,
our obligation hereunder, to you and the Other Client on a
combined basis, shall not exceed $50,000 per annum.
(c) We shall not be obligated to pay you, or make any
Advances or loans against, the purchase price of any Receivable
which arises out of your delivery of inventory to any of your
licensors for which you receive no consideration other than a
credit toward your obligations to such licensor to advertise the
products which are the subject of such agreement, and we shall
not be entitled to charge our commission on such Receivables
provided, however, that the gross face amount of such Receivables
(measured by the amount of such credit against your said
advertising obligations) shall not exceed the aggregate amount of
$500,000 per annum.
(d) Until we notify you otherwise, you may retain the
proceeds of any sales made on the basis of cash before or on
delivery. In no event shall we be obligated to make any payments
(including, but not limited to, Advances or loans) against any
such transactions. You warrant and represent that such
transactions will not exceed the aggregate amount of $3,000,000
per annum for you and the Other Client, on a combined basis.
4. ADVANCES; INTEREST; COMMISSIONS; LATE PAYMENT CHARGES
(a) I. If you request, we shall, subject to the
other provisions of this agreement, make payments to you of the
purchase price of Receivables in advance of the Maturity Date
("Advances") and additional amounts, subject to our right to
withhold Reserves. All amounts, if any, which we pay or make
available to you or for your account in excess of the purchase
price of Receivables are loans and shall be chargeable to your
account when paid or made available to you. However, at no time
shall the aggregate amount of then outstanding Obligations of you
and the Other Client on a combined basis, including but not
limited to Obligations under the $4,157,000 Promissory Note dated
July 29, 1994 and the $1,480,000 Promissory Note dated July 29,
1994, each by Signal Apparel Company, Inc. as maker to us as
payee, as each may now exist or may hereafter be amended,
restated, replaced, substituted, extended, or otherwise modified
(collectively, the "Notes"; outstanding Obligations under the
- 3 -
Notes, as the same may change from time to time, are hereinafter
called collectively, the "Note Amounts") but excluding amounts
owing by you and the Other Client to any present or future client
of ours on invoices purchased by us ("Ledger Debt"), and
including without limitation, all advances, other loans and all
other amounts charged or chargeable to your account and the Other
Client's account, exceed the Facility Amount (as defined herein),
subject in all respects to availability under the Borrowing Base
(as defined herein). The Borrowing Base shall be calculated for
you and the Other Client on a combined basis. Obligations of you
and the Other Client other than the Note Amounts and Ledger Debt,
as such Obligations shall change from time to time, are
hereinafter collectively called the "Revolver Amount". At no
time shall the Revolver Amount exceed the Borrowing Base, EXCEPT
THAT, in our sole discretion, we may from time to time at your
request, permit the Revolver Amount to exceed the Borrowing Base
by an amount not to exceed the Special Overadvance amount in
effect from time to time, PROVIDED THAT, notwithstanding anything
to the contrary contained herein, the aggregate amount of
outstanding Obligations of you and the Other Client on a combined
basis, shall not at any one time exceed the Facility Amount.
Furthermore, and without limiting your obligations or our other
rights, you shall forthwith pay us the amount, if any, by which
the Revolver Amount at any time and from time to time exceeds the
Borrowing Base.
II. The "Facility Amount" means, for you and the
Other Client, on a combined basis, the sum of $55,000,000.
III. The "Borrowing Base" means, at any time for
you and the Other Client on a combined basis, the sum of (i) the
then "Applicable Percentage" (as hereinafter defined) of the net
face amount of then outstanding credit approved "Eligible
Receivables" (as hereinafter defined) plus, to the extent
included in our sole and absolute discretion, the then Applicable
Percentage of the net face amount of then outstanding non-credit
approved Receivables, less Reserves, plus (ii) the lesser of (A)
$16,000,000 or (B) 50% of "Eligible Inventory" (as hereinafter
defined) less Reserves plus (iii) the amount of cash or cash
equivalents satisfactory to us ("Pledged Amount") pledged to us
as security for your Obligations on terms and conditions
satisfactory to us, so long as (A) we hold the Pledged Amount
pursuant to said pledge, (B) said pledge and the validity and
enforceability thereof are not subject to attack by any entity,
(C) the pledgor is not in a bankruptcy proceeding, and (D) the
pledgor is not in any other proceeding in which the pledge or its
validity or enforceability is the subject of attack by any
entity. However, we may at any time and from time to time, in
our reasonable discretion, increase or decrease any of the
percentages referred to in the preceding sentence.
Notwithstanding anything to the contrary contained herein, the
Borrowing Base shall not include, without limitation, the
Applicable Percentage of the net face amount of outstanding non-
credit approved Receivables owing by any account debtor where
fifty (50%) percent or more of such outstanding non-credit
approved Receivables owing by any such account debtor are more
than sixty (60) days past due.
- 4 -
IV. "Applicable Percentage" means, subject to our
right to withhold Reserves, 85% except that said percentage shall
be 90% after the expiry of two consecutive calendar quarters
during which less than 3% of all Receivables (measured by gross
face amount) becoming due during those quarters fail to be paid
in full in accordance with their terms; provided, however, that
said percentage shall revert to 85% after the passage of one
calendar quarter during which 3% or more of all Receivables
(measured by gross face amount) becoming due during those
quarters fail to be paid in full in accordance with their terms.
