Exhibit 10.29


 


GMAC COMMERCIAL FINANCE LLC


AMENDED AND RESTATED


COLLECTION SERVICES FACTORING AGREEMENT


 


Rafaella Apparel Group, Inc.


1411 Broadway


New York, New York 10018


 


Reference is made to the Factoring Agreement entered
into between us dated June 20, 2005, as the same may have been amended and
supplemented from time to time (the “Original Factoring Agreement”).
Effective as of December 16, 2008, GMAC
COMMERCIAL FINANCE LLC and RAFAELLA APPAREL GROUP,
INC. agree that the Original Factoring Agreement is hereby amended
and restated in its entirety as follows:


 


Factor shall act as Client’s 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.              SALE OF ACCOUNTS AND SECURITY
INTEREST


 


(a)          Factor hereby
assigns and sells without representation or warranty to Client, as absolute
owner, and Client hereby purchases from Factor, all Accounts previously
purchased by and assigned to Factor by Client under (and as defined in) the
Original Factoring Agreement and in respect of which the Settlement Date has
not occurred prior to the date hereof (the “Re-Assigned Accounts”).


 


(b)         (i) Client
hereby assigns and sells to Factor, as absolute owner, and Factor hereby
purchases from Client, on the date hereof, the Re-Assigned Accounts; and (ii) Client
hereby agrees to assign and sell to Factor, as absolute owner, and Factor
hereby agrees to purchase from Client, on the relevant Settlement Date as
described below, all Accounts (other than, for the avoidance of doubt, the
Re-Assigned Accounts) created on or after the Effective Date that are
specifically assigned hereunder by Client to Factor from time to time which
arise from Client’s sale of merchandise or rendition of services, together with
the Supporting Obligations, General Intangibles, and Documents arising
therefrom and related thereto, together with rights of stoppage in
transit, replevin, repossession, reclamation, and other rights and remedies of
an unpaid vendor.  Factor’s purchase of,
and acquisition of title to, each Account will be effective as of the
respective Settlement Date as to each Account. 
Prior to the respective Settlement Date as to an Account, Factor shall
provide services under this agreement as Client’s collection services agent and
title to each Account until the respective Settlement Date shall remain vested
in Client.


 


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


 


3.              CUSTOMER CREDIT APPROVAL


 


(a)  Client shall submit to Factor the principal terms of each
Customer order for Factor’s written credit approval. Factor may, in Factor’s
discretion, approve all or a portion of a Customer order, either by
establishing a credit line limited to a specific amount for a specific
Customer, or by approving all or a portion of a specific order.  No credit approval shall be effective unless:
(i) the goods are shipped or the services rendered within the time
specified in Factor’s written credit approval or, if no time is specified,
within forty-five (45) days after the approval is given, (ii) the
corresponding invoice is assigned to and received by Factor within ten (10) business
days from ship date, and (iii) the sales terms are approved by Factor on
the ship date.  After Customer has
accepted the goods or performance of the services, Factor shall then have the
Credit Risk on the Account (but not the risk of non-payment for any other
reason), to the extent of the dollar amount specified in the credit approval
for the specific order or, where Factor has established a credit line for the
Customer, to the extent of availability on the credit line from time to
time.  Notwithstanding anything herein to
the contrary, Factor shall not have Credit Risk on (i) Accounts evidenced
by invoices for the purchase and sale of samples and invoices of less than Two
Hundred Fifty Dollars ($250.00), and (ii) Accounts created with a Customer
while that Customer is sixty (60) days or more past due on any invoice from
Client.  Factor may withdraw Factor’s
credit approval or withdraw or adjust a credit line at any time before Client
ships the goods or renders the services.


 


Only credit approvals and Factor’s withdrawal thereof communicated to
Client in writing, transmitted electronically or entered on Client’s internet
accessible account information shall be effective.


 


(b)  Factor’s Credit Risk, if any, on an Account shall immediately
terminate without any action on Factor’s part in the event that (i) any
representation, warranty or covenant by Client as to the Account is breached;
or (ii) there is any change in the selling terms or dating without Factor’s
prior written approval; or (iii) Customer asserts a Dispute; or (iv) Factor
credits Client with payment of the purchase price for the Account; or (v) Client
over-ships Factor’s then effective credit approval by 50%; or (vi) this
agreement is terminated.  Factor may
charge back to Client, at any time, including after the Settlement Date, the
uncollected gross face amount of any 


 

















 


Account
(or portion thereof) on which Factor’s Credit Risk has been terminated.  Such action on Factor’s part shall not be
deemed a reassignment of such Account and will not impair Factor’s rights or
security interest therein, which will continue to be effective until this
agreement is terminated and all Obligations are fully satisfied.


