Document:

Exhibit 4.6

 

$172,000,000

 

RAFAELLA
APPAREL GROUP, INC.

 

11 1/4% of
Senior Secured Notes due 2011

 

REGISTRATION
RIGHTS AGREEMENT

 

June 20, 2005

 

JEFFERIES & COMPANY, INC.

520 Madison Avenue

New York, NY 10022

 

Ladies and Gentlemen:

 

Rafaella Apparel Group,
Inc., a Delaware corporation (the “Company”) is issuing and selling to
Jefferies & Company, Inc. (the “Initial Purchaser”), upon the terms set
forth in the Purchase Agreement dated June 13, 2005, by and among the Company,
the Initial Purchaser and the subsidiary guarantors named therein (the “Purchase
Agreement”), $172,000,000 aggregate principal amount at maturity of 11 1/4%
Senior Secured Notes due 2011 issued by the Company (each, a “Note” and
collectively, the “Notes”). As an inducement to the Initial Purchaser to enter
into the Purchase Agreement, the Company and each of the Subsidiary Guarantors
(as defined below), agree with the Initial Purchaser, for the benefit of the
Holders (as defined below) of the Notes (including, without limitation, the Initial
Purchaser), as follows:

 

1.         Definitions

 

Capitalized terms that
are used herein without definition and are defined in the Purchase Agreement
shall have the respective meanings ascribed to them in the Purchase Agreement.
As used in this Agreement, the following terms shall have the following
meanings:

 

Additional
Interest: See Section 4(a).

 

Advice: See
Section 6(w).

 

Agreement:
This Registration Rights Agreement, dated as of the Closing
Date, between the Company and the Initial Purchaser.

 

Applicable
Period: See Section 2(e).

 

Business
Day: A day that is not a Saturday, a Sunday or a day on which
banking institutions in the City of New York are authorized or required by law
or executive order to be closed.

 

Closing
Date: June 20, 2005.

 

1

 

Collateral
Agreements: Shall have the meaning set forth in the
Indenture.

 

Company:
See the introductory paragraph to this Agreement.

 

Effectiveness
Date: The 120th day after the Filing Date.

 

Effectiveness
Period: See Section 3(a).

 

Event
Date: See Section 4(b).

 

Exchange
Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.

 

Exchange
Notes: Senior Secured Notes due 2011 of the Company,
identical in all material respects to the Notes, including the guarantees
endorsed thereon, except for references to series and restrictive legends.

 

Exchange
Offer: See Section 2(a).

 

Exchange
Registration Statement: See Section 2(a).

 

Filing
Date: October 31, 2006.

 

Holder: Any
registered holder of Registrable Notes.

 

Indemnified
Party: See Section 8(c).

 

Indemnifying
Party: See Section 8(c).

 

Indenture:
The Indenture, dated as of the Closing Date, among the
Company, the Subsidiary Guarantors and Bank of New York, as trustee and
collateral agent, pursuant to which the Notes are being issued, as amended or
supplemented from time to time in accordance with the terms hereof.

 

Initial
Purchaser: See the introductory paragraph to this Agreement.

 

Initial
Shelf Registration: See Section 3(a).

 

Inspectors:
See Section 6(o).

 

Lien: Shall
have the meaning set forth in the Indenture.

 

Losses: See
Section 8(a).

 

NASD: National
Association of Securities Dealers, Inc.

 

Notes: See
the introductory paragraph to this Agreement.

 

Participating
Broker-Dealer: See Section 2(e).

 

2

 

Person: An
individual, trustee, corporation, partnership, limited liability company, joint
stock company, trust, unincorporated association, union, business association,
firm, government or agency or political subdivision thereof, or other legal
entity.

 

Private
Exchange: See Section 2(f).

 

Private
Exchange Notes: See Section 2(f).

 

Prospectus:
The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Notes covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

Purchase
Agreement: See the introductory paragraph to this Agreement.

 

Records:
See Section 6(o).

 

Registrable
Notes: (i) Notes, (ii) Private Exchange Notes and (iii)
Exchange Notes received in the Exchange Offer, in each case, that may not be
sold without restriction under federal or state securities laws.

 

Registration
Statement: Any registration statement of the Company and the
Subsidiary Guarantors filed with the SEC under the Securities Act (including,
but not limited to, the Exchange Registration Statement, the Shelf Registration
and any subsequent Shelf Registration) that covers any of the Registrable Notes
pursuant to the provisions of this Agreement, including the Prospectus, amendments
and supplements to such registration statement, including post-effective
amendments, all exhibits and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.

 

Rule
144: Rule 144 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer or such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.

 

Rule
144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.

 

Rule
415: Rule 415 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

 

Rule
430A: Rule 430A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.

 

3

 

SEC:
The Securities and Exchange Commission.

 

Securities:
The Notes, the Exchange Notes and the Private Exchange Notes.

 

Securities
Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.

 

Shelf
Notice: See Section 2(j).

 

Shelf
Registration: See Section 3(b).

 

Subsequent
Shelf Registration: See Section 3(b).

 

Subsidiary
Guarantor: Each subsidiary of the Company that guarantees the
obligations of the Company under the Notes and the Indenture.

 

TIA:
The Trust Indenture Act of 1939, as amended.

 

Trustee:
The trustee under the Indenture and, if applicable, the trustee under any
indenture governing the Exchange Notes and Private Exchange Notes (if any).

 

Underwritten
Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.

 

2.                          Exchange Offer

 

(a)                    Unless the
Exchange Offer would not be permitted by applicable laws or a policy of the
SEC, the Company shall (and shall cause each Subsidiary Guarantor to) (i)
prepare and file with the SEC promptly after the date hereof, but in no event
later than the Filing Date, a registration statement (the “Exchange
Registration Statement”) on an appropriate form under the Securities Act with
respect to an offer (the “Exchange Offer”) to the Holders of Notes to issue and
deliver to such Holders, in exchange for the Notes, a like principal amount at
maturity of Exchange Notes, (ii) use its reasonable best efforts to cause the
Exchange Registration Statement to become effective as promptly as practicable
after the filing thereof, but in no event later than the Effectiveness Date,
(iii) use its reasonable best efforts to keep the Exchange Registration
Statement effective until the consummation of the Exchange Offer in accordance
with its terms, and (iv) commence the Exchange Offer and use its reasonable
best efforts to issue on or prior to 30 days after the Effectiveness Date,
Exchange Notes in exchange for all Notes tendered prior thereto in the Exchange
Offer. The Exchange Offer shall not be subject to any conditions, other than
that the Exchange Offer does not violate applicable law or any applicable
interpretation of the staff of the SEC.

 

(b)                   The Exchange
Notes shall be issued under, and entitled to the benefits of, (i) the Indenture
or a trust indenture that is identical to the Indenture (other than such
changes as are necessary to comply with any requirements of the SEC to effect
or

 

4

 

maintain the qualifications
thereof under the TIA) and (ii) the Collateral Agreements.

 

(c)                    Interest on
the Exchange Notes and Private Exchange Notes will accrue (A) from the later of
(i) the last interest payment due date on which interest was paid on the Notes
surrendered in exchange therefor or, (ii) if the note is surrendered for
exchange on a date in a period which includes the record date for an interest
payment date to occur on or after the date of such exchange and as to which
interest will be paid, the date of such interest payment date; or (B) if no
interest has been paid on the Notes, from the date of original issue of the
Notes. Each Exchange Note and Private Exchange Note shall bear interest at the
rate set forth thereon; provided, that interest with respect to the period
prior to the issuance thereof shall accrue at the rate or rates borne by the
Notes from time to time during such period.

 

(d)                   The Company may
require each Holder as a condition to participation in the Exchange Offer to
represent (i) that any Exchange Notes received by it will be acquired in the
ordinary course of its business, (ii) that at the time of the commencement and
consummation of the Exchange Offer such Holder has not entered into any
arrangement or understanding with any Person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Notes in violation
of the provisions of the Securities Act, (iii) that if such Holder is an “affiliate”
of the either of the Company within the meaning of Rule 405 of the Securities
Act, it will comply with the registration and prospectus delivery requirements
of the Securities Act to the extent applicable to it, (iv) if such Holder is
not a broker-dealer, that it is not engaged in, and does not intend to engage
in, the distribution of the Notes and (v) if such Holder is a Participating
Broker-Dealer (as defined below), that it will deliver a Prospectus in
connection with any resale of the Exchange Notes.

 

(e)                    The Company
shall (and shall cause each Subsidiary Guarantor to) include within the
Prospectus contained in the Exchange Registration Statement a section entitled “Plan
of Distribution” reasonably acceptable to the Initial Purchaser which shall
contain a summary statement of the then current positions taken or policies made
by the staff of the SEC with respect to the potential “underwriter” status of
any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act) of Exchange Notes received by such broker-dealer in the
Exchange Offer for its own account in exchange for Notes that were acquired by
it as a result of market-making or other trading activity (a “Participating
Broker-Dealer”). Such “Plan of Distribution” section shall also allow, to the
extent permitted by applicable policies and regulations of the SEC, the use of
the Prospectus by all Persons subject to the prospectus delivery requirements
of the Securities Act, including, to the extent so permitted, all Participating
Broker-Dealers, and include a statement describing the manner in which
Participating Broker-Dealers may resell the Exchange Notes. The Company shall
use its reasonable best efforts to keep the Exchange Registration Statement
effective and to amend and supplement the Prospectus contained therein, in
order to permit

 

5

 

such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes; provided
that such period shall not exceed the lesser of 180 days and the date on which
all persons subject to the prospectus delivery requirements of the Securities
Act have sold all Exchange Notes held by them (the “Applicable Period”).

 

(f)                      If, upon
consummation of the Exchange Offer, the Initial Purchaser holds any Notes
acquired by it and having the status of an unsold allotment in the initial
distribution, the Company (upon the written request from the Initial Purchaser)
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to the Initial Purchaser, in exchange (the “Private
Exchange”) for the Notes held by the Initial Purchaser, a like principal amount
at maturity of Senior Secured Notes that are identical to the Exchange Notes
except for the existence of restrictions on transfer thereof under the
Securities Act and securities laws of the several states of the United States
(the “Private Exchange Notes”) (and which are issued pursuant to the same
indenture as the Exchange Notes). The Private Exchange Notes shall bear the
same CUSIP number as the Exchange Notes.

 

(g)                   In connection
with the Exchange Offer, the Company shall (and shall cause each Subsidiary
Guarantor to):

 

(i)                        mail to
each Holder a copy of the Prospectus forming part of the Exchange Registration
Statement, together with an appropriate letter of transmittal that is an
exhibit to the Exchange Offer Registration Statement, and any related
documents;

 

(ii)                     keep the
Exchange Offer open for not less than 20 Business Days after the date notice
thereof is mailed to the Holders (or longer if required by applicable law);

 

(iii)                  utilize the
services of a depository for the Exchange Offer with an address in the Borough
of Manhattan, the City of New York, which may be the Trustee or an affiliate
thereof;

 

(iv)                 permit Holders to
withdraw tendered Registrable Notes at any time prior to the close of business,
New York time, on the last Business Day on which the Exchange Offer shall
remain open; and

 

(v)                    otherwise
comply in all material respects with all applicable laws.

 

(h)                   As soon as
practicable after the close of the Exchange Offer or the Private Exchange, as
the case may be, the Company shall (and shall cause each Subsidiary Guarantor
to):

 

6

 

(i)                        accept for
exchange all Registrable Notes validly tendered pursuant to the Exchange Offer
or the Private Exchange, as the case may be, and not validly withdrawn;

 

(ii)                     deliver to
the Trustee for cancellation all Registrable Notes so accepted for exchange;
and

 

(iii)                  cause the
Trustee to authenticate and deliver promptly to each Holder tendering such
Registrable Notes, Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount at maturity to the Notes of such Holder so
accepted for exchange.

 

(i)                       The
Exchange Notes and the Private Exchange Notes may be issued under (i) the
Indenture or (ii) an indenture identical to the Indenture (other than such
changes as are necessary to comply with any requirements of the SEC to effect
or maintain the qualification thereof under the TIA), which in either event
will provide that the Exchange Notes will not be subject to the transfer
restrictions set forth in the Indenture, that the Private Exchange Notes will
be subject to the transfer restrictions set forth in the Indenture, and that
the Exchange Notes, the Private Exchange Notes and the Notes, if any, will be
deemed one class of security (subject to the provisions of the Indenture) and
entitled to participate in all the security granted by the Company pursuant to
the Collateral Agreements and in any Subsidiary Guarantee (as such terms are
defined in the Indenture) on an equal and ratable basis.