V. "Eligible Receivables" means each Receivable
arising in the ordinary course of your business and the Other
Client's business and which we, in our sole credit judgment,
shall deem to be an Eligible Receivable, based on such
considerations as we may from time to time deem appropriate. In
general, a Receivable shall not be deemed eligible unless such
Receivable is subject to our perfected security interest and no
other lien and is evidenced by an invoice or other documentary
evidence satisfactory to us. In addition, no Receivable shall be
an Eligible Receivable if:
(a) it arises out of a sale made by you or
the Other Client to an affiliate of yours or to an entity
controlled by an affiliate of yours or the Other Client's;
(b) it is not credit approved by us;
(c) fifty (50%) percent or more of the
Receivables from the account debtor are not deemed Eligible
Receivables hereunder; such percentage may, in our sole
discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty
contained in this Agreement with respect to such Receivable has
been breached;
(e) the account debtor is also your creditor
or supplier or a creditor or supplier of the Other Client, or the
account debtor has disputed liability, or the account debtor has
made any claim with respect to any other Receivable due from such
account debtor to you or the Other Client, or the Receivable
otherwise is or may become subject to any right of setoff by the
account debtor;
(f) the account debtor has commenced a
voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or made an assignment for the
benefit of creditors, or if a decree or order for relief has been
entered by a court having jurisdiction in the premises in respect
of the account debtor in an involuntary case under any state or
federal bankruptcy laws, as now constituted or hereafter amended,
or if any other petition or other application for relief under
any state or federal bankruptcy law has been filed against the
account debtor, or if the account debtor has failed, suspended
business, ceased to be
- 5 -
solvent, called a meeting of its creditors, or consented to or
suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its
assets or affairs;
(g) the sale is to an account debtor outside
the continental United States, unless the sale is on letter of
credit, guaranty or acceptance terms, in each case acceptable to
us in our sole discretion;
(h) the sale to the account debtor is on a
bill-and-hold, guaranteed sale, sale-and return, sale on
approval, consignment or any other repurchase or return basis or
is evidenced by chattel paper;
(i) the account debtor is the United States
of America, any state or any department, agency or
instrumentality or any of them, unless you assign your right to
payment of such Receivable to us pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. sub-Section 203 ET
SEQ.) or have otherwise complied with other applicable statutes
or ordinances;
(j) (i) the goods giving rise to such
Receivable have not been shipped and delivered to and accepted by
the account debtor or (ii) the goods giving rise to such
Receivable have not been deposited with a common carrier for
delivery to the account debtor on "f.o.b. point of origin terms";
or (iii) the services giving rise to such receivable have not
been performed by you or the Other Client and accepted by the
account debtor or (iv) the Receivable otherwise does not
represent a final sale;
(k) the Receivables of the account debtor
exceed a credit limit determined by us in our sole discretion, to
the extent such Receivable exceeds such limit;
(l) the Receivable is subject to any offset,
deduction, defense, dispute, or counterclaim or if the Receivable
is contingent in any respect or for any reason;
(m) you or the Other Client have made any
agreement with any account debtor for any deduction therefrom,
except for discounts or allowances made in the ordinary course of
business for prompt payment, all of which discounts or allowances
are reflected in the calculation of the face value of each
respective invoice related thereto;
(n) any return, rejection or repossession of
the merchandise has occurred;
(o) such Receivable is not payable to you or
the Other Client;
- 6 -
(p) such Receivable is not otherwise
satisfactory to us as determined in good faith by us in the
exercise of our discretion in a reasonable manner; or
(q) more than one hundred-twenty (120) days
have elapsed after the date of the invoice.
VI. "Special Overadvance" means, for you and the
Other Client, on a combined basis, an amount determined by us in
our sole discretion, which amount shall not exceed at any one
time outstanding, the aggregate sum of $15,000,000.
VII. "Eligible Inventory" means for you and the
Other Client on a combined basis, T-Shirt and fleece blanks which
are then work-in-process and finished goods (other than inventory
in retail stores) located in the U.S.A., valued at the lower of
cost or market value, determined on a first-in first-out basis,
(it being understood that with respect to finished goods, cost
shall mean your "Standard Cost" as published by you from time to
time subject to our approval thereof) which is not, in our
opinion, obsolete, slow moving, in unacceptable condition or
unmerchantable or merchantable only at a price less than cost and
which we, in our sole discretion, shall not deem ineligible
inventory, based on such considerations as we may from time to
time deem appropriate including, without limitation, whether the
inventory is subject to a perfected, first priority security
interest in favor of us and whether the inventory conforms to all
standards imposed by any governmental agency, division or
department thereof which has regulatory authority over such goods
or the use or sale thereof. Without limiting the foregoing, so
long as you are in default under any licensing agreement relating
to any inventory, or so long as the licensor thereunder shall not
have entered into an agreement in form and substance acceptable
to us relating to such inventory and our rights therein, the
respective inventory may, in our sole discretion, be ineligible.
Our making loans to you related to the value of such inventory
despite its ineligibility shall not be deemed a waiver of any of
our rights to deem such inventory ineligible at any time or times
before or after December 31, 1997 (the date specified in
paragraph 11(c) hereof), or your obligation hereunder to pay us
forthwith the amount by which outstanding Obligations shall
exceed the Borrowing Base as a result of such ineligibility.
(b) For our services, we shall charge to your account
and the Other Client's account, on a combined basis, without
duplication:
(i) monthly, as of the last day of each month,
interest on the average daily balance of all Advances (which do
not include the Note Amounts) and amounts charged and chargeable
to your account hereunder (said Advances, loans, which do not
include the Note Amounts, and amounts being herein collectively
called "Interest Bearing Obligations") which are outstanding
during such month at a rate per annum which exceeds the average
"Alternate Base Rate" (as hereinafter defined) in effect during
such month by the then "Applicable Margin" (as
- 7 -
hereinafter defined); provided, however, that said interest rate
shall not be less than six percent (6%) per annum and shall in no
event be higher than the highest rate permitted by New York law.
"Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the higher of (i) the Prime Rate in effect on such day
and (ii) the Federal Funds Rate in effect on such day plus 1/2 of
1%. "Prime Rate" shall mean the prime commercial lending rate of
the "Bank" as publicly announced to be in effect from time to
time, such rate to be adjusted automatically, without notice, on
the effective date of any change in such rate. "Bank" shall mean
The Bank of New York, New York, New York. "Federal Funds Rate"
shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published
for such day (or if such day is not a business day, for the next
preceding business day) by the Federal Reserve Bank of New York,
or if such rate is not so published for any day which is a
business day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank. Interest
shall be calculated on the basis of the actual number of days
elapsed over a year of 360 days. "Applicable Margin" shall mean
one and one-quarter percent (1 1/4%); provided, however, that for
each period during which the Revolver Amount does not exceed an
amount equal to 85% of the net face amount of the then
outstanding Eligible Receivables, plus (i) an amount equal to 25%
of the then Eligible Inventory, the Applicable Margin shall be
one (1%) percent, or (ii) an amount greater than 25% of the then
Eligible Inventory, but less than 36% of the then Eligible
Inventory, the Applicable Margin shall be one and one-eighth
(1_%) percent, provided further that, if the Interest Bearing
Obligations and amounts due under letters of credit issued
pursuant to the Letter of Credit Supplement outstanding for a
period of five (5) or more days in any month during the Initial
Term, including any Renewal Term, exceed the sum of the Borrowing
Base less Reserves (such excess, an "Overadvance") plus the
amount of the Special Overadvance, on such days, the Applicable
Margin pertaining to all Interest Bearing Obligations shall be
increased by one half of one (1/2%) percent. Furthermore,
"Applicable Margin" shall mean three and three-quarters percent
(3 3/4%) with respect to all Obligations not paid when due
hereunder so long as they remain unpaid.
(ii) monthly, as of the 15th day of each month, a
commission at the rate of sixty-five one hundredths of one
percent (.65%) of the gross face amount of each invoice
evidencing a Receivable purchased hereunder during such month on
terms not exceeding 90 days (including dating), plus an
additional one-quarter of one percent (1/4%) for each additional
thirty (30) days or portion thereof of selling terms. Our
commission on any invoice evidencing a receivable purchased
hereunder shall not be less than $4.50. Furthermore, the
aggregate amount of Receivables with respect to which you and the
Other Client, on a combined basis, are obligated to pay
commissions and which you sell and assign to us ("Volume") shall
not be less than $40,000,000 ("Minimum") per Contract Year (each
successive period of twelve consecutive months the first of which
periods shall start on the Effective Date) during which this
agreement is in effect, EXCEPT THAT, (y) for the first Contract
Year, the Minimum shall be $30,000,000 and
- 8 -
(z) for the second Contract Year, the Minimum shall be
$35,000,000. If the Volume in any Contract Year is less than the
Minimum, we shall charge to your account the difference ("Minimum
Volume Charge") between the commission on the Minimum and the
commission on the Volume for the Contract Year. We shall compute
the Minimum Volume Charge, if any, on a calendar quarterly basis
and charge your account and the Other Client's account therefor
for each calendar quarter in the month following the end of such
calendar quarter, or in the month following the effective date of
termination of this agreement, whichever is earlier. If you do
not meet the Minimum Volume with respect to any particular
calendar quarter period within a Contract Year and you therefore
pay to us a yearly Minimum Volume Charge for such particular
calendar quarter period and in the subsequent calendar quarter
period in the same Contract Year, your Minimum Volume for which
commissions have been paid by you to us under this agreement then
exceeds the Minimum applicable to such subsequent calendar
quarter period, by reason of such Minimum Volume Charge
previously paid, you shall then be entitled to receive a rebate
from us to your account, to the extent of the lesser of such
excess or the Minimum Volume Charges previously paid to us in any
such prior calendar quarter period of the same Contract Year.
Similarly, if for any calendar quarter period within a particular
Contract Year, the commissions paid to us under this agreement
exceed the Minimum applicable to such calendar quarter period and
in any subsequent calendar quarter period we otherwise would have
been entitled to receive and you would have been responsible for
paying to us any Minimum Volume Charge applicable to such
subsequent calendar quarter period, in calculating the amount of
such Minimum Volume Charge payable in such subsequent calendar
quarter period you shall be entitled to a credit against the same
to the extent of the lesser of such excess or the Minimum Volume
Charge that would otherwise then have been due from you to us in
relation to such subsequent calendar quarter period within the
same Contract Year. Except however to the extent specifically
set forth above, nothing contained herein is or shall be deemed
to change, limit or otherwise adversely affect our right to
charge and receive and your obligation to pay to us commissions
and/or any Minimum Volume Charges payable with respect to any
Contract Year or part thereof during which this agreement remains
in effect, or to entitle you to receive any rebate and/or credit
with respect to any commissions payable to us hereunder.
Notwithstanding the foregoing, should the Volume during any
Contract Year or part thereof during which this agreement remains
in effect, exceed the Minimum applicable thereto, nothing
contained herein shall entitle you to receive any rebate and/or
credit other than strictly as provided for above. However, if an
Event of Default occurs, and if we so elect, and whether or not
we then or thereafter exercise any of our rights of termination
hereunder (including but not limited to our rights under
Paragraph 9(a)(ii)), we may on or at any time after the
occurrence of such Event of Default compute and charge your
account for the Minimum Volume Charge for the period starting on
such occurrence and ending on the next date as of which you may
terminate this agreement under Paragraph 9(a)(i), and, for the
purpose only of computing such Minimum Volume Charge, we may
assume that your Volume for the period will be zero, subject, of
course, to subsequent adjustment if such Volume in fact is more
than zero.
- 9 -
(iii) all bank charges for wire transfers.
(iv) quarterly, as of the 15th day of the month
next occurring after the end of each of your fiscal quarters, a
fee at the rate of one quarter of one percent (1/4%) per annum,
calculated and payable quarterly, on the difference between the
Facility Amount and the sum of (x) average outstanding Revolver
Amount during such quarter, and (y) the average outstanding Note
Amounts during such quarter.
(v) Customer late payment charges, not paid by
the customer, but only if the charge exceeds five ($5.00) dollars
and the payment is five (5) business days or more past due, said
charges are to be computed at the rate specified in paragraph
4(b)(i) of this Agreement (subject to change as indicated
therein).