 


(c)  Notwithstanding the foregoing, each Re-Assigned Account shall
be deemed approved by Factor, and Factor shall have the Credit Risk on each
Re-Assigned Accounts to the extent that Factor had assumed and retained the
Credit Risk for such Re-Assigned Accounts under the Original Factoring Agreement
and subject to the terms and conditions of this agreement.


 


4.              PAYMENT OF PURCHASE PRICE


 


The
purchase price of Accounts is the Net Face Amount thereof less Factor’s
commission.  The purchase price will be
credited to Client on the Settlement Date. 
Factor may withhold Reserves from any amount credited or to be credited
to Client or otherwise payable to Client. 
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 to Client with respect to such Account or the proceeds thereof.


 


5.              COMMISSIONS, FEES


 


For Factor’s services, Factor shall charge to Client (without
duplication of any previous charges in respect of any Re-Assigned Accounts
under the Original Factoring Agreement):


 


(a)          for each Account
specifically assigned hereunder, as of the date of its creation, excluding the
Re-Assigned Accounts and any other Accounts arising through credit card
transactions and sales where Client does not extend terms to the Customer, but
including all other Accounts (excluding Re-Assigned Accounts), even where such
Account is not specifically assigned to Factor, a commission at the rate of (x) three-tenths
of one percent (0.30%) percent) of the gross face amount of the invoice with
respect to which the Customer is Macy’s Department Stores or Belk, Inc.;
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
for selling terms not exceeding sixty (60) days including dating, plus an
additional one-quarter of one percent (0.25%) for each additional thirty (30)
days or portion thereof of selling terms, provided, however, that if Client
changes the terms of any invoice, then the commission on the gross face amount
of that invoice shall be the applicable commission set forth above, plus
one-quarter of one percent (0.25%) for each thirty (30) days or portion thereof
of such change, plus an additional five one hundredths of one percent (0.05%)
if the invoice is not transmitted to Factor electronically in a format
acceptable to Factor.  Factor’s
commission on any invoice evidencing an Account shall not be less than Two
Dollars ($2.00); and


 


(b)         notwithstanding
anything to the contrary herein, Factor may from time to time impose surcharges
upon the commissions set forth in Paragraph 5(a) with respect to invoices
owing by Specified Customers.  Schedule 5(b) hereto
is the current schedule of the Specified Customers and the surcharge for
each.  Factor may, in its sole
discretion, revise Schedule 5(b), which revisions shall become effective (i) three
(3) business days after the initial posting thereof on Factor Website or (ii) seven
(7) business days after the deposit thereof in the U.S. mail, addressed to
Client’s address appearing on the signature page of this agreement (or
such other address as later provided in writing).


 


(c)          as of the last
day of each month, interest on the actual daily balance of all Obligations which
are outstanding during such month at the Borrowing Rate.  Upon and after the occurrence of an Event of
Default, and during the continuance thereof, all Obligations shall bear
interest at the Default Rate. Interest, at the Borrowing Rate from Settlement Date
to the date of chargeback, shall also be charged where Factor’s Credit Risk on
an unpaid Account is terminated after the Settlement Date. Interest shall be
calculated on the basis of the actual number of days elapsed over a year of
three hundred sixty (360) days.


 


6.              STATEMENTS


 


Factor will make available to Client a monthly statement of account,
which shall be fully binding on Client and constitute an account stated,
unless, within forty-five (45) days after such statement is made available to
Client, Client gives Factor specific written notice of exceptions.


 


7.              [RESERVED]


 


8.              REPRESENTATIONS, WARRANTIES AND COVENANTS


 


For as long as this agreement is in effect, or Obligations remain
outstanding, Client hereby represents, warrants and covenants:


 


(a)          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; each Account is due and payable
no more than sixty (60) days from date of invoice; the Customer is
unconditionally obligated to pay at maturity the full amount of each Account
and will not withhold payment on account of 


 


2

















 


Dispute; all documents arising out of or relating to each Account are
genuine.


