Document:

Exhibit 10.8

 

DEPOSIT ACCOUNT CONTROL AGREEMENT

 

This
DEPOSIT ACCOUNT CONTROL AGREEMENT (this “Agreement”)
is entered into as of June 20, 2005, among HSBC Bank USA, National
Association, as Agent pursuant to a certain Financing Agreement (as defined
herein) (the “Secured Party”),
The Bank of New York, as Collateral Agent pursuant to a certain Second Lien
Security Agreement (as defined herein) (the “Collateral
Agent”), Rafaella Apparel Group, Inc. (the “Debtor”), and HSBC Bank USA, National
Association (the “Bank”).

 

BACKGROUND

 

The
Bank maintains for the Debtor one or more demand deposit accounts designated by
the account number or numbers indicated on the Schedule hereto. The
demand deposit account or accounts, as re-numbered or otherwise re-designated
from time to time, are referred to in this Agreement, collectively, as the “Deposit Account”.

 

In
connection with certain financing or other arrangements between (i) the
Secured Party and the Debtor including, without limitation, that certain
Financing Agreement, dated as of June 20, 2005, among the Debtor,
Verrazano, Inc. (the “Subsidiary”),
certain Guarantors, Secured Party and certain financial institutions, as
Lenders, which presently or in the future become party thereto (the “Financing Agreement”), and (ii) the
Collateral Agent and the Debtor including, without limitation, that certain
Second Lien Security Agreement, dated as of June 20, 2005, among the
Debtor, the Subsidiary and the Collateral Agent (the “Security Agreement”), the Debtor has
informed the Bank that the Debtor has granted to each of the Secured Party and
the Collateral Agent a security interest in the Deposit Account. The Secured
Party, the Collateral Agent, the Debtor and the Subsidiary have entered into an
Intercreditor Agreement, dated as of June 20, 2005 (the “Intercreditor
Agreement”), setting forth certain agreements with respect to the Collateral
(as defined therein). The Debtor is hereby requesting that the Bank enter into
this Agreement. The Bank is willing to do so upon the terms contained in this
Agreement.

 

Accordingly,
the parties agree as follows:

 

AGREEMENTS

 

1.                                       Definitions and Rules of Interpretation.

 

(a)                                  As used in this Agreement, terms defined in
the UCC of the State and not otherwise defined herein have the same meanings herein
as specified therein.

 

(b)                                 In addition, the following terms used in this
Agreement shall have the following meanings:

 

“Business Day” means (i) in the case
of a notification or other communication to be given or made to the Bank, any
day, other than a Saturday or Sunday, on which the office, branch or department
of the Bank designated in the form of Initial Instruction attached as the Exhibit hereto
is open for business and can act upon the Initial Instruction and (ii) in
the case of a notification or other communication to be given or made to the
Debtor, the Secured Party or the Collateral 

 

 

Agent, any day, other than a
Saturday or Sunday, on which the Debtor or, as the case may be, the
Secured Party or the Collateral Agent is open for business in the location to
which the notification or other communication is to be given or made.

 

“Deposit Account” has the meaning set forth
in the “Background” portion of this Agreement and includes any funds from time
to time in the Deposit Account.

 

“Deposit Agreement” means, collectively,
the deposit account agreement and any other agreements between the Bank and the
Debtor governing the Deposit Account and any cash management or like services
provided by the Bank to the Debtor in connection with the Deposit Account, in
each case as in effect from time to time.

 

“Initial Instruction” means the first
instruction to the Bank originated by the Secured Party or the Collateral
Agent, as the case may be, directing the disposition of the funds in the
Deposit Account.

 

“Items” means all checks, drafts, money
orders, instruments, cash and other items at any time received for deposit in
the Deposit Account, and all wire transfers of funds, automated clearing house
entries, credits from a merchant card transaction and other electronic funds
transfers or other funds deposited in, credited to, or held for deposit in or
credit to the Deposit Account, or otherwise in the possession or under control
of, or in transit to, the Bank or any agent, bailee or custodian thereof, for
credit to the Deposit Account.

 

“Order or Process” means any order,
judgment, decree, injunction or legal process directing or prohibiting or
otherwise restricting the disposition of the funds in the Deposit Account.

 

“Outside Time” means, absent an earlier Outside
Time set forth on the Schedule hereto, the opening of business on
the Business Day next succeeding the Business Day on which the Initial
Instruction is actually received by the person or persons or department at the
Bank to whom or which the Initial Instruction is required under this Agreement
to be addressed. Absent an earlier Outside Time set forth on the Schedule hereto,
if the Initial Instruction is actually received by the person or persons or
department after 12:00 noon, in the time zone set forth on the Schedule hereto,
on any Business Day, the Outside Time shall be the opening of business on the
second Business Day next succeeding the Business Day on which the actual
receipt occurs.

 

“Permitted Debit” means, to the extent, in
each case, to which the Bank has a right to charge the Debtor or the Deposit
Account, or to obtain a refund or other payment from the Debtor, by contract or
applicable law therefor:

 

(i) the face amount of any Item:

 

(A) deposited into or credited to the Deposit Account, either
before or after the date of this Agreement, and returned unpaid or otherwise
uncollected or subject to an adjustment entry, whether for insufficient funds
or for any other reason and without regard to the timeliness of such return or
adjustment or the occurrence or timeliness of any other party’s notice of
nonpayment or adjustment,

 

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(B) subject to a claim against the Bank for breach of transfer,
presentment, encoding, retention, or other warranty under Federal Reserve
Regulations or Operating Circulars, clearing house rules, the UCC or other
applicable law; or

 

(C) constituting a credit to the Deposit Account from a merchant
card transaction against which a contractual demand for chargeback has been made;

 

(ii) any usual and customary service charge or fee payable to or
incurred by the Bank, including out of pocket and allocable internal legal fees
and expenses, payable or incurred in connection with the negotiation,
administration or enforcement of this Agreement,

 

(iii) any adjustment or correction of any posting or encoding
error, or

 

(iv) any other Item or amount normally chargeable by the Bank to
or against a demand deposit account or customer in the ordinary course of a
demand deposit account relationship between a bank and a customer.