 

(j)                       If: (i)
prior to the consummation of the Exchange Offer, the Holders of a majority in
aggregate principal amount at maturity of Registrable Notes determines in its
or their reasonable judgment that (A) the Exchange Notes would not, upon
receipt, be tradeable by the Holders thereof without restriction under the
Securities Act and the Exchange Act and without material restrictions under
applicable Blue Sky or state securities laws, or (B) the interests of the
Holders under this Agreement, taken as a whole, would be materially adversely
affected by the consummation of the Exchange Offer; (ii) applicable
interpretations of the staff of the SEC would not permit the consummation of
the Exchange Offer prior to the Effectiveness Date; (iii) subsequent to the
consummation of the Private Exchange, any Holder of Private Exchange Notes so
requests; (iv) the Exchange Offer is not consummated within 30 days from the
Effectiveness Date; or (v) in the case of (A) any Holder not permitted by
applicable law or SEC policy to participate in the Exchange Offer, (B) any
Holder participating in the Exchange Offer that receives Exchange Notes that
may not be sold without restriction under state and federal securities laws
(other than due solely to the status of such Holder as an affiliate of the
Company within the meaning of the Securities Act) or (C) any broker-dealer that
holds Notes acquired directly from the Company or any of its affiliates and, in
each such case contemplated by this clause (v), such Holder notifies the
Company within six months of consummation of the Exchange Offer, then the
Company shall promptly (and in any event within five Business Days) deliver to
the Holders (or in the case of an occurrence of any event described in clause
(v) of

 

7

 

this Section 2(j), to any
such Holder) and the Trustee notice thereof (the “Shelf Notice”) and shall as
promptly as possible thereafter (but in no event more than 45 days after
delivery of the Shelf Notice) file an Initial Shelf Registration pursuant to
Section 3.

 

3.         Shelf Registration

 

If a Shelf Notice is
delivered pursuant to Section 2(j), then this Section 3 shall apply to all
Registrable Notes. Otherwise, upon consummation of the Exchange Offer in
accordance with Section 2, the provisions of Section 3 shall apply solely with
respect to (i) Notes held by any Holder thereof not permitted to participate in
the Exchange Offer, (ii) Notes held by any broker-dealer that acquired such
Notes directly from the Company or any of its affiliates and (iii) Exchange Notes
that are not freely tradeable as contemplated by Section 2(j)(v) hereof,
provided in each case that the relevant Holder has duly notified the Company
within six months of the Exchange Offer as required by Section 2(j)(v).

 

(a)                    Initial
Shelf Registration. The Company shall (and shall cause each Subsidiary
Guarantor to), as promptly as practicable, file with the SEC a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415
covering all of the Registrable Notes (the “Initial Shelf Registration”).
If the Company (and any Subsidiary Guarantor) has not yet filed an Exchange
Registration Statement, the Company shall (and shall cause each Subsidiary
Guarantor to) file with the SEC the Initial Shelf Registration on or prior to
the Filing Date and shall use its reasonable best efforts to cause such Initial
Shelf Registration to be declared effective under the Securities Act on or
prior to the Effectiveness Date. Otherwise, the Company shall (and shall cause
each Subsidiary Guarantor to) use its reasonable best efforts to file with the
SEC the Initial Shelf Registration within 30 days of the delivery of the Shelf
Notice and shall use its reasonable best efforts to cause such Shelf
Registration to be declared effective under the Securities Act as promptly as
practicable thereafter (but in no event more than 45 days after delivery of the
Shelf Notice). The Initial Shelf Registration shall be on Form S-l or another
appropriate form permitting registration of such Registrable Notes for resale
by Holders in the manner or manners reasonably designated by them (including,
without limitation, one or more underwritten offerings). The Company and
Subsidiary Guarantors shall not permit any securities other than the
Registrable Notes to be included in any Shelf Registration. The Company shall
(and shall cause each Subsidiary Guarantor to) use its reasonable best efforts
to keep the Initial Shelf Registration continuously effective under the
Securities Act until the date which is 24 months from the Closing Date (subject
to extension pursuant to the last paragraph of Section 6(w) (the “Effectiveness
Period”), or such shorter period ending when (i) all Registrable Notes
covered by the Initial Shelf Registration have been sold in the manner set forth
and as contemplated in the Initial Shelf Registration (ii) a Subsequent Shelf
Registration covering all of the Registrable Notes covered by and not sold
under the Initial Shelf Registration or an earlier Subsequent Shelf
Registration has been declared effective under the Securities Act or (iii)
there cease to be any outstanding Registrable Notes.

 

8

 

(b)                   Subsequent
Shelf Registrations. If the Initial Shelf Registration or any Subsequent
Shelf Registration (as defined below) ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), the Company shall (and shall cause
each Subsidiary Guarantor to) use its reasonable best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in any
event shall within 30 days of such cessation of effectiveness amend such Shelf
Registration in a manner to obtain the withdrawal of the order suspending the
effectiveness thereof, or file (and cause each Subsidiary Guarantor to file) an
additional “shelf” Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes (a “Subsequent Shelf Registration”). If a
Subsequent Shelf Registration is filed, the Company shall (and shall cause each
Subsidiary Guarantor to) use its reasonable best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as practicable
after such filing and to keep such Subsequent Shelf Registration continuously
effective for a period equal to the number of days in the Effectiveness Period
less the aggregate number of days during which the Initial Shelf Registration
or any Subsequent Shelf Registration was previously continuously effective. As
used herein the term “Shelf Registration” means the Initial Shelf Registration
and any Subsequent Shelf Registrations

 

(c)                    Supplements
and Amendments. The Company shall promptly supplement and amend any Shelf
Registration if required by the rules, regulations or instructions applicable
to the registration form used for such Shelf Registration, if required by the
Securities Act, or if reasonably requested in writing by the Holders of a
majority in aggregate principal amount at maturity of the Registrable Notes
covered by such Shelf Registration or by any underwriter of such Registrable
Notes.

 

(d)                   Provision of
Information. No Holder of Registrable Notes shall be entitled to include
any of its Registrable Notes in any Shelf Registration pursuant to this
Agreement unless such Holder furnishes to the Company and the Trustee in
writing, within 20 days after receipt of a written request therefor, such
information as the Company and the Trustee after conferring with counsel with
regard to information relating to Holders that would be required by the SEC to
be included in such Shelf Registration or Prospectus included therein, may
reasonably request for inclusion in any Shelf Registration or Prospectus
included therein, and no such Holder shall be entitled to Additional Interest
pursuant to Section 4 hereof unless and until such Holder shall have provided
such information.

 

4.         Additional Interest

 

(a)                    The Company
and each Subsidiary Guarantor acknowledges and agrees that the Holders of
Registrable Notes will suffer damages if the Company or any Subsidiary
Guarantor fails to fulfill its material obligations under Section 2 or Section
3 hereof and that it would not be feasible to ascertain the extent of such

 

9

 

damages with precision.
Accordingly, the Company and the Subsidiary Guarantors agree to pay additional
cash interest on the Notes of 1.0% per annum (“Additional Interest”)
under the circumstances and to the extent set forth below (each of which shall
be given independent effect):

 

(i)                        if neither
the Exchange Registration Statement nor the Initial Shelf Registration has been
filed on or prior to the Filing Date;

 

(ii)                     if neither
the Exchange Registration Statement nor the Initial Shelf Registration is declared
effective on or prior to the Effectiveness Date;

 

(iii)                  if (A) the
Company (and any Subsidiary Guarantor) has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer on or
prior to the 30th day after the Effectiveness Date, (B) the Exchange
Registration Statement ceases to be effective at any time prior to the time
that the Exchange Offer is consummated, (C) if applicable, a Shelf Registration
has been declared effective and such Shelf Registration ceases to be effective
at any time prior to the second anniversary of the Closing Date (other than
such time as all Notes have been disposed of thereunder) and is not declared
effective again within 30 days, or (D) pending the announcement of a material corporate
transaction, the Company issues a written notice pursuant to Section 6(e)(v) or
(vi) that a Shelf Registration Statement or Exchange Registration Statement is
unusable and the aggregate number of days in any 365-day period for which all
such notices issued or required to be issued, have been, or were required to
be, in effect exceeds 120 days in the aggregate or 30 days consecutively, in
the case of a Shelf Registration statement, or 15 days in the aggregate in the
case of an Exchange Registration Statement;

 

provided,
however, that the Additional Interest rate on the Notes will in no event
exceed 1.0% per annum; and provided  further, that (1) upon the
filing of the Exchange Registration Statement or Initial Shelf Registration (in
the case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or Initial Shelf Registration (in the case of (ii) above), or (3)
upon the exchange of Exchange Notes for all Notes tendered (in the case of
(iii)(A) above), or upon the effectiveness of the Exchange Registration
Statement that had ceased to remain effective (in the case of clause (iii)(B)
above), or upon the effectiveness of a Shelf Registration which had ceased to
remain effective (in the case of (iii)(C) above), Additional Interest on the
Notes as a result of such clause (or the relevant subclause thereof) or upon
the effectiveness of such Registration Statement or Exchange Registration
Statement (in the case of clause (iii)(D) above), as the case may be, shall
cease to accrue.

 

(b)                   The Company
shall notify the Trustee within 3 Business Days after each and every date on
which an event occurs in respect of which Additional Interest is required to be
paid (an “Event Date”). Any amounts of Additional Interest due

 

10

 

pursuant to clause
(a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable in cash, on the
dates and in the manner provided in the Indenture and whether or not any cash
interest would then be payable on such date, commencing with the first such
semi-annual date occurring after any such Additional Interest commences to
accrue. The amount of Additional Interest will be determined by multiplying the
applicable Additional Interest rate by the principal amount at maturity of the Notes,
multiplied by a fraction, the numerator of which is the number of days such
Additional Interest rate was applicable during such period (determined on the
basis of a 360-day year comprised of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed), and the denominator of which
is 360.

 

5.                          Hold-Back Agreements

 

The Company agrees that
it will not effect any public or private sale or distribution (including a sale
pursuant to Regulation D under the Securities Act) of any securities the same
as or similar to those covered by a Registration Statement filed pursuant to
Section 2 or 3 hereof (other than Additional Notes (as defined in the
Indenture) issued under the Indenture), or any securities convertible into or
exchangeable or exercisable for such securities, during the 10 days prior to,
and during the 90-day period beginning on, the effective date of any
Registration Statement filed pursuant to Sections 2 and 3 hereof unless the
Holders of a majority in the aggregate principal amount at maturity of the
Registrable Notes to be included in such Registration Statement consent, if the
managing underwriter thereof so requests in writing.

 

6.                          Registration Procedures

 

In connection with the
filing of any Registration Statement pursuant to Sections 2 or 3 hereof, the
Company shall (and shall cause each Subsidiary Guarantor to) effect such
registrations to permit the sale of such securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Company hereunder, the Company shall (and shall cause each Subsidiary Guarantor
to):

 

(a)                    Prepare and
file with the SEC as soon as practicable after the date hereof but in any event
on or prior to the Filing Date, the Exchange Registration Statement or if the
Exchange Registration Statement is not filed because of the circumstances
contemplated by Section 2(j), a Shelf Registration as prescribed by Section 3,
and to cause each such Registration Statement to become effective and remain
effective as provided herein; provided that, if (1) a Shelf Registration is
filed pursuant to Section 3 or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period relating thereto, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto
the Company shall (and shall cause each Subsidiary Guarantor to), if requested,
furnish to and afford the Holders of the Registrable Notes to be registered
pursuant to such Shelf Registration Statement, each Participating
Broker-Dealer, the managing

 

11

 

underwriters, if any, and
each of their respective counsel, a reasonable opportunity to review copies of
all such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in each case
at least 5 Business Days prior to such filing). The Company and each Subsidiary
Guarantor shall not file any such Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must provide
information for the inclusion therein without the Holders being afforded an
opportunity to review such documentation if the holders of a majority in
aggregate principal amount at maturity of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the case
may be, the managing underwriters, if any, or any of their respective counsel
shall reasonably object in writing on a timely basis. A Holder shall be deemed to
have reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains an untrue statement of a material fact or omits to state any material
fact necessary to make the statements therein not misleading or fails to comply
with the applicable requirements of the Securities Act.

 

(b)                   Provide an
indenture trustee for the Registrable Notes, the Exchange Notes or the Private
Exchange Notes, as the case may be, and cause the Indenture (or other indenture
relating to the Registrable Notes) to be qualified under the TIA not later than
the effective date of the first Registration Statement; and in connection
therewith, to effect such changes to such indenture as may be required for such
indenture to be so qualified in accordance with the terms of the TIA; and
execute, and use its reasonable best efforts to cause such trustee to execute,
all documents as may be required to effect such changes, and all other forms
and documents required to be filed with the SEC to enable such indenture to be
so qualified in a timely manner.

 

(c)                    Prepare and
file with the SEC such pre-effective amendments and post-effective amendments
to each Shelf Registration or Exchange Registration Statement, as the case may
be, as may be necessary to keep such Registration Statement continuously
effective for the Effectiveness Period or the Applicable Period, as the case
may be; cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; and comply with the provisions of the Securities Act
and the Exchange Act applicable to them with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale of any
securities being sold by a Participating Broker-Dealer covered by any such
Prospectus. The Company and each Subsidiary Guarantor shall not, during the
Applicable Period, voluntarily take any action that would result in selling
Holders of the Registrable Notes covered by a Registration Statement or
Participating Broker-Dealers seeking to sell Exchange Notes not being able to
sell such Registrable Notes or such Exchange Notes during that period, unless
such action is required by applicable law, rule or regulation or permitted by
this Agreement.

 

12

 

(d)                   Furnish to such
selling Holders and Participating Broker-Dealers who so request in writing (i)
upon the Company’s receipt, a copy of the order of the SEC declaring such
Registration Statement and any post effective amendment thereto effective, (ii)
such reasonable number of copies of such Registration Statement and of each
amendment and supplement thereto (in each case including any documents
incorporated therein by reference and all exhibits), (iii) such reasonable
number of copies of the Prospectus included in such Registration Statement
(including each preliminary Prospectus) and each amendment and supplement
thereto, and such reasonable number of copies of the final Prospectus as filed
by the Company and each Subsidiary Guarantor pursuant to Rule 424(b) under the
Securities Act, in conformity with the requirements of the Securities Act and
each amendment and supplement thereto, and (iv) such other documents (including
any amendments required to be filed pursuant to clause (c) of this Section), as
any such Person may reasonably request in writing. The Company and the
Subsidiary Guarantors hereby consent to the use of the Prospectus by each of
the selling Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, and the underwriters or agents, if any, and
dealers, if any, in connection with the offering and sale of the Registrable
Notes covered by, or the sale by Participating Broker-Dealers of the Exchange
Notes pursuant to, such Prospectus and any amendment or supplement thereto.

 

(e)                    If (1) a Shelf
Registration is filed pursuant to Section 3, or (2) a Prospectus contained in
an Exchange Registration Statement filed pursuant to Section 2 is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period relating thereto, the
Company shall notify in writing the selling Holders of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, the managing underwriters,
if any, and each of their respective counsel promptly (but in any event within
2 Business Days) (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and
schedules, documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or suspending
the use of any Prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a Prospectus is required by the Securities
Act to be delivered in connection with sales of the Registrable Notes the
representations and warranties of the Company and any Subsidiary Guarantor
contained in any agreement (including any underwriting agreement) contemplated
by Section 6(n) hereof cease to be true and correct, (iv) of the receipt by the
Company or any Subsidiary Guarantor of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Notes or the Exchange Notes to
be sold by any Participating Broker-Dealer for offer or sale in any jurisdiction,
or

 

13

 

the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event, the existence of any condition of any information becoming known that
makes any statement made in such Registration Statement or related Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in,
or amendments or supplements to, such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement and the
Prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, (vi) of any reasonable determination by the Company or any
Subsidiary Guarantor that a post-effective amendment to a Registration
Statement would be appropriate and (vii) of any request by the SEC for
amendments to the Registration Statement or supplements to the Prospectus or
for additional information relating thereto.

 

(f)                      Use its
reasonable best efforts to prevent the issuance of any order suspending the effectiveness
of a Registration Statement or of any order preventing or suspending the use of
a Prospectus or suspending the qualification (or exemption from qualification)
of any of the Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any such
order is issued, to use its reasonable best efforts to obtain the withdrawal of
any such order at the earliest possible date.

 

(g)                   If (A) a Shelf
Registration is filed pursuant to Section 3, (B) a Prospectus contained in an
Exchange Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period or (C) reasonably requested
in writing by the managing underwriters, if any, or the Holders of a majority
in aggregate principal amount at maturity of the Registrable Notes being sold
in connection with an underwritten offering, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information or revisions
to information therein relating to such underwriters or selling Holders as the
managing underwriters, if any, or such Holders or any of their respective
counsel reasonably request in writing to be included or made therein and (ii)
make all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplements or post-effective
amendment.

 

(h)                   Prior to any
public offering of Registrable Notes or any delivery of a Prospectus contained
in the Exchange Registration Statement by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, use its reasonable
best efforts to register or qualify, and to cooperate with the selling Holders
of Registrable Notes or each such Participating Broker-Dealer, as the case may
be, the underwriters, if any, and their respective counsel in connection with
the registration or qualification (or exemption from such registration or

 

14

 

qualification) of such
Registrable Notes or Exchange Notes, as the case may be, for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any selling Holder, Participating Broker-Dealer or any managing
underwriter or underwriters, if any, reasonably request in writing; provided
that where Exchange Notes held by Participating Broker-Dealers or Registrable
Notes are offered other than through an underwritten offering, the Company and
each Subsidiary Guarantor agree to cause its counsel to perform Blue Sky
investigations and file any registrations and qualifications required to be
filed pursuant to this Section 6(h), keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable Registration
Statement; provided that neither the Company nor any Subsidiary Guarantor shall
be required to (A) qualify generally to do business in any jurisdiction where
it is not then so qualified, (B) take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or (C) subject itself to taxation in any such jurisdiction where it is
not then so subject.

 

(i)                       If (A) a
Shelf Registration is filed pursuant to Section 3 or (B) a Prospectus contained
in an Exchange Registration Statement filed pursuant to Section 2 is requested
to be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, cooperate with the
selling Holders of Registrable Notes and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Notes to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company, and enable such Registrable Notes to
be in such denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably request.

 

(j)                       Use its
reasonable best efforts to cause the Registrable Notes covered by any Registration
Statement to be registered with or approved by such governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or the
underwriter, if any, to consummate the disposition of such Registrable Notes,
except as may be required solely as a consequence of the nature of such selling
Holder’s business, in which case the Company shall (and shall cause each
Subsidiary Guarantor to) cooperate in all reasonable respects with the filing
of such Registration Statement and the granting of such approvals; provided
that neither the Company nor any existing Subsidiary Guarantor shall be
required to (A) qualify generally to do business in any jurisdiction where it
is not then so qualified, (B) take any action that would subject it to general
service of process in any jurisdiction where it is not then so subject or (C)
subject itself to taxation in any such jurisdiction where it is not then so
subject.

 

15

 

(k)                    If (1) a Shelf
Registration is filed pursuant to Section 3, or (2) a Prospectus contained in
an Exchange Registration Statement filed pursuant to Section 2 is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, upon the occurrence
of any event contemplated by paragraph 6(e)(v) or 6(e)(vi) hereof, as promptly
as practicable, prepare and file with the SEC, at the expense of the Company
and the Subsidiary Guarantors, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes being sold thereunder or to the purchasers
of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and, if SEC review is
required, use its reasonable best efforts to cause such post-effective amendment
to be declared effective as soon as possible.

 

(l)                       Use its
reasonable best efforts to cause the Registrable Notes covered by a
Registration Statement to be rated with such appropriate rating agencies, if so
requested in writing by the Holders of a majority in aggregate principal amount
at maturity of the Registrable Notes covered by such Registration Statement or
the managing underwriter or underwriters, if any.

 

(m)                 Prior to the
initial issuance of the Exchange Notes, (i) provide the Trustee with one or
more certificates for the Registrable Notes in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the Exchange
Notes.

 

(n)                   If a Shelf
Registration is filed pursuant to Section 3, enter into such agreements
(including an underwriting agreement in form, scope and substance as is
customary in underwritten offerings of debt securities similar to the Notes, as
may be appropriate in the circumstances) and take all such other actions in
connection therewith (including those reasonably requested in writing by the
managing underwriters, if any, or the Holders of a majority in aggregate
principal amount at maturity of the Registrable Notes being sold) in order to
expedite or facilitate the registration or the disposition of such Registrable
Notes, and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an Underwritten
Registration, (i) make such representations and warranties to the Holders and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries as then conducted, and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings of debt securities similar to
the Notes, as may be appropriate in the circumstances, and confirm the same if
and when reasonably required; (ii) obtain an opinion of

 

16

 

counsel to the Company
and the Subsidiary Guarantors and updates thereof (which counsel and opinions
(in form, scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the Holders of a majority in aggregate principal
amount at maturity of the Registrable Notes being sold), addressed to each
selling Holder and each of the underwriters, if any, covering the matters
customarily covered in opinions of counsel to the Company and the Subsidiary
Guarantors requested in underwritten offerings of debt securities similar to
the Notes, as may be appropriate in the circumstances; (iii) obtain “cold
comfort” letters and updates thereof (which letters and updates (in form, scope
and substance) shall be reasonably satisfactory to the managing underwriters)
from the independent certified public accountants of the Company and the
Subsidiary Guarantors (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in “cold comfort” letters in connection with
underwritten offerings of debt securities similar to the Notes, as may be
appropriate in the circumstances, and such other matters as reasonably requested
in writing by the underwriters; and (iv) deliver such documents and
certificates as may be reasonably requested in writing by the Holders of a
majority in aggregate principal amount at maturity of the Registrable Notes
being sold and the managing underwriters, if any, to evidence the continued
validity of the representations and warranties of the Company and its
subsidiaries made pursuant to clause (i) above and to evidence compliance with
any conditions contained in the underwriting agreement or other similar
agreement entered into by the Company or any Subsidiary Guarantor.

 

(o)                   If (1) a Shelf
Registration is filed pursuant to Section 3, or (2) a Prospectus contained in
an Exchange Registration Statement filed pursuant to Section 2 is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Notes being sold, or each
such Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Notes, if any, and any
attorney, accountant or other agent retained by any such selling Holder or each
such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the “Inspectors”), at the offices where normally kept, during
reasonable business hours, all financial and other records and pertinent
corporate documents of the Company and its subsidiaries (collectively, the “Records”)
as shall be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees of
the Company and its subsidiaries to supply all information reasonably requested
in writing by any such Inspector in connection with such Registration
Statement. Each Inspector shall agree in writing that it will keep the Records
confidential and not disclose any of the Records unless (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in
such Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or

 

17

 

other order from a court
of competent jurisdiction, (iii) the information in such Records is public or
has been made generally available to the public other than as a result of a
disclosure or failure to safeguard by such Inspector or (iv) disclosure of such
information is, in the reasonable written opinion of counsel for any Inspector,
necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, related to, or involving this
Agreement, or any transaction contemplated hereby or arising hereunder. Each
selling Holder of such Registrable Notes and each such Participating
Broker-Dealer will be required to agree that information obtained by it as a
result of such inspections shall be deemed confidential and shall not be used
by it as the basis for any market transactions in the securities of the Company
unless and until such is made generally available to the public. Each
Inspector, each selling Holder of such Registrable Notes and each such
Participating Broker-Dealer will be required to further agree that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and, to the extent practicable, use
its best efforts to allow the Company, at its expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential at its expense.

 

(p)                   Comply with all
applicable rules and regulations of the SEC and make generally available to the
security holders of the Company with regard to any Applicable Registration
Statement earning statements satisfying the provisions of section 1l(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable
Notes are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company after
the effective date of a Registration Statement, which statements shall cover
said 12-month periods.

 

(q)                   Upon
consummation of an Exchange Offer or Private Exchange, obtain an opinion of
counsel to the Company and the Subsidiary Guarantors (in form, scope and
substance reasonably satisfactory to the Initial Purchaser), addressed to the
Trustee for the benefit of all Holders participating in the Exchange Offer or
Private Exchange, as the case may be, to the effect that (i) the Company and
the Subsidiary Guarantors have duly authorized, executed and delivered the
Exchange Notes or the Private Exchange Notes, as the case may be, and the Indenture,
(ii) the Exchange Notes or the Private Exchange Notes, as the case may be, and
the Indenture constitute legal, valid and binding obligations of the Company
and the Subsidiary Guarantors, enforceable against the Company and the
Subsidiary Guarantors in accordance with their respective terms, except as such
enforcement may be subject to customary United States and foreign exceptions
and (iii) all obligations of the Company and the Subsidiary Guarantors under
the Exchange Notes or the Private Exchange Notes, as the case may be, and the
Indenture are

 

18

 

secured by Liens on the
assets securing the obligations of the Company and the Subsidiary Guarantors
under the Notes, Indenture and Collateral Agreements to the extent and as
discussed in the Registration Statement.

 

(r)                      If the
Exchange Offer or a Private Exchange is to be consummated, upon delivery of the
Registrable Notes by the Holders to the Company and the Subsidiary Guarantors
(or to such other Person as directed by the Company and the Subsidiary
Guarantors) in exchange for the Exchange Notes or the Private Exchange Notes,
as the case may be, the Company and the Subsidiary Guarantors shall mark, or
caused to be marked, on such Registrable Notes that the Exchange Notes or the
Private Exchange Notes, as the case may be, are being issued as substitute
evidence of the indebtedness originally evidenced by the Registrable Notes;
provided that in no event shall such Registrable Notes be marked as paid or otherwise
satisfied.