 


(b)         Client has good
title to the Collateral, subject only to Factor’s right, title and interest
therein.


 


(c)          The FACTORING
AGREEMENT INFORMATION CERTIFICATION AND ACKNOWLEDGEMENT FORM completed by
Client and delivered to Factor, is and shall remain accurate in all material
respects.


 


(d)         Client shall
furnish to Factor, annual audited 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 the respective presidents or chief financial officers and
reviewed, by an independent certified public accountant acceptable to
Factor.  Client shall, at Client’s
expense, furnish Factor with other financial and operational information
requested by Factor from time to time. 
Client shall furnish to Factor a monthly report of all Client sales not
factored with Factor within fifteen (15) days after the end of each month.


 


(e)      Client shall immediately
notify Factor in writing if Client obtains knowledge of any material adverse
change in the condition, financial or otherwise, of any Customer for which
Client requests or has received Factor’s credit approval.  Client shall immediately notify Factor in
writing of any merchandise returns, Disputes, discounts, anticipation reductions,
other unilateral deductions taken by Customers, or credits and allowances
issued to Customers.  Client will settle
all Disputes at no cost or expense to Factor. 
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; or (iii) direct Client to set aside, identify as Factor’s
property and procure insurance satisfactory to Factor on any Returned
Goods.  Client shall restock and resell
All Returned Goods unless Factor directs otherwise.


 


(f)        CLIENT WILL NOT PERMIT OR
GRANT A LIEN OR SECURITY INTEREST IN ANY OF THE COLLATERAL OR IN ANY OF CLIENT’S
INVENTORY, OR TRANSFER ANY OTHER INTEREST IN ANY OF THE COLLATERAL, 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.


 


(g)     Client is and shall remain in
compliance with all applicable laws, regulations and rules and each
Account is created in a transaction which complies with all applicable laws,
regulations and rules.


 


(h)     Client, at Client’s expense,
shall take all actions requested by Factor, from time to time, to establish,
maintain, and enforce a perfected, first-priority security interest in the
Collateral in favor of Factor. Client irrevocably and unconditionally
authorizes Factor to file such financing statements, together with any
amendment and continuations with respect thereto, with respect to the
Collateral naming Factor or Factor’s designee as the secured party and Client
as debtor, as Factor may require.  Client
agrees that the foregoing authorizations shall be irrevocable while this
agreement remains in effect and thereafter until Factor receives final payment
and satisfaction in full of all Obligations.


 


(i)       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 Factor’s reasonable
judgment to effectuate the provisions and purposes of this agreement.


 


(j)       The execution, delivery and
performance of this agreement and of the documents executed in connection
herewith (i) are within Client’s corporate powers, have been duly
authorized, are not in contravention of law or the terms of such Client’s
by-laws, certificate of incorporation or other applicable documents relating to
Client’s formation or to the conduct of Client’s business or of any material
agreement or undertaking to which Client is a party or by which Client is
bound, and (ii) will not conflict with nor result in any breach in any of
the provisions of or constitute a default under or result in the creation of
any interest in any asset of Client under the provisions of any agreement,
charter document, instrument, by-law, or other instrument to which Client or
its property is a party or by which it may be bound.


 


9.              INVOICING AND PAYMENTS


 


(a)                Each of Client’s
invoices and all copies thereof shall bear a notice acceptable to Factor that
Client has agreed to assign such invoice to, and it is payable only to, Factor
at a location designated by Factor.  With
respect to each such invoice, Client shall either (i) furnish Factor with
a legible duplicate original of the invoice and a confirmatory assignment
thereof, or (ii) electronically transmit to Factor the invoice details and
an assignment schedule in a format acceptable to factor.  Client’s failure to furnish such specific
assignments shall not adversely affect Factor’s rights.  Client shall procure and furnish to Factor at
Factor’s request satisfactory evidence of each shipment and delivery or
rendition of services. For electronically transmitted invoices, Client shall,
at Factor’s request, (i) retain and furnish to Factor legible copies of
sales schedules and registers and duplicate originals of the invoices, and (ii) reproduce
for Factor any and all such electronic transmissions.  Each invoice shall bear the terms stated on
the Customer’s order, as submitted to Factor. 
Client shall deliver to Factor, in the 


