Exhibit 10.39


 


	
  

  	
   

  	
  Wells Fargo Trade Capital

  
	
   

  	
  100
  Park Avenue

  
	
   

  	
  New
  York, NY 10017

  
	
   

  	
  212
  703-3500

  
	
   

  	
  212
  703-3520 Fax

  
	
   

  	
   

  
	
   

  	
  February 18,
  2010

  



 


Mr. Lance Arneson 


Rafaella Apparel Group, Inc. 


1411 Broadway 


New York, NY 10018


 


Re: Amendment


 


Dear Mr. Arneson:


 


Reference is made to the
Factoring Agreement between RAFAELLA APPAREL GROUP, INC. (“Client”) and
WELLS FARGO TRADE CAPITAL, LLC (“Factor”), bearing the effective date of
December 19, 2008 (as amended or otherwise modified, the “Factoring
Agreement”).


 


Anything in the Factoring Agreement to the contrary
notwithstanding:


 


1.           The commission which Client is obligated to pay to Factor
on Client’s invoices dated on or after February 16, 2010 owing by the
customer(s) specified on Schedule A annexed hereto (each, a “Surcharge
Customer”) which are credit approved by Factor, in Factor’s sole
discretion, and are on selling terms not exceeding the selling terms set forth
on Schedule A for such Surcharge Customer (each, a “Special Approved Invoice”)
shall be the rate set forth in the Factoring Agreement plus the surcharge set
forth on Schedule A for such Surcharge Customer.


 


2.           Without limiting Factor’s right to charge Client’s account
with Factor for all other Obligations (as defined in the Factoring Agreement),
Factor shall charge Client’s account for the Credit Loss Percentage of Credit
Losses as set forth on Schedule A arising from sales to a Surcharge Customer as
and when such Credit Losses are incurred by Factor. For the purposes of this
letter agreement, the term “Credit Losses” shall mean the aggregate net
amount of any Special Approved Invoice which remains wholly or partially unpaid
solely and exclusively from the financial inability of the applicable Surcharge
Customer to pay the Special Approved Invoice at maturity.


 


3.           Factor may at any time terminate this letter agreement by
giving Client at least 10 days prior notice of termination. Such termination
will not affect Client’s or Factor’s rights hereunder with respect to any
Special Approved Invoice created on or before the effective date of such
termination, and the Factoring Agreement will continue in full force and effect
in accordance with the terms thereof, but this letter agreement shall not apply
to any invoices created after the effective date of such termination by Factor.


 


1

















 


4.              Whether or not Factor terminates this letter agreement,
Factor shall be under no obligation at any time to credit approve any of Client’s
invoices to any Surcharge Customers.


 


5.           In addition, the first sentence of paragraph 9.1 of the
Factoring Agreement is amended to read as follows:


 


“9.1 Term. This Agreement shall begin as of
the effective date hereof and shall continue until December 19, 2011 and
thereafter shall be automatically renewed from year to year unless terminated
as of December 19, 2011 or any anniversary thereof by Client giving Factor
at least sixty (60) days prior written notice by registered or certified mail,
return receipt requested.”


 


6.           This letter agreement amends, restates and supersedes in
the entirety any other agreement or understanding, whether written or oral,
regarding surcharges heretofore entered into between Factor and Client.


 


Except as herein amended or
modified, the Factoring Agreement is hereby ratified and confirmed.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO TRADE CAPITAL, LLC

  
	
   

  	
   

  
	
   

  	
  /s/
  John Szwalek

  
	
   

  	
  John
  Szwalek

  
	
   

  	
  Senior
  Vice President

  



 


 


AGREED:


 


RAFAELLA APPAREL GROUP, INC.


 


 


	
  By:

  	
  /s/ Lance D. Arneson

  	
   

  	
   

  
	
   

  	
  Lance D. Arneson

  	
  2/26/10

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
   

  



 


2