Exhibit 10.10


 


GMAC COMMERCIAL FINANCE LLC

FACTORING AGREEMENT


 


[Collection w/o Advances]


 


RAFAELLA APPAREL GROUP, INC.

1411 BROADWAY

NEW YORK NY 10018


 


Effective
as of June 20, 2005 GMAC COMMERCIAL FINANCE
LLC and Rafaella Apparel Group, Inc. agree that Factor shall act as
Client’s sole factor upon the following terms and conditions:


 


1.        DEFINITIONS


 


All
initially capitalized terms used in this agreement are defined in Rider I
attached hereto. All other terms used herein, unless otherwise defined herein,
shall have the meanings given such terms in the UCC.


 


2.        COVERED SALES; SECURITY INTEREST


 


(a)       Client hereby assigns and sells to Factor, as absolute owner, and Factor
hereby purchases from Client, all Accounts assigned to Client on the date
hereof by Rafaella Sportswear, Inc. and all Accounts created on or after the
Effective Date that are specifically assigned hereunder by Client to Factor
from time to time and that arise from Client’s sale of merchandise or rendition
of services. Factor’s purchase of and acquisition of title to each Account so
assigned will be effective as of the date of its creation and will be entered
on Factor’s books when Client furnishes Factor with a copy of the invoice
evidencing such Account or electronically transmits to Factor the details of
the invoice in accordance with Paragraph 8(a) hereof.


 


(b)       Client hereby grants to Factor a continuing security interest in all of
the Collateral as security for all Obligations.


 


3.        CUSTOMER CREDIT APPROVAL


 


Client
shall submit to Factor the principal terms of each of Client’s Customers’
orders for Factor’s written credit approval. Factor may, in Factor’s
discretion, approve in writing all or a portion of Client’s 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 Client. No credit approval shall be effective (a) unless in
writing or transmitted by Factor electronically; (b) unless the goods are
shipped or the services rendered within the time specified in Factor’s written
credit approval or within forty-five (45) days after the approval is given, if
no time is specified and (c) unless the assignment of the invoice evidencing
the applicable Account is received by Factor, in accordance with Paragraph 8(a)
hereof, within ten (10) business days from the date of such invoice. After the
Customer has accepted delivery of the goods or performance of the services,
Factor shall then have the Credit Risk (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 Accounts evidenced by invoices which arise from orders
approved by Factor in writing except for those Accounts evidenced by invoices
less than Two Hundred Fifty Dollars ($250.00) and invoices evidencing charges
for samples supplied to Client’s Customers. Factor shall have neither the
Credit Risk nor the risk of non-payment for any other reason on Accounts
arising from orders not approved by Factor in writing. Factor may withdraw
Factor’s credit approval or withdraw or adjust a credit line at any time before
Client delivers the goods or renders the services.


 


4.        PURCHASE PRICE OF ACCOUNTS; RESERVES


 


The
purchase price of Accounts is the Net Face Amount thereof less Factor’s
commission. The purchase price will be credited to Client’s account on the
Settlement Date. Factor may deduct Reserves from the amount payable to Client
on any Settlement Date.


 


5.        COMMISSIONS


 


(a)       For Factor’s services, Factor shall charge to Client’s account monthly,
as of the 15th day of each month, a commission at the rate of (x) three-tenths
of one percent (0.30%) of the gross face amount of each invoice evidencing an
Account with respect to which the Customer is May Department Stores Co., Belk,
Inc. or Saks Fifth Avenue, or (y) four-tenths of one percent (0.40%) of the
gross amount of each invoice evidencing any other Account, in either case
created during such month on terms not exceeding sixty (60) 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; provided, however, that
if Client changes the terms of any invoice whether or not Factor consents to
such change (it being understood that nothing in this provision diminishes
Factor’s rights or Client’s obligations under any other provision hereof
including but not limited to Paragraph 8), then the commission on the gross
face amount of that invoice shall be the commission hereinabove set forth plus
one-quarter of one percent (1⁄4%) for each thirty (30) days or portion thereof of
such change. Factor’s commission on any invoice evidencing an Account shall not
be less than Two Dollars ($2.00).


