BIBBY FINANCIAL SERVICES STANDARD CONDITIONS FOR THE PURCHASE OF DEBTS (EDITION A/2004) INCORPORATED INTO THE CONFIDENTIAL INVOICE DISCOUNTING AGREEMENT MADE WITH SIGNATURE INDUSTRIES LIMITED

3

3

3

4

5

7

10

14

18

19

22

24

28

28

33

37

37

38

39

40

40

1.

Introduction

1.2

Terms set out in any Special Conditions or Schedule to this Agreement shall prevail over any inconsistent term in these Standard Conditions.

2.

Duration of this Agreement

2.2

We shall have the right at any time following a Termination Event to terminate this Agreement by written notice to you.

3.1

This Agreement shall apply to the categories of Debts referred to in clause 4 of the Particulars and such other categories of Debts as we may agree in writing with you.

3.3

Initial Debts shall be Notified to us on an Invoice Schedule on the Commencement Date. Debts coming into existence after the Commencement Date shall be Notified to us on Invoice Schedules within 2 days of the issue of an invoice evidencing the Debt to your Customer or within such other period as we may stipulate in writing.

3.5

If any Debt shall fail to vest in us, you will hold the Debt and its Related Rights on trust for us.

3.7

Unless we tell you in writing, your obligation to Notify Debts under condition 3.3 does not apply to Non-notifiable Debts.

3.9

Any credit note will be raised immediately when due and Notified to us on a Credit Note Schedule together with, if we tell you, a copy of the credit note within 2 days of its issue.

4.1

The Purchase Price of each Debt vesting in us shall be the amount paid to us in or towards discharge of the Debt less:

4.1.2

Factor’s Discount, Fees and any other amounts due from you to us under this Agreement or any other agreement.

4.2

Unless otherwise agreed by us, the Purchase Price shall be payable in Sterling. If a Debt is expressed in a currency other than Sterling:

4.2.2

when converting any Collection to Sterling we may calculate the Purchase Price at the rate of exchange quoted by our bankers for them to purchase the relevant currency on the date we debit the Collection to the Sales Ledger Control Account; and

5.

Credit Limits

5.2

If we decide not to establish Credit Limits for any of your Customers, in our sole discretion we may treat some or all Debts which are Disapproved Debts as Approved Debts.

5.4

We may establish, increase, reduce or cancel a Credit Limit entirely at our discretion and shall not be obliged to give you any reason for our decision. We shall advise you of Credit Limits and changes to them in such manner as we shall decide.

5.6

We are not a credit reference agency and the establishment of a Credit Limit is not to be treated as an indication of the creditworthiness of a Customer. You will not tell anyone, including your Customers, the amount or absence of any Credit Limit.

5.7.1

upon expiry of the Approval Period;

5.7.3

upon the occurrence of a Termination Event (whether or not we exercise our right to terminate this Agreement).

5.9

If an Approved Debt becomes a Disapproved Debt, you will forthwith repay any Prepayment made in respect of such Debt.

5.11

In so far as a Debt in excess of a Credit Limit or a Debt for which no Credit Limit has been established is designated as an Approved Debt on any report or account provided by us to you, including (without limitation) on a Customer Aged Debt Analysis, for the purpose of calculating the Available Funds, such Debt will only be an Approved Debt to the extent that it is within the relevant Credit Limit and does not exceed the Customer Concentration Percentage.

6.

Your accounts

6.2

The anticipated Purchase Price of all Debts will be credited to your Sales Ledger Control Account. The amount credited may be equivalent to the Notified Value before deduction of the items referred to in conditions 4.1.1 and 4.1.2 and may be adjusted as necessary at any time.

6.3.1

the Notified amount of any credit note issued by you;

6.3.2

the amount of any Allowance due to or taken by a Customer;

6.3.4

any Collection.

6.4

The net amount of all credits and debits made to your Sales Ledger Control Account under conditions 6.2 and 6.3, excluding Collections, shall be applied to your Client Account.

6.6

The balance on your Current Account at any time will be calculated by deducting the balance on your Client Account from the balance on your Sales Ledger Control Account.

6.7.1

Prepayment to you in respect of all Outstanding Approved Debts on the Working Day following the receipt of your Invoice Schedule relating to such Debts;

6.8

We shall not be obliged to make any payments to you:

6.8.2

if, having made such payment, the balance on your Current Account would exceed the Funding Limit;

6.8.4

if you are Insolvent; or

6.9

In our absolute discretion, we may make Prepayments to you in excess of the Available Funds or Funding Limit on such terms and subject to the payment of such additional charges as we may specify.