 

(s)                    Cooperate with
each seller of Registrable Notes covered by any Registration Statement and each
underwriter, if any, participating in the disposition of such Registrable Notes
and their respective counsel in connection with any filings required to be made
with the NASD.

 

(t)                      Use its
reasonable best efforts to cause all Securities covered by a Registration
Statement to be listed on each securities exchange, if any, on which similar
debt securities issued by the Company are then listed.

 

(u)                   Use its
reasonable best efforts to take such other steps reasonably necessary to effect
the registration of the Registrable Notes covered by a Registration Statement
contemplated hereby.

 

(v)                   The Company may
require each seller of Registrable Notes or Participating Broker-Dealer as to
which any registration is being effected to furnish to the Company such
information regarding such seller or Participating Broker-Dealer and the
distribution of such Registrable Notes as the Company may, from time to time,
reasonably request in writing. The Company may exclude from such registration
the Registrable Notes of any seller who fails to furnish such information
within a reasonable time (which time in no event shall exceed 45 days, subject
to Section 3(d)) hereof) after receiving such request. Each seller of
Registrable Notes or Participating Broker-Dealer as to which any registration
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
by such seller not materially misleading.

 

(w)                 Each Holder of
Registrable Notes and each Participating Broker-Dealer agrees by acquisition of
such Registrable Notes or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
6(e)(2)(ii), 6(e)(2)(iii), 6(e)(2)(iv), 6(e)(2)(v), or 6(e)(2)(vi), such Holder
will forthwith discontinue disposition of such Registrable Notes covered by a

 

19

 

Registration Statement
and such Participating Broker-Dealer will forthwith discontinue disposition of
such Exchange Notes pursuant to any Prospectus and, in each case, forthwith
discontinue dissemination of such Prospectus until such Holder’s or
Participating Broker-Dealer’s receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 6(k), or until it is advised in
writing (the “Advice”) by the Company and the Subsidiary Guarantors that the
use of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto and, if so directed by the Company and the
Subsidiary Guarantors, such Holder or Participating Broker-Dealer, as the case
may be, will deliver to the Company all copies, other than permanent file
copies, then in such Holder’s or Participating Broker-Dealer’s possession, of
the Prospectus covering such Registrable Notes current at the time of the receipt
of such notice. In the event the Company and the Subsidiary Guarantors shall
give any such notice, the Applicable Period shall be extended by the number of
days during such periods from and including the date of the giving of such
notice to and including the date when each Participating Broker-Dealer shall
have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 6(k) or (y) the Advice.

 

7.                          Registration Expenses

 

(a)                    All fees and
expenses incident to the performance of or compliance with this Agreement by
the Company and the Subsidiary Guarantors shall be borne by the Company and the
Subsidiary Guarantors, whether or not the Exchange Offer or a Shelf
Registration is filed or becomes effective, including, without limitation, (i)
all registration and filing fees, including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with any
Underwritten Offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws as provided in Section 6(h) hereof (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions (x) where the Holders are
located, in the case of the Exchange Notes, or (y) as provided in Section 6(h),
in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing Prospectuses if
the printing of Prospectuses is requested by the managing underwriter or
underwriters, if any, or by the Holders of a majority in aggregate principal
amount at maturity of the Registrable Notes included in any Registration
Statement or by any Participating Broker-Dealer during the Applicable Period,
as the case may be, (iii) messenger, telephone and delivery expenses incurred
in connection with the performance of their obligations hereunder, (iv) fees
and disbursements of counsel for the Company, the Subsidiary Guarantors and,
subject to 7(b), the Holders, (v) fees and disbursements of all independent certified
public accountants referred to in Section 6 (including, without limitation, the
expenses of any special audit and “cold comfort” letters required by or
incident to such performance), (vi) rating

 

20

 

agency fees and the fees
and expenses incurred in connection with the listing of the Securities to be
registered on any securities exchange, (vii) Securities Act liability
insurance, if the Company and the Subsidiary Guarantors desire such insurance,
(viii) fees and expenses of all other Persons retained by the Company and the
Subsidiary Guarantors, (ix) fees and expenses of any “qualified independent
underwriter” or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the By-laws of the NASD, but only where
the need for such a “qualified independent underwriter” arises due to a
relationship with the Company and the Subsidiary Guarantors, (x) internal
expenses of the Company and the Subsidiary Guarantors (including, without
limitation, all salaries and expenses of officers and employees of the Company
or the Subsidiary Guarantors performing legal or accounting duties), (xi) the
expense of any annual audit, (xii) the fees and expenses of the Trustee and the
Exchange Agent and (xiii) the expenses relating to printing, word processing
and distributing all Registration Statements, underwriting agreements,
securities sales agreements, indentures and any other documents necessary in
order to comply with this Agreement.

 

(b)                   The Company and
the Subsidiary Guarantors shall reimburse the Holders for the reasonable fees
and disbursements of not more than one counsel chosen by the Holders of a
majority in aggregate principal amount at maturity of the Registrable Notes to
be included in any Registration Statement. The Company and the Subsidiary
Guarantors shall pay all documentary, stamp, transfer or other transactional
taxes attributable to the issuance or delivery of the Exchange Notes or Private
Exchange Notes in exchange for the Notes; provided that the Company shall not
be required to pay taxes payable in respect of any transfer involved in the
issuance or delivery of any Exchange Note or Private Exchange Note in a name
other than that of the Holder of the Note in respect of which such Exchange
Note or Private Exchange Note is being issued. The Company and the Subsidiary
Guarantors shall reimburse the Holders for fees and expenses (including
reasonable fees and expenses of counsel to the Holders) relating to any
enforcement of any rights of the Holders under this Agreement.

 

8.                          Indemnification

 

(a)                    Indemnification
by the Company and the Subsidiary Guarantors. The Company and the
Subsidiary Guarantors jointly and severally agree to indemnify and hold
harmless each Holder of Registrable Notes, Exchange Notes or Private Exchange
Notes and each Participating Broker-Dealer selling Exchange Notes during the
Applicable Period, each Person, if any, who controls each such Holder (within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act) and the officers, directors and partners of each such Holder,
Participating Broker-Dealer and controlling person, to the fullest extent
lawful, from and against any and all losses, claims, damages, liabilities,
costs (including, without limitation, reasonable costs of preparation and
reasonable attorneys’ fees as provided in this Section 8) and expenses
(including, without limitation, reasonable costs and expenses incurred in
connection with investigating, preparing, pursuing or

 

21

 

defending against any of
the foregoing) (collectively, “Losses”), as incurred, directly or indirectly
caused by, related to, based upon, arising out of or in connection with any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or form of prospectus, or in any amendment
or supplement thereto, or in any preliminary prospectus, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, but only to the extent, that such
Losses are finally judicially determined by a court of competent jurisdiction
in a final, unappealable order, except insofar as such Losses are solely based
upon information relating to such Holder or Participating Broker-Dealer and
furnished in writing to the Company and the Subsidiary Guarantors (or reviewed
and approved in writing) by such Holder or Participating Broker-Dealer or their
counsel expressly for use therein; provided, however, that the Company and the
Subsidiary Guarantors will not be liable to any Indemnified Party (as defined
below) under this Section 8 to the extent Losses were solely caused by an
untrue statement or omission or alleged untrue statement or omission that was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto if (i) the Prospectus does not contain
any other untrue statement or omission or alleged untrue statement or omission
of a material fact that was the subject matter of the related proceeding, (ii)
any such Losses resulted from an action, claim or suit by any Person who purchased
Registrable Notes or Exchange Notes which are the subject thereof from such
Indemnified Party and (iii) it is established in the related proceeding that
such Indemnified Party failed to deliver or provide a copy of the Prospectus
(as amended or supplemented) to such Person with or prior to the confirmation
of the sale of such Registrable Notes or Exchange Notes sold to such Person if
required by applicable law, unless such failure to deliver or provide a copy of
the Prospectus (as amended or supplemented) was a result of noncompliance by
the Company with Section 6 of this Agreement. The Company and the Subsidiary
Guarantors also agree to indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers, directors, agents and employees and each Person
who controls such Persons (within the meaning of Section 5 of the Securities
Act or Section 20(a) of the Exchange Act) to the same extent as provided above
with respect to the indemnification of the Holders or the Participating
Broker-Dealer.

 

(b)                   Indemnification
by Holder. In connection with any Registration Statement, Prospectus or
form of prospectus, any amendment or supplement thereto, or any preliminary
prospectus in which a Holder is participating, such Holder shall furnish to the
Company and the Subsidiary Guarantors in writing such information as the
Company and the Subsidiary Guarantors reasonably request for use in connection
with any Registration Statement, Prospectus or form of prospectus, any
amendment or supplement thereto, or any preliminary prospectus and shall
indemnify and hold harmless the Company, the Subsidiary Guarantors, their
respective directors and each Person, if any, who controls the Company and the
Subsidiary Guarantors (within the meaning of Section 15 of the Securities Act

 

22

 

and Section 20(a) of the
Exchange Act), and the directors, officers and partners of such controlling
persons, to the fullest extent lawful, from and against all Losses arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading to the extent, but
only to the extent, that such losses are finally judicially determined by a
court of competent jurisdiction in a final, unappealable order to have resulted
solely from an untrue statement or alleged untrue statement of a material fact
or omission or alleged omission of a material fact contained in or omitted from
any information so furnished in writing by such Holder to the Company and the
Subsidiary Guarantors expressly for use therein. Notwithstanding the foregoing,
in no event shall the liability of any selling Holder be greater in amount than
such Holder’s Maximum Contribution Amount (as defined below).

 

(c)                    Conduct of
Indemnification Proceedings. If any proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the party or parties from which
such indemnity is sought (the “Indemnifying Party” or “Indemnifying Parties”,
as applicable) in writing; provided, that the failure to so notify the Indemnifying
Parties shall not relieve the Indemnifying Parties from any obligation or
liability except to the extent (but only to the extent) that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal) that the Indemnifying Parties have been prejudiced
materially by such failure.

 

The Indemnifying Party
shall have the right, exercisable by giving written notice to an Indemnified
Party, within 20 Business Days after receipt of written notice from such Indemnified
Party of such proceeding, to assume, at its expense, the defense of any such
proceeding, provided, that an Indemnified Party shall have the right to employ
separate counsel in any such proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or parties unless: (1) the Indemnifying Party has agreed
to pay such fees and expenses; or (2) the Indemnifying Party shall have failed
promptly to assume the defense of such proceeding or shall have failed to
employ counsel reasonably satisfactory to such Indemnified Party; or (3) the
named parties to any such proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party or any of its affiliates
or controlling persons, and such Indemnified Party shall have been advised by
counsel that there may be one or more defenses available to such Indemnified
Party that are in addition to, or in conflict with, those defenses available to
the Indemnifying Party or such affiliate or controlling person (in which case,
if such Indemnified Party notifies the Indemnifying Parties in writing that it
elects to employ separate counsel at the expense of the Indemnifying Parties,
the Indemnifying Parties shall not have the right to assume the defense and the
reasonable fees and expenses of such counsel shall be at the expense of the
Indemnifying Party; it being understood, however, that, the Indemnifying Party
shall not, in connection with any one such proceeding or separate but
substantially similar or related

 

23

 

proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party).

 

No Indemnifying Party
shall be liable for any settlement of any such proceeding effected without its
written consent, which shall not be unreasonably withheld, but if settled with
its written consent, or if there be a final judgment for the plaintiff in any
such proceeding, each Indemnifying Party jointly and severally agrees, subject
to the exceptions and limitations set forth above, to indemnify and hold
harmless each Indemnified Party from and against any and all Losses by reason
of such settlement or judgment. The Indemnifying Party shall not consent to the
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
Indemnified Party of a release, in form and substance reasonably satisfactory
to the Indemnified Party, from all liability in respect of such proceeding for
which such Indemnified Party would be entitled to indemnification hereunder
(whether or not any Indemnified Party is a party thereto).

 

(d)                   Contribution.
If the indemnification provided for in this Section 8 is unavailable to an
Indemnified Party or is insufficient to hold such Indemnified Party harmless
for any Losses in respect of which this Section 8 would otherwise apply by its
terms (other than by reason of exceptions provided in this Section 8), then
each applicable Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall have a joint and several obligation to contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party, on the one hand, and such Indemnified Party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party, on the one hand, and Indemnified Party, on
the other hand, shall be determined by reference to, among other things,
whether any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent any such
statement or omission. The amount paid or payable by an Indemnified Party as a
result of any Losses shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any proceeding, to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in Section 8(a) or 8(b) was available to such
party.