 


(b)       Anything in the preceding Paragraph 5(a) to the contrary
notwithstanding, Client acknowledges and agrees that Factor may from time to
time impose surcharges upon the commissions set forth in Paragraph 5(a) with
respect to invoices owing to Client by certain Customers from time to time
designated by Factor (as designated by Factor from time to time, the “Specified
Customers”). Attached hereto as Schedule 5(b) is a schedule of the
Specified Customers, as currently designated, and the surcharges currently in
effect in respect of each. Factor shall, from time to time in the exercise of
its sole discretion, revise such schedule of Specified Customers and related
surcharges (as revised from time to time, the “Surcharge Schedule”), which
revisions shall be effective upon the posting thereof on a website maintained
by, or on behalf of, Factor (or, if Factor


 

















 


chooses to mail a revised Surcharge Schedule
rather than post it on its website, three (3) business days after the deposit
thereof in the US mail, addressed to Client’s chief executive offices at the address
therefor set forth on Schedule 7(d) hereto).


 


6.        CHARGES; BALANCES


 


Factor
may charge to Client’s account all Obligations. Unless otherwise specified, all
Obligations shall be payable on demand. All amounts, if any, that Factor, in
the exercise of its sole discretion, pays or makes available to Client or for
Client’s account in excess of the purchase price of Accounts shall be
chargeable to Client’s account when paid or made available to Client. Factor
may also charge to Client’s account interest on the average daily balance of
all Obligations, if any, which are outstanding during each month at the
Interest Rate. Interest shall be calculated on the basis of the actual number
of days elapsed over a year of three hundred and sixty (360) days. All credit
balances or other sums at any time standing to Client’s credit and all Reserves
on Factor’s books, and all of Client’s property in Factor’s possession at any
time or in the possession of any parent, affiliate or subsidiary of Factor or
on or in which Factor or any of them have a lien or security interest, may be
held and reserved by Factor as security for all Obligations. Factor will
account to Client monthly and each monthly accounting statement will be fully
binding on Client and will constitute an account stated, unless, within
forty-five (45) days after such statement is mailed to Client or within
forty-five (45) days after the mailing of any adjustment thereof Factor may
make, Client gives Factor specific written notice of exceptions.


 


7.        REPRESENTATIONS, WARRANTIES AND COVENANTS


 


Client
hereby represents, warrants and covenants that:


 


(a)       Client has good title to the Collateral, including without limitation,
the Accounts, free of any encumbrance except in Factor’s favor and as set forth
on Schedule 7(a) hereto; each Account is a bona fide, enforceable
obligation created by the absolute sale and delivery of goods or the rendition
of services in the ordinary course of business; each Account is due from a
Customer located in the United States, Puerto Rico or Canada and is payable in
United States dollars; the selling terms of each Account shall not exceed sixty
(60) days without the prior written consent of Factor; Client’s Customer is
unconditionally obligated to pay at maturity the full amount of each Account
without defense, counterclaim or offset (regardless of merit); all documents in
connection therewith are genuine; and the Customer will accept the goods or
services.


 


(b)       Client’s exact legal name is as set forth on the signature page of this
agreement. Client shall not change Client’s legal name unless Factor shall have
received not less than forty-five (45) days prior written notice of such
proposed change. Client has not, during the past five years, been known by or
used any Trade Names or been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any entity, or acquired any
of its property or assets out of the ordinary course of business, except for
its acquisition of substantially all of the assets and liabilities of Rafaella
Sportswear, Inc., a Delaware corporation.