 


3

















 


form received, any payments received by Client from Customers with such
payment held in trust for Factor when received by Client after the
corresponding Settlement Date for the underlying Account.  Client irrevocably authorizes Factor to
endorse Client’s name on all checks and other forms of payment.  Regardless of actual application in
accordance with Customer instructions, remittance advice or otherwise, each Customer
payment shall first reduce Factor’s then aggregate Credit Risk with respect to
such Customer, with any Customer payment or a portion thereof reducing Client’s
Credit Risk with respect to such Customer only after Factor’s Credit Risk has
been fully retired.  Factor shall not be
liable for any selling expenses, orders, purchases, contracts, taxes or other
liabilities of any kind resulting from any of Client’s transactions, and Client
agrees to indemnify Factor and hold Factor harmless with respect thereto, 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.


 


10.             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 gives Factor no
less than sixty (60) days prior written notice of termination; 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 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 the later of (i) the
last day of the Term, (ii) all Obligations have been fully and finally
satisfied (iii) or Client has given Factor an indemnity satisfactory to
Factor in its sole discretion.


 


11.       REMEDIES AND 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.  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
10(c) and elsewhere herein and in the Other Documents.


 


12.             INDEMNITY


 


Client shall indemnify Factor for all claims, losses, costs
and expenses incurred by Factor in connection with Accounts for which Factor
does not have the Credit Risk, Accounts factored on a full recourse basis,
Accounts which are unpaid at maturity for reasons other than Customer’s
financial inability to pay, and claims, losses, costs, and expenses related to
recovery of a Customer payment with respect to any account where such payment
is alleged to be “preferential” under bankruptcy and insolvency laws and claims
based on any theory which would characterize Factor’s receipt of Customer
payment with respect to any account as a recoverable preference in bankruptcy,
and Factor’s attorney’s fees and defense costs associated therewith.  This indemnity shall survive the termination
of this agreement.


 


4

















 


13.       GENERAL


 


(a)          Factor may
charge to Client 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 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, field
examinations, appraisals and searches relating to Client or any
Collateral.  Factor may also charge to
Client’s account all charges for wire transfers and the fees set forth on the
Supplemental Services Schedule posted on Factor Website.  Factor may, in its sole discretion, revise
such Supplemental Services Schedule, which revisions shall be effective (i) three
(3) business days after the initial posting thereof on the Factor Website
or (ii) seven (7) business days after the deposit thereof in the U.S.
mail, addressed to Client’s address appearing on the signature page of
this agreement (or such other address as later provided in writing).  Client’s Obligations under this paragraph
shall survive termination of this agreement.


 


(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. Any notice permitted or
provided for hereunder shall be given as of (i) the date of receipt if
delivered to the address for Client or Factor, as the case may be, appearing on
the signature page of this Agreement (or such other address as later
provided in writing), first class mail, return receipt requested or (ii) the
date delivery is first attempted, if returned undelivered.


 


(c)          All Obligations
shall be paid at Factor’s office in New York, New York.


 


(d)         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.


 


(e)          Client agrees
that all actions and proceedings arising out of or relating directly or
indirectly to this agreement, any Other Documents or any other Obligations
shall be litigated in any local, state or federal court located in the City 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 service of process
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.


 


(f)            TO THE EXTENT
LEGALLY PERMISSIBLE, BOTH CLIENT AND FACTOR WAIVE ALL RIGHT TO TRIAL BY JURY IN
ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
DOCUMENTS.


 


(g)         Client authorizes
Factor to use Client’s name and logo and testimonials provided by Client in
national and regional publications, brochures, tombstones, and other printed
and web-based sales and marketing materials.


 


(h)         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.


 


 


	
   

  	
  RAFAELLA APPAREL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chad Spooner

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  1411 Broadway

  
	
   

  	
   

  	
  New York, New York 10018

  
				



 


5

















 


	
   

  	
  ACCEPTED:

  
	
   

  	
   

  
	
   

  	
  GMAC COMMERCIAL FINANCE LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew Rogow

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  1290 Avenue of the Americas

  
	
   

  	
   

  	
  New York, New York 10104

  
				



 


6
















 


RIDER I


 


FACTORING AGREEMENT


between


GMAC COMMERCIAL FINANCE LLC


and


RAFAELLA APPAREL GROUP, INC


 


DEFINITIONS


 


“Account”
shall have the meaning set forth in the UCC and, except whether the context
suggests otherwise, shall include the Re-Assigned Accounts.


