1
EXHIBIT 10.3
NationsBank
NationsBanc Commercial Corporation
Amended and Restated
Factoring Agreement
entered into between
NORTON XXXXXXXXXX OF XXXXXX, INC.
and
NationsBanc Commercial Corporation
NationsBanc Commercial Corporation
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000
Gentlemen:
We are pleased to confirm the following agreement by which you are to
act as sole factor for sales made by us:
SECTION 1. DEFINITIONS
1.1 "Banking Day" shall mean a day for dealings by and between banks,
excluding Saturday, Sunday and any day which shall be a legal holiday in the
City of Atlanta, Georgia, and any other day on which banking institutions are
authorized to close in the City of Atlanta, Georgia.
1.2 "Credit Risk" shall mean the risk of loss resulting solely and
exclusively from a Customer's failure to pay at maturity because of its
financial inability.
1.3 "Customer Dispute" shall mean any cause for nonpayment of
Receivables, other than the financial inability of the Customer, including,
without limitation, any alleged defense, offset, or counterclaim.
1.4 "Customers" shall mean the account debtors obligated on the
Receivables.
1.5 "Default" shall mean the occurrence of any of the following events:
(a) nonpayment when due of any amount payable on any of the Obligations or
failure to perform in any material respect any material agreement or meet any
obligation of ours contained herein or in any agreement out of which any of the
Obligations arose; (b) default by us in repayment when due of any indebtedness
now or hereafter owed for monies borrowed from any one other than you unless
cured within any applicable grace period; (c) any material statement,
representation, or warranty of ours made orally or in writing herein or in any
other writing or statement at any time furnished or made by us to you is untrue
in any material respect as of the date furnished or made; (d) suspension of the
operation of our present business; (e) any Obligor becomes insolvent or unable
to pay debts as they mature, makes an assignment
1
2
for the benefit of creditors, or a proceeding is instituted by or against any
Obligor alleging that such Obligor is insolvent or unable to pay debts as they
mature, or a petition under any provision of Title 11 of the United States Code
(entitled "Bankruptcy"), as amended is brought by or against any Obligor and if
such proceeding or petition is against us, it is either consented to or not
dismissed within sixty (60) days after the filing thereof; (f) dissolution,
merger, or consolidation of any Obligor which is a corporation except a merger
of Norton XxXxxxxxxx of Xxxxxx, Inc. into Norton XxXxxxxxxx, Inc. or a
dissolution of Norty's Inc.; (g) sale, transfer or exchange, either directly or
indirectly, of a controlling stock interest of any Obligor which is a
corporation; (h) appointment of a receiver for any collateral pledged for the
Obligations or for any property in which we have an interest unless dismissed
within thirty (30) days; (i) the Pension Benefit Guaranty Corporation shall
commence proceedings under Section 4042 of the Employee Retirement Income
Security Act of 1974 (ERISA) to terminate any employee pension benefit plan of
Debtor; or (j) you in good xxxxx xxxx the prospect of our payment or performance
of the Obligations to have been materially impaired.
1.6 "Ledger Debt" shall mean all sums owing to you and, during the term
of the Participation Agreement between you and The CIT Group/Commercial
Services, Inc. ("CIT") of even date herewith, to CIT for goods and/or services
purchased from any other firm factored by you or CIT.
1.7 "Loan Documents" shall mean the Financing Agreement by and among
Norton XxXxxxxxxx, Inc., us, Miss Xxxxx, Inc., you, as collateral agent, CIT, as
administrative agent and certain lenders from time to time party thereto of even
date herewith, the Notes, the Guaranties, the Security Agreements, the
Assignment Agreement, the Letter of Credit Applications and all other
instruments, agreements and other documents executed and delivered pursuant
hereto or thereto.
1.8 "Net Amount" of Receivables shall mean the gross amount of
Receivables, less discounts as shown on Customer invoices, less returns and
deductions by Customers, less credits or allowances of any nature at any time
issued by us, owing, granted or outstanding, and less also your commission as
set forth herein.