 

The parties hereto agree
that it would not be just and equitable if contribution pursuant to this
Section 8(d) were determined by pro rata allocation or by other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the provisions of
this Section 8(d), a selling Holder shall not be required to contribute, in the
aggregate, any amount in excess of such Holder’s Maximum Contribution Amount. A
selling Holder’s “Maximum Contribution Amount” shall equal the excess of (i)
the aggregate proceeds received by such Holder pursuant to the sale of such
Registrable Notes or Exchange Notes over (ii) the aggregate amount of damages
that such

 

24

 

Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The Holders’ obligations to
contribute pursuant to this Section 8(d) are several in proportion to the
respective principal amount at maturity of the Registrable Securities held by
each Holder hereunder and not joint. The Company’s and Subsidiary Guarantors’
obligations to contribute pursuant to this Section 8(d) are joint and several.

 

The indemnity and
contribution agreements contained in this Section 8 are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

 

9.         Rules 144 and 144A

 

The Company covenants
that it shall (a) file the reports required to be filed by it (if so required)
under the Securities Act and the Exchange Act in a timely manner and, if at any
time the Company is not required to file such reports, it will, upon the
written request of any Holder of Registrable Notes, make publicly available
other information necessary to permit sales pursuant to Rule 144 and 144A and
(b) take such further action as any Holder may reasonably request in writing,
all to the extent required from time to time to enable such Holder to sell
Registrable Notes without registration under the Securities Act pursuant to the
exemptions provided by Rule 144 and Rule 144A. Upon the request of any Holder,
the Company shall deliver to such Holder a written statement as to whether it
has complied with such information and requirements.

 

10.       Underwritten Registrations of Registrable Notes

 

If any of the Registrable
Notes covered by any Shelf Registration is to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Holders of a majority in
aggregate principal amount at maturity of such Registrable Notes included in
such offering; provided, however, that such investment banker or investment
bankers and manager or managers must be reasonably acceptable to the Company.

 

No Holder of Registrable
Notes may participate in any underwritten registration hereunder unless such
Holder (a) agrees to sell such Holder’s Registrable Notes on the basis provided
in any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.

 

11.       Miscellaneous

 

(a)                    Remedies.
In the event of a breach by either the Company or any of the Subsidiary
Guarantors of any of their respective obligations under this Agreement, each
Holder, in addition to being entitled to exercise all rights provided herein,
in the Indenture or, in the case of the Initial Purchaser, in the Purchase
Agreement, or granted by law, including recovery of damages, will be

 

25

 

entitled to specific
performance of its rights under this Agreement. The Company and the Subsidiary
Guarantors agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by either the Company or any of the
Subsidiary Guarantors of any of the provisions of this Agreement and hereby further
agree that, in the event of any action for specific performance in respect of
such breach, the Company shall (and shall cause each Subsidiary Guarantor to)
waive the defense that a remedy at law would be adequate.

 

(b)                   No
Inconsistent Agreements. The Company and each of the Subsidiary Guarantors
have not entered, as of the date hereof, and the Company and each of the
Subsidiary Guarantors shall not enter, after the date of this Agreement, into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Securities in this Agreement or otherwise
conflicts with the provisions hereof. The Company and each of the Subsidiary
Guarantors have not entered and will not enter into any agreement with respect
to any of its securities that will grant to any Person piggy-back rights with
respect to a Registration Statement.

 

(c)                    Adjustments
Affecting Registrable Notes. The Company shall not, directly or indirectly,
take any action with respect to the Registrable Notes as a class that would
adversely affect the ability of the Holders to include such Registrable Notes
in a registration undertaken pursuant to this Agreement.

 

(d)                   Amendments
and Waivers. The provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may not be given, otherwise than with the prior written consent of the
Holders of not less than a majority in aggregate principal amount at maturity
of the then outstanding Registrable Notes in circumstances that would adversely
affect any Holders of Registrable Notes; provided, however, that Section 8 and
this Section 11(d) may not be amended, modified or supplemented without the
prior written consent of each Holder. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders of Registrable Notes whose
securities are being tendered pursuant to the Exchange Offer or sold pursuant
to a Notes Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Notes may be given by Holders of at least a majority in aggregate principal
amount at maturity of the Registrable Notes being tendered or being sold by
such Holders pursuant to such Notes Registration Statement.

 

(e)                    Notices.
All notices and other communications provided for or permitted hereunder shall
be made in writing by hand delivery, registered first-class mail, next-day air
courier or telecopier:

 

(i)                        if to a
Holder of Securities or to any Participating Broker-Dealer, at the most current
address of such Holder or Participating Broker-Dealer, as the

 

26

 

case may be, set forth on
the records of the registrar of the Notes, with a copy in like manner to the
Initial Purchaser as follows:

 

Jefferies & Company, Inc.

11100 Santa Monica Boulevard

10th Floor

Los Angeles, California 90025

Attention: Lloyd H. Feller, Esq.

 

with a copy to:

 

Proskauer Rose LLP

1585 Broadway

New York, New York 10036

Facsimile No.: (212) 969-2900

Attention: Julie Allen, Esq.

 

(ii)       if to the Initial
Purchaser, at the address specified in Section 11(e)(1);

 

(iii)      if to the Company or any
Subsidiary Guarantor, as follows:

 

Rafaella Apparel Group, Inc.

1411 Broadway

2nd Floor

New York, New York 10018

Attention: Glenn S. Palmer

 

with a copy to:

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Attention: David Rosewater, Esq.

 

All such notices and
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; five Business Days after being deposited in the United
States mail, postage prepaid, if mailed, one Business Day after being deposited
in the United States mail, postage prepaid, if mailed; one Business Day after
being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.

 

Copies of all such
notices, demands or other communications shall be concurrently delivered by the
Person giving the same to the Trustee under the Indenture at the address
specified in such Indenture.

 

(f)                      Successors
and Assigns. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto, including,

 

27

 

without limitation and
without the need for an express assignment, subsequent Holders of Securities.

 

(g)                   Counterparts.
This Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

 

(h)                   Headings.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

 

(i)                       Governing
Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITS AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS SAID
ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE COMPANY IN ANY OTHER JURISDICTION.

 

(j)                       Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best efforts

 

28

 

to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

(k)                    Securities
Held by the Company or Its Affiliates. Whenever the consent or approval of
Holders of a specified percentage of Securities is required hereunder,
Securities held by the Company or its affiliates (as such term is defined in
Rule 405 under the Securities Act) shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.

 

(l)                       Third
Party Beneficiaries. Holders and Participating Broker-Dealers are intended
third party beneficiaries of this Agreement and this Agreement may be enforced
by such Persons.

 

(m)                 Entire
Agreement. This Agreement, together with the Purchase Agreement, the
Indenture and the Collateral Agreements, is intended by the parties as a final
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein and any
and all prior oral or written agreements, representations, or warranties,
contracts, understanding, correspondence, conversations and memoranda between
the Initial Purchaser on the one hand and the Company and the Subsidiary
Guarantors on the other, or between or among any agents, representatives,
parents, subsidiaries, affiliates, predecessors in interest or successors in
interest with respect to the subject matter hereof and thereof are merged
herein and replaced hereby.

 

29

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written.

	
   

  	
  RAFAELLA APPAREL GROUP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn Palmer

  
	
   

  	
   

  	
  Name: Glenn Palmer

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
  VERRAZANO, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn Palmer

  
	
   

  	
   

  	
  Name: Glenn Palmer

  
	
   

  	
   

  	
  Title: President

  

 

 

	
  ACCEPTED AND AGREED TO:

  	
   

  
	
   

  	
   

  
	
  JEFFERIES & COMPANY, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Andrew Booth

  	
   

  
	
  Name:

  	
  Andrew Booth

  	
   

  
	
  Title:

  	
  Managing Director

  	
   

  

 

 

Registration
Rights AgreementExhibit 4.7

 

INTERCREDITOR
AGREEMENT

 

This Intercreditor Agreement (this “Agreement”) dated
as of June 20, 2005 among HSBC BANK USA, NATIONAL ASSOCIATION as agent for
Lenders (as defined below) (in such capacity, “Agent”), THE BANK OF NEW YORK,
as Trustee and as Collateral Agent (“Subordinated Lienholder”), RAFAELLA
APPAREL GROUP, INC., a Delaware corporation (“Rafaella”), and VERRAZANO,
INC, a New York corporation (“Verrazano”).

 

BACKGROUND

 

As an inducement for Agent and Lenders (as defined
below) to provide a secured credit facility in favor of Rafaella, which credit
facility is guaranteed by Verrazano (Rafaella and Verrazano hereinafter each a “Credit
Party” and collectively “the Credit Parties”), Subordinated Lienholder has
agreed to enter into this Agreement to provide for the subordination of the
Liens (as defined below) in the assets of Credit Parties granted to
Subordinated Lienholder under the Indenture Security Agreements (as defined
below) to the Liens in such assets of Credit Parties granted to Agent for its
benefit and for the ratable benefit of Lenders.

 

AGREEMENTS

 

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

 

1.                                       Definitions.

 

1.1.                              General
Terms. For purposes of this Agreement, the following terms shall have the
following meanings:

 

“Agent” shall have the meaning set forth in the
introductory paragraph to this Agreement.

 

“Code” shall have the meaning set forth in Section 5.3(a) to
this Agreement.

 

“Collateral” shall mean all of the property and
interests in property, tangible or intangible, real or personal, now owned or
hereafter acquired by any Credit Party in or upon which Agent for its benefit
and for the ratable benefit of Lenders at any time has a Lien, and including,
without limitation, all proceeds and products of such property and interests in
property.

 

“Credit Party” and “Credit Parties”
shall have the meaning set forth in the background paragraph to this Agreement.

 

“Creditor Agreements” shall mean, collectively,
the Lending Agreements and the Subordinated Lienholder Agreements.

 

“Creditors” shall mean, collectively, Agent and
Subordinated Lienholder and their respective successors and assigns.

 

“Discharge of Senior Indebtedness” shall mean
payment in full in cash (or in the case of letters of credit and bank product
obligations, the cash collateralization as required by the Lending Agreements)
of the Senior Indebtedness (other than Senior Indebtedness consisting solely of
contingent indemnification obligations under the Lending Agreements) after or 

 

1

 

concurrently with the
termination or expiration of all commitments to extend credit that would
constitute Senior Indebtedness.

 

“Documents” shall have the meaning given to the
term “Other Documents” in the Loan Agreement.

 

“Exercise Any Secured Creditor Remedies” or “Exercise
of Secured Creditor Remedies” means (a) the taking of any action to
enforce or realize upon any Lien, including the institution of any foreclosure
proceedings or the noticing of any public or private sale or other disposition
pursuant to Article 9 of the applicable Uniform Commercial Code, (b) the
exercise of any right or remedy provided to a secured creditor or otherwise on
account of a Lien under the Creditor Agreements, applicable law, in an
Insolvency Proceeding or otherwise, including the election to retain Collateral
in satisfaction of a Lien, (c) the taking of any action or the exercise of
any right or remedy in respect of the collection on, set off against,
marshaling of, or foreclosure on the Collateral or the Proceeds of Collateral, (d) the
sale, lease, license, or other disposition of all or any portion of the
Collateral, by private or public sale, other disposition or any other means
permissible under applicable law, (e) the solicitation of bids from third
parties to conduct the liquidation of all or a material portion of Collateral
to the extent undertaken and being diligently pursued in good faith to
consummate the sale of such Collateral within a commercially reasonable time, (f) the
engagement or retention of sales brokers, marketing agents, investment bankers,
accountants, appraisers, auctioneers or other third parties for the purposes of
valuing, marketing, promoting and selling the Collateral to the extent
undertaken and being diligently pursued in good faith to consummate the sale of
such Collateral within a commercially reasonable time, and (g) the
exercise of any other enforcement right relating to the Collateral (including
the exercise of any voting rights relating to any capital stock and including
any right of recoupment or set-off) whether under the Lending Agreements, the
Subordinated Lienholder Agreements, applicable law, in an Insolvency Proceeding
or otherwise.

 

“Indenture” shall mean that certain Indenture,
dated as of the date hereof, among Rafaella, the Guarantors (as defined
therein) and The Bank of New York, as trustee, pursuant to which Rafaella
issued $172,000,000 in aggregate principal amount of its 11.25% Senior Secured
Notes due 2011, as the same may be amended, supplemented, amended and
restated or otherwise modified and in effect from time to time, subject to Section 5.6
to this Agreement.

 

“Indenture Security Agreements” shall mean the
Second Lien Security Agreement dated as of the date hereof, made by Rafaella
and Verrazano to the Subordinated Lienholder (as Collateral Agent), together
with any agreements in substantially the form of any Exhibits to the
Second Lien Security Agreement which are executed and delivered in accordance
with the Second Lien Security Agreement.

 

“Insolvency Proceeding” shall have
the meaning set forth in Section 5.3(a) to this Agreement.

 

“Lenders” shall mean each of the financial
institutions named in or which hereafter become a party to the Loan Agreement.

 

“Lending Agreements” shall mean collectively,
the Loan Agreement, the Notes and the other Documents, each as from time to
time in effect.