5. MATURED FUNDS
On the last day of each month, we shall credit your account
with interest at the Matured Funds Rate in effect during such
month on the average daily balance during such month of any
amounts payable by us to you or the Other Client, as the case may
be, hereunder (as confirmed by us by appropriate credit to your
account with us or the Other Client's account, as the case may
be) which are not drawn by you on the Maturity Date, while held
by us after the Maturity Date. "Matured Funds Rate" shall mean
the rate of interest, announced by us from time to time, as the
rate applicable to matured funds, such rate to be adjusted
automatically on the effective date of any change in such rate
announced by us.
6. CHARGES; BALANCES; RESERVES
We may charge to your account all Obligations. Recourse to
security will not be required at any time. All credit balances
or other sums at any time standing to your credit and all
Reserves on our books, and all of your property in our possession
at any time or in the possession of any parent, affiliate or
subsidiary of ours or on or in which we or any of them have a
lien or security interest, may be held and reserved by us as
security for all Obligations. We will account to you monthly and
each monthly accounting statement will be fully binding on you
and will constitute an account stated, unless, within thirty (30)
days after such statement is mailed to you or within thirty (30)
days after the mailing of any adjustment thereof we may make, you
give us specific written notice of exceptions.
7. REPRESENTATIONS AND WARRANTIES; DISPUTES; RETURNS;
CHARGEBACKS
(a) You warrant and represent that you have good title
to the Receivables free of any encumbrance except in our favor;
each Receivable purchased hereunder is a bona fide,
- 10 -
enforceable obligation created by the absolute sale and delivery
of goods (including, without limitation, the deposit of goods
with a common carrier as contemplated in Paragraph 2 hereof) or
the rendition of services in the ordinary course of business;
when you assign each Receivable to us your customer is
unconditionally obligated to pay at maturity the full amount of
each Receivable purchased hereunder without defense, counterclaim
or offset, real or alleged; all documents in connection therewith
are genuine; and when you assign each Receivable to us the
customer will accept the goods or services without alleging any
defense, counterclaim, offset, dispute or other claim whether
arising from or relating to the sale of such goods or services or
arising from or relating to any other transaction or occurrence
(a "Dispute").
(b) You further represent and warrant that (i) your
address set forth above is that of your chief place of business
and chief executive office and the location of all "Collateral"
(as hereinafter defined) and of your books and records relating
to the Receivables; (ii) by a separate writing you have disclosed
to us the locations of all of your other places of business as
well as all trade names or styles, trademarks, divisions or other
names under which you conduct business (hereinafter collectively
defined as the "Trade Names"); and (iii) except after 30 days
prior written notice to us of your intention to do so, you will
not make any change in your name or corporate structure (whether
by merger, reorganization or otherwise) or sell or acquire any
assets except in the ordinary course of your business, nor make
any change which would have the effect of rendering inaccurate or
incomplete the representations contained in this subparagraph
(b). If you make or propose to make any changes referred to in
the immediately preceding subdivision (iii), we may, before or at
any time after such change occurs, terminate this agreement
effective immediately by giving you written notice of such
termination.
(c) You shall promptly provide us with duplicate
originals of all credits which you issue to your customers and
immediately notify us of any merchandise returns or Disputes.
You will settle all Disputes at no cost or expense to us; our
practice is to allow you a reasonable time to do so. If you so
request, provided no Event of Default has occurred and is
continuing, you may enforce your rights against any of your
customers on any Receivable which is subject to a Dispute if we
have charged your account for such Receivable. We will
reasonably cooperate with you in such enforcement but at your
sole cost and expense. However, the settlement of any such claim
shall be subject to our prior written approval. Furthermore, all
proceeds of such enforcement shall be promptly delivered to us
for credit to your account. Should we so elect, we may at any
time in our discretion (i) withdraw your authority to issue
credits to your customers without our prior written consent; (ii)
litigate Disputes or settle them directly with the customers on
terms acceptable to us; or (iii) direct you to set aside,
identify as our property and procure insurance satisfactory to us
on any returned or repossessed merchandise or other goods which
by sale resulted in Receivables theretofore assigned to us
("Retained Goods"). All Retained Goods (and the proceeds
thereof) shall be (A) held by you in trust for us as our
property; and (B) subject to a security interest in our favor as
security for the Obligations; and (C) disposed of only in
accordance with our express written instructions.
- 11 -
(d) Our Credit Risk, if any, on a Receivable shall
immediately terminate without any action on our part in the event
that (i) your customer asserts a Dispute (regardless of merit) as
a ground for non-payment of the Receivable or returns or attempts
to return the goods represented thereby; or (ii) any warranty as
to the Receivable is breached. We may charge to your account at
any time the gross face amount of any Receivable purchased
hereunder (or portion thereof) on which we do not then have the
Credit Risk, whether or not we had the Credit Risk before we make
such charge, together with interest thereon from the due date of
such Receivable to the date of chargeback; such action on our
part shall not be deemed a reassignment of such Receivable and
will not impair our rights thereto or security interest therein,
which will continue to be effective until all Obligations are
fully satisfied.
(e) YOU WARRANT THAT YOU WILL NOT GRANT A SECURITY
INTEREST IN ANY OF YOUR RECEIVABLES OR IN ANY OF YOUR INVENTORY
TO ANYONE EXCEPT US WITHOUT OUR PRIOR WRITTEN CONSENT.
(f) You warrant and represent that you are now and
will at all times hereafter be and remain in compliance with all
laws, rules and regulations of all federal, state and local
governmental agencies having jurisdiction, including but not
limited to those relating to environmental protection (including
EPA) and employees (including ERISA, FLSA and PBGC).
(g) You warrant and represent that (x) you are not a
party to any litigation or proceeding the adverse outcome of
which could have a material adverse effect on your business, and
(y) the only litigation and proceedings to which your are party
as set forth on Exhibit A hereto.
(h) You may sell equipment which in your reasonable
opinion is obsolete, but no such sale shall be for less than the
reasonable value of such equipment. You agree not to make during
any calendar year any such sales of equipment, the receivable
value of which exceeds $50,000 per sale or $500,000 in the
aggregate, without our prior written consent. You will promptly
deliver the proceeds of such sales to us for application against
installments of the $4,157,000 Promissory Note dated July 29,
1994 by Signal Apparel Company, Inc., as maker, to us as payee,
as hereafter amended or supplemented, in inverse order of
maturity.
