Exhibit 10.6


 


PLEDGE AGREEMENT


 


This Pledge Agreement
(this “Agreement”) dated as of June 20, 2005 between HSBC BANK USA, N.A.,
having an office at 452 Fifth Avenue, New York, New York 10018, as agent for
Lenders (as defined below) (in such capacity, “Agent”) and RAFAELLA APPAREL
GROUP, INC., a Delaware corporation having an office at 1411 Broadway, New
York, New York 10018 (“Pledgor”).


 


BACKGROUND TO THE AGREEMENT


 


Pledgor has entered or is
entering into a Financing Agreement dated as of June 20, 2005 (as amended,
modified, restated or supplemented from time to time, the “Financing Agreement”)
with Verrazano, Inc., each other subsidiary of Pledgor which becomes a
guarantor of the obligations thereunder from time to time, the financial
institutions named therein or which hereafter become a party thereto (each a “Lender”
and collectively, “Lenders”) and Agent pursuant to which Agent and Lenders have
agreed, subject to the terms and conditions contained therein, to provide
certain financial accommodations to Pledgor.


 


In order to induce Agent
and Lenders to provide or continue to provide the financial accommodations
described in the Financing Agreement, Pledgor has agreed to pledge and grant a
security interest to Agent for its benefit and for the ratable benefit of
Lenders in the Collateral (as hereinafter defined).


 


NOW, THEREFORE, in
consideration of the premises and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:


 


1.         Definitions.


 


All capitalized terms
used herein which are not defined shall have the meanings given to them in the
Financing Agreement.


 


2.         Pledge and Grant of
Security Interest.


 


To secure the full and
punctual payment and performance of the Obligations (the “Indebtedness”),
Pledgor hereby pledges, assigns, hypothecates, transfers and grants a security
interest to Agent for its benefit and for the ratable benefit of Lenders in all
of the following (the “Collateral”):


 


(a)       the shares of stock issued
by the issuers and set forth on Schedule A (each such issuer, an “Issuer”)
annexed hereto and expressly made a part hereof (all such shares, the “Pledged
Stock”), the certificates representing the Pledged Stock and all dividends,
cash, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Stock;


 

















 


(b)       all additional shares of
stock of any Issuer of the Pledged Stock from time to time acquired by the Pledgor
in any manner, including, without limitation, stock dividends or a distribution
in connection with any increase or reduction of capital, reclassification,
merger, consolidation, sale of assets, combination of shares, stock split,
spin-off or split-off (which shares shall be deemed to be part of the
Collateral), and the certificates representing such additional shares, and all
dividends, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares; and


 


(c)       all options and rights,
whether as an addition to, in substitution of or in exchange for any shares of
the Pledged Stock.


 


3.         Delivery of Collateral.


 


All certificates
representing or evidencing the Pledged Stock shall be delivered to and held by
or on behalf of Agent pursuant hereto and shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to Agent. Pledgor hereby authorizes the Issuer upon
demand by Agent to deliver any certificates, instruments or other distributions
issued in connection with the Collateral directly to Agent, in each case to be
held by Agent, subject to the terms hereof. Agent shall have the right, when a
Event of Default has occurred and is continuing, to transfer to or to register
in the name of Agent or any of its nominees any or all of the Pledged Stock,
and to exchange certificates or instruments representing or evidencing Pledged
Stock for certificates or instruments of smaller or larger denominations.


 


4.         Representations and
Warranties of Pledgor.


 


Pledgor represents and
warrants to Agent that:


 


(a)       Pledgor has the requisite
power and authority to enter into this Agreement, to pledge the Collateral for
the purposes described herein and to carry out the transactions contemplated by
this Agreement.


 


(b)       The execution, delivery and
performance by Pledgor of this Agreement and the pledge of the Collateral
hereunder have been duly and properly authorized and do not and will not result
in any violation of any agreement, indenture, instrument, license, judgment,
decree, order, law, statute, ordinance or other governmental rule or regulation
applicable to Pledgor, except as could not reasonably be expected to have a
Material Adverse Effect.


 


(c)       This Agreement constitutes
the legal, valid and binding obligation of Pledgor enforceable against Pledgor
in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws.


 


(d)       Pledgor is the direct and
beneficial owner of each share of the Pledged Stock.


 


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(e)       All of the shares of the
Pledged Stock have been duly authorized, validly issued and are fully paid and
nonassessable.


 


(f)        Upon delivery of the
Pledged Stock to Agent or an agent for Agent, this Agreement creates and grants
a valid first Lien on and in the Collateral and the proceeds thereof, subject
to no prior security interest, mortgage, pledge, claim, lien, charge,
hypothecation, assignment, offset or encumbrance whatsoever or to any agreement
purporting to grant to any third party a Lien upon the property or assets of
Pledgor which would include the Collateral, except for Permitted Encumbrances.


 


(g)       There are no restrictions
on transfer of the Pledged Stock contained in the Certificate of Incorporation
or by-laws of the Issuer or otherwise which have not otherwise been enforceably
and legally waived by the necessary parties.


 


(h)       None of the Pledged Stock
has been issued or transferred in violation of the securities registration,
securities disclosure or similar laws of any jurisdiction to which such
issuance or transfer may be subject.


 


(i)        There are no actions or
proceedings pending or, to the best of Pledgor’s knowledge, threatened in
writing before any court, judicial body, administrative agency or arbitrator
which may materially adversely affect the Collateral.


 


(j)        No consent, approval,
authorization or other order of any person, firm, corporation or other entity (“Person”)
and no consent, authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required by the
Pledgor either (i) for the pledge of the Collateral pursuant to this Agreement
or for the execution, delivery or performance of this Agreement or (ii) for the
exercise by the Agent of the voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with such disposition by
laws affecting the offering and sale of securities generally.


 


(k)       No notification of the
pledge evidenced hereby to any Person is required.


 


(l)        The Pledged Stock
constitutes one hundred percent (100%) of the issued and outstanding shares of
capital stock of the Issuers thereof set forth on Schedule A annexed
hereto.


 


(m)      As of the date hereof, there
are no existing options, warrants, calls or commitments of any such character
whatsoever relating to any Pledged Stock and no indebtedness or other security
convertible into any Pledged Stock.


 


The representations and
warranties set forth in this Section 4 shall survive the execution and delivery
of this Agreement.


 


5.         Covenants.


 


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Until such time as all of
the Indebtedness has been paid in full and the Financing Agreement has been
irrevocably terminated, Pledgor shall:


 


(a)       Not, other than as
permitted by the Loan Documents, sell, assign, transfer, convey, or otherwise
dispose of its rights in or to the Collateral or any interest therein; nor
create, incur or permit to exist any Lien whatsoever with respect to any of the
Collateral or the proceeds thereof other than that created hereby.


 


(b)       At Pledgor’s expense,
defend Agent’s right, title and security interest in and to the Collateral
against the claims of any Person and keep the Collateral free from all Liens,
except for the Liens granted to Agent under this Agreement.


 


(c)       At any time, and from time
to time, upon the written request of Agent, execute and deliver such further
documents and do such further acts and things as Agent may reasonably request
in order to effect the purposes of this Agreement including, but without
limitation, delivering to Agent upon the occurrence and during the continuance
of an Event of Default irrevocable proxies in respect of the Collateral in form
satisfactory to Agent exercisable only upon the occurrence and during the
continuance of an Event of Default. Until receipt thereof, this Agreement shall
constitute Pledgor’s proxy to Agent or its nominee to vote all shares of
Collateral then registered in Pledgor’s name upon the occurrence and during the
continuance of an Event of Default.


 


(d)       Within five (5) Business
Days of receipt thereof by Pledgor, deliver to Agent all notices and statements
relating to the Collateral received by Pledgor.


 


(e)       Not consent to or approve
the issuance to any Person other than Pledgor of (i) any additional shares of
any class of capital stock of the Issuer; (ii) any securities convertible
either voluntarily by the holder thereof or automatically upon the occurrence
or nonoccurrence of any event or condition into, or any securities exchangeable
for, any such shares; or (iii) any warrants, options, contracts or other
commitments entitling any person to purchase or otherwise acquire any such
shares.