 

“Lien” shall mean any mortgage, deed of trust,
pledge, hypothecation, assignment, deposit arrangement, security interest,
encumbrance (including, but not limited to, easements, 

 

2

 

rights of way and the
like), lien (statutory or other), charge against or interest in property, security
agreement or transfer intended as security, including without limitation, any
conditional sale or other title retention agreement, the interest of a lessor
under a capital lease or any financing lease having substantially the same
economic effect as any of the foregoing, in each case of any kind. to secure
payment of a debt or performance of an obligation.

 

“Loan Agreement” shall mean the Revolving
Credit and Security Agreement dated as of June 20, 2005 among Credit
Parties, Lenders and Agent, as the same may be amended, supplemented,
modified or restated from time to time.

 

“Maximum Priority Debt Amount” shall mean, as
of any date of determination, the outstanding principal amount (including the
undrawn amount of all letters of credit) of Senior Indebtedness as of such date
up to, but not in excess of, an aggregate principal amount equal to the amount
permitted to be incurred pursuant to clause (2) of the definition of “Permitted
Indebtedness” contained in the Indenture, plus all costs, interest fees and
expenses payable by Credit Parties to Lenders and Agent, minus the amount of
all permanent commitment reductions made or required to be made pursuant to the
Indenture from and after the date hereof.

 

“Person” shall mean an individual, a
partnership, a corporation (including a business trust), a joint stock company,
a trust, an unincorporated association, a joint venture, a limited liability
company, a limited liability partnership or other entity or a government or any
agency, instrumentality or political subdivision thereof.

 

“Petition” shall have the meaning set forth in Section 5.3(a) to
this Agreement.

 

“Proceeds” shall mean (i) all “proceeds”
as defined in Article 9 of the UCC with respect to the Collateral, and (ii) whatever
is recoverable or recovered when Collateral is sold, exchanged, collected, or
disposed of, whether voluntarily or involuntarily.

 

“Senior Creditors” shall mean the Agent, the
Lenders and any other Persons for which a Lien on the Collateral is granted
pursuant to the Lending Agreements.

 

“Senior Indebtedness” shall mean all
Obligations of any kind owed by Credit Parties to Lenders and/or Agent from
time to time under or pursuant to any of the Lending Agreements including,
without limitation, all principal, interest (including all interest, charges,
expenses, fees and other sums accruing after commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of any Credit Party) accruing thereon, charges, expenses, fees
and other sums chargeable to any Credit Party by Lenders and/or Agent, and
reimbursement, indemnity or other obligations due and payable to Lenders and/or
Agent. Senior Indebtedness shall continue to constitute Senior Indebtedness,
notwithstanding the fact that such Senior Indebtedness or any claim for such
Senior Indebtedness is subordinated, avoided or disallowed under the Code or
other applicable law. Senior Indebtedness shall also include any indebtedness
of any Credit Party incurred in connection with a refinancing of the Senior Indebtedness
under the Lending Agreements provided that the terms and conditions of the
agreements, documents and instruments related to such refinancing, taken as a
whole, do not materially impair the rights of the Subordinated Creditors and
are not materially more adverse to the Subordinated Creditors than those set
forth in the Lending Agreements, as in effect on the date of such refinancing.

 

“Standstill Period” shall have the meaning set
forth in Section 2.7(b) of this Agreement.

 

3

 

“Subordinated Creditors” shall mean the
Subordinated Lienholder, the Noteholders (as defined in the Indenture) and any
other Persons for which a Lien on the Collateral is granted pursuant to the
Indenture Security Agreements.

 

“Subordinated Indebtedness” shall mean all
Obligations (as defined in the Indenture) of any kind owed by Credit Parties to
any Subordinated Creditor from time to time under or pursuant to any of the
Subordinated Lienholder Agreements including, without limitation, all
principal, interest (including all interest, charges, expenses, fees and other
sums accruing after commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of any Credit Party)
accruing thereon, charges, expenses, fees and other sums chargeable to any
Credit Party by any Subordinated Creditor, and reimbursement, indemnity or
other obligations due and payable to any Subordinated Creditor. Subordinated
Indebtedness shall continue to constitute Subordinated Indebtedness,
notwithstanding the fact that such Subordinated Indebtedness or any claim for
such Subordinated Indebtedness is subordinated, avoided or disallowed under the
Code or other applicable law. Subordinated Indebtedness shall also include any
indebtedness of any Credit Party incurred in connection with a refinancing of
the Subordinated Indebtedness under the Subordinated Lienholder Agreements if
the terms and conditions of the agreements, documents and instruments related
to such refinancing are permitted under the terms of the Lending Agreements.

 

“Subordinated Lienholder” shall have the
meaning set forth in the introductory paragraph of this Agreement.

 

“Subordinated Lienholder Agreements” shall
mean, collectively, the Indenture, Indenture Security Agreements and all
promissory notes, agreements, documents and instruments now or at any time
hereafter executed and/or delivered by any Credit Party or any other Person to,
with or in favor of the Subordinated Lienholder in connection therewith or
related thereto, as all of the foregoing now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

 

“UCC” shall mean the Uniform Commercial
Code as from time to time in effect in the State of New York.

 

1.2.                              Other
Terms. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Loan Agreement.

 

1.3.                              Certain
Matters of Construction. The terms “herein”, “hereof” and “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision. Any pronoun used shall be deemed
to cover all genders. Wherever appropriate in the context, terms used herein in
the singular also include the plural and vice versa. All references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations. Except as expressly set forth herein, all references
to any instruments or agreements, including, without limitation, references to
any of the Creditor Agreements shall include any and all modifications or
amendments thereto and any and all extensions or renewals thereof.

 

2.                                       Intercreditor
Provisions.

 

2.1.                              Acknowledgment
of Lien. Each Creditor hereby agrees and acknowledges that the other
Creditor has been granted a Lien upon the Collateral.

 

4

 

2.2.                              Priority.
Notwithstanding the order or time of attachment, or the order, time or manner
of perfection, or the order or time of filing or recordation of any document or
instrument, or other method of perfecting a Lien in favor of each Creditor in
any Collateral, and notwithstanding any conflicting terms or conditions which may be
contained in any of the Creditor Agreements, the Liens upon the Collateral of
Agent have and shall have priority over the Liens upon the Collateral of
Subordinated Lienholder and such Liens of Subordinated Lienholder are and shall
be, in all respects, subject and subordinate to the Liens of Agent therein to
the full extent of the Maximum Priority Debt Amount outstanding from time to
time, so that:

 

(a)                                  any
Lien in respect of all or any portion of the Collateral now or hereafter held
by or on behalf of Subordinated Lienholder that secures all or any portion of
the Subordinated Indebtedness, shall in all respects be junior and subordinate
to all Liens granted to Agent in the Collateral to secure all or any portion of
the Senior Indebtedness up to (but not in excess of) the Maximum Priority Debt
Amount, and (ii) any Lien in respect of all or any portion of the
Collateral now or hereafter held by or on behalf of Agent that secures all or
any portion of the Senior Indebtedness in excess of the Maximum Priority Debt
Amount, shall in all respects be junior and subordinate to all Liens granted to
Subordinated Lienholder in the Collateral to secure all or any portion of the
Subordinated Indebtedness, and

 

(b)                                 any
Lien in respect of all or any portion of the Collateral now or hereafter held
by or on behalf of Agent that secures all or any portion of the Senior
Indebtedness up to (but not in excess of) the Maximum Priority Debt Amount,
shall in all respects be senior and prior to all Liens granted to Subordinated
Lienholder in the Collateral to secure all or any portion of the Subordinated
Indebtedness, and (ii) any Lien in respect of all or any portion of the
Collateral now or hereafter held by or on behalf of Subordinated Lienholder
that secures all or any portion of the Subordinated Indebtedness, shall in all
respects be senior and prior to all Liens granted to Agent in the Collateral to
secure all or any portion of the Senior Indebtedness in excess of the Maximum
Priority Debt Amount.

 

The subordination of Liens (up to the Maximum Priority
Debt Amount) by Subordinated Lienholder in favor of Agent herein shall not be
deemed to subordinate Subordinated Lienholder’s Liens to the Liens of any other
Person. The subordination of Liens (in excess of the Maximum Priority Debt
Amount) in favor of Subordinated Lienholder herein shall not be deemed to
subordinate Agent’s Liens to the Liens of any other Person.

 

2.3.                              No
Alteration of Priority. The Lien priorities provided in Section 2.2
hereof shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement or refinancing (except
as may be otherwise provided in this Agreement in connection with any
refinancing) of any Senior Indebtedness or any indebtedness payable under the
Subordinated Lienholder Agreements, nor by any action or inaction which either
Creditor or Lenders may take or fail to take in respect of the Collateral.

 

2.4.                              Perfection.

 

(a)                                  Responsibility
to Perfect. Each Creditor shall be solely responsible for perfecting and
maintaining the perfection of its Lien in and to each item constituting the
Collateral in which such Creditor has been granted a Lien; provided, however,
that, solely for purposes of perfecting the Liens of the Subordinated
Lienholder in any portion of the Collateral in the possession of the Agent (or
its agents or bailees) as part of the collateral securing the Senior
Indebtedness, including, without limitation, any instruments, goods, negotiable

 

5

 

documents, tangible
chattel paper, certificated securities or money, the Agent acknowledges that
the Agent also holds that property as bailee for the benefit of the
Subordinated Lienholder for the benefit of the Subordinated Creditors. The
foregoing provisions of this Agreement are intended solely to govern the
respective Lien priorities as between the Creditors and shall not impose on
Agent any obligations in respect of the disposition of proceeds of foreclosure
on any Collateral which would conflict with prior perfected claims therein in
favor of any other Person.

 

(b)                                 Agreement
Not to Contest or Challenge. Each Creditor agrees that it will not contest
or challenge (or assist or support any other Person in contesting or
challenging), directly or indirectly, whether or not in any proceeding
(including any Insolvency Proceeding) the validity, perfection, priority or
enforceability of the Liens of the other Creditor in the Collateral, and that
as between Agent and Subordinated Lienholder, the terms of this Agreement shall
govern even if part or all of the Senior Indebtedness or the Liens of
Agent securing payment and performance thereof, on the one hand, or the
Subordinated Indebtedness or the Liens of Subordinated Lienholder securing
payment and performance thereof, on the other hand, are avoided, disallowed,
set aside or otherwise invalidated in any judicial proceeding or otherwise.

 

(c)                                  Obligations
Following Discharge of Senior Indebtedness. Following the Discharge of
Senior Indebtedness, the Agent, on behalf of itself and the Lenders, agrees
that it will not take any action that would hinder any exercise of remedies
undertaken by Subordinated Lienholder or any other Subordinated Creditor under
the Subordinated Lienholder Agreements, including any public or private sale,
lease, exchange, transfer, or other disposition of the Collateral, whether by
foreclosure or otherwise. Following the Discharge of Senior Indebtedness,
Agent, on behalf of itself and the Lenders, hereby waives any and all rights it
may have as a junior lien creditor or otherwise to contest, protest,
object to, interfere with the manner in which Subordinated Lienholder or any
other Subordinated Creditor seeks to enforce the Liens in any portion of the
Collateral (it being understood and agreed that the terms of this Agreement
shall govern with respect to the Collateral even if any portion of the Liens
securing the Subordinated Indebtedness are avoided, disallowed, set aside or
otherwise invalidated in any judicial proceeding or otherwise). Upon the
Discharge of Senior Indebtedness, the Agent will, to the extent permitted by
applicable law, deliver to (1) the Subordinated Lienholder or (2) such
other person as a court of competent jurisdiction may otherwise direct, (a) any
Collateral held by, or on behalf of, the Agent or any holder of Senior
Indebtedness, and (b) all proceeds of Collateral held by, or on behalf of,
the Agent or any holder of Senior Indebtedness, whether arising out of an
action taken to enforce, collect or realize upon any Collateral or otherwise.
Such Collateral and such proceeds will be delivered without recourse and
without any representation or warranty whatsoever as to the enforceability,
perfection, priority or sufficiency of any Lien securing or guarantee or other
supporting obligation for any Senior Indebtedness or Subordinated Indebtedness,
together with any necessary endorsements or as a court of competent
jurisdiction may otherwise direct.

 

2.5.                              Sale
of Collateral. Agent and Subordinated Lienholder shall release their
respective Liens upon any Collateral in the event that such Collateral is sold,
transferred or otherwise disposed of by any Credit Party in a transaction or
other circumstance that complies with Section 4.10 of the Indenture and is
permitted by all other Creditor Agreements, at the time of such sale, transfer
or other disposition or to the extent of the interest sold, transferred or 

 

6

 

otherwise disposed of;
provided, that the Subordinated Lienholder’s Liens upon such Collateral will
not be released if the sale or disposition is subject to Section 5.01 of
the Indenture.

