Exhibit 10.2


 


ESCROW AGREEMENT


 


THIS ESCROW AGREEMENT, dated as of June 20,
2005 (the “Escrow Agreement”), is by and among RA Cerberus Acquisition,
LLC, a Delaware limited liability company (the “Purchaser”), Rafaella
Apparel Group, Inc. a Delaware corporation (formerly known as Rafaella
Corporation) (“Corporation”), Rafaella Sportswear, Inc., a Delaware
corporation (“Rafaella”), Ronald Frankel (“Frankel”) and JPMorgan
Chase Bank, N.A., as Escrow Agent and securities intermediary hereunder (the “Escrow
Agent”).


 


RECITALS


 


WHEREAS, Purchaser, Rafaella, Frankel and
Corporation are parties to that certain Securities Purchase Agreement, dated as
of April 15, 2005, as amended by Amendment No. 1 to the Securities
Purchase Agreement, dated May 27, 2005 (the “Purchase Agreement”)
pursuant to which Purchaser is contributing $40 million to the capital of the
Corporation in exchange for the issuance of 100% of the preferred stock of the
Corporation;


 


WHEREAS, pursuant to the Redemption Agreement,
Rafaella has agreed to deposit $20,000,000 in a segregated escrow account which
shall constitute a “securities account” as defined in Section 8-501 of the
Uniform Commercial Code (the “First Escrow Account”) and the
Corporation has agreed to deposit $10,000,000 into a segregated escrow account
which shall constitute a “securities account” as defined in Section 8-501
of the Uniform Commercial Code (the “Second Escrow Account,” and,
such $30,000,000 amount in the First Escrow Account and Second Escrow Account
in the aggregate, the “Escrow Amount”) to be held by JPMorgan Chase
Bank, as escrow agent (the “Escrow Agent”) pursuant to the terms of this
Escrow Agreement; and


 


WHEREAS, the Escrow Funds in the Second Escrow
Account secure the obligation of Corporation to make payments under Section 1.1(b)(2) of
the Redemption Agreement and the Escrow Amount will also support the
indemnification obligations of Rafaella and Frankel under the Purchase
Agreement.


 


WHEREAS, in order to establish the escrow of funds
and to effect the provisions of the Transaction Documents, the parties hereto
have entered into this Escrow Agreement.


 


NOW THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, for themselves, their successors and assigns, hereby agree as follows:


 


1.                                       Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in the
Purchase Agreement. The following terms have the following meanings when used
herein:


 


“Claim(s)” means a Claim (as such term is
defined in Section 8.02 of the Purchase Agreement) with respect to which a
Person is entitled to be indemnified in accordance with Section 8.02 of
the Purchase Agreement.


 

















 


“Claim Notice” means a written notification,
signed by Purchaser, which shall describe (a) the obligation,
representation, warranty or agreement in a Transaction Document with respect to
which a Claim subject to indemnification in accordance with Section 8.02
of the Purchase Agreement is being made, (b) the amount claimed to be due
to Purchaser under Section 8.02 of the Purchase Agreement (the “Estimated
Claim Amount”), (c) the alleged facts giving rise to and basis for
such Claim and (d) the date of such notice. Each Claim Notice also shall
include a certification by Purchaser that payment of the Claim is being made
pursuant to Section 8.02 of the Purchase Agreement and Section 4(a) of
the Escrow Agreement.


 


“Claim Response” means a written
notification, signed by the Representative, which shall set forth the
Representative’s good faith dispute on any matter with respect to a Claim
Notice or the Claim described therein and such amount, if any, in dispute by
the Representative.


 


“Code” means the Internal Revenue Code of
1986, as amended from time to time.


 


“Escrow Funds” means the sum of Thirty
Million Dollars ($30,000,000) deposited by Rafaella and Corporation with the
Escrow Agent pursuant to this Escrow Agreement, less any disbursements pursuant
to Sections 3, 4 and 5, plus any and all interest earned thereon, as from time
to time invested and reinvested as herein provided.


 


“Joint Written Direction” means a written
direction executed by Purchaser and the Representative and directing the Escrow
Agent to disburse all or a portion of the Escrow Funds or to take or refrain
from taking an action pursuant to this Escrow Agreement.


 


“Person” means any individual, firm,
partnership, corporation (including, without limitation, a business trust),
limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, and shall include any successor (by
merger or otherwise) of any such entity.