6.10.1

the balance on your Current Account exceeds the value of Approved Debts after applying the Approved Funding Percentage and Customer Concentration Percentage; or

6.11

Unless otherwise agreed by us, all payments by us to you shall be made to your account through the Bankers Automated Clearing System or Clearing Houses Automated Payment System, except payments in Approved Currencies which shall be made to you through the Society for Worldwide Interbank Telecommunication system.

6.13

We shall have the right at any time to debit to your Client Account all amounts owing by you to us, whether under this Agreement or any other agreement or on any other account and whether payable presently, prospectively or contingently, or by reason of an assignment to us, and/or to set off such amounts against sums due from us to you. In our absolute discretion, we may make a reasonable estimate of an amount payable where it cannot be determined at the relevant time. All such amounts shall be combined into a single account. Any debit balance shall be immediately payable to us and any credit balance may be payable to you.

6.15

We shall send you statements of the Sales Ledger Control Account and Client Account at such intervals as we shall decide and a Client Statement at the end of each month or we shall provide you with access to such Accounts through our Computerised Services. Such Accounts shall be treated as correct and binding upon you except for obvious errors or those of which you tell us within 15 days of the date of our sending such Accounts to you or of their publication though our Computerised Services.

6.17

All payments to be made by you under this Agreement shall be made immediately without deduction or set off. If any deduction is required by law, you will:

6.17.2

promptly account to the relevant authority for such amount and deliver to us on demand such documents as we may reasonably request in respect of that payment; and

7.

Factor’s Discount, Fees and other charges

7.1.1

the Retrospective Fee, which we shall debit to your Client Account at any time on or after the Commencement Date;

7.1.3

the Refactoring Fee, which we shall debit to your Client Account on or at any time after the first Working Day of the month following the month during which the Refactoring Fee accrues;

7.2

The Fee and Retrospective Fee cover:

7.2.2

the provision of statements of your Sales Ledger Control, Client and Current Accounts and other reports;

7.2.4

the management of your sales ledger; and

7.3

If the total of the Fees (excluding the Retrospective and Refactoring Fees) debited to your Client Account in the period shown in clause 10 of the Particulars (starting from the first day of the month following the Commencement Date) is less than the Minimum Fees for such period, you will pay to us the amount of such deficit. If we anticipate that there will be a deficit in any subsequent period, we may debit your Client Account with the estimated amount of such deficit.

7.5

If this Agreement ends for any reason before the expiry of the Minimum Period or without you giving us notice of at least the Minimum Notice Period or if we exercise any of our rights under condition 15.3 following a Termination Event, you will pay to us the greater of either:

7.5.2

a sum equivalent to the Fees which would have accrued had this Agreement continued from the date of termination or the occurrence of the Termination Event (as appropriate) for, as appropriate, the remainder of the Minimum Period and the Minimum Notice Period on the assumption that such Fees would have accrued proportionally at a rate equivalent to the monthly average of the Fees charged to you during the six months immediately preceding the ending of this Agreement or the occurrence of the Termination Event (as appropriate).

7.7

If we agree in writing that this Agreement may end without you giving us the full period of notice to which we are entitled, you will pay to us such sum as we may specify as consideration for our agreement to waive our entitlement to receive such notice.

7.8

You will pay to us an arrangement fee for any variation of this Agreement or any additional service or facility requested by you, including our processing of Invoice Schedules or Collections so that we may make payments to you the same day as the receipt of such items, the making of payments to you in excess of the Available Funds or Funding Limit and the provision of additional reports, our charges for which will be provided to you from time to time.

7.9.1

all costs and expenses payable by us as a result of appointing accountants, lawyers, other professional advisers or debt collection agencies to:

7.9.2

all costs and expenses payable to any Customer or third party in any proceedings;

7.9.4

all bank charges of whatever nature for which we are liable in respect of any Debt or Collection;

7.9.6

any increase from time to time in the cost to us of the funds we obtain to provide Prepayments to you under this Agreement including, without limitation, to the discount or interest rate or other costs, charges, fees and expenses relating to such funds (whether such Prepayments are in existence at the time of, or made after, such increase); and

7.9.7

any costs and expenses incurred by us in carrying out any of your obligations under this Agreement or anything which we reasonably request you to do in connection with the proper performance of this Agreement.

7.11

Where applicable, Value Added Tax will be payable on all Fees and other amounts payable by you to us under this Agreement.

8.1

We shall have the sole and exclusive right of collecting and enforcing payment of any Debt in such manner as we consider appropriate. You have no right to collect Debts unless condition 8.6 applies or you have our written authority.