1.9 "Obligations" shall mean all of our obligations to you hereunder,
including without limitation, all obligations of ours to you under any note,
contract of surety, guaranty, or accommodation, or with respect to letters of
credit or acceptances, Ledger Debt, and all other obligations of ours to you,
however and whenever created, arising or evidenced, whether direct or indirect,
through assignment from third parties in the ordinary course of your business,
absolute, contingent or otherwise, now or hereafter existing or due or to become
due.
1.10 "Obligor" shall mean: us and each other party primarily or
secondarily, directly or indirectly liable on any of the Obligations.
1.11 "Payment Date" shall mean: (a) for each credit-approved Receivable
for which you retain the Credit Risk, the date of deposit of Customer payment by
you plus one (1) Banking Day for collection and clearance of checks or, if such
Receivable is not paid, one hundred twenty (120) days after the due date of the
Receivable or, if such day is not a Banking Day, the next Banking Day; and (b)
for each Receivable for which you do not bear the Credit Risk, the date of
deposit of Customer payment
2
3
by you plus one (1) Banking Day for collection and clearance of checks. You will
use your best efforts to make deposits promptly. Payment Date may be delayed to
the next Banking Day following the day of application of remittances to
Receivables.
1.12 "Prime Rate" shall mean the rate of interest announced by
NationsBank, N.A. from time to time as its Prime Rate.
1.13 "Receivables" shall mean all accounts arising from our Sales, the
proceeds thereof, and all instruments, contract rights, chattel paper,
documents, and general intangibles relating directly thereto and all security
and guaranties therefor, whether now existing or hereafter created.
1.14 "Sales" shall mean the sale of goods and/or the rendition of
services by us in the ordinary course of our business to Customers in the United
States of America and Puerto Rico.
SECTION 2. SALE AND APPROVAL; PURCHASE PRICE; COMMISSION; ADVANCES; RESERVE
2.1 We hereby assign and sell to you as absolute owner, without
recourse, except as hereinafter set forth, our entire interest in all of our
present and future Receivables specifically assigned to you.
2.2 Notwithstanding any other provision of this Agreement, each of our
Receivables in a gross amount of One Hundred Dollars ($100) or less is assigned
and sold to you under this Agreement with full recourse.
2.3 All orders for Sales shall be submitted to you for credit approval
prior to shipment of the goods or rendition of the services so ordered, and each
approved Sale shall be made only in accordance with such approval. All credit
approvals must be in writing. Receivables arising from orders not so approved by
you, in whole or in part, shall be with full recourse to us to the extent and in
the respects not so approved. A credit approval shall not be effective if (a)
the approved terms of sale are changed in any material respect, (b) delivery of
the goods to the Customer is not made by us within forty-five (45) days after
the shipping date specified in our request for credit approval, or if no such
date is specified, within forty-five (45) days of the credit approval, or (c)
the invoice representing the Sale is not delivered to you within twenty (20)
days after the shipment date. Credit approval may be by credit line. While a
credit line remains in force, Receivables (or parts thereof) in excess of such
line will succeed amounts within the line which are paid by or credited to the
Customer; the succession of Receivables (or parts thereof) shall take place in
the order of maturity and shall be limited to amounts then so paid or credited.
The right of succession ceases when the line is canceled. Except as hereinafter
provided otherwise, on all credit-approved Sales you assume the Credit Risk up
to the amount so approved and will bear the credit loss on the amount of the
uncollected Receivables if a Customer, after delivery/rendition and acceptance
of the goods/services, fails on due date to pay in full solely because of
financial inability, but you are not to be responsible where nonpayment results
from any Customer Dispute, acts of God, war, civil strife, currency
restrictions, or foreign political impediments, because we assume all other
risks. In each contract year credit-approved Sales shall be with full recourse
to us until you have, by charge-off,
3
4
established US One Hundred Thousand Dollars (US$100,000.00) of gross credit
losses for credit-approved sales. "Gross Credit Losses" shall mean the amounts
charged-off. Any recoveries with respect to such charged-off Receivables will be
credited to our account. "Contract year" means the 12-month period commencing
on the date hereof and each succeeding 12-month period thereafter. Should there
exist for any Customer other credit-approved Receivables, recoveries shall be
shared on a pro rata basis. Credit approvals, once granted, may be withdrawn by
you prior to shipment/rendition of the goods/services by written notice received
by us prior to such shipment/rendition. Notwithstanding the provisions hereof,
with respect to written credit approval of orders from customers listed on
Schedule A annexed hereto for which our credit inquiries specify in writing that
such orders cover merchandise prepared specifically for such Customer ("Special
Goods"), should you withdraw such a credit approval for any reason, it is agreed
that we shall use our best efforts to sell such Special Goods at the highest
price then attainable, subject to your approval. Immediately upon such sale by
us, or if we are unable to sell such Special Goods immediately after notice by
us to you to that effect, you will pay us the difference or credit our account
with the difference between such sale price and the cost to us of such Special
Goods; provided, however, that in no event can the cost used exceed the amount
of the original selling price, and further provided, however, that in the event,
for whatever reason, you fail to approve any such sale or we are unable to sell
such Special Goods, then for purposes of the foregoing "such sale price" for
such Special Goods shall be deemed to be $0.00.