 


“Resolved Claim” means a final non-appealable
order, decree or judgment issued or rendered by a court of competent
jurisdiction presented by the Purchaser or the Representative and directing the
Escrow Agent to disburse all or a portion of the Escrow Funds or to take or
refrain from taking an action pursuant to this Escrow Agreement.


 


“Representative” means Ronald Frankel or any
other person designated in a writing signed by Rafaella and delivered to the
Escrow Agent and Purchaser in accordance with the notice provisions of this
Escrow Agreement, to act as representative of Rafaella and Frankel under this
Escrow Agreement.


 


2.                                       Appointment of and Acceptance by the
Escrow Agent.
Purchaser, Corporation, Rafaella and Frankel hereby appoint the Escrow Agent to
serve as the escrow agent hereunder. The Escrow Agent hereby accepts such
appointment and agrees to hold, invest and disburse the Escrow Funds
transferred to it in accordance with this Escrow Agreement.


 


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3.                                       Disbursements of Escrow Funds. The Escrow Agent shall disburse Escrow
Funds, at any time and from time to time, only in accordance with a Joint
Written Direction or a Resolved Claim or as otherwise specifically provided
pursuant to this Escrow Agreement.


 


4.                                       Indemnity Claim.


 


(a)                                  In the event that Purchaser shall become
aware of facts or events that may reasonably be expected to give rise to a
Claim, Purchaser shall deliver a Claim Notice, together with proof of delivery
of a copy of such Claim Notice to the Representative (“Proof of Delivery”),
to the Escrow Agent, such delivery to be in accordance with the notice
provisions of this Escrow Agreement.


 


(b)                                 Upon receipt of any Claim Notice and
Proof of Delivery, the Escrow Agent shall promptly (x) make entries or
notations in the account records relating to the Escrow Funds, (i) indicating
that funds equal to the Estimated Claim Amount are reserved to satisfy such
Claim, and (ii) identifying the date and number of such Claim Notice and
(y) deliver notice of receipt of such Claim Notice to the Representative. If
requested by the Representative, the Escrow Agent will promptly deliver a copy
of such Claim Notice to the Representative.


 


(c)                                  If on or prior to the expiration of the
thirty (30) day period immediately following the delivery by Purchaser of any
Claim Notice and the associated Proof of Delivery to the Escrow Agent, the
Escrow Agent receives a Claim Response from the Representative, a copy of which
shall be delivered contemporaneously by the Representative to Purchaser, the
Escrow Agent (i) shall disburse to Purchaser the amount stated in such
Claim Response not to be in dispute and (ii) shall not disburse the amount
so stated to be in dispute (the “Disputed Amount”) until it receives a
Joint Written Direction or a Resolved Claim directing an amount of the Escrow
Funds be so disbursed, and then only in such amount.


 


(d)                                 If after expiration of such thirty (30)
day period the Escrow Agent has not received a Claim Response, the Escrow Agent
shall disburse the Estimated Claim Amount to Purchaser at the direction of
Purchaser.


 


(e)                                  Any payment to or at the direction of
Purchaser, including payment for Claims, shall be made from the Second Escrow
Account to the extent funds are available in such account, and, to the extent
all of the funds in the Second Escrow Account have been disbursed, from the
First Escrow Account.


 


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5.                                       Monthly Release of Escrow. On each one month anniversary of the
date hereof, the Escrow Agent shall distribute to Rafaella an amount equal to
the lesser of (i) Two Million Five Hundred Thousand Dollars ($2,500,000)
and (ii) an amount equal to (x) the Escrow Funds less (y) such Escrow
Funds sufficient to pay in full all Disputed Amounts, if any, that have not
been resolved at such time and (z) the Estimated Claim Amounts specified in
Claim Notices, if any, for which Representative has not yet delivered a Claim
Response to Escrow Agent and Purchaser and the time period for delivery of such
Claim Response has not expired. Such payments shall be made from the First
Escrow Account to the extent funds are available in such account and, to the
extent all of the funds in the First Escrow Account have been disbursed, from
the Second Escrow Account.