 

2.6.                              Management
of Collateral. Agent shall have the exclusive right to manage, perform and
enforce the terms of the Lending Agreements with respect to the Collateral and
to exercise and enforce all privileges and rights thereunder according to its
discretion and the exercise of its business judgment, including, without
limitation, the exclusive right to enforce or settle insurance claims, take or
retake control or possession of such Collateral and to hold, prepare for sale,
process, sell, lease, dispose of, or liquidate such Collateral. In connection
therewith, Subordinated Lienholder waives any and all rights to affect the
method or challenge the appropriateness of any action by Agent.

 

2.7.                              Exercise
of Secured Creditor Remedies.

 

(a)                                  In
no event shall Subordinated Lienholder Exercise Any Secured Creditor Remedies (other
than those described in Section 2.7(e) below) prior to the Discharge
of Senior Indebtedness; nor shall Subordinated Lienholder join in, solicit any
other person to, or act to cause the commencement of, any case involving any
Credit Party under any state or federal bankruptcy or insolvency laws or seek
the appointment of a receiver for the affairs or property of any Credit Party
prior to the Discharge of Senior Indebtedness. In the event Subordinated
Lienholder shall receive any payment or distribution of any kind representing
proceeds of any Collateral as to which its Lien in the Collateral is or is
required to be subordinated to the Lien of Agent, prior to the Discharge of
Senior Indebtedness, such sums shall be held in trust by Subordinated
Lienholder for the benefit and on account of Agent and such amounts shall be
paid to Agent for application to the then unpaid Senior Indebtedness under the
Lending Agreements. Acceleration of the Subordinated Indebtedness in accordance
with the provisions of the Indenture shall not be deemed an “Exercise of
Secured Creditor Remedies” and is not prohibited by this Agreement.

 

(b)                                 Notwithstanding
the provisions of Section 2.7(a), following the expiration of 180 days
from the date Agent receives written notice from Subordinated Lienholder that
the Subordinated Lienholder has accelerated the obligations secured by the
Liens of the Subordinated Lienholder (the “Standstill Period”), the
Subordinated Lienholder may Exercise Any Secured Creditor Remedies unless
prior to the expiration of such time period or at any time thereafter, the
Agent has commenced and is diligently pursuing the Exercise of Secured Creditor
Remedies against all or a material portion of the Collateral.

 

(c)                                  No
Other Restrictions. Except as expressly set forth in this Agreement, each
of the Subordinated Lienholder, the other Subordinated Creditors, the Agent and
the Lenders shall have any and all rights and remedies it may have as a
creditor under applicable law, including the rights to exercise all rights and
remedies in foreclosure or otherwise with respect to any of the Collateral;
provided, however, that any such exercise by the Subordinated Lienholder or the
other Subordinated Creditors, and any collection or sale of all or any portion
of the Collateral by the Subordinated Lienholder or the other Subordinated
Creditors, shall be subject to the Liens of the Agent on the Collateral to the
extent provided in Section 2.2 and to the provisions of this Agreement
including Section 4.2 hereof. In exercising rights and remedies with
respect to the Collateral, the Agent may enforce the provisions of the
Lending Agreements and exercise remedies thereunder, all in such order and in
such manner as it may determine in the exercise of its sole discretion. Such
exercise and enforcement shall include the sale, lease, license, or other
disposition of all or any portion of the Collateral by 

 

7

 

private
or public sale or any other means permissible under applicable law or any
agreement; provided, that the Agent agrees to provide copies of any notices
that it is required under applicable law to deliver to any Credit Party to the
Subordinated Lienholder; provided further, that the failure to provide any such
copies to the Subordinated Lienholder shall not impair any of the Agent’s
rights hereunder. In the event the Subordinated Lienholder is permitted by this
Agreement to exercise rights and remedies with respect to the Collateral, the
Subordinated Lienholder may enforce the provisions of the Subordinated
Lienholder Agreements and exercise remedies thereunder, all in such order and
in such manner as it may determine in the exercise of its sole discretion.
Such exercise and enforcement shall include the sale, lease, license, or other
disposition of all or any portion of the Collateral by private or public sale
or any other means permissible under applicable law or any agreement; provided,
that the Subordinated Lienholder agrees to provide copies of any notices that
it is required under applicable law to deliver to any Credit Party to the
Agent; provided further, that the failure to provide any such copies to the
Agent shall not impair any of the Subordinated Lienholder’s rights hereunder.

 

(d)                                 Release
of Liens.

 

(i)                                     In
the event of any such private or public sale, Subordinated Lienholder agrees,
on behalf of itself and the other Subordinated Creditors, that such sale will
be free and clear of the Liens securing the Subordinated Indebtedness and, if
the sale or other disposition includes the Equity Interests in any Borrower or
any Guarantor, agrees to release the entities whose Equity Interests are sold
from all Subordinated Indebtedness so long as Agent and Senior Lenders also
release the entities whose Equity Interests are sold from all Senior
Indebtedness. In furtherance thereof, Subordinated Lienholder agrees that it
will execute any and all Lien releases or other documents reasonably requested
by Agent in connection therewith, so long as the proceeds from such sale or
other disposition of the Collateral are applied in accordance with the terms of
this Agreement.

 

(ii)                                  If
and to the extent that the Agent or its designee releases any of its Liens on
any Collateral in connection with the sale, lease, exchange, transfer or other
disposition of the Collateral in accordance with the terms of this Agreement,
the Liens, if any, of the Subordinated Lienholder, for itself or for the
benefit of the other Subordinated Creditors, on such Collateral shall be
automatically, unconditionally and simultaneously released and the Subordinated
Lienholder, for itself and for each of the other Subordinated Creditors,
promptly shall execute and deliver to the Agent such termination statements,
releases and other documents as the Agent may request to effectively
confirm such release in respect of such payments. Notwithstanding the
foregoing, the obligation of the Subordinated Lienholder to release its Lien on
such Collateral shall arise only if such sale, lease, exchange, transfer or
other disposition of the Collateral is effected in connection with an exercise
of remedies or is permitted by (or permitted pursuant to a waiver of or consent
to a transaction otherwise prohibited by) the Lending Agreements and the terms
hereof

 

(e)                                  Filing
of Certain Claims. The Subordinated Lienholder may make such demands
or file such claims in respect of the Subordinated Indebtedness as may be
necessary to prevent the waiver or bar of such claims under applicable statutes
of limitations or other statutes, court orders or rules of procedure
(including, without limitation, the filing of any proofs of claim in any
Insolvency Proceeding), but except as provided in this Section 2.7 or 

 

8

 

otherwise in this
Agreement, the Subordinated Lienholder shall not take any actions restricted by
this Agreement until the Discharge of Senior Indebtedness shall have occurred.

 

(f)                                    Following
the Discharge of Senior Indebtedness, the Subordinated Creditors may assert
their right under the UCC or otherwise to any proceeds following a sale or
other disposition of Collateral by, or on behalf of, the Senior Creditors.

 

2.8.                              Section 9-611
Notice and Waiver of Marshaling. Subordinated Lienholder and Agent
acknowledge that this Agreement shall constitute notice of their respective
interests in the Collateral as provided by Section 9-611 of the New York
Uniform Commercial Code and each hereby waive any right to compel any
marshaling of any of the Collateral.

 

3.                                       Actions
of the Parties.

 

3.1.                              Limitation
of Certain Actions. Notwithstanding any other provision hereof, prior to
the date that the Discharge of Senior Indebtedness occurs or, if earlier, the
termination of the Standstill Period, the Subordinated Lienholder will not:

 

(a)                                  commence
receivership or foreclosure proceedings against any Credit Party, or any
Collateral;

 

(b)                                 make
demands or file claims in respect of the Subordinated Indebtedness except as
permitted under Section 2.7(e) hereof;

 

(c)                                  sell,
collect, transfer or dispose of any Collateral or Proceeds; or

 

(d)                                 notify
third party account debtors to make payment directly to it or any of its agents
or other Persons acting on its behalf.

 

3.2.                              Receipt
of Proceeds or Collateral in Certain Cases. The Agent is not and shall not
be deemed to be a fiduciary of any kind for any Subordinated Creditor or any
other Person. The Subordinated Lienholder is not and shall not be deemed to be
a fiduciary of any kind for the Agent, the Lenders or any other Person. In the
event that (a) any of Subordinated Creditor receives any Proceeds or
Collateral in contravention of the priority of Liens under Section 2.2, or
(b) the Agent or any Lender receives any Proceeds or Collateral in
contravention of the priority of Liens under Section 2.2, it shall
promptly pay over such Proceeds or Collateral to (i) in the case of clause
(a), the Agent, or (ii) in the case of clause (b), the Subordinated
Lienholder, in the same form as received with any necessary endorsements,
for application in accordance with the provisions of Section 4.2 of this
Agreement.

 

4.                                       Notices
and Application of Proceeds.

 

4.1.                              Notices
of Exercise. Concurrently with any exercise by the Subordinated Lienholder
of any of its rights and remedies under the Subordinated Lienholder Agreements
following the occurrence of any default under the Subordinated Lienholder
Agreements, the Subordinated Lienholder shall give notice of such exercise to
the Agent and shall only exercise such rights or remedies in a manner
consistent with the terms of this Agreement. Concurrently with any exercise by
the Agent of any of its rights and remedies under the Lender Agreements
following the occurrence of any default under the Lender Agreements, the Agent
shall give notice of such exercise to the Subordinated Lienholder and shall
only exercise such rights or remedies in a manner consistent with the terms of
this Agreement.

 

9

 

4.2.                              Application
of Proceeds. The Agent and Subordinated Lienholder hereby agree that all
Collateral and all Proceeds received by either of them upon the Exercise of
Secured Creditor Remedies shall be applied,

 

first, to the
payment of costs and expenses of the Agent or, to the extent it was permitted
to engage in the Exercise of Secured Creditor Remedies, Subordinated
Lienholder, as applicable, in connection with such exercise,

 

second, to the
payment of the Senior Indebtedness up to (but not in excess of) the Maximum
Priority Debt Amount,

 

third, to the
payment of the Subordinated Indebtedness,

 

fourth, to the
payment of any Senior Indebtedness in excess of the Maximum Priority Debt
Amount, and

 

fifth, any
surplus remaining after the payment in full in cash of the amounts described in
the preceding clause will be paid to the applicable Credit Party, its
successors or assigns, or as a court of competent jurisdiction may direct.

 

In exercising remedies, whether as a secured creditor
or otherwise, the Agent shall have no obligation or liability to the
Subordinated Lienholder or to any other Subordinated Creditor and the
Subordinated Lienholder shall have no obligation or liability to the Agent or
any Lender regarding the adequacy of any Proceeds following any commercially
reasonable sale or for any action or omission save and except solely an action
or omission that breaches the express obligations undertaken by each party
under the terms of this Agreement

 

5.                                       Miscellaneous.

 

5.1.                              Survival
of Rights. The right of Agent to enforce the provisions of this Agreement
shall not be prejudiced or impaired by any act or omitted act of any Credit
Party, Lenders or Agent, including forbearance, waiver, consent, compromise,
amendment, extension, renewal, or taking or release of security in respect of
any Senior Indebtedness or noncompliance by any Credit Party with such
provisions, regardless of the actual or imputed knowledge of Lenders or Agent. The
right of Subordinated Lienholder to enforce the provisions of this Agreement
shall not be prejudiced or impaired by any act or omitted act of any Credit
Party, or Subordinated Creditor, including forbearance, waiver, consent,
compromise, amendment, extension, renewal, or taking or release of security in
respect of any Subordinated Indebtedness or noncompliance by any Credit Party
with such provisions, regardless of the actual or imputed knowledge of any
Subordinated Creditor.

 

5.2.                              Amendments
to Lending Agreements. Nothing contained in this Agreement, or in any other
agreement or instrument binding upon any of the parties hereto, shall in any
manner limit or restrict the ability of Lenders and Agent from increasing or
changing the terms of the loans under the Lending Agreements, or to otherwise
waive, amend or modify the terms and conditions of the Lending Agreements, in
such manner as Lenders, Agent and each applicable Credit Party shall mutually
determine. Subordinated Lienholder hereby consents to any and all such waivers,
amendments, modifications and compromises, and any other renewals, extensions,
indulgences, releases of collateral or other accommodations granted by Lenders
and Agent to each applicable Credit Party from time to time, and agrees that,
to the extent consistent with the last sentence of the definition of “Senior
Indebtedness”, none of such actions shall in any manner affect or impair the
relative Lien priorities and subordination established by this 

 

10

 

Agreement in respect of
the indebtedness payable under the Subordinated Lienholder Agreements.