8. INVOICING; PAYMENTS; RETURNS
Each of your invoices and all copies thereof shall bear a
notice (in form satisfactory to us) that it is owned by and
payable directly and only to us at locations designated by us,
and you shall furnish us with duplicate originals of your
invoices accompanied by a confirmatory assignment thereof. Your
failure to furnish such specific assignments shall not diminish
our rights. You shall procure and hold in trust for us and
furnish to us at our request satisfactory evidence of each
shipment and delivery or rendition of services. Each invoice
shall bear the
- 12 -
terms stated on the customer's order, as submitted to us, whether
or not the order has been approved by us, and no change from the
original terms of the order shall be made without our prior
written consent. Any such change not so approved by us shall
automatically terminate our Credit Risk, if any, on the
Receivable arising from your performance of the order. You will
hold in trust for us and deliver to us any payments received from
your customers in the form received, and hereby irrevocably
authorize us to endorse your name on all checks and other forms
of payment. Each payment made by a customer shall first be
applied to Receivables, if any, on which we have the Credit Risk,
and the balance, if any, of such payment shall be applied to
other Receivables due from such customer. You understand that we
shall not be liable for any selling expenses, orders, purchases,
contracts or taxes of any kind resulting from any of your
transactions, and you agree to indemnify us and hold us harmless
with respect thereto, which indemnity shall survive termination
of this agreement.
9. TERMINATION
(a) This agreement shall remain in full force and
effect until the expiration of the Term unless sooner terminated
as set forth below. The Term shall be automatically extended for
successive periods of one year each unless either party shall
have provided the other with written notice of termination (by
Certified Mail, Return Receipt Requested) not less than sixty
(60) days prior to and effective on expiration of the Initial
Term or any Renewal Term.
(i) You may terminate this agreement effective at
any time by giving written notice of termination to us sixty (60)
days prior to the effective date of such termination, and upon
payment in full of all Obligations, including, but not limited
to, the Minimum Volume Charge for the Contract Year in which such
termination occurs, as well as any Contract Year remaining in the
Initial Term or any Renewal Term (as the case may be), and we may
terminate this agreement effective as of March 31, 2000 or any
time thereafter, by giving you written notice of termination not
less than sixty (60) days prior to the effective date of
termination. You and we each acknowledge and agree that you or
we may exercise the right to terminate under this subdivision (i)
even if the other party is not in breach of or in default under
this agreement.
(ii) If you shall suspend business, sell all or a
significant portion of your assets, become insolvent or unable to
pay debts as they mature, make an assignment for the benefit of
creditors, or apply for an extension from creditors; or if a
meeting of your creditors is called; or if a Receiver or Trustee
shall be appointed for you or your property; or if your property
shall become subject to any lien or attachment; or if a petition
under the Federal Bankruptcy Code shall be filed by or against
you; or if you shall seek relief under any insolvency statute,
federal, state or other; or if a custodian shall be appointed for
all or substantially all of your property; or if any agreement
between ourselves and any of your existing or future parent or
wholly owned subsidiaries including, without limitation, the
Other Client (collectively, the "Related Concerns") or any
instrument now or hereafter held by us or
- 13 -
to our order and made by you or any of such Related Concerns
shall be breached by any of such Related Concerns or if any
Related Concerns shall be in default thereunder; or if any
separate factoring agreement between ourselves and any of the
Related Concerns is terminated, for any reason whatsoever, or any
event or circumstance exists which would permit us to terminate
any such factoring agreement in accordance with its terms; or if
you shall breach this agreement or any other agreement between
us; or if you are or become in default under this agreement, or
if any warranty, or representation hereunder or any portion of
the contents of any document heretofore or hereafter furnished in
connection with this agreement is or becomes untrue or misleading
(except for future performance against projections heretofore
furnished to us); or if you shall fail to pay any Obligation when
due; or if any guaranty of the Obligations shall be terminated;
then in any such event, we may terminate this agreement at any
time without notice, and this agreement shall automatically
terminate in the event of a filing of a petition under the
Federal Bankruptcy Code by or against you; or
(iii) If this agreement is terminated pursuant
to paragraph 7 (b) above.
(b) On the effective date of termination all
Obligations (including, without limitation, any Overadvance and
any Special Overadvance) shall become immediately due and payable
in full without further notice or demand and we shall have no
further obligation to provide any Advances or loans hereunder.
Our rights with respect to Obligations owing to us, or chargeable
to your account, arising out of transactions having their
inception prior to the effective date of termination, will not be
affected by termination. Without limiting the foregoing, all of
our security interests and other rights in and to all
Receivables, whether then existing or arising thereafter
(including assignments and remittance of payments), Retained
Goods, credit balances, and any other property in our possession
or the possession of any parent, affiliate or subsidiary of ours
and any other security for the Obligations (including but not
limited to inventory and machinery and equipment), whether coming
into existence or into our or their possession before, on or
after the effective date of termination and all proceeds thereof
(collectively "Collateral") shall continue to be operative until
such Obligations have been fully and finally satisfied or you
have furnished us an indemnity from an indemnitor satisfactory to
us.
(c) If you terminate this agreement pursuant to
paragraph 9 (a)(i), effective as of any date prior to March 31,
2000, or if you cease for a period of thirty (30) or more
consecutive calendar days prior to March 31, 2000 to request
Advances or loans from us, or if this agreement is terminated
pursuant to paragraph 9(a)(ii) or (iii), or if we suspend making
Advances, loans or any other extensions of credit to you pursuant
to Paragraph 9(d) of this agreement, then, in any such case, in
addition to your other Obligations, you will pay us on the
effective date of termination, cessation or suspension, as the
case may be, an "Early Termination Fee" in the amount of (x)
$500,000 if the effective date of termination, cessation or
suspension occurs during the period from April 1, 1997 through
and including March 31, 1998; (y)
- 14 -
$300,000 if the effective date of termination, cessation or
suspension occurs during the period from April 1, 1998 through
and including March 31, 1999; or (z) $200,000 if the effective
date of termination, cessation or suspension occurs during the
period from April 1, 1999 through and including March 31, 2000;
provided, however, that the aforesaid Early Termination Fee
applicable to your termination under Paragraph 9(a)(i) shall be
reduced by fifty (50%) percent if such termination occurs on or
before the effective date of any sale of substantially all of
your assets to any entity which or who is not affiliated with you
in any way and if such termination occurs in connection with such
sale.