With regard to Sales without credit approval or in excess of any
approved amount of credit, as to any given Customer, we agree that any payments
or credits on any Receivables owing from such Customer may be applied first to
any credit-approved Receivables which may at any time be unpaid, regardless of
the respective dates such Sales occurred and regardless of any notations on
payment items, or may be applied in such other manner as you in your sole
discretion shall deem appropriate.
2.4 We will provide you with listings of Receivables in form reasonably
satisfactory to you, together with Customers' invoices, shipping documents, and
such other documents and proof of delivery/rendition as you may at any time
reasonably require. Billing on invoices by whomever done shall be conclusive
evidence of assignment and sale hereunder of such Receivables whether or not we
execute any other instrument with regard thereto. All invoices to Customers
shall state plainly on the face thereof that the Receivables represented by such
invoices have been assigned, sold, and are payable to you only. All remittances
obtained by us against Receivables will be received in trust for you, and we
will turn over to you the identical remittances as speedily as possible;
provided, however, that nothing herein authorizes us to collect Receivables.
2.5 The purchase price of Receivables is to be the Net Amount thereof,
which, less any charges made to our account under and in accordance with the
express terms of this Agreement and reserves, will be due and payable on Payment
Date. We shall pay you a commission in an amount equal to four tenths of one
percent (.4%) of the gross amount of such Receivables less applicable discounts
as shown on customer invoices. You may retain from sums payable to us a reserve,
which reserve shall be, at your discretion, exercised in good faith, in order to
provide for Customer Disputes. A discount, credit, or allowance after issuance
or granting may not be claimed by us, but may be claimed solely by the Customer;
provided, however, that at our request and if approved by you, you will credit
to us any Customer credits which have not been applied to specific invoices and
simultaneously you will charge
4
5
back to us any Receivable related thereto; no third party beneficiary rights are
created hereby. We will indemnify, defend and hold you harmless from and against
any and all claims which may thereafter be asserted against you for a refund or
recovery of such monies credited to our account or otherwise paid to us or our
order.
2.6 You will render a statement of account monthly, and such statement
shall be binding upon us absent manifest error and except for specific matters
for which you are notified in writing to the contrary within sixty (60) days
after the date of such statement.
SECTION 3. INTEREST
Interest shall be charged for the number of days that charges to our
account remain outstanding at the Prime Rate less three quarters of one percent
(3/4%) per annum. Interest shall be computed on the basis of a year of three
hundred sixty (360) days, for actual days elapsed. Changes in the rate shall be
effected monthly to reflect changes in the Prime Rate, as follows: The rate
shall be adjusted on the first day of each month based on the Prime Rate in
effect at the close of business on the last Banking Day of the immediately
preceding month. After termination, we shall pay interest on our obligations
hereunder at the rates hereinbefore provided. For the purpose of interest
calculation, commissions earned during each month shall be deemed charged to our
account on the fifteenth (15th) day of each month.
SECTION 4. POWER OF ATTORNEY
We hereby appoint you as our attorney-in-fact to receive, open, and
dispose of all mail addressed to us pertaining to Receivables; to endorse our
name upon any notes, acceptances, checks, drafts, money orders, and other
evidences of payment of Receivables that may come into your possession and to
deposit or otherwise collect the same; and following our failure to do so to do
all other acts and things necessary to carry out the terms of this Agreement.
This power, being coupled with an interest, is irrevocable while any Receivable
shall remain unpaid. You, as attorney-in-fact, shall not be liable for any
errors of judgment or mistake of fact excluding, however, acts of omission or
willful misconduct or gross negligence.
SECTION 5. SECURITY INTEREST
We hereby grant you a security interest in all of our present and
future Receivables (whether arising before or after termination of this
Agreement) and all returned, repossessed, and reclaimed goods, and books and
records relating thereto, to secure all of the Obligations. We further sell and
assign to you all our title and/or interest in the goods (unless released by
you) represented by Receivables as well as goods returned by or repossessed from
Customers, all of our rights as an unpaid vendor or lienor, all or our rights of
stoppage in transit, replevin and reclamation relating thereto, and all of our
rights against third parties with respect thereto; we will reasonably cooperate
with you in exercising any rights with respect to the goods. In addition, we
hereby grant you a security interest in the reserve established pursuant to
Section 2.5 hereof, to secure all of the Obligations.
5
6
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS
The following representations and warranties are made as of the date of
execution and delivery hereof:
6.1 We represent and warrant that we are fully authorized to enter into
this Agreement and perform hereunder and covenant that we will continue to be so
for the duration of this Agreement.
6.2 We represent and warrant that we are solvent.
6.3 We represent and warrant that our Receivables are, and covenant
that they shall be, at the time of their creation, bona fide and existing
obligations of our Customers arising out of our Sales, free and clear of all
security interests, liens, and claims whatsoever other than the security
interest granted pursuant to the Loan Documents provided that you have entered
into an intercreditor agreement in form and substance satisfactory to you.
6.4 We represent and warrant that our inventory is not subject to any
security interest, lien or encumbrance whatsoever, other than the security
interest granted pursuant to the Loan Documents and we covenant that we shall
not permit it to become so encumbered without your prior written consent.
6.5 We represent and warrant with respect to each Receivable as it
arises:
(a) We will have made delivery of the goods or will have rendered
the services ordered;
(b) To the best of our knowledge, the Customer will accept the
goods and/or services;
(c) To the best of our knowledge, no Customer Dispute will exist in
any respect;
(d) We will have preserved and will continue to preserve any liens
and any rights to liens available by virtue of Sales; and
(e) With respect to all assigned Receivables the Customer will not
be our affiliate.
SECTION 7. CUSTOMER DISPUTES, CHARGEBACKS AND RETURNS
We will notify you promptly and will settle all Customer Disputes in
accordance with prudent business judgment. Upon the occurrence and continuation
of Default, you shall have the right to settle Customer Disputes directly and to
compromise, adjust, or litigate all such Customer Disputes. If a Customer
Dispute exists or is asserted with regard to any Receivable, or if we breach any
representation, warranty or covenant with respect to any Receivable, you may
charge back to our account the Net Amount of such Receivable. You may charge
back to our account at any time any unapproved Receivable, whether before or
after its due date. A chargeback shall not be deemed a reassignment of the
Receivable, and title thereto and to the goods represented thereby shall remain
in you until you execute a reassignment. All returned, replevied, and reclaimed
goods coming into our possession shall be held in trust by us for you.
SECTION 8. BOOKS AND RECORDS; FINANCIAL STATEMENTS
6
7
You and your representatives shall at all reasonable times and upon
reasonable prior notice have the right to examine all of our books and records.
We agree to prepare and furnish you within forty-five (45) days after the close
of each of the first three quarters, consolidated financial statements unaudited
and in such form and detail as you may reasonably require. We also agree to have
prepared, and to furnish you within one hundred twenty (120) days after the
close of our fiscal year, consolidated financial statements which have been
audited and certified by an independent certified public accountant suitable to
you.
SECTION 9. INDEMNITY
We shall indemnify you for all losses, reasonable costs and expenses
incurred by you in connection with Receivables for which credit approval has not
been given and in connection with Receivables which are unpaid at maturity for
reasons other than financial inability. Further, we shall indemnify you for any
liability for duties, forwarder's fees, storage, shipping charges, sales or
excise taxes or other expenses in connection with the Receivables and for any
losses occasioned by claims of Customers under Receivables. This indemnity shall
survive the termination of this Agreement.