 


6.                                       Investment of Funds; Distributions.


 


(a)                                  The Escrow Agent is herein directed and
instructed to initially invest and reinvest the Escrow Funds as set forth on Schedule II.
Corporation may provide instructions changing the investment of the Escrow
Funds and the Escrow Agent shall invest and reinvest the Escrow Funds in the
name of the Escrow Agent as Corporation shall direct (subject to applicable
minimum investments) by the furnishing of written instructions to the Escrow
Agent; provided, however, that no investment or reinvestment may be
made except in the following:


 


(i)                                     JP Morgan Chase Bank Money Market
Account;


 


(ii)                                  A trust account with JP Morgan Chase
Bank; or


 


(iii)                               A money market mutual fund, including
without limitation, the JP Morgan Fund or any other mutual fund for which the
Escrow Agent or any affiliate of the Escrow Agent serves as investment manager,
administrator, shareholder servicing agent and/or custodian or subcustodian,
notwithstanding that (i) the Escrow Agent or an affiliate of the Escrow
Agent receives fees from such funds for services rendered, (ii) the Escrow
Agent charges and collects fees for services rendered pursuant to this Escrow
Agreement, which fees are separate from the fees received from such funds, and (iii) services
performed for such funds and pursuant to this Escrow Agreement may at
times duplicate those provided to such funds by the Escrow Agent or its
affiliates. (Must specify name of particular fund).


 


(b)                                 Within fifteen (15) days of December 31
of each calendar year during the term of this Escrow Agreement, the Escrow
Agent shall deliver to Corporation, Purchaser and the Representative a
statement (an “Annual Statement”) setting forth the amount of the Escrow
Funds as at such date; and the amount of income of the Escrow Funds during the
period covered by such Annual Statement (the “Annual Income”).


 


(c)                                  If the Escrow Agent has not received
written instruction from the Representative at any time that an investment
decision must be made, the Escrow Agent shall invest the Escrow Funds, or such
portion of the Escrow Funds as to which no written instruction from the
Representative has been received, in investments described on Schedule II.


 


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(d)                                 Notwithstanding anything to the contrary
contained herein, the Escrow Agent may, without notice to Corporation, the
Representative and Purchaser, sell or liquidate any of the foregoing
investments at any time if the proceeds thereof are required for any release of
funds permitted or required hereunder, and the Escrow Agent shall not be liable
or responsible for any loss, cost or penalty resulting from any such sale or
liquidation.


 


(e)                                  With respect to any funds received by the
Escrow Agent for deposit into the Escrow Funds or any direction received by the
Escrow Agent with respect to investment of any funds in the Escrow Funds after
10:00 a.m., eastern time, the Escrow Agent shall not be required to invest
such funds or to effect such investment instruction until the next day upon
which banks in New York are open for business.


 


(f)                                    Unless the Escrow Agent receives other
fund transfer instructions, distributions to Purchaser shall be made to
Purchaser using the wire instructions specified for Purchaser on the Call-Back Schedule and
distributions to Rafaella shall be made to Rafaella using the wire instructions
specified for Representative on the Call-Back Schedule.


 


7.                                       Concerning the Escrow Agent.


 


(a)                                  Purchaser, Corporation, Rafaella and
Frankel agree to indemnify, jointly and severally, the Escrow Agent, and its
officers, directors, employees and agents, for, and to hold it and each of them
harmless against, any loss, liability or expense arising out of or in
connection with this Escrow Agreement and carrying out its duties hereunder,
including the cost and expenses of defending itself against any claim of
liability; provided, however, that none of Purchaser, Corporation,
Rafaella and Frankel will be liable for indemnification or otherwise for any
loss, liability or expense to the extent arising out of the gross negligence,
willful misconduct or bad faith of the Escrow Agent.


 


(b)                                 The Escrow Agent shall exercise the same
degree of care toward the Escrow Funds as it exercises toward its own similar
property and shall not be held to any higher standard of care under this Escrow
Agreement, nor be deemed to owe any fiduciary duty to the Representative.


 


(c)                                  The Escrow Agent may act upon any
instrument or other writing believed by it in good faith to be genuine and to
have been signed or presented by the proper person, and shall not be liable to
any party hereto in connection with the performance of its duties hereunder,
except for its own negligence, willful misconduct or bad faith. The duties of
the Escrow Agent shall be determined only with reference to this Escrow
Agreement and applicable laws and the Escrow Agent is not charged with any
knowledge of, or any duties or responsibilities in connection with, any other
document or agreement. If in doubt as to its duties and responsibilities
hereunder, the Escrow Agent may consult with counsel and shall be
protected in any action taken or omitted in good faith in reliance on the advice
or opinion of such counsel.


 


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(d)                                 The Escrow Agent may execute any of
its powers or responsibilities hereunder and exercise any rights hereunder
either directly or by or through its agents or attorneys.


 


(e)                                  Nothing in this Escrow Agreement shall be
deemed to impose upon the Escrow Agent any duty to qualify to do business or to
act as agent or otherwise in any jurisdiction other than the State of New York.


 


(f)                                    The Escrow Agent shall not be responsible
for and shall not be under a duty to examine into or pass upon the validity,
binding effect, execution or sufficiency of this Escrow Agreement, any
agreement amendatory or supplemental hereto or of any certificates delivered to
it hereunder.


 


(g)                                 The Escrow Agent makes no representation
as to the validity, value, genuineness or collectability of any security or
other document or instrument held by or delivered to it.


 


(h)                                 The Escrow Agent shall not be called upon
to advise any party as to selling or retaining, or taking or refraining from
taking any action with respect to, any securities or other property deposited
hereunder.


 


(i)                                     The Escrow Agent shall have the right at
any time to resign hereunder by giving written notice of its resignation to
Purchaser and the Representative at the address set forth herein or at such
other address as Purchaser and the Representative shall provide, at least 30
days prior to the date specified for such resignation to take effect. Upon the
effective date of such resignation, all cash and other payments and all other
property then held by the Escrow Agent hereunder shall be delivered by it to a
successor escrow agent selected by the Representative and Purchaser. Such
successor escrow agent shall be a bank or trust company in good standing
organized and doing business under the laws of the United States or any state
thereof, subject to examination by state or federal authorities, and having
combined capital and surplus of not less than $500,000,000 which is authorized
under the laws of its jurisdiction of incorporation to exercise corporate trust
powers. If no successor escrow agent is appointed, the Escrow Agent may apply
to a court of competent jurisdiction for such appointment.


 


(j)                                     If the Escrow Agent should at any time be
confronted with inconsistent claims or demands to the Escrow Funds, the Escrow
Agent shall be entitled to refrain from taking any action and its sole
obligation shall be to keep safely all property held in escrow until it shall
be directed otherwise in a Joint Written Direction or by a final order or
judgment of a court of competent jurisdiction and the Escrow Agent shall have
the right, but not the duty, to interplead the parties in any state or federal
court sitting in the City of New York, Borough of Manhattan, in the State of
New York and request that such court determine the respective rights of the
parties with respect to the Escrow Funds. In the event the Escrow Agent no
longer holds any Escrow Funds, it shall be released from any obligation or
liability as a consequence of any such claims or demands.


 


(k)                                  In the event fund transfer instructions
are given (other than in writing at the time of the execution of this Escrow
Agreement), whether in writing, by telecopier 


 


6

















 


or
otherwise, the Escrow Agent is authorized to seek confirmation of such
instructions by telephone call-back to the person or persons designated on the
call-back schedule attached hereto (the “Call-Back Schedule”), and
the Escrow Agent may rely upon the confirmations of anyone purporting to
be the person or persons so designated. The persons and telephone numbers for
call-backs may be changed only in writing actually received and
acknowledged by the Escrow Agent. If the Escrow Agent is unable to contact any
of the authorized representatives identified in the Call-Back Schedule, the
Escrow Agent is hereby authorized to seek confirmation of such instructions by
telephone call-back to any one or more of a party’s executive officers, (“Executive
Officers”), which shall include the titles of Chief Executive Officer,
Executive Vice President, General Counsel and Secretary, as the Escrow Agent may select.
Such “Executive Officer” shall deliver to the Escrow Agent a fully executed
Incumbency Certificate, and the Escrow Agent may rely upon the
confirmation of anyone purporting to be any such officer. The Escrow Agent and
the beneficiary’s bank in any funds transfer may rely solely upon any
account numbers or similar identifying numbers provided by Purchaser or the
Representative to identify (i) the beneficiary, (ii) the beneficiary’s
bank, or (iii) an intermediary bank. The Escrow Agent may apply any
of escrowed funds for any payment order it executes using any such identifying
number, even when its use may result in a person other than the
beneficiary being paid, or the transfer of funds to a bank other than the
beneficiary’s bank or an intermediary bank designated. The parties to this
Escrow Agreement acknowledge that such security procedure is commercially
reasonable.


 


(l)                                     Any corporation into which the Escrow
Agent in its individual capacity may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Escrow Agent in its individual
capacity shall be a party, or any corporation to which substantially all the
corporate trust business of the Escrow Agent in its individual capacity may be
transferred, shall be the Escrow Agent under this Escrow Agreement without
further act.


