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Buying Agency Agreement

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Governing Law: New York     Date: 3/31/2006
Industry: Retail (Apparel)     Sector: Services

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Exhibit 10.47



THIS BUYING AGENCY AGREEMENT (this “Agreement”) is entered into and made effective this 16th day of November, 2005 (the “Effective Date”) by and between DESIGNS APPAREL, INC., a Delaware corporation, located at 555 Turnpike Street, Canton, MA 02021, a (hereinafter referred to as “Principal” or “Party”, which terms shall include any and all affiliates and subsidiaries), and LI & FUNG (TRADING) LIMITED, a company incorporated in Hong Kong with limited liability, located at 9th Flr. LiFung Tower, 888 Cheung Sha Wan Road, Kowloon, Hong Kong (hereinafter referred to as “Agent” or “Party”) (Collectively, the “Parties”).

W I T N E S S E T H:

WHEREAS , Principal is engaged in the business of merchandising of apparel and accessories throughout the World; and

WHEREAS , Principal wishes to purchase certain non-U.S. produced merchandise (hereinafter referred to as the “Merchandise”); and

WHEREAS , Agent is in the business of providing buying services (hereinafter referred to as the “Services” which term shall include, but not limited to, all of the services described in Section 4, below); and

WHEREAS , Principal wishes to appoint Agent as its non-exclusive buying agent throughout the World (the “Territory”),

NOW, THEREFORE , in consideration of the covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, Principal and Agent agree as follows:

1. APPOINTMENT . Principal hereby appoints Agent as a non-exclusive buying agent to render Services in the Territory in connection with the purchase of Merchandise by Principal. Agent hereby accepts such appointment on the terms and conditions contained herein. Principal may at any time and from time to time, without notice, appoint other buying agents and Agent may accept other appointments from any other Principal to perform services.


2.1 Each Party to this Agreement will be and agrees to act as an independent contractor and not as a partner of, or joint venturer with, the other Party for any purpose related to this Agreement or the transactions contemplated by this Agreement, and neither Party will by virtue of this Agreement have any right, power or authority to act or create any obligation, expressed or implied, on behalf of the other Party except as provided in Section 4(L)(i) below, or to act on his own account. Except as expressly provided herein, Principal shall bear all risk of loss for damaged, lost, defective or non-conforming merchandise purchased by Principal under this Agreement.

2.2 Principal acknowledges and agrees that Agent may engage sub-agents to perform some or all Agent’s services hereunder, provided, however, that in no event shall the relationship between the Agent and sub-agent result in either Party becoming a Principal or seller of Merchandise from the other. Agent shall advise Principal in writing of the appointment of any sub-agents who may perform services under this Agreement. Further, Agent shall be solely responsible to ensure that its sub-agents strictly adhere to the terms and conditions of this Agreement and to pay all remuneration payable to its sub-agents.


3.1 TERM. The term of this Agreement shall commence on the Effective Date and, unless sooner terminated as provided herein, shall continue in full force and effect for an initial term of one (1) year (the “Initial Term”), and thereafter shall remain in force until terminated in writing by either Party upon sixty (60) days prior written notice to the other, provided, however, that, in any event, the confidentiality provisions of this Agreement shall remain in full force and effect in perpetuity as to any Confidential Information disclosed hereunder prior to the date of expiration or termination of this Agreement.

3.2 CONDITIONS FOR TERMINATION BASED ON CAUSE; NON-PERFORMANCE. Either Party may suspend its performance or terminate this Agreement in the event either Party fails to perform any material term or condition of this Agreement and the defaulting Party does not cure such failure within thirty (30) days after written demand by the other, five (5) days for an Agent delay in meeting a delivery schedule default; or immediately upon written notice at any time upon occurrence of any of the following events: (a) the other Party (i) becomes insolvent; (ii) enters into or files a petition, arrangement or proceeding seeking an order for relief under bankruptcy laws of the United States; (iii) enters into a receivership for any of its assets; or (iv) enters into a composition with or assignment for the benefit of its creditors. If such default remains uncured after thirty (30) days (or five days, as the case may be), the aggrieved Party may terminate this Agreement by sending further notice to such effect, effective immediately. Any failure by Agent in the performance of its duties and obligations under this Agreement, which is not the result of an excusable delay as provided in Section 15 herein, shall be deemed a failure by Agent to perform a material term or condition of this Agreement. In the event of termination upon default of the Agent, in addition to any and all other remedies permitted by law, Principal shall be entitled to enjoy all Services rendered by Agent through the date of termination.