(d) If any of the events specified in paragraph
9(a)(ii) hereof occurs, we may, if we so elect, in addition to
our other rights, suspend indefinitely the making of any
additional Advances or loans to you, and/or reduce the Borrowing
Base in a manner and in amounts in our sole discretion, without
at the same time terminating this agreement. However, such
suspension shall not be a waiver of or otherwise deprive us of
any of our other rights, including but not limited to the right
at any time to terminate this agreement because of the occurrence
of such event or any other event, or the right to terminate this
agreement pursuant to paragraph 9 (a)(i) hereof, all of which
rights are now hereby, and then shall be automatically, reserved
without any other action on our part.
10. DEFINITIONS: "RECEIVABLES;" "OBLIGATIONS;" OTHER
CLIENT;" "CREDIT RISK;" "INITIAL TERM"; "RENEWAL TERM"; "TERM";
"LETTER OF CREDIT SUPPLEMENT;
As used herein
(a) "RECEIVABLES" means all amounts and all forms of
obligations now or hereafter owing to you (including but not
limited to accounts, instruments, contract rights, documents and
chattel paper) and general intangibles; all security therefor and
guaranties thereof; all of your rights as an unpaid seller of
goods and your rights to goods sold which may be represented
thereby (including but not limited to your rights of replevin and
stoppage in transit); all of your books of account, records,
files, and documents relating thereto and the equipment
containing said books, records, files and documents; all of your
rights under insurance policies relating to the foregoing; the
right to use the Trade Names in connection with our rights with
respect to the goods; and all proceeds of the foregoing.
(b) "OBLIGATIONS" means all amounts of any nature
whatsoever, direct or indirect, absolute or contingent, due or to
become due, arising or incurred heretofore or hereafter, arising
under this or any other agreement or by operation of law, now or
hereafter owing by you to us or to any parent, subsidiary or
affiliate of ours. Said amounts include, but are not limited to,
loans, debts and liabilities heretofore or hereafter acquired by
purchase or assignment from other present or future clients of
ours, or through participation. Without
- 15 -
limiting the foregoing, Obligations shall include Advances, loans
(including but not limited to the Note Amounts), amounts due
under letters of credit, interest, commission, bank related
charges, costs, fees, expenses, taxes, and all Receivables and
other amounts charged or chargeable to your account hereunder.
(c) "OTHER CLIENT" means The Shirt Shed, Inc. and its
successors and assigns, as permitted by us in our sole
discretion.
(d) "CREDIT RISK" means the risk of loss resulting
solely and exclusively from the financial inability of your
customer to pay at maturity a Receivable purchased hereunder.
(e) "INITIAL TERM" means the Effective Date through
March 31, 2000.
(f) "RENEWAL TERM" means each annual renewal of this
agreement after the Initial Term.
(g) "TERM" means the Effective Date through March 31,
2000 and each annual renewal of this agreement thereafter,
subject to acceleration upon the occurrence of an Event of
Default or other termination hereunder.
(h) "LETTER OF CREDIT SUPPLEMENT" means the Letter of
Credit Financing Supplement to Factoring Agreement dated January
31, 1992 between us and Signal Apparel Company, Inc., as the same
may be hereafter amended, supplemented or otherwise modified.
11. COVENANTS. You covenant and agree that, until the
later of the termination of this Agreement or the satisfaction in
full of all of the Obligations
(a) you and the Other Client will not
(i) permit any of your or the Other Client's
property (including but not limited to Receivables, inventory,
machinery, equipment, furniture, fixtures, plant, and real
estate) to be encumbered by any security interest, encumbrance,
mortgage, or other lien of any nature whatsoever except (x) in
favor of us or (y) pursuant to a subordination agreement
acceptable to us in our sole and absolute discretion, executed in
our favor.
(ii) permit your and the Other Client's Tangible
Net Worth (equity plus subordinated debt minus goodwill and
intangible assets), on a combined basis, to be less than the
following amounts on the dates indicated;
AS AT AMOUNT
- 16 -
(a) 09/30/97 ($51,400,000)
12/31/97 ( 54,800,000)
03/31/98 ( 56,100,000)
06/30/98 ( 57,350,000)
09/30/98 ( 58,600,000)
12/31/98 ( 59,850,000)
03/31/99 ( 60,000,000)
06/30/99 ( 60,000,000)
09/30/99 ( 60,000,000)
12/31/99 ( 60,000,000)
03/31/00 ( 60,000,000)
PLUS (b) an amount equal to sixty-five (65%)
percent of the aggregate amount of any capital contribution
and/or equity infusion into or any other additional equity
hereafter derived from any source by you or the Other Client,
excluding the conversion of any subordinated debt existing on the
date hereof into equity of you or the Other Client.
Intangible assets include write-ups,
unamortized debt discount and expense, unamortized deferred
charges, patents, licenses, R&D expenses, and other intangible
items.
(iii) permit your and the Other Client's
Working Capital (the amount by which your current assets exceed
your current liabilities) to be less than the following amounts
on the dates indicated:
AS AT AMOUNT
(a) 09/30/97 ($35,000,000)
12/31/97 ( 38,000,000)
03/31/98 ( 41,000,000)
06/30/98 ( 43,000,000)
09/30/98 ( 45,000,000)
02/31/98 ( 47,000,000)
03/31/99 ( 47,000,000)
06/30/99 ( 47,000,000)
09/30/99 ( 47,000,000)
12/31/99 ( 47,000,000)
03/31/00 ( 47,000,000)
PLUS (b) an amount equal to eighty (80%) percent
of the aggregate amount of any capital contribution and/or equity
infusion into or any other additional equity
- 17 -
hereafter derived from any source by you or the Other Client,
excluding the conversion of any subordinated debt existing on the
date hereof into equity of you or the Other Client.