 

“State” means the State of New York.

 

“UCC” means, unless the context otherwise
requires, the Uniform Commercial Code as enacted in the State or in any
other jurisdiction whose Uniform Commercial Code applies under applicable
choice of law rules.

 

“Writing” means a tangible writing
including a facsimile. If the Schedule so permits, the term also
includes an electronic record. “Written”
refers to a communication in the form of a writing.

 

(c)                                  The rules of interpretation contained in
Article 1 of the UCC of the State shall apply to the interpretation of the
provisions of this Agreement.

 

2.                                       The Debtor’s Dealings with the Deposit
Account.

 

(a)                                  Except as provided in Section 2(b), the
Debtor shall be entitled to direct the disposition of the funds in the Deposit
Account in accordance with the terms of the Deposit Agreement.

 

(b)                                 The Debtor shall no longer be entitled to
direct, and the Bank shall cease complying with instructions originated by the
Debtor to direct, the disposition of the funds in the Deposit Account from and
after (i) the Outside Time or (ii) such earlier time as the Bank in
its discretion ceases complying with the Debtor’s directions as permitted by Section 4(a)(iv).

 

3.                                       The Secured Party’s and the Collateral Agent’s
Right to Give Exclusive Instructions as to the Deposit Account.

 

(a)                                  The Bank shall comply with the Initial
Instruction, or any other instruction originated by the Secured Party or the
Collateral Agent, as the case may be, directing the disposition of the
funds in the Deposit Account, in each case without further consent of the
Debtor.

 

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(b)                                 The Bank shall follow the Initial
Instruction, or any other instruction originated by the Secured Party or the
Collateral Agent, as the case may be, directing disposition of the funds
in the Deposit Account, even if the result of following the Initial Instruction
or such other instruction is that the Bank dishonors Items presented for
payment from the Deposit Account.

 

(c)                                  Notwithstanding the foregoing clauses (a) and
(b), the Bank shall not follow an Initial Instruction or any other instruction
originated by the Collateral Agent unless the Bank shall have received prior
written notice (x) from the Secured Party that the Discharge of Senior
Indebtedness (as defined in the Intercreditor Agreement) shall have occurred or
(y) from the Collateral Agent (a “Collateral Agent Notice”) that the Standstill
Period (as defined in the Intercreditor Agreement) shall have expired and Bank
thereafter does not receive written notice from the Secured Party that it has
commenced and is dilgently pursuing the Exercise of Secured Creditor Remedies
(as defined in the Intercreditor Agreement) against all or a material portion
of the Collateral (as defined in the Intercreditor Agreement) in which case the
Bank shall thereafter not follow any Instruction originated by the Collateral
Agent unless it receives written notice from the Secured Party as provided in
clause (x) above.

 

4.                                       Exculpation of the Bank.

 

(a)                                  The Bank shall have no liability to the
Debtor, the Secured Party or the Collateral Agent, notwithstanding the Bank’s
agreement in Section 3, if the Bank in its discretion:

 

(i)                                     declines to follow the Initial Instruction
because the Initial Instruction is not in writing in the form set forth on
the Exhibit hereto, does not specify the person or persons or
department at the Bank to receive the Initial Instruction or the address of the
Bank to which the Initial Instruction is to be sent, is not otherwise
completed, or does not have attached to it a copy of this Agreement as fully
executed;

 

(ii)                                  declines to follow the Initial Instruction or
any other instruction originated by the Secured Party or the Collateral Agent,
as the case may be, directing the disposition of the funds in the Deposit
Account:

 

(A) prior to the Outside Time,

 

(B) which requires the disposition of the funds in the Deposit
Account by a method not available to the Debtor under the Deposit Agreement,

 

(C) which in the reasonable opinion of the Bank would result in
the Bank’s failure to comply with any statute, rule or regulation, or any
Order or Process, binding upon the Bank,

 

(D) to the extent requiring the disposition of the funds that are
not currently available in the Deposit Account,

 

(E) which directs the disposition of the funds in the Deposit
Account through the use of a computational or allocational formula or
procedure, or

 

(F) for which the Bank has not received evidence reasonably
required by the Bank as to the authority of the person giving the instruction
to act for the 

 

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Secured
Party or the Collateral Agent, as the case may be, except as provided in Section 4(b);

 

(iii)                               by itself or through any affiliate of the
Bank, consummates or processes any transaction involving the Deposit Account
which the Bank had started to process prior to the Outside Time; or

 

(iv)                              at any time or from time to time after the
Bank becomes aware that the Secured Party or the Collateral Agent, as the case may be,
has sent the Initial Instruction, or any other instruction to the Bank
directing the disposition of the funds in the Deposit Account, but prior to the
Outside Time, ceases complying with any directions from the Debtor, and complies
with the Initial Instruction or such other instruction notwithstanding that:

 

(A) any person or persons or the department at the Bank specified
to receive the Initial Instruction has not actