Document:

EXHIBIT 10.26

 

AMENDMENT NO. 1

 

TO

 

FINANCING AGREEMENT

 

THIS AMENDMENT NO. 1 (this “Amendment”) is entered
into as of March 31, 2006, by and among RAFAELLA APPAREL GROUP, INC., a
Delaware corporation (“Borrower”), VERRAZANO, INC., a New York corporation (“Verrazano)”,
HSBC BANK USA, NATIONAL ASSOCIATION (“HSBC”) and the other financial
institutions which are now or which hereafter become a party hereto (each a “Lender”
and collectively, the “Lenders”) and HSBC, as agent for the Lenders (in such
capacity, the “Agent”).

 

BACKGROUND

 

Borrower, Verrazano, Agent and Lenders are parties
to a Financing Agreement dated June 20, 2005 (as amended, restated,
supplemented or otherwise modified from time to time, the “Loan Agreement”)
pursuant to which Agent and Lenders provide Borrower with certain financial
accommodations.

 

Borrower has requested that Agent and Lenders amend
certain reporting requirements contained in the Loan Agreement, and Agent and
Lenders are willing to do so on the terms and conditions hereafter set forth.

 

NOW, THEREFORE, in consideration of any loan or
advance or grant of credit heretofore or hereafter made to or for the account
of Borrower by Agent and Lenders, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

 

1.             Definitions.  All capitalized terms not otherwise defined
herein shall have the meanings given to them in the Loan Agreement

 

2.             Amendment to
Loan Agreement.  Subject to
satisfaction of the conditions precedent set forth in Section 3 below, the
Loan Agreement is hereby amended as follows:

 

(a)           Section 9.7
of the Loan Agreement is hereby amended by amending and restating the first
sentence thereof in its entirety to provide as follows:

 

“Furnish Agent and Lenders within one hundred twenty
(120) days after the end of each fiscal year of Loan Parties annual
information that would be required to be contained in a filing with the SEC on Form 10-K
if Borrower was required to file such form, including a “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” that
describes the financial condition and results of the Loan Parties on a
Consolidated Basis (showing in reasonable detail, either on the face of the
financial statements or in the footnotes thereto and in 

 

 

Management’s Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of Borrower and its Restricted Subsidiaries (as that term is defined
in the Senior Note Indenture) separate from the financial condition and results
of operations of the Unrestricted Subsidiaries (as that term is defined in the
Senior Note Indenture) of the Borrower, if any), audited by an independent
public accounting firm selected by Loan Parties and satisfactory to Agent (the “Accountants”).

 

(b)           Section 9.8
of the Loan Agreement is hereby amended by amending and restating the first two
sentences thereof in their entirety to provide as follows:

 

“Furnish to Agent and Lenders within one hundred
twenty (120) days after the end of the second fiscal quarter of Loan
Parties quarterly information that would be required to be contained in a
filing with the SEC on Form 10-Q if Borrower were required to file such
forms, including a “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” that describes the financial condition and results
of operations of Loan Parties on a Consolidated Basis (showing in reasonable
detail, either on the face of the financial statements or in the footnotes
thereto and in Management’s Discussion and Analysis of Financial Condition and
Results of Operations, the financial condition and results of operations of
Borrower and its Restricted Subsidiaries (as that term is defined in the Senior
Note Indenture) separate from the financial condition and results of operations
of the Unrestricted Subsidiaries (as that term is defined in the Senior Note
Indenture) of the Borrower, if any), reviewed by the Accountants.  In addition to the financial information
provided above, Borrower will provide a balance sheet, statement of income and
equityholders’ equity and statement of cash flow setting forth a comparison of
the figures for (x) the current year-to-date with the figures for (y) the
same year-to-date period of the immediately preceding fiscal year, and (z) the
projections for such year-to-date period delivered pursuant to Section 5.5(b) or
Section 9.12, is applicable.”

 

3.             Conditions of
Effectiveness.  This
Amendment shall become effective upon satisfaction of the following conditions
precedent:  Agent shall have received
four (4) copies of this Amendment executed by Borrower, Verrazano, Agent
and Lenders.

 

4.             Representations
and Warranties.  Borrower
and Verrazano each hereby represents and warrants as follows:

 

(a)           This Amendment
and the Loan Agreement, as amended hereby, constitute its legal, valid and
binding obligations and are enforceable against it in accordance with their
respective terms.

 

(b)           Upon the
effectiveness of this Amendment, it hereby reaffirms, in all material respects,
all representations, warranties and covenants made in the Loan Agreement on 

 

 

and as of the date hereof except:  (i) to the extent such representation,
warranties or covenants are limited by their terms to a specific date in which
case they shall be true and correct in all material respects as of such date or
(ii) for changes in the nature of its business or operations that may
occur after the Closing Date in the ordinary course of business so long as
Agent has consented to such changes or such changes are not in violation of any
provision of the Loan Agreement or any Other Document.

 

(c)           No Event of
Default or Default has occurred and is continuing or would exist after giving
effect to this Amendment.

 

(d)           It does not
have any defense, counterclaim or offset with respect to the Loan Agreement.

 

5.             Effect
on the Loan Agreement.

 

(a)           Upon the
effectiveness of Section 2 hereof, each reference in the Loan Agreement to
“this Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall
mean and be a reference to the Loan Agreement as amended hereby.

 

(b)           Except as
specifically amended herein, the Loan Agreement, and all other documents,
instruments and agreements executed and/or delivered in connection therewith,
shall remain in full force and effect, and are hereby ratified and confirmed.

 

(c)           The execution,
delivery and effectiveness of this Amendment shall not operate as a waiver of
any right, power or remedy of Agent or Lenders, nor constitute a waiver of any
provision of the Loan Agreement, or any other documents, instruments or
agreements executed and/or delivered under or in connection therewith.

 

6.             Governing Law.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns and shall be governed by and construed in accordance with the laws of
the State of New York.

 

7.             Headings.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

 

8.             Counterparts;
Facsimile.  This
Amendment may be executed by the parties hereto 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 agreement. 
Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.

 

 

IN WITNESS WHEREOF, this Amendment has been duly
executed as of the day and year first written above.

 

	
   

  	
  RAFAELLA APPAREL GROUP,
  as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chad J. Spooner

  
	
   

  	
   

  	
  Name: Chad J. Spooner

  
	
   

  	
   

  	
  Title: CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VERRAZANO, INC., as
  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By: :

  	
  /s/ Chad J. Spooner

  
	
   

  	
   

  	
  Name: Chad J. Spooner

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HSBC BANK USA, N.A., as
  Agent and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lisa Augustus

  
	
   

  	
   

  	
  Name: Lisa Augustus

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ISRAEL DISCOUNT BANK OF
  NEW YORK, as

  
	
   

  	
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matilde Reyes

  
	
   

  	
   

  	
  Name: Matilde Reyes

  
	
   

  	
   

  	
  Title: First Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dina Tourloukis

  
	
   

  	
   

  	
  Name: Dina Tourloukis

  
	
   

  	
   

  	
  Title: Assistant Vice
  PresidentEXHIBIT
10.27

 

AMENDMENT NO. 2

 

TO

 

FINANCING AGREEMENT

 

THIS AMENDMENT NO. 2 (this “Amendment”) is entered
into effective as of December 31, 2006, by and among RAFAELLA APPAREL
GROUP, INC., a Delaware corporation (“Borrower”), VERRAZANO, INC., a New York corporation
(“Verrazano”), HSBC BANK USA, NATIONAL ASSOCIATION (“HSBC”) and the other
financial institutions which are now or which hereafter become a party hereto
(each a “Lender” and collectively, the “Lenders”) and HSBC, as agent for the
Lenders (in such capacity, the “Agent”).

 

BACKGROUND

 

Borrower, Verrazano, Agent and Lenders are parties
to a Financing Agreement dated June 20, 2005 (as amended by Amendment No. 1
to Financing Agreement dated as of March     , 2006,
and as hereafter further amended, restated, supplemented or otherwise modified
from time to time, the “Financing Agreement”) pursuant to which Agent and
Lenders provide Borrower with certain financial accommodations.

 

Borrower has requested that Agent and Lenders amend
certain financial covenants contained in the Financing Agreement, and Agent and
Lenders are willing to do so on the terms and conditions hereafter set forth.