Current assets means cash and marketable
securities, accounts receivable and inventory. Current
liabilities are accounts payable, accrued expenses, the Advances
and our loans to you (other than the then current portions of the
Note Amounts), short term debt and other short term liabilities.
(iv) permit your and the Other Client's Cumulative
Pre-Tax Operating Earnings (net income or loss-taken as a
cumulative whole-and amortization of goodwill before taxes, from
operations only, excluding (x) gains or losses from the sales of
assets and (y) and extraordinary items), on a combined basis, to
be less than the following amounts for the periods indicated:
PERIOD AMOUNT
01/01/97 to 09/30/97 ($18,000,000)
01/01/97 to 12/31/97 ( 25,000,000)
01/01/98 to 03/31/98 ( 3,000,000)
01/01/98 to 06/30/98 ( 5,000,000)
01/01/98 to 09/30/98 ( 7,000,000)
01/01/98 to 12/31/98 ( 10,000,000)
01/01/99 to 03/31/99 ( 2,000,000)
01/01/99 to 06/30/99 ( 3,000,000)
01/01/99 to 09/30/99 ( 4,000,000)
01/01/99 to 12/31/99 ( 5,000,000)
01/01/00 to 03/31/00 -0-
PROVIDED THAT, notwithstanding anything to the contrary contained
herein, your and the Other Client's Cumulative Pre-Tax Operating
Earnings (as defined above), on a combined basis, shall not be
less than (A) commencing with the fiscal quarter beginning
October 1, 1997, ($6,500,000) during any one fiscal quarter
occurring in fiscal year 1997, (B) ($3,000,000) during any one
fiscal quarter occurring in fiscal year 1998 and (C) ($2,000,000)
during any one fiscal quarter occurring in fiscal year 1999.
(v) permit your and the Other Client's Capital
Expenditures to exceed the following applicable amounts during
the years indicated:
PERIOD AMOUNT
1997 - $2,000,000
- 18 -
1998 - 1,000,000
1999 - 1,000,000
(vi) incur or permit to exist any indebtedness or
guaranty by you of the obligations of any other entity, except
that you and the Other Client, on a combined basis may incur (i)
unsecured debt to suppliers in the ordinary course of your
business; (ii) such other indebtedness and guaranties, if any,
which are subordinated in our favor on terms and conditions
acceptable to us (iii) indebtedness to us, and guaranties to us
of the Obligations to us of others, including, but not limited
to, the Other Client and American Marketing Works, Inc., and (iv)
unsecured debt for Capital Expenditures but only to the extent
permitted by Paragraph 11(a)(v) hereof.
(vii) pay or permit the payment (either with
Advances, loans or other amounts, if any, extended to you under
either this agreement or with any other funds) or your capital
stock now or hereafter outstanding of, for or on account of any
indebtedness which is the subject of any subordination agreement
to which you are a party unless you give us (i) advance written
notice of the proposed payment, and (ii) financial and other
statements, in form and substance acceptable to us, certified by
your Chief Financial Officer, confirming that before and after
giving effect to such payment, you are and will be in compliance
with all of the provisions of the agreement and that no event has
occurred or will have occurred which, with or without notice or
the passage of time, would constitute a breach or default under,
or would permit us to terminate this agreement.
(b) you will give us
(i) twice in each calendar year (but not more
than six months shall elapse between the first and second report
in each calendar year) a physical count of your inventory
observed by an independent public accountant acceptable to us in
a manner consistent with procedures followed in connection with
the certification of your annual financial statements.
(ii) not later than five (5) business days after
the end of each week, fifteen business days after the close of
each month and twenty (20) business days after the close of each
quarter, inventory designations certified by your Chief Financial
Officer or Treasurer, all in form and substance satisfactory to
us.
(iii) from time to time at our request
financial projections in form and substance satisfactory to us;
(iv) prompt written notice of any breach or
default under this agreement or any of your Obligations to us, or
any other agreement material to your business (including but not
limited to all license agreements relating to inventory), your
failure to comply with any
- 19 -
applicable law, rule or regulation of any governmental agency
having jurisdiction, and the commencement by or against you of
any suit, action or proceeding of a civil, criminal or an
administrative nature. We may, but shall not be obligated to
cure any such breach or default and, if elect to do so, you will
on demand reimburse us for the cost thereof.
(v) within 30 days after the close of each month,
except January, and within 45 days after the close of January and
each of the first three quarters in each of your fiscal years
consolidated and consolidating balance sheets of you and your
subsidiaries as at the end of such month or quarter,
respectively, and the related consolidated and consolidating
statements of income, retained earnings and statement of cash
flows of you and your subsidiaries for the elapsed portion of the
fiscal year ended with the last day of such month or quarter,
respectively, setting forth in each case in comparative form the
figures for the corresponding periods of the previous fiscal
year, each of which shall be accompanied by a certificate of your
Chief Financial Officer in form and substance satisfactory to us.
(vi) within 90 days after the end of each of your
fiscal years, consolidated and consolidating balance sheets of
you and your subsidiaries as at the end of such fiscal year and
the related consolidated and consolidating statements of income,
retained earnings and statement of cash flows of you and your
subsidiaries for such fiscal year, setting forth in comparative
form the figures as at the end of and for the previous fiscal
year, in each case certified by independent certified public
accountants of recognized standing satisfactory to us, whose
certificates shall be in scope and substance satisfactory to us.
Together with such financial statements you shall deliver a
certificate of your Chief Financial Officer in form and substance
satisfactory to us and a certificate of such accountants
addressed to us (x) stating that you are authorized to deliver
such financial statements and their certifications thereof to us
pursuant to this agreement and that they have caused this
agreement to be reviewed and that, in making the examination
necessary for the certification of such financial statements,
nothing has come to their attention to lead them to believe that
any default hereunder or breach hereof exists, or, if such is not
the case, specifying such default or breach and its nature, when
it occurred and whether it is continuing and (y) having attached
the calculations required to establish whether or not you and
your subsidiaries were in compliance with the covenants contained
in paragraph 11(a)(ii) through 11(a)(v).