 


(c)       Client is an organization of the type and organized in the jurisdiction
set forth on Schedule 7(c). Schedule 7(c) accurately sets forth
Client’s organizational identification number or accurately states that Client
has none and accurately sets forth Client’s federal employer identification
number. Client shall not change Client’s organizational identification number
(or if Client does not have an organizational identification number, Client shall
not acquire one), or change Client’s type of organization, jurisdiction of
organization or other legal structure unless Factor shall have received not
less than thirty (30) days prior written notice of such proposed change.


 


(d)       Client’s chief executive office and mailing address and Client’s Records
concerning Accounts are located only at the address identified as such on Schedule
7(d) and Client’s only other places of business and the only other
locations of Collateral, if any, are the addresses set forth on Schedule
7(d). Schedule 7(d) correctly identifies any of such locations which
are not owned by Client and sets forth the owners and/or operators thereof.
Client shall not change Client’s chief executive office, mailing address or any
location of Collateral unless Factor shall have received not less than thirty
(30) days prior written notice of such proposed change.


 


(e)       Client shall furnish to Factor, annual financial statements within one
hundred twenty (120) days after the end of each fiscal year fairly presenting
the financial position and results of operations of Client as at and for such
year and prepared in accordance with generally accepted accounting principles,
certified by their respective president or chief financial officer, and reviewed
by an independent certified public accountant reasonably acceptable to Factor.
Client shall, at Client’s expense, furnish Factor with other financial and
operational information requested by Factor from time to time. Factor may at
all times have access to and inspect, audit and make abstracts from all of
Client’s Records at Client’s expense.


 


(f)        Client shall immediately notify Factor in writing of any merchandise
returns or Disputes and promptly notify Factor in writing of any discounts,
anticipation reductions or other unilateral deductions taken by Customers,
credits and allowances to Customers. Client will settle all Disputes at no cost
or expense to Factor; Factor’s practice is to allow Client sixty (60) days to
do so. Should Factor so elect, Factor may at any time in Factor’s discretion
(i) withdraw Client’s authority to issue credits to Client’s Customers without
Factor’s prior written consent; (ii) litigate Disputes or settle them directly
with the Customers on terms acceptable to Factor in the event that Obligations
are then outstanding or Factor has made payment to Client with respect to the
Accounts involved in such litigation or settlement; or (iii) direct Client to
set aside, identify as Factor’s property and procure insurance satisfactory to
Factor on any Retained Goods. All Retained Goods (and the proceeds thereof)
shall be (A) held by Client in trust for Factor as Factor’s property, (B)
subject to a security interest in Factor’s favor as security for the
Obligations, and (C) disposed of only in accordance with Factor’s express
written instructions.


 


(g)       Factor’s Credit Risk, if any, on an Account shall immediately terminate
without any action on Factor’s part in the event that (i) Client’s Customer
asserts a Dispute (regardless of merit) as a ground for non-payment of the
Account or returns or attempts to return the goods represented thereby; (ii)
any


 


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representation, warranty or covenant by Client
as to the Account is breached; or (iii) there is any change in the terms or
dating on the Account without Factor’s prior written approval. Factor may
charge to Client’s account, at any time after the Settlement Date, the gross
face amount of any Account (or portion thereof) on which Factor does not then
have the Credit Risk, together with interest thereon from the Settlement Date
of such Account to the date of chargeback; such action on Factor’s part shall
not be deemed a reassignment of such Account and will not impair Factor’s
rights thereto or security interest therein, which will continue to be
effective until this agreement is terminated and all Obligations are fully
satisfied. Notwithstanding anything to the contrary herein, if any payment to
be made to Client hereunder in respect of any Account would be prohibited
under, or would be in violation of, any law, rule, code or regulation of the
United States or any State thereof, including, without limitation, regulations
of the Office of Foreign Assets Control of the United States Department of the Treasury,
Factor’s Credit Risk, if any, with respect to such Account shall immediately
terminate and Client hereby authorizes and directs Factor to remit the proceeds
of any such payment in accordance with the directions of any applicable
governmental authority and, thereafter, Factor shall have no further obligation
of any kind or nature to Client with respect to such Account or the proceeds
thereof.


 


(h)       CLIENT WILL NOT GRANT A SECURITY INTEREST OR TRANSFER ANY OTHER INTEREST
IN ANY OF THE COLLATERAL OR IN ANY OF CLIENT’S INVENTORY, EXCLUSIVE OF THE
SECURITY INTERESTS SET FORTH ON SCHEDULE 7(a) HERETO, TO ANYONE EXCEPT FACTOR
WITHOUT (I) FACTOR’S PRIOR WRITTEN CONSENT OR (II) THE DELIVERY TO FACTOR OF AN
INTERCREDITOR AGREEMENT, IN FORM AND SUBSTANCE ACCEPTABLE TO FACTOR IN ITS SOLE
DISCRETION, EXECUTED BY FACTOR AND THE PARTY RECEIVING SUCH SECURITY INTEREST
OR OTHER INTEREST.


 


(i)        Client is and shall remain in compliance in all material respects with
all applicable laws, regulations and rules.


 


(j)        Client shall take all actions requested by Factor from time to time to
cause the attachment, perfection and first priority of, and Factor’s ability to
enforce, Factor’s security interest in any and all of the Collateral. Client
irrevocably and unconditionally authorizes Factor (or Factor’s agent) to file
and ratifies the filing at any time and from time to time such financing
statements with respect to the Collateral naming Factor or Factor’s designee as
the secured party and Client as debtor, as Factor may require, and including
any other information with respect to Client or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdictions as Factor may
determine, and setting forth a notice that any disposition of any of the
Collateral by Client without Factor’s prior written consent violates the rights
of Factor, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Client agrees that the foregoing authorizations shall
be irrevocable while this agreement remains in effect and thereafter until
Factor has received final payment and satisfaction in full in immediately
available funds of all Obligations. In no event shall Client at any time file,
or permit or cause to be filed, any correction statement or termination
statement with respect to any financing statement (or amendment or continuation
with respect thereto) naming Factor or Factor’s designee as secured party and Client
as debtor.


 


(k)       Upon Factor’s request, Client shall, at Client’s expense, duly execute
and deliver, or shall cause to be duly executed and delivered, to Factor such
further instruments and do and cause to be done such further acts as may be
necessary or proper in the opinion of Factor to effectuate the provisions and
purposes of this agreement


 


(1)       Client acknowledges, confirms and agrees that Client has assumed all
liabilities, indebtedness and other obligations of every kind, nature and
description owing by Rafaella Sportswear, Inc. to Factor, as successor to
Security Pacific Business Credit, Inc., under or in connection with the
Factoring Agreement dated as of August 7, 1985 and all other agreements and
documents executed and/or delivered in connection therewith (said Factoring
Agreement, collectively with all such agreements and documents, the “Prior
Agreements”), which liabilities, indebtedness and other obligations shall
constitute Obligations hereunder, and Factor acknowledges, confirms and agrees
that Client has succeeded to all of the rights of Rafaella Sportswear, Inc.
under the Prior Agreements.


 


8.        INVOICING; PAYMENTS; RETURNS; NOTIFICATION


 