 


“Actual
Commission” shall mean the aggregate amount of commissions actually charged
to Client in each quarter of each Contract Year.


 


“Borrowing
Rate” for each month shall mean an interest rate per annum which is one
percent (1%) in excess of the average Prime Rate in effect during such month;
provided , however, that said interest rate shall not be less than six percent
(6%) and shall in no event be higher than the rate permitted by New York law.


 


 “Client” shall mean Rafaella Apparel
Group, Inc.


 


“Collateral” shall mean and include all of Client’s present and
future Accounts specifically assigned to Factor by Client from time to time,
Chattel Paper and Instruments, and all Supporting Obligations, General
Intangibles and Documents arising out of or relating to the foregoing; Returned
Goods; credit balances and other property of Client held or received by Factor;
rights of stoppage in transit, replevin, repossession, reclamation and
other rights and remedies of an unpaid vendor; and Records relating to and all
proceeds of the foregoing property and rights.


 


“Collection Settlement Date” shall mean three (3) business
days after the day (i) on which invoice payment is received by Factor, if
delivered by wire transfer and credited to Factory by 3:00 p.m. (Eastern
Standard Time), or (ii) the day following receipt by Factor, at Factor’s
payment address or by wire transfer credited after 3:00 p.m. (Eastern
Standard Time).


 


“Contract
Year” shall mean the twelve-month period starting on December     ,
of each year.


 


“Credit
Risk” shall mean the risk of loss resulting solely and exclusively from the
financial inability of Customer to pay an Account at maturity.  Credit Risk shall not include such Customer’s
inability, financial or otherwise, to pay an Account at maturity due to war,
civil strife, currency restrictions or foreign political impediments.


 


“Customer”
shall mean and include the account debtor with respect to any Account and/or
the prospective purchaser of goods, services or both with respect to any
contract or contract right, and/or any party who enters into or proposes to
enter into any contract or other arrangement with Client, pursuant to which
Client is to deliver any personal property or perform any services.


 


“Default
Rate” shall mean an interest rate per annum which is two percent (2%) in
excess of the Borrowing Rate.


 


“Dispute”
shall mean any cause for nonpayment of an Account, or claim or deduction to
recover an amount already paid, regardless of merit, including, without
limitation, Customer return or rejection of goods, any alleged defense,
counterclaim, offset, dispute or other claim whether arising from or relating
to the sale of goods or rendition of services or arising from or relating to
any other transaction or occurrence, except for financial inability of Customer
to pay an Account at maturity.


 


 “Document” shall have the meaning set
forth in the UCC.


 


“Effective
Date” shall mean the date set forth in the introductory paragraph of this
agreement.


 


“Event
of Default” shall mean the occurrence of any of the following events:
Client shall breach any representation, warranty, term or other provision of
this agreement or any other agreement between Factor and Client; Client shall
fail to pay any Obligation when due; any guaranty of the Obligations shall be
terminated or revoked; a default or breach by a guarantor under a Guaranty held
by Factor; ownership or control of twenty percent (20%) or more of Client’s
aggregate outstanding stock, stock equivalents and any other equity changes
after the Effective Date; any other significant change in the identity of those
in control of Client (whether or not qualifying under the preceding “20%”
provision) or any significant change in Client’s management occurs after the
Effective Date; Client shall suspend business, sell all or a significant
portion of Client’s 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; a receiver or trustee shall be appointed for Client
or Client’s property; Client’s property shall become subject to any lien or
attachment other than in favor of Factor; a petition under the United States
Bankruptcy Code shall be filed by or against Client; or Client shall seek
relief under any other insolvency statute, federal, state or other.


 


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“Factor”
shall mean GMAC Commercial Finance LLC.


 


“Factor
Website” shall mean Factor’s CHOICE System or any successor on-line
websites designated by Factor for such purpose.


 


“General
Intangible” shall have the meaning set forth in the UCC.


 


“Instrument”
shall have the meaning set forth in the UCC.


 


 “Inventory” shall have the meaning set
forth in the UCC.