(vii) such other reports as and when we
reasonably request
(c) you will, not later than December 31, 1997 cause
each licensor of any trademark, trade style, copyright or other
property (collectively "Properties") you use or will use in your
business under licenses heretofore granted to enter into an
agreement with us, in form and substance acceptable to us, giving
us such rights as we may request with respect to the Properties
in connection with your inventory. With respect to future such
licenses, you will use your best efforts to cause the licensors
to enter into such agreements with us when or before you
- 20 -
enter into such licenses, PROVIDED THAT, if after exercise of
your best efforts you are unable to cause the licensors to enter
into the aforementioned agreements with us, when or before you
enter into such licenses, you shall nevertheless cause each such
licensor to execute and deliver such an agreement with us within
90 days after you have entered into a license with each such
licensor. You will at all times be in full compliance with, and
perform timely all of your obligations under your agreements with
each such licensor.
12. PLACE OF PAYMENT; NEW YORK LAW AND COURT
(a) All Obligations shall be paid at our office in New
York, New York.
(b) This agreement shall be governed by and construed
according to the laws of the State of New York. All terms used
herein, unless otherwise defined herein, shall have the meanings
given in the New York Uniform Commercial Code.
(c) Each of us expressly submits and consents to the
exclusive jurisdiction of the Supreme Court of the State of New
York, and the United States District Court for the Southern
District of New York, with respect to any controversy arising out
of or relating to this agreement or any supplement hereto or to
any transactions in connection therewith and hereby waives
personal service of the summons, complaint or other process or
papers to be issued therein and hereby agrees that service of
such summons, complaint, process or papers may be made by
registered or certified mail addressed to the other party at the
address appearing herein.
13. REPORTS; RECORDS; ASSURANCES; WAIVERS; REMEDIES; ETC.
(a) We may at all times during business hours have
access to, and inspect, audit, and make extracts from, all of
your records, files and books of account, and we may charge your
account with the costs, fees or expenses incurred in connection
therewith and our then standard charges for each examiner or
auditor.
(b) You shall perform all acts requested by us to
perfect and maintain our security interest and other rights in
the Collateral.
(c) Failure by us to exercise any right, remedy or
option under this agreement or delay by us in exercising the same
will not operate as a waiver; no waiver by us will be effective
unless we confirm it in writing and then only to the extent
specifically stated.
(d) We may charge to your account, when incurred by
us, the amount of reasonable legal fees (including fees, expenses
and costs payable or allocable to attorneys retained or employed
by us) and other costs, fees and expenses incurred by us in
negotiating or preparing this agreement and any legal
documentation required by us or requested by you in
- 21 -
connection with this agreement or any amendments or supplements
thereof, or in enforcing our rights hereunder or in connection
with the litigation of any controversy arising out of this
agreement, or in protecting, preserving or perfecting our
interest in, any Collateral, including without limitation all
taxes assessed or payable with respect to any Collateral, and the
costs of all public record filings, appraisals and searches
relating to any Collateral. We may file Financing Statements
under the Uniform Commercial Code without your signature or, if
we so elect, sign and file them as your agent.
(e) Our rights and remedies under this agreement will
be cumulative and not exclusive of any other right or remedy we
may have hereunder or under the Uniform Commercial Code or
otherwise. Without limiting the foregoing, if we exercise our
rights as a secured party we may, at any time or times, without
demand, advertisement or notice, all of which you hereby waive,
sell the Collateral, or any part of it, at public or private
sale, for cash, upon credit, or otherwise, at our sole option and
discretion, and we may bid or become purchaser at any such sale,
free of any right of redemption which you hereby waive. After
application of all Collateral to your Obligations (in such order
and manner as we in our sole discretion shall determine), you
shall remain liable to us for any deficiency.
(f) We shall have no liability hereunder (i) for any
losses or damages (including indirect, special or consequential
damages) resulting from our refusal to assume, or delay in
assuming, the Credit Risk, or any malfunction, failure or
interruption of communication facilities, or labor difficulties,
or other causes beyond our control; or (ii) for indirect, special
or consequential damages arising from accounting errors with
respect to your account with us. Our liability for any default
by us hereunder shall not exceed a refund to you of any
commission paid by you during the period starting on the
occurrence of the default and ending when it is cured or waived,
or when this agreement is terminated, whichever is earlier.
(g) This agreement cannot be changed or terminated
orally and is for the benefit of and binding upon the parties and
their respective successors and assigns. However, you may not
assign any of your rights hereunder without our prior written
consent. This agreement, and any concurrent or subsequent
written supplements thereto or amendments thereof signed by both
of us, represent our entire understanding and supersede all
inconsistent agreements and communications, written or oral,
between your and our officers, employees, agents and other
representatives.
(h) This agreement shall not be effective unless
signed by you below, and signed by us at the place for our
acceptance.
(i) TO THE EXTENT LEGALLY PERMISSIBLE, BOTH YOU AND WE
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY LITIGATION RELATING TO
- 22 -
TRANSACTIONS UNDER THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE.
(j) References herein to written notice shall include
but shall not be limited to notice by telecopier, mail, messenger
or any courier service.
(k) This agreement is subject in all respect to the
Forbearance Agreement. In the event of any conflict of any term
or provision of this agreement with any term or provision of the
Forbearance Agreement, the term or provision of the Forbearance
Agreement shall control.
Very truly yours,
BNY FINANCIAL CORPORATION
By:/s/ Joseph A. Grimaldi
Title:President
AGREED TO as of the 31st day of October, 1997.
ATTEST: /s/ Robert J. Powell
SIGNAL APPAREL COMPANY, INC.
By: /s/ David E. Houseman
Title: Chief Executive Officer
[SEAL]