3.3 EFFECT OF TERMINATION IN GENERAL. Upon any termination of this Agreement, each Party will be released from all obligations and liabilities to the other occurring or arising after the date of such termination, except that the obligations of the Parties under this Agreement, which, by their nature, would continue beyond termination or expiration of this Agreement, including but not limited to performance of the Parties respective obligations with respect to any purchase order placed by Agent for Principal pursuant to this Agreement, which shall remain until the Merchandise has been delivered to Principal or such order is canceled, as the case may be, shall survive termination of this Agreement. While termination will not relieve the Parties from liability arising from any breach of this Agreement, neither Party will be liable to the other for damages or any sort solely as a result of terminating this Agreement in accordance with its terms. Termination of this Agreement will be without prejudice to any other right or remedy of either Party.


A. Agent shall, on behalf of and pursuant to Principal’s directions, perform the following Services for Principal:




Advise Principal of Merchandise of the types described by Principal, of current styles and fashions, current prices, trends, material availability, shipping conditions and availability of production;




Assist Principal in the location of qualified suppliers (the “Suppliers”) and the arrangement of the manufacture of the Merchandise which Principal wishes to purchase in the Territory. Prior to engagement, Agent shall provide Principal with a vendor profile and factory evaluation for each Supplier. For the avoidance of doubt, the term “ qualified ” as used in this Section 4(A)(ii) shall mean Suppliers that are reputable, have acceptable credit ratings and have the financial and other means to be able to meet the requirements set forth in Principal’s written purchase order(s), where or when available.




Place orders for specified Merchandise on Principal’s behalf with Suppliers designated by Principal by written instructions to Agent, and negotiate the lowest possible price for such Merchandise for the benefit of Principal;





Until delivery of the Merchandise is made to Principal or its designee, Agent shall communicate with Suppliers and monitor Supplier’s performance to ensure that production of the Merchandise is running according to the delivery schedule set by the Principal for each item and inform Principal as to production status of all such orders. Further, Agent shall use its best reasonable efforts to assure that the Merchandise being produced by Supplier conforms substantially, and in all material respects, to the production specification and samples approved by Principal;




Arrange for the shipment of the Merchandise including preparation of all relevant export documentation in accordance with the terms of the relevant purchase order;




Use its best efforts to monitor the transfer of Merchandise to Principal, or its designee, assuring that said transfer of Merchandise meets U.S. tariff classification requirements, and is delivered in the proper quantities and in a timely manner;




Should Principal fail, for any reason, to accept delivery of the Merchandise, Agent shall use its best reasonable efforts to prevent Supplier from disposing of the Merchandise without first removing the labels, brand names or markings (logos) affixed to the Merchandise which relate to Principal. Principal agrees that Agent shall have no liability to Principal for acts or omissions of Supplier that are not within its control.




Conduct INTRO, DUPRO and FRI statistical audits on each shipment of Principal as described in Principal’s Quality Assurance Manual.

B. Agent shall provide an inspection certificate to Principal for each shipment stating that:




The quality of materials, workmanship and styling of the Merchandise meets the relevant quality requirements of the written specifications of the samples upon which Principal’s purchase was based and passed a Final Random Inspection (FRI);




If the Flammable Fabric Act applies to the Merchandise, reasonable and representative tests were conducted in accordance with said Act to demonstrate that the Merchandise conforms in all material respects with the flammability standards issued thereunder;




The Merchandise complies with all requirements provided, in writing, by Principal;




The color of the Merchandise matches the laboratory dips upon which Principal’s purchase was based;




The Merchandise, if knit, meets the weight specifications that may have been provided by Principal; and.




The Merchandise is packed in a manner specified and approved by Principal which will insure its safe transport to Principal’s designated destination.

C. Agent shall assure to the best of its ability that all invoices, affidavits, letters, papers or other statements, written or verbal, pertaining to the Merchandise are complete and contain no material omissions or fraudulent or false statements in contravention of the U.S. Tariff Act of 1930, as amended, or any other applicable law, and shall supply Principal with the originals or copies of all such written documents promptly upon Principal’s request. Agent shall abide by the terms of the Foreign Corrupt Practices Act.

D. Agent shall verify that the quota category (if any) for the Merchandise shipped is open at the time of shipment.

E. Agent, only at Principal’s specific written direction, shall purchase quota on Principal’s behalf. Principal shall fund all such purchases. Any quota benefits, whether temporary or permanent, resulting from such purchase shall inure to the sole benefit of Principal.

F. Agent will ensure that copies of invoices, bills of lading, packing lists, properly authenticated visas (when required), certificates of origin (when required), assemblers’ declarations (when required), plus other related and/



or necessary documents, as well as shipping and other export documents covering all Merchandise purchases by Principal, are forwarded to Principal not later than fifteen (15) days after shipment.

G. Agent represents and warrants that it is knowledgeable and familiar with Property Rights in the apparel and accessories industry.

H. Agent will verify, in writing, that Suppliers are reputable, have acceptable credit ratings and have the financial and other means to be able to meet the requirements set forth in Principal’s written purchase orders. Where or when available, Agent shall obtain credit reports and/or other information regarding Suppliers or potential Suppliers and forward such reports to Principal, upon request.

I. Undertake its best efforts to ensure that goods ordered by Principal will not be transshipped, or their country of origin otherwise misrepresented, including the careful selection of each factory and ensuring that each factory selected possesses the necessary capacity in plant, machinery, and personnel to produce the merchandise to be ordered.

J. Ensure that upon request by Principal, Agent will obtain, and forward to Principal, within fifteen (15) days of receipt of the request, the following production/country of origin verification documents for any and all shipments of Merchandise, including, but not limited to, cutting records, packing lists, production records, employee time clock and other records, bills of lading, necessary to verify the country of origin of the Merchandise, or for any other purpose.

K. Ensure that Principal and/or its broker or representative, will be given access to Supplier’s facilities: (i) at times designated by Principal so that it may perform its own in-factory quality insurance inspection, and (ii) at all reasonable times, and from time to time, and without notice, to inspect the facilities of any Supplier introduced to Principal by Agent, or any sub-agents (as the case may be), under this Agreement in order that Principal may be satisfied that the Merchandise being produced pursuant to its written purchase order(s) is being manufactured by Supplier in accordance with all laws and legal requirements of the country in which the Merchandise, or any portion of the Merchandise, is manufactured, including all laws relating to the minimum age, hours, wages, health and safety.

L. Agent, at Principal’s written request and direction, agrees to use its best reasonable efforts to negotiate any and all disputes and claims arising with any Supplier of Merchandise, and upon Principal’s written request, consistent with Principal’s reasonable instructions, and on Principal’s behalf, to settle any and all such disputes and claims to the satisfaction of Principal.

M. Agent will, at all times during the term of this Agreement, use its best reasonable efforts to monitor and ensure that all Merchandise, or any portion thereof, manufactured by any Supplier introduced to Principal by Agent is produced in accordance with the written purchase order of Principal and in strict compliance with all applicable governmental laws, ordinances, codes, rules, regulations, programs, plans and orders of the United States and of the country in which such Merchandise, or any such portion thereof, is produced, including without limitation the Occupational Safety and Health Act, the Fair Labor Standards Act of 1938, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, Executive Order 11246, as amended by Executive Order 11375, along with the implementing rules and regulations of the Office of Federal Contracts Compliance ( MINIMUM AGE, HOURS, WAGES HEALTH AND SAFETY) , and § 307 of the U.S. Tariff Act of 1930, as amended (19 U.S.C. §1307), prohibiting the importation of goods, or any portion thereof, manufactured by use of convict, forced or indentured labor of any kind (including convict, forced or indentured child labor) destined for United States markets, and Agent will notify Principal immediately upon becoming aware of any violation thereof. Further, Agent will ensure that all Suppliers are, at all times during the term of this Agreement, complaint with Principal’s written “Standards for Suppliers”.



N. Agent will monitor all requirements of the United States Customs Service regarding global security, as described in the Customs-Trade Partnership Against Terrorism (C-TPAT) Program, and will notify Principal immediately upon becoming aware of any violation thereof.

O. In all transactions connected with this Agreement, Agent shall:




have no authority to bind Principal except upon Principal’s written purchase order or other written instructions as finally approved by Principal; and




clearly indicate that Agent is at all times only acting as a buying agent, and that Principal is at all times the principal solely responsible for purchasing, accepting delivery, and paying for the Merchandise. Agent has no authority, express or implied, to purchase the Merchandise on its own account, take delivery or title to said Merchandise, hold such Merchandise in inventory, pay, commit to pay, or arrange for the payment for such Merchandise from its own funds, such functions being the sole responsibility of Principal.

P. Agent warrants that under no circumstances shall Agent:




receive, directly or indirectly, any compensation or other monetary or non-monetary remuneration from any Party other than Principal, in connection with Agent’s activities or the performance of its duties under this Agreement, unless and with the exception that:




Principal expressly authorizes Agent, in writing, to provide financial assistance that may be requested by the Supplier in question at a cost to be borne by that Supplier, in order that raw materials can be secured and production can proceed to meet the specified shipment date of Principal. Such financial assistance shall primarily consist of Agent’s opening a letter of credit to that Supplier; and




Agent may receive reimbursement by Suppliers for product liability insurance coverage purchased by Agent on behalf of Suppliers against Merchandise shipped to Principal.




share, directly or indirectly, any of its commission with any Supplier;




sell, exchange, transfer or provide any materials used in or, tools, patterns, molds, dies used for, the production of Merchandise that is the subject of this Agreement.

5. PURCHASING TERMS. All purchases made by Agent for Principal’s

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