 


“Net
Face Amount” shall mean the gross face amount of the invoice, less returns,
discounts (which shall be determined by Factor where optional terms are given),
anticipation reductions or any other unilateral deductions taken by Customers,
and credits and allowances to Customers of any nature.


 


“Obligations”
shall mean and include all debts, liabilities, obligations, covenants, duties
and amounts of any nature whatsoever, for which Client is now or hereafter
obligated to Factor (or to any corporation that directly or indirectly controls
or is controlled by or is under common control with Factor, including without
limitation any parent, subsidiary and affiliate of Factor), of every kind and
description (whether or not evidenced by any note or other instrument and
whether or not for the payment of money or the performance or non-performance
of any act), direct or indirect, absolute or contingent, due or to become due,
contractual or tortious, liquidated or unliquidated, whether arising under this
or any other present or future agreement or other documentation, or by
operation of law or otherwise, now existing or hereafter arising (whether
before or after the filing of any petition in bankruptcy by or against Client
or the commencement of any other insolvency proceeding, including but not
limited to an assignment for the benefit of creditors), including, without
limitation, any debt, liability or obligation now or hereafter owing from
Client to others, including without limitation any other present or future
client(s) of Factor, which Factor may have obtained or may obtain, by
purchase, assignment, participation or otherwise, and further including without
limitation, all commissions, interest, charges or any other payments Client is
required to make to Factor, together with all expenses and attorneys’ fees and
costs chargeable to Client or incurred by Factor in connection with Client,
whether provided for herein or in any such other agreement or
documentation.  Without limiting the
foregoing, Obligations shall include the amounts of all interest, commissions,
customer late payment charges and bank related charges, costs, fees, expenses,
taxes and all Accounts charged or chargeable to Client hereunder.


 


“Other
Documents” shall mean, collectively, all notes, guarantees, security
agreements and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by Client or any third party in connection
with this agreement.


 


 “Prime Rate” shall mean the “Prime Rate”
publicly announced or published by Bank of America, N.A., such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate.


 


“Re-Assigned
Accounts” shall have the meaning set forth in paragraph 2(a) of this
agreement.


 


“Records”
shall mean all of Client’s present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, ledger sheets,
bills of lading and other shipping evidence, statements, files, correspondence,
memoranda, documents, credit files, business papers and other data relating to
the Collateral or any Customer, together with the computer software (whether
owned by Client or in which it has an interest), computer programs, tapes,
disks, diskettes and other data and software storage media and devices,
computers, file cabinets or containers in or on which the foregoing are stored
(including, without limitation, any of Client’s rights with respect to the
foregoing maintained with or by any other person).


 


“Reserves”
shall mean all Obligations then chargeable to Client, as well as Obligations which
may, in Factor’s sole discretion, be chargeable to Client thereafter, and, in
Factor’s sole discretion, reductions on account of the Collateral, results of
operations, changes in business plans, disputes, deductions, credits, or any
other matter which, in Factor’s sole discretion, may affect repayment of any
Obligations.


 


“Returned
Goods” shall mean all merchandise returned or rejected by Customers or
repossessed from Customers relating to or securing any Account.


 


“Settlement
Date” shall mean (a) for each Account on which Factor has the Credit
Risk and which is not due from a department or chain store, the Collection
Settlement Date or the day on which such payment becomes sixty (60) days past
due, whichever is earlier, (b) for each Account on which Factor has the
Credit Risk and which is due from a department or chain store, the Collection
Settlement Date or twenty (20) business days after the day on which Factor
receives notice that the Account has been allowed as a claim under the United
States Bankruptcy Code, whichever is earlier, and (c) for each Account on
which Factor does not have the Credit Risk, the Collection Settlement Date.


 


“Specified
Customers” shall mean Customers designated on Schedule 5(b).


 


“Supporting
Obligation” shall have the meaning set forth in the UCC.


 


“Term”
shall mean the period ending on the next date as of which Client may terminate
this agreement under Paragraph 9(a)(i) hereof.


 


“Trade
Names” shall mean all trade names or styles, 


 


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trademarks,
divisions or other names under which Client conducts business.


 


“UCC”
shall mean the Uniform Commercial Code as in effect on the Effective Date in
the State of New York, as from time to time amended.


 


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