 

5.3.                              Bankruptcy
Financing Issues.

 

(a)                                  This
Agreement shall continue in full force and effect after the filing of any
petition (each, a “Petition”) by or against any Credit Party under the United
States Bankruptcy Code (the “Code”) and all converted or succeeding cases in
respect thereof or any other insolvency or reorganization proceeding. All
references herein to any Credit Party shall be deemed to apply to such Credit
Party as debtor-in-possession and to a trustee for such Credit Party. If any Credit
Party shall become subject to a proceeding under the Code or any other
insolvency or reorganization proceeding (each, an “Insolvency Proceeding”), and
if Agent and/or Lenders shall desire to permit the use of cash collateral or to
provide post-petition financing from Agent and/or Lenders to such Credit Party
under the Code, Subordinated Lienholder agrees as follows: (1) adequate
notice to Subordinated Lienholder shall be deemed to have been provided for
such post-petition financing if Subordinated Lienholder receives notice thereof
at least three (3) Business Days (or such shorter notice as is given to
Agent) prior to the earlier of any hearing on a request to approve such
post-petition financing or the date of entry of an order approving the same; and
(2) no objection will be raised by Subordinated Lienholder to, and it will
not contest (or support any Person in contesting) any such use of cash
collateral or such post-petition financing from Agent and/or Lenders.

 

(b)                                 Subject
to Section 5.3(a), Subordinated Lienholder shall not contest (or support
any Person contesting) (i) any request by Agent and/or Lenders for
adequate protection or (ii) any objection by Agent and/or Lenders to any
motion, relief, action or proceeding based upon Agent and/or Lenders claiming a
lack of adequate protection. Notwithstanding the foregoing provisions in this Section 5.3(b),
in any Insolvency Proceeding (i) if Agent and/or Lenders are granted
adequate protection in the form of additional collateral in connection
with any use of cash collateral or post-petition financing, then Subordinated
Lienholder shall receive adequate protection in the form of a Lien on such
additional collateral, which Lien shall be subordinated to the Liens securing
the Senior Indebtedness and such post-petition financing on the same basis as
the other Liens securing the obligations secured by the Liens of the
Subordinated Lienholder are so subordinated to the Liens securing the Senior
Indebtedness under this Agreement, and (ii) prior to the Discharge of
Senior Indebtedness, in the event the Subordinated Lienholder seeks or requests
adequate protection in respect of the obligations secured by the Liens of the
Subordinated Lienholder and such adequate protection is granted in the form of
additional collateral, then the Agent shall also be granted a senior Lien on
such additional collateral as security for the Senior Indebtedness and for any
post-petition financing provided by Agent and/or Lenders and any Lien on such
additional collateral securing the obligations owed to the Subordinated
Lienholder shall be subordinate to the Liens on such collateral securing the
Senior Indebtedness and any such post-petition financing provided by Agent
and/or Lenders and to any other Liens granted to Agent as adequate protection
on the same terms as the other Liens securing the obligations owed to the
Subordinated Lienholder are subordinated to the Liens securing the Senior
Indebtedness.

 

(c)                                  Subordinated
Lienholder shall not join in, solicit any other Person to, or act to cause the
commencement of any Insolvency Proceeding or seek appointment of a receiver for
the affairs or property of any Credit Party prior to the Discharge of Senior
Indebtedness or, if earlier, the termination of the Standstill Period.

 

11

 

5.4.                              Insurance
Proceeds. Proceeds of the Collateral include insurance proceeds, and
therefore, notwithstanding the terms set forth in the Lending Agreements or
Subordinated Lienholder Agreements, the priorities set forth in Section 2.2
govern the ultimate disposition of casualty insurance proceeds. Agent, as the
holder of a senior security interest on the Collateral insured shall have the
sole and exclusive right, as against Subordinated Lienholder, to adjust
settlement of insurance claims in the event of any covered loss, theft or
destruction of such Collateral. All proceeds of such insurance shall inure to
Agent, to the extent of Lenders’ and Agent’s claim, and Subordinated Lienholder
shall cooperate (if necessary) in a reasonable manner in effecting the payment
of insurance proceeds to Lenders and Agent. In the event Agent, in its sole
discretion or pursuant to agreement with any Credit Party, permits such Credit
Party to utilize the proceeds of insurance to replace Collateral, the consent
of Agent thereto shall be deemed to include the consent of Subordinated
Lienholder.

 

5.5.                              Receipt
of Agreements. Subordinated Lienholder hereby acknowledges that it has
delivered to Agent a correct and complete copy of the Subordinated Lienholder
Agreements as in effect on the date hereof. Subordinated Lienholder, solely for
the purposes of this Agreement, hereby acknowledges receipt of a correct and
complete copy of each of the Lending Agreements as in effect on the date
hereof.

 

5.6.                              No
Amendment of Subordinated Lienholder Agreements. Prior to the Discharge of
Senior Indebtedness, neither any Credit Party nor Subordinated Lienholder shall
enter into any amendment to or modification of any Subordinated Lienholder
Agreements which would (i) increase the principal amount of or interest
rate applicable to the Subordinated Indebtedness (excluding fluctuations in
underlying indices and imposition of a default rate), (ii) shorten the
maturity of the Subordinated Indebtedness, or (iii) add or make more
restrictive the covenants, agreements or events of default applicable to the
Subordinated Indebtedness, without the prior written consent of Agent.

 

5.7.                              Notice
of Default and Certain Events. Agent and the Subordinated Lienholder shall
undertake in good faith to notify the other of the occurrence of any of the
following as applicable:

 

(a)                                  the
obtaining of actual knowledge of the occurrence of any default under the
Subordinated Lienholder Agreement;

 

(b)                                 the
acceleration of any Senior Indebtedness or of any of the indebtedness payable
under the Subordinated Lienholder Agreements;

 

(c)                                  the
granting by Lenders and/or Agent of any waiver of any Event of Default under
the Loan Agreement or the granting by Subordinated Lienholder of any waiver of
any “default” or “event of default” under the Subordinated Lienholder
Agreements;

 

(d)                                 the
payment in full by the Credit Parties (whether as a result of refinancing or
otherwise) of all Senior Indebtedness; or

 

(e)                                  the
sale or liquidation of, or realization upon, the Collateral.

 

The failure of any party to give such notice shall not
affect the relative Lien priorities as provided in this Agreement.

 

5.8.                              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 

 

12

 

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, National
Association

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:                                           Steven
J. Seif

Telephone:                                      212-478-7200

Facsimile:                                            212-478-7400

 

If to Subordinated
Lienholder:

The Bank of New York

101 Barclay Street, 8W

New York, New York 10286

Attention:                                           Beata
Hryniewicka

Telephone:                                      212-815-6907

Facsimile:                                            626-835-8465

 

with a copy to:

 

Proskauer Rose LLP

1585 Broadway

New York, New York
10036-8299

Attention:                                           Julie
M. Allen

Telephone:                                      212-969-3155

Facsimile:                                            212-969-2900

 

If to any Credit Party:

 

Rafaella Apparel Group, Inc.

1411 Broadway, 2nd
Floor

New York, New York 10018

Attention:                                           Chad
Spooner

Telephone:                                      212-403-0300

Facsimile:                                            212-764-9725

 

13

 

with copies to:

 

Cerberus Capital
Management, L.P.

299 Park Avenue, 22nd
Floor

New York, New York 10171

Attention:                                           George
Kollitides

Telephone:                                      212-284-7931

Facsimile:                                            212-284-7916

 

-and-

 

Schulte Roth &
Zabel LLP

919 Third Avenue

New York, New York 10022

Attention:                                           Ronald
Risdon

 and David Rosewater, Esq.

Telephone:                                      212-756-2203

Facsimile:                                            212-593-5955

 

5.9.                              Binding
Effect; Other. This Agreement shall be a continuing agreement, shall be binding
upon and shall inure to the benefit of the parties hereto from time to time and
their respective successors and assigns, shall be irrevocable and shall remain
in full force and effect until the Discharge of Senior Indebtedness, but shall
continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any amount paid by or on behalf of
any Credit Party with regard to the Senior Indebtedness is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Credit Party, or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee,
custodian, or similar officer, for any Credit Party or any substantial part of
its property, or otherwise, all as though such payments had not been made. No
action which Lenders, Agent or any Credit Party may take or refrain from
taking with respect to the Senior Indebtedness, including any amendments
thereto, shall affect the provisions of this Agreement or the obligations of
Subordinated Lienholder. Any waiver or amendment hereunder must be evidenced by
a signed writing of the party to be bound thereby, and shall only be effective
in the specific instance. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. The headings in this
Agreement are for convenience of reference only, and shall not alter or
otherwise affect the meaning hereof.

 

6.                                       Representations
and Warranties.

 

(a)                                  Subordinated
Lienholder represents and warrants to Agent that (a) it is the holder of
the Liens which secure or will secure the indebtedness payable under the
Subordinated Lienholder Agreements, and (b) it has full right, power and
authority to enter into this Agreement and, to the extent Subordinated
Lienholder is an agent or trustee for other parties, that this Agreement shall
fully bind all such other parties. Subordinated Lienholder agrees that it shall
not assign or transfer any of the Liens without (i) prior notice being
given to Agent and (ii) such assignment or transfer being made expressly
subject to the terms of this Agreement.

 

(b)                                 Agent
represents and warrants to Subordinated Lienholder that (a) Lenders and
Agent are the holders of the Liens which secure or will secure the Senior
Indebtedness, and (b) it has full right, power and authority to enter into
this Agreement and, to 

 

14

 

the extent Agent is an
agent or trustee for other parties, that this Agreement shall fully bind all
such other parties. Agent agrees that it shall not assign or transfer any of
the Liens without (i) prior notice being given to Subordinated Lienholder
and (ii) such assignment or transfer being made expressly subject to the
terms and provisions of this Agreement.

 

7.                                       Refinancing.
In the event that the Senior Indebtedness are refinanced in full in accordance
with the last sentence of “Senior Indebtedness”, Subordinated Lienholder agrees
at the request of such refinancing party to enter into an intercreditor
agreement on terms substantially similar to this Agreement.

 

8.                                       Proceedings.
ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST SUBORDINATED LIENHOLDER OR ANY
CREDIT PARTY WITH RESPECT TO THIS AGREEMENT OR ANY RELATED AGREEMENT MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN STATE OF NEW YORK, UNITED
STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH PARTY
THERETO ACCEPTS FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY FINAL JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
OF AGENT OR LENDERS TO BRING PROCEEDINGS AGAINST SUBORDINATED LIENHOLDER OR ANY
CREDIT PARTY IN ANY COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING
BY SUBORDINATED LIENHOLDER OR ANY CREDIT PARTY AGAINST AGENT OR LENDERS
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 COURT LOCATED IN THE CITY OF NEW YORK, STATE OF NEW YORK;
PROVIDED THAT NOTWITHSTANDING THE FOREGOING, IF IN ANY JUDICIAL PROCEEDING BY
OR AGAINST SUBORDINATED LIENHOLDER OR ANY CREDIT PARTY THAT IS BROUGHT IN ANY
OTHER COURT SUCH COURT DETERMINES THAT AGENT IS AN INDISPENSABLE PARTY,
SUBORDINATED LIENHOLDER OR SUCH CREDIT PARTY SHALL BE ENTITLED TO JOIN OR
INCLUDE EACH PARTY HERETO IN SUCH PROCEEDINGS IN SUCH OTHER COURT. SUBORDINATED
LIENHOLDER AND EACH CREDIT PARTY 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.

 

9.                                       Waiver
Of Jury Trial. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES 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 ANY CREDITOR, LENDERS OR ANY CREDIT
PARTY OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENTS OR AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR
THE TRANSACTIONS RELATED HERETO OR 

 

15

 

THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT JURY, AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THEIR CONSENT
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

10.                                 Credit
Party Acknowledgement. Each Credit Party agrees that (i) nothing
contained in this Agreement shall be deemed to amend, modify, supersede or
otherwise alter the terms of the respective agreements between such Credit
Party and each Creditor and (ii) this Agreement is solely for the benefit
of the Creditors and shall not give any Credit Party, its successors or assigns
or any other Person any rights vis-à-vis any Creditor.

 

11.                                 Counterparts;
Facsimile. This Agreement 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.

 

16

 

IN WITNESS WHEREOF, the undersigned have entered into
this Agreement as of this 20th day of June, 2005.

 

	
   

  	
  HSBC
  BANK USA, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lisa H. Augustus

  	
   

  
	
   

  	
  Name:

  	
  Lisa
  H. Augustus

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  BANK OF NEW YORK,

  
	
   

  	
  as
  Subordinated Lienholder

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Beata Hryniewieka

  	
   

  
	
   

  	
  Name:

  	
  Beata
  Hryniewieka

  	
   

  
	
   

  	
  Title:

  	
  Assistant
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
  RAFAELLA
  APPAREL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Glenn Palmer

  	
   

  
	
   

  	
  Name:

  	
  Glenn
  Palmer

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  VERRAZANO, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Glenn Palmer

  	
   

  
	
   

  	
  Name:

  	
  Glenn
  Palmer

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
						

 

17

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