 


(m)                               Anything in this Escrow Agreement to the
contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential damage of any kind whatsoever (including but
not limited to lost profits), even if the Escrow Agent has been advised of the
likelihood for such loss or damage and regardless of the form of action.
The parties hereto acknowledge that the foregoing indemnities shall survive the
resignation or removal of the Escrow Agent or the termination of this Escrow
Agreement.


 


(n)                                 All trust investment orders involving
Treasuries, commercial paper and other direct investments will be executed
through J.P. Morgan Fleming Asset Management (“JPFAM”), in the
investment management division of J.P. Morgan Chase. Subject to the principles
of best execution, transactions are effected on behalf of the account through
broker-dealers selected by JPFAM. In this regard, JPFAM seeks to attain the
best overall result for the account, taking into consideration quality of
service and reliability. An agency fee will be assessed in connection with each
transaction.


 


8.                                       Fees. The fee of the Escrow Agent hereunder is as set
forth on Schedule I attached hereto, which fee shall be
nonrefundable and paid in advance one-half by Rafaella and one-half by
Purchaser. Rafaella and Purchaser also agree to pay on demand one-half each of
the 


 


7

















 


costs
and expenses of the Escrow Agent, including the reasonable fees and expenses of
counsel selected by the Escrow Agent incurred in connection with its duties
hereunder.


 


9.                                       Tax Reporting Information and
Certification of Tax Identification Numbers.


 


(a)                                  The parties hereto agree that, for tax
reporting purposes, all taxable interest on or other income, if any,
attributable to the Escrow Funds or any other amount held in escrow by the
Escrow Agent pursuant to the Agreement shall be allocable to Corporation.


 


(b)                                 Corporation agrees to provide the Escrow
Agent with its tax identification number by furnishing an appropriate form W-9
and any other forms and documents for Corporation that the Escrow Agent may reasonably
request (collectively, “Tax Reporting Documentation”) to the Escrow
Agent. The parties hereto understand that, if such Tax Reporting Documentation
is not so provided to the Escrow Agent, the Escrow Agent shall be required by
the Code to withhold and promptly remit to the Internal Revenue Service a
portion of any interest or other income earned on the investment of monies or
other property held by the Escrow Agent pursuant to this Escrow Agreement.


 


(c)                                  Rafaella and Frankel shall assume jointly
and severally all obligations imposed now or hereafter by any applicable tax
law with respect to any payment or distribution of the Escrow Funds to Rafaella
and Frankel.


 


(d)                                 Purchaser shall assume all obligations
imposed now or hereafter by any applicable tax law with respect to any payment
or distribution of the Escrow Funds to Purchaser.


 


10.                                 Covenant of Frankel. Frankel covenants and agrees, for the
benefit of Purchaser, that from the date hereof until the first anniversary of
the Closing Date he shall maintain a minimum Net Worth of $40,000,000. For
purposes of this Section 10, “Net Worth” means the sum of (a) the
amount of Escrow Funds and (b) the gross fair market value of Frankel’s
total assets (excluding intangibles and without duplication) less total
liabilities, including but not limited to estimated taxes on asset appreciation
and any offsets against assets.


 


11.                                 Notice. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) or sent by fax (with immediate confirmation)
or nationally recognized overnight courier service, as follows:


 


(a)                                  if to the Representative:


 


Rafaella Sportswear, Inc.


1411 Broadway


New York, New York 10018


Attention: 
President


 


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Telephone: 
(212) 403-0300


Telecopier: 
(212) 764-9275


 


with a copy to:


 


Kronish Lieb Weiner & Hellman LLP


1114 Avenue of the Americas


New York, New York 10036


Attention: 
Steven K. Weinberg, Esq.


Telephone: 
(212) 479-6240


Telecopier: 
(212) 479-6275


 


(b)                                 if to Purchaser:


 


RA Cerberus Acquisition, LLC


c/o Cerberus Capital Management, L.P.


299 Park Avenue


New York, New York 
10171


Attention: 
Mark Neporent, Kurt Larsen


and George Kollitides


Telephone: 
(212) 891-2100


Telecopier: 
(212) 891-1540


 


with a copy to:


 


Schulte Roth & Zabel LLP


919 Third Avenue


New York, New York 
10022


Attention: 
David E. Rosewater, Esq.


 


Telephone: 
(212) 756-2208


Telecopier: 
(212) 593-5955


 


(c)                                  if to Corporation:


 


Rafaella Apparel Group, Inc.