 

NOW, THEREFORE, in consideration of any loan or
advance or grant of credit heretofore or hereafter made to or for the account
of Borrower by Agent and Lenders, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

 

1.             Definitions.  All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Financing Agreement.

 

2.             Amendment to Financing
Agreement.  Subject to
satisfaction of the conditions precedent set forth in Section 3 below, Section 6.8(b) of
the Financing Agreement is hereby amended and restated in its entirety as
follows:

 

“(b) Net Income.  Maintain (i) Net Income in excess of $0
during each fiscal quarter ending on or after September 30, 2005 through
and including September 30, 2006, (ii) Net Income during each fiscal
quarter ending on or after December 31, 2006 in excess of ($3,000,000)
(i.e. not suffer a loss of greater than $3,000,000 in any fiscal quarter) and (iii) Net
Income in excess of $0 during each period of two consecutive fiscal quarters
(on a rolling basis) ending on or after December 31, 2006.”

 

 

3.             Condition of Effectiveness.  This Amendment shall become effective upon
receipt by Agent of four (4) copies of this Amendment executed by
Borrower, Verrazano, Agent and Lenders.

 

4.             Representations and
Warranties.  Borrower and
Verrazano each hereby represents and warrants as follows:

 

(a)           This Amendment and the
Financing Agreement, as amended hereby, constitute its legal, valid and binding
obligations and are enforceable against it in accordance with their respective
terms.

 

(b)           Upon the effectiveness of
this Amendment, it hereby reaffirms, in all material respects, all
representations, warranties and covenants made in the Financing Agreement on
and as of the date hereof except:  (i) to
the extent such representation, warranties or covenants are limited by their
terms to a specific date in which case they shall be true and correct in all
material respects as of such date or (ii) for changes in the nature of its
business or operations that may occur after the Closing Date in the ordinary
course of business so long as Agent has consented to such changes or such
changes are not in violation of any provision of the Financing Agreement or any
Other Document.

 

(c)           No Event of Default or
Default has occurred and is continuing or would exist after giving effect to
this Amendment.

 

(d)           It does not have any
defense, counterclaim or offset with respect to the Financing Agreement.

 

5.             Effect on the Financing
Agreement.

 

(a)           Upon the effectiveness of Section 2
hereof, each reference in the Financing Agreement to “this Agreement,” “hereunder,”
“hereof,” “herein” or words of like import shall mean and be a reference to the
Financing Agreement as amended hereby.

 

(b)           Except as specifically
amended herein, the Financing Agreement, and all other documents, instruments
and agreements executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.

 

(c)           The execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of Agent or Lenders, nor constitute a waiver of any provision
of the Financing Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.

 

6.             Governing Law.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns and shall be governed by and construed in accordance with the laws of
the State of New York.

 

7.             Headings.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

 

 

8.             Counterparts; Facsimile.  This Amendment may be executed by the parties
hereto 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
agreement.  Any signature delivered by a
party by facsimile or electronic transmission, including via “pdf” format,
shall be deemed to be an original signature hereto.

 

[THE
REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]

 

 

IN WITNESS WHEREOF, this Amendment has been duly
executed as of the day and year first written above.

 

	
   

  	
  RAFAELLA APPAREL GROUP,
  as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chad J. Spooner

  
	
   

  	
   

  	
  Name: Chad J. Spooner

  
	
   

  	
   

  	
  Title: CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VERRAZANO, INC., as
  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By: :

  	
  /s/ Chad J. Spooner

  
	
   

  	
   

  	
  Name: Chad J. Spooner

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HSBC BANK USA, N.A., as
  Agent and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lisa Augustus

  
	
   

  	
   

  	
  Name: Lisa Augustus

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ISRAEL DISCOUNT BANK OF
  NEW YORK, as

  
	
   

  	
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matilde Reyes

  
	
   

  	
   

  	
  Name: Matilde Reyes

  
	
   

  	
   

  	
  Title: First Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dina Tourloukis

  
	
   

  	
   

  	
  Name: Dina Tourloukis

  
	
   

  	
   

  	
  Title: Assistant Vice
  President

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