SECTION 10. APPLICABLE LAW
This Agreement shall be governed by, construed and enforced according
to the laws of the State of New York.
SECTION 11. EFFECTIVE DATE; TERMINATION; BINDING EFFECT
If accepted by you, this Agreement shall be effective on the 25th day
of September, 1997, and shall continue in full force and effect until: three (3)
years from such effective date and from year to year thereafter until terminated
by either party at any time giving to the other not less than sixty (60) days
prior written notice. This Agreement may be terminated at any time by you
without notice to us should any Default occur and be continuing. Upon
termination, we will pay all of our Obligations to you, and in any event we will
remain liable to you for any deficiency remaining after determination of our
liability hereunder and liquidation of any collateral. Also, upon termination
you may withhold any payment to us unless supplied with an indemnity
satisfactory to you. This Agreement shall bind us, our successors and assigns
and shall inure to the benefit of you, your successors and assigns; we agree
that you may delegate your duties hereunder.
SECTION 12. EXPENSES; ATTORNEYS' FEES; NO WAIVER; SEVERABILITY; NOTICES;
HEADINGS
We shall pay all reasonable expenses incurred by you in connection with
the execution of this Agreement, including expenses incurred in connection with
the filing of financing statements, continuation statements, record searches and
reasonable attorneys' fees. We shall also pay you such reasonable wire transfer
and similar fees as you charge from time to time. Upon liquidation of any
collateral, settlement or prosecution of Customer Disputes, or enforcement of
any obligation of ours hereunder, you may charge to our account all costs and
expenses incurred including reasonable
7
8
attorneys' fees, if collection is by or through an attorney and such costs,
expenses and fees shall constitute amounts owed hereunder. No delay or failure
on your part in exercising any right, privilege, or option hereunder shall
operate as a waiver of such or of any other right, privilege, or option, and no
waiver, amendment, or modification of any provision of this Agreement shall be
valid, unless in writing signed by you and then only to the extent therein
stated. Should any provision of this Agreement be prohibited by or invalid under
applicable law, the validity of the remaining provisions shall not be affected
thereby. Any notices, requests, demands or other communications given by you
under this Agreement may be sent by mail, telex, telegraph, delivery or telecopy
to our most current address as reflected in your records. The headings used
herein are intended to be for convenience of reference only and shall not define
or limit the scope, extent or intent or otherwise affect the meaning of any
portion hereof.
SECTION 13. ENTIRE AGREEMENT; WAIVER OF JURY TRIAL
This Agreement embodies our entire agreement as to the subject matter
and amends and restates our Agreement of March 1, 1994. EACH OF US HEREBY WAIVES
ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO
TRANSACTIONS UNDER THIS AGREEMENT.
SECTION 14. TRADE STYLES
Receivables under this Agreement shall include those created by our
doing business under the following trade styles, all of which have been duly and
properly registered:
Norton XxXxxxxxxx Pant-Her Woman
Norton XxXxxxxxxx Petites Pant-Her Petites
XxXxxxxxxx Wear Modiano
XxXxxxxxxx Wear Petites Modiano Woman
XxXxxxxxxx Wear Woman Xxxxxx XxXxxxxxxx
Pant-Her Xxxxxx XxXxxxxxxx Petites
Modiano Petite Xxxxxxxx Xxxxx
D.P.S. D.P.S. Woman
Norton Studio Norton Studio Woman
Xxxxxxxxx Xxxxx Xxxxxxxxx Xxxxx Petite
Xxxxxxxxx Xxxxx Woman Lauren Xxxxxxxxx
Xxxxxx Xxxxxxxxx Woman
Norton XxXxxxxxxx of Xxxxxx, Inc.
By: /s/ Xxxxxxx Xxxxxxxxx
----------------------
Title: Chairman of the Board
and CEO
8
9
ACCEPTANCE
The foregoing Factoring Agreement is accepted in Atlanta, Georgia as of
the ______ day of ______, 19__ .
NationsBanc Commercial Corporation
By: /s/ Xxxxxxx X. Xxxx
---------------------
Title: President
9