(a)       Each of Client’s invoices that evidences an Account and all copies
thereof shall bear a notice (in form and substance satisfactory to Factor) that
it is owned by and payable directly and only to Factor at locations designated
by Factor. With respect to each such invoice, Client shall either (i) furnish
Factor with a legible duplicate original of the invoice accompanied by a
confirmatory assignment thereof, or (ii) electronically transmit to Factor the
invoice details and an assignment schedule using a transmission format
acceptable to Factor. Client’s failure to furnish such specific assignments
shall not diminish Factor’s rights. Client shall procure and hold in trust for
Factor and furnish to Factor at Factor’s request satisfactory evidence of each
shipment and delivery or rendition of services. For invoices electronically
transmitted to Factor, Client shall also (i) retain and furnish Factor at
Factor’s request legible copies of sales schedules and registers, as well as
duplicate originals of the invoices, and (ii) reproduce for Factor at Factor’s
request any and all such electronic transmissions. Each invoice shall bear the
terms stated on the Customer’s order, as submitted to Factor, whether or not
the order has been approved by Factor, and no change from the original terms of
the order shall be made without Factor’s prior written consent Any such change
not so approved by Factor shall automatically terminate Factor’s Credit Risk,
if any, on the Account arising from Client’s performance of the order. Client
will hold in trust for Factor and deliver to Factor any payments received from
Client’s Customers in the form received, and hereby irrevocably authorizes
Factor to endorse Client’s name on all checks and other forms of payment Each
payment made by a Customer shall first be applied to Accounts, if any, on which
Factor has the Credit Risk, and the balance, if any, of such payment shall be
applied to other Accounts due from such Customer. Client understands that
Factor shall not be liable for any selling expenses, orders, purchases,
contracts or taxes of any kind resulting from any of Client’s transactions, and
Client agrees to indemnify Factor and hold Factor harmless with respect
thereto,


 


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which indemnity shall survive termination of
this agreement.


 


(b)       Factor shall have the right to communicate with and instruct the
Customers on Client’s Accounts to make payments in respect thereof directly to
Factor.


 


9.        TERMINATION


 


(a)       This agreement shall remain in full force and effect until terminated as
follows:


 


(i)        Factor may terminate this agreement at any time upon sixty (60) days
prior written notice to Client. If not so terminated, this agreement shall
remain in full force and effect unless Client terminates this agreement upon
not less than sixty (60) days prior written notice to Factor; or


 


(ii)       Upon the occurrence of an Event of Default, Factor may terminate this
agreement at any time without notice.


 


(b)       On the effective date of termination all Obligations shall become
immediately due and payable in full without further notice or demand. Factor’s
rights with respect to Obligations owing to Factor, or chargeable to Client’s
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 Factor’s security interests and other rights in
and to all Collateral shall continue to be operative until such Obligations
have been fully and finally satisfied or Client has given Factor an indemnity
satisfactory to Factor.


 


10.      PLACE OF PAYMENT; NEW YORK LAW; FORUM SELECTION; WAIVER OF
JURY TRIAL


 


(a)       All Obligations shall be paid at Factor’s 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 (without giving effect to its choice of law
principles).


 


(c)       Client agrees that all actions and proceedings arising out of or
relating directly or indirectly to this agreement or any ancillary agreement or
any Obligations shall be litigated in any local, state or federal court located
in the County of New York, State of New York, that such courts are convenient
forums, and that Client submits to the personal jurisdiction of such courts.
Client hereby consents to the service of process therein by registered or
certified mail, return receipt requested, directed to Client at Client’s
address set forth above, and Client agrees that service so made shall be deemed
complete five (5) days after the date of mailing.


 


(d)       TO THE EXTENT LEGALLY PERMISSIBLE, BOTH CLIENT AND FACTOR WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY LITIGATION RELATING TO TRANSACTIONS UNDER THIS
AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.


 


11.      REMEDIES; WAIVERS; LIMITATION OF LIABILITY


 


(a)       Factor’s rights and remedies under this agreement will be cumulative and
not exclusive of any other right or remedy Factor may have hereunder or under
the UCC or otherwise. Without limiting the foregoing, if Factor exercises
Factor’s rights as a secured party Factor may, at any time or times, without
demand, advertisement or notice, all of which Client hereby waives, sell the
Collateral, or any part of it, at public or private sale, for cash, upon
credit, or otherwise, at Factor’s sole option and discretion, and Factor may
bid or become purchaser at any such sale, free of any right of redemption which
Client hereby waives. After application of all Collateral to Client’s
Obligations (in such order and manner as Factor in Factor’s sole discretion
shall determine), Client shall remain liable to Factor for any deficiency.