8.2.1

you will give written notice to each Customer of the assignment of Debts to us on all invoices, statements of account and other documents in such format and at such times as we shall tell you; and

8.3

We shall have the right to:

8.3.2

accept payment from a Customer of a sum less than the Notified Value of the Debt in satisfaction of such Debt ;

8.3.4

make payment to a Customer of any credit balance on the Customer’s account; and

8.4

You will be bound by our decisions even if the Purchase Price of a Debt is reduced as a consequence.

8.5.1

fully co-operate with us to collect Debts and resolve disputes with Customers;

8.5.3

ensure the attendance at any hearing of all witnesses required in connection with any proceedings; and

8.6

If we appoint you as our agent to collect Debts:

8.6.2

you undertake to act promptly and efficiently at your expense in carrying out your duties as our agent;

8.6.4

you will not appoint any other person to collect payment of Debts without our prior written consent;

8.6.6

you will manage the accounts of Customers, render statements to Customers and maintain such accounts and records in respect of the Debts as we shall from time to time stipulate and will conspicuously mark your ledgers to show that the Debts have been assigned to us;

8.6.8

no Prepayments shall be made in respect of Debts payable by standing order or direct debit until you have provided us with satisfactory evidence that payment under such standing order or direct debit will be made to the bank account identified in condition 8.6.7;

8.6.10

you will provide us with the following documents completed to the month end by the 12th day of the following month:

8.6.10.2

an open item aged Customer listing, including the Customer’s name, address and telephone number;

8.6.10.4

an aged creditors’ listing; and

8.6.11

you will provide us with monthly management accounts for each month by the end of the calendar month following the month to which the accounts relate; and

8.7

We may at any time terminate your agency to collect Debts. Upon termination of such agency:

8.7.2

you will not hold yourself out as our agent for any purpose;

8.7.3

we shall collect all Debts or supervise their collection by a third party;

8.7.4

you will ensure that Customers pay all Debts directly to us;

8.7.6

we shall be entitled to charge you a collection fee of 10% of the Notified Value of all Debts Outstanding at the date of the termination of the agency (which we may debit to your Client Account at any time after such date) and of all Debts Notified to us after such date (which we may debit to your Client Account at any time after each Debt is Notified). Such collection fee is to cover the additional work we will be required to perform to carry out the obligations you agreed to undertake under the terms of your agency. You acknowledge that such collection fee represents a genuine pre-estimate of the loss we are likely to sustain in consequence of the termination of your agency to collect Debts.

9.1

You agree to allow any representative or agent of ours at all reasonable times to enter any premises at which you carry on business to inspect goods (including Returned Goods) and check Contracts of Sale and all books, accounts, computer or other records, orders, correspondence and such other documents as we may require and to copy such documents and computer disks at your expense.

9.3

You will provide us with your management accounts and such other financial reports showing your financial position and the results of your operations as we may require for such periods and at such intervals as we may specify.

10.

Your undertakings

You undertake, for the duration of this Agreement and until you have discharged all monies owing to us, that:

10.1.1

you will not vary the terms of the Contract of Sale, any payment terms or settlement discounts (if any);

10.1.3

you will owe no obligations to the Customer other than under the Contract of Sale;

10.1.5

you will not issue or agree with the Customer to issue any credit note against the Debt if we have notified you that you must not do so;

10.3

every Contract of Sale is subject to the law of England and Wales, provides for payment in Sterling (unless we have agreed in writing that your Customers may make payment of Debts in an Approved Currency) and such Contract of Sale does not include any prohibition against the assignment of the Debt or the Contract of Sale under which the Debt arises;

10.4.1

until the relevant Contract of Sale has been completely performed;

10.4.3

owed by a Customer from whom you purchase goods or services or with whom you have any contra accounting agreements;

10.4.4

which arises from a Contract of Sale containing terms that entitle the Customer to return the goods;

10.4.6

in respect of which a payment has previously been made to you; or

10.5

you will Notify us separately of each Debt which:

10.5.2

relates to a claim for interest and/or compensation payable either pursuant to the Contract of Sale or the Late Payment of Commercial Debts (Interest) Act 1998, providing details of how the claim arises and the calculation of the claim; or

10.6

you will tell us immediately of any:

10.6.2

change or proposed change in the Control of your business or that of any Associate or Guarantor;

10.6.4

security holder enforcing its security over any part of your assets or undertaking;

10.6.6

dispute between you and a Customer and provide us with full particulars of such dispute; and

10.7

you will not create any security, trust, lien or other interest over your existing or future Debts without our prior written consent;