 


6.         Voting Rights and
Dividends.


 


In addition to Agent’s
rights and remedies set forth in Section 8 hereof, in case an Event of Default
shall have occurred and has been declared by Agent and shall be continuing,
Agent shall (i) be entitled to vote the Collateral, (ii) be entitled to give
consents, waivers and ratifications in respect of the Collateral (Pledgor
hereby irrevocably constituting and appointing Agent, with full power of
substitution, the proxy and attorney-in-fact after the occurrence and during
the continuance of an Event of Default of Pledgor for such purposes) and (iii)
be entitled to collect and receive for its own use cash dividends paid on the
Collateral. Unless and until the Agent exercises its rights under the preceding
sentence, Pledgor shall remain entitled to take all such actions. Pledgor shall
not be permitted to exercise or refrain from exercising any voting rights or
other powers if such action would reasonably be expected to have a material
adverse effect on the value of the Collateral or any part thereof; and, provided,
further, that Pledgor shall give at least five (5) days’ written notice
of the manner in which Pledgor intends to exercise, or the reasons for
refraining from exercising, any voting rights or other powers other than with


 


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respect to any election of directors and voting with respect to any
incidental matters. All dividends and all other distributions in respect of any
of the Collateral, whenever paid or made, shall be delivered to Agent to hold
as Collateral and shall, if received by the Pledgor, be received in trust for
the benefit of Agent, be segregated from the other property or funds of the
Pledgor, and be forthwith delivered to Agent as Collateral in the same form as
so received (with any necessary endorsement).


 


7.         Events of Default.


 


The term “Event of
Default” wherever used herein shall mean the occurrence of an Event of Default
under the Financing Agreement, or Pledgor or the Issuer shall default in the
payment of any Obligation;


 


8.         Remedies.


 


Upon the occurrence of an
Event of Default, Agent may:


 


(a)       Demand, collect, receipt
for, settle, compromise, adjust, sue for, foreclose or realize upon the
Collateral (or any part thereof), as Agent may determine in its sole
discretion;


 


(b)       Transfer any or all of the
Collateral into its name, or into the name of its nominee or nominees;


 


(c)       Exercise all rights with
respect to the Collateral including, without limitation, all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any shares of the Collateral as if it were the absolute owner
thereof, including, but without limitation, the right to exchange, at its
discretion, any or all of the Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the Issuer thereof,
or upon the exercise by the Issuer of any right, privilege or option pertaining
to any of the Collateral, and, in connection therewith, to deposit and deliver
any and all of the Collateral with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and conditions as it may
determine, all without liability except to account for property actually
received by it;


 


(d)       Subject to the requirements
of applicable law, sell, assign and deliver the whole or, from time to time,
any part of the Collateral at the time held by Agent, at any private or public
sale or auction, with or without demand, advertisement or notice of the time or
place of sale or adjournment thereof or otherwise (all of which are hereby
waived, except such notice as is required by applicable law and cannot be
waived), for cash or credit or for other property for immediate or future
delivery, and for such price or prices and on such terms as Agent in its sole
discretion may determine, or as may be required by applicable law.


 


Pledgor hereby waives and
releases any and all right or equity of redemption, whether before or after
sale hereunder. At any such sale, unless prohibited by applicable law, Agent
may bid for and purchase the whole or any part of the Collateral so sold free
from any such right or equity of redemption. All moneys received by Agent
hereunder whether upon sale of the Collateral or any part thereof or otherwise
shall be held by Agent and applied by it as


 


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provided in Section 11 hereof. No failure or delay on the part of Agent
in exercising any rights hereunder shall operate as a waiver of any such rights
nor shall any single or partial exercise of any such rights preclude any other
or future exercise thereof or the exercise of any other rights hereunder. Agent
shall have no duty as to the collection or protection of the Collateral or any
income thereon nor any duty as to preservation of any rights pertaining
thereto, except to apply the funds in accordance with the requirements of
Section 11 hereof. Agent may exercise its rights with respect to property held
hereunder without resort to other security for or sources of reimbursement for
the Indebtedness. In addition to the foregoing, Agent shall have all of the
rights, remedies and privileges of a secured party under applicable law and the
Uniform Commercial Code of New York regardless of the jurisdiction in which
enforcement hereof is sought.


 


9.         Private Sale.


 


Pledgor recognizes that
Agent may be unable to effect (or to do so only after delay which would
adversely affect the value that might be realized from the Collateral) a public
sale of all or part of the Collateral by reason of certain prohibitions
contained in the Securities Act, and may be compelled to resort to one or more
private sales to a restricted group of purchasers who will be obliged to agree,
among other things, to acquire such Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. Pledgor
agrees that any such private sale may be at prices and on terms less favorable
to the seller than if sold at public sales and that such private sales shall be
deemed to have been made in a commercially reasonable manner. Pledgor agrees
that Agent has no obligation to delay sale of any Collateral for the period of
time necessary to permit the Issuer to register the Collateral for public sale
under the Securities Act.


 


10.       Proceeds of Sale.


 


The proceeds of any
collection, recovery, receipt, appropriation, realization, disposition or sale
of the Collateral shall be applied by Agent as provided under the Financing
Agreement.


 


11.       Waiver of Marshaling.


 


Pledgor hereby waives any
right to compel any marshaling of any of the Collateral.


 


12.       Agent Appointed
Attorney-In-Fact and Performance by Agent. Upon the occurrence and during
the continuance of an Event of Default, Pledgor hereby irrevocably constitutes
and appoints Agent as Pledgor’s true and lawful attorney-in-fact exercisable
only after the occurrence and during the continuance of an Event of Default,
with full power of substitution, to execute, acknowledge and deliver any
instruments and to do in Pledgor’s name, place and stead, all such acts, things
and deeds for and on behalf of and in the name of Pledgor, which Pledgor could
or might do or which Agent may deem necessary, desirable or convenient to
accomplish the purposes of this Agreement, including, without limitation, to
execute such instruments of assignment or transfer or orders and to register,
convey or otherwise transfer title to the Collateral into Agent’s name. Pledgor
hereby ratifies and confirms all that said attorney-in-fact may so do and
hereby declares this power of attorney to be coupled with an interest and
irrevocable. If Pledgor fails to perform any agreement herein contained, Agent
may, after notice


 


6

















 


to Pledgor and reasonable opportunity (but in no event less than 5
days) to cure, itself perform or cause performance thereof, and any reasonable
costs and expenses of Agent incurred in connection therewith shall be paid by
Pledgor as provided in Section 24 hereof.


 


13.       Termination.


 


This Agreement shall
terminate and Pledgor shall be entitled to the return, at Pledgor’s expense, of
such of the Collateral as has not theretofore been sold, disposed of or
otherwise applied pursuant to this Agreement upon payment in full of the
Indebtedness and irrevocable termination of the Financing Agreement.


 


14.       Concerning Agent.


 


The recitals of fact
herein shall be taken as statements of Pledgor for which Agent assumes no
responsibility. Agent makes no representation to anyone as to the value of the
Collateral or any part thereof or as to the validity or adequacy of the
security afforded or intended to be afforded thereby or as to the validity of
this Agreement. Agent shall be protected in relying upon any notice, consent,
request or other paper or document believed by it to be genuine and correct and
to have been signed by a proper person. The permissive rights of Agent
hereunder shall not be construed as duties of Agent. Agent shall be under no
obligation to take any action toward the enforcement of this Agreement or
rights or remedies in respect of any of the Collateral. Agent shall not be
personally liable for any action taken or omitted by it in good faith and
reasonably believed by it to be within the power or discretion conferred upon
it by this Agreement.