 


(b)       Factor shall have the right, in Factor’s sole discretion, to determine
which rights, liens, security interests or remedies Factor may at any time
pursue, relinquish, subordinate, or modify or to take any other action and
incur any costs or expenses with respect thereto and such determination will
not in any way modify or affect any of Factor’s rights hereunder. Failure by
Factor to exercise any right, remedy or option under this agreement or delay by
Factor in exercising the same will not operate as a waiver; no waiver by Factor
will be effective unless Factor confirms it in writing and then only to the
extent specifically stated.


 


(c)       Factor shall have no liability hereunder (i) for any losses or damages
(including, without limitation, incidental, special, exemplary, punitive or
consequential damages) resulting from Factor’s 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
Factor’s control; or (ii) for indirect, special or consequential damages
arising from accounting errors with respect to Client’s account with Factor.
Factor’s liability for any default by Factor hereunder shall be limited to a
refund to Client of any commission paid by Client 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. Except as prohibited by
law, Client waives any right which it may have to claim or recover in any litigation
with Factor any incidental, special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages. Client:
(A) certifies that neither Factor nor any representative, agent or attorney
acting for or on behalf of Factor has represented, expressly or otherwise, that
Factor would not, in the event of litigation, seek to enforce any of the
waivers provided for in this agreement or any of the Other Documents and (B)
acknowledges that in entering into this agreement and the Other Documents,
Factor is relying upon, among other things, the waivers and certifications set
forth in this Paragraph 11(c) and elsewhere herein and in the Other Documents.


 


12.      GENERAL


 


(a)       Factor may charge to Client’s account the amount of reasonable legal
fees (including, without limitation, fees, expenses and costs payable or
allocable to attorneys retained or employed by Factor) and other costs, fees
and expenses incurred by Factor in negotiating or preparing this agreement and
any


 


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legal documentation required by Factor or
requested by Client in connection with this agreement or any amendments or
supplements thereof, or in enforcing Factor’s rights hereunder or in connection
with the litigation of any controversy arising out of this agreement, or in
protecting, preserving or perfecting Factor’s interest in, any Collateral,
including without limitation all costs incurred or payable with respect to any
Collateral, and the costs of all public record filings, appraisals and searches
relating to any Collateral. Factor may also charge to Client’s account all
charges for wire transfers and Factor’s then standard price for furnishing to
Client or Client’s designees copies of any statements, records, files or other
data requested by Client or them other than statements and reports of the kind
furnished to Client and Factor’s other clients on a regular, periodic basis in
the ordinary course of Factor’s business.


 


(b)       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 except that Client may not assign or transfer any of Client’s rights or
obligations under this Agreement without Factor’s prior written consent, and no
such assignment or transfer of any such obligation shall relieve Client thereof
unless Factor has consented to such release in a writing specifically referring
to the obligation from which Client is to be released. This agreement, and any
concurrent or subsequent written supplements thereto or amendments thereof
signed by both of Factor and Client, represent the entire understanding of the
parties and supersede all inconsistent agreements and communications, written
or oral, between Client’s and Factor’s officers, employees, agents and other
representatives.


 


(c)       This agreement shall not be effective unless signed by Client and Factor
below


 


IN WITNESS WHEREOF, each of Factor and Client has executed this agreement as of the
Effective Date.


 


	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GMAC
  COMMERCIAL FINANCE LLC

  



 


 


AGREED TO on this 20th day of June, 2005.


 


	
  ATTEST:

  	
   

  	
  RAFAELLA
  APPAREL GROUP, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Chad Spooner

  	
   

  
	
  /s/ (illegible)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   CFO

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
							



 


 


	
  ACCEPTED at New York, New
  York, as of the Effective Date.

  	
   

  
	
   

  	
   

  
	
  GMAC
  COMMERCIAL FINANCE LLC

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kevin M. Sauny

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  EVP

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  1290 Avenue of the Americas

  New York, New York 10104

  	
   

  



 


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