1411 Broadway


New York, New York 
10018


Attention: 
Chief Executive Officer


Telephone: 
(212) 403-0300


Telecopier: 
(212) 764-9275


 


with a copy to:


 


Schulte Roth & Zabel LLP


919 Third Avenue


New York, New York 
10022


Attention: 
David E. Rosewater, Esq.


 


Telephone: 
(212) 756-2208


 


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Telecopier: 
(212) 593-5955


 


(d)                                 if to the Escrow Agent:


 


JPMorgan Chase Bank, N.A.

4 New York Plaza, 21st Floor 

New York, NY  10004

Attention:  Audrey Mohan


 


Telephone: 
(212) 623-5087


Telecopier: 
(212) 623-6168


 


or to such other address as each party may designate
for itself by like notice.


 


12.                                 Amendment or Waiver. This Escrow Agreement may be
changed, waived, discharged or terminated only by a writing signed by the
Representative, Corporation, Purchaser and the Escrow Agent. No delay or
omission by any party in exercising any right with respect hereto shall operate
as a waiver. A waiver on any one occasion shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion.


 


13.                                 Severability. To the extent any provision of this
Escrow Agreement is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Escrow Agreement.


 


14.                                 Governing Law. This Escrow Agreement shall be
construed and interpreted in accordance with the internal laws of the State of
New York without giving effect to the conflict of laws principles thereof.


 


15.                                 Entire Agreement. This Escrow Agreement constitutes the
entire agreement between the parties relating to the holding, investment and
disbursement of the Escrow Funds and sets forth in their entirety the
obligations and duties of the Escrow Agent with respect to the Escrow Funds.


 


16.                                 No Assignment. Except as provided in Section 7(l),
this Escrow Agreement is not assignable (by operation of law or otherwise)
without the prior written consent of the other parties, provided,
however, Purchaser may assign this Escrow Agreement to its financing
sources as collateral in connection with the Financing or to any of its
Affiliates so long as Purchaser remains an obligor under this Agreement,
without the prior written consent of the other parties.


 


17.                                 Successors and Assigns. This Escrow Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, successors and assigns. For purposes of this Escrow Agreement, “successor”
for any entity other than a natural person shall mean a successor to such
entity as a result of such entity’s merger, consolidation, sale of
substantially all of its assets or similar transaction.


 


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18.                                 Execution in Counterparts. This Escrow Agreement and any Joint
Written Direction may be executed in two or more counterparts and be
delivered via facsimile, which when so executed shall constitute one and the
same agreement or direction.


 


19.                                 Grant of Security Interest. To secure the obligations of
Corporation to make the payments under Section 1.1(b)(2) of the
Redemption Agreement, Corporation hereby grants Rafaella a security interest
and lien in the Second Escrow Account and on all of the funds from time to time
on deposit therein and grants to Rafaella the authority to file a UCC-1
financing statement with respect to such collateral.


 


20.                                 Termination. Upon the disbursement of all amounts in
the Escrow Funds pursuant to the terms of this Escrow Agreement, this Escrow
Agreement shall terminate and the Escrow Agent shall have no further obligation
or liability whatsoever with respect to this Escrow Agreement or the Escrow
Funds.


 


21.                                 Account Opening Information. IMPORTANT INFORMATION ABOUT PROCEDURES
FOR OPENING A NEW ACCOUNT For Accounts opened in the U.S.:  To help the government fight the funding of
terrorism and money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that identifies each
person who opens an account. When an account is opened, we will ask for
information that will allow us to identify relevant parties.


 


22.                                 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING, WHETHER AT LAW OR
EQUITY, BROUGHT BY ANY OF THEM IN CONNECTION WITH THIS ESCROW AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.


 


*                                         *                                         *


 


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  RA CERBERUS ACQUISITION, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George Kollitides

  	
   

  
	
   

  	
   

  	
  Name: George Kollitides

  
	
   

  	
   

  	
  Title: Authorized Person

  	 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RAFAELLA SPORTSWEAR, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald Frankel

  	
   

  
	
   

  	
   

  	
  Name: Ronald Frankel

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  	 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Ronald Frankel

  	
   

  
	
   

  	
  Ronald Frankel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RAFAELLA APPAREL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn Palmer

  	
   

  
	
   

  	
   

  	
  Name: Glenn Palmer

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  	 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Debra A. DeMarco

  	
   

  
	
   

  	
   

  	
  Name: Debra A. DeMarco

  
	
   

  	
   

  	
  Title:  Vice President

  	 

						



 


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