 


15.       Notices.


 


Any notice or other
communication required or permitted pursuant to this Agreement shall be deemed
given (a) when personally delivered to any officer of the party to whom it is
addressed, (b) on the earlier of actual receipt thereof or three (3) days
following posting thereof by certified or registered mail, postage prepaid, (c)
upon actual receipt thereof when sent by a recognized overnight delivery
service or (d) upon actual receipt thereof when sent by telecopier to the
number set forth below with electronic confirmation of receipt, in each case
addressed to each party at its address or telecopier number set forth below or
at such other address or telecopier number as has been furnished in writing by
a party to the other by like notice:


 


	
  If to Agent:

  	
   

  	
  HSBC Bank USA

  452 Fifth Avenue 

  New York, New York 10018 

  
	
   

  	
   

  	
  Attention:

  	
  Douglas Taliaferro

  
	
   

  	
   

  	
  Telephone:

  	
  212-525-5799

  
	
   

  	
   

  	
  Facsimile:

  	
  212-525-6905

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Hahn & Hessen LLP

  488 Madison Avenue

  New York, New York 10022

  Attention:

  



 


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  Telephone:

  	
  (212) 736-1000 

  
	
   

  	
   

  	
  Facsimile:

  	
  (212) 478-7400

  
	
  If to Pledgor:

  	
   

  	
  Rafaella Corporation

  1411 Broadway

  New York, New York 10018

  
	
   

  	
   

  	
  Attention:

  	
  Chad Spooner 

  
	
   

  	
   

  	
  Telephone:

  	
  212 403-0300 

  
	
   

  	
   

  	
  Facsimile:

  	
  212 764-9275

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Schulte Roth & Zabel LLP

  919 Third Avenue 

  New York, New York 10022

  
	
   

  	
   

  	
  Attention:

  	
  Stuart Freedman, Esq. 

  
	
   

  	
   

  	
  Telephone:

  	
  212-756-2000 

  
	
   

  	
   

  	
  Facsimile:

  	
  212-593-5955

  
						



 


16.       Governing Law.


 


This Agreement and all
rights and obligations hereunder shall be governed by and construed and
enforced in all respects in accordance with the laws of the State of New York
applied to contracts to be performed wholly within the State of New York.


 


17.       Waivers.


 


PLEDGOR AND AGENT HEREBY
EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND
PLEDGOR AND AGENT HEREBY CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT PLEDGOR AND
AGENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THEIR CONSENTS HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.


 


18.       Litigation.


 


ANY JUDICIAL PROCEEDING
BROUGHT BY OR AGAINST PLEDGOR OR AGENT WITH RESPECT TO ANY OF THE OBLIGATIONS,
THIS AGREEMENT OR ANY RELATED AGREEMENT MAY BE BROUGHT IN ANY COURT OF
COMPETENT JURISDICTION IN NEW YORK COUNTY, STATE OF NEW YORK, UNITED STATES OF


 


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AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
PLEDGOR AND AGENT ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. EACH OF PLEDGOR AND AGENT HEREBY WAIVE PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENT THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO
EACH OF PLEDGOR AND AGENT AT ITS ADDRESS SET FORTH IN SECTION 15 ABOVE AND
SERVICE SO MADE SHALL BE DEEMED COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL
HAVE BEEN SO DEPOSITED IN THE MAILS OF THE UNITED STATES OF AMERICA. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW
OR SHALL LIMIT THE RIGHT OF AGENT TO BRING PROCEEDINGS AGAINST PLEDGOR IN THE
COURTS OF ANY OTHER JURISDICTION. PLEDGOR AND AGENT WAIVE ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND SHALL NOT ASSERT
ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON
CONVENIENS. ANY JUDICIAL PROCEEDING BY PLEDGOR AGAINST AGENT INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED
TO OR CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, SHALL BE BROUGHT
ONLY IN A FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK, STATE OF NEW
YORK.


 


19.       No Waiver; Cumulative
Remedies.


 


Any and all of Agent’s
and Lenders’ rights with respect to the Liens granted under this Agreement
shall continue unimpaired, and Pledgor shall be and remain obligated in
accordance with the terms hereof, notwithstanding (a) the bankruptcy,
insolvency or reorganization of Pledgor, (b) the release or substitution of any
item of the Collateral at any time, or of any rights or interests therein, or
(c) any delay, extension of time, renewal, compromise or other indulgence
granted by Agent and Lenders in reference to any of the Indebtedness. Pledgor
hereby waives all notice of any such delay, extension, release, substitution,
renewal, compromise or other indulgence, and hereby consents to be bound hereby
as fully and effectively as if Pledgor had expressly agreed thereto in advance.
No failure on the part of Agent or Lenders to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any such right, power or
remedy by Agent and Lenders preclude any other or further exercise thereof or
the exercise of any right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.


 


20.       Severability.


 


In case any security
interest or other right of Agent and/or any Lender shall be held to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect any other security interest or other right, privilege or power
granted under this Agreement. In the event that any provision of this Agreement
or the application thereof to Pledgor or any circumstance in any jurisdiction
governing this Agreement shall, to any extent, be invalid or


 


9

















 


unenforceable under any applicable statute, regulation, or rule of law,
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform to such statute, regulation
or rule of law, and the remainder of this Agreement and the application of any
such invalid or unenforceable provision to parties, jurisdictions, or
circumstances other than to whom or to which it is held invalid or
unenforceable shall not be affected thereby, nor shall same affect the validity
or enforceability of any other provision of this Agreement.


 


21.       Counterparts; Facsimiles.


 


This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which when taken together shall constitute one and the same
instrument. Any signature delivered by a party by facsimile transmission or
electronic mail shall be deemed an original signature hereto.


 


22.       Miscellaneous.


 


(a)       This Agreement constitutes
the entire and final agreement among the parties with respect to the subject
matter hereof and neither this Agreement nor any term hereof may be changed,
discharged or terminated orally, but only by an instrument in writing, signed
by Agent and Pledgor. No waiver of any term or condition of this Agreement,
whether by delay, omission or otherwise, shall be effective unless in writing
and signed by the party sought to be charged, and then such waiver shall be
effective only in the specific instance and for the purpose for which given.


 


(b)       This Agreement shall be
binding upon Pledgor, and Pledgor’s successors and assigns, and shall inure to
the benefit of Agent, Lenders and their successors and assigns. The term “Agent”,
as used herein, shall include any successor or assign of Agent at the time
entitled to the pledged interest in the Collateral.


 


(c)       The headings and captions
in this Agreement are for purposes of reference only and shall not constitute
part of this Agreement for any other purpose.


 


23.       Expenses.


 


The Collateral shall also
secure, and Pledgor shall pay to Agent on demand, from time to time, all
reasonable costs and expenses (including but not limited to, reasonable
attorneys’ fees and costs, taxes, and all transfer, recording, filing and other
charges) of or incidental to, the custody, care, transfer, administration of
the Collateral or any other collateral, or in any way relating to the
enforcement, protection or preservation of the rights or remedies of Agent and
Lenders under this Agreement or with respect to any of the Indebtedness.


 


24.       Recapture


 


Anything in this
Agreement to the contrary notwithstanding, if Agent and/or Lenders receives any
payment or payments on account of the Indebtedness, which payment or payments
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set


 


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aside and/or required to be repaid to a trustee, receiver, or any other
party under the United States Bankruptcy Code, as amended, or any other federal
or state bankruptcy, reorganization, moratorium or insolvency law relating to
or affecting the enforcement of creditors’ rights generally, common law or
equitable doctrine, then to the extent of any sum not finally retained by Agent
and/or Lenders, Pledgor’s obligations to Agent and Lenders shall be reinstated
and this Agreement shall remain in full force and effect (or be reinstated)
until payment shall have been made to Agent, which payment shall be due on
demand.


 


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IN WITNESS WHEREOF, the
parties have duly executed this Agreement as of the day and year first written
above.


 


 


	
   

  	
   

  	
  RAFAELLA APPAREL GROUP, INC., as Pledgor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn S. Palmer

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Glenn S. Palmer

  
	
   

  	
   

  	
   

  	
  Its: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HSBC BANK USA, NATIONAL ASSOCIATION,

  as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lisa H. Augustus

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Lisa H. Augustus

  
	
   

  	
   

  	
   

  	
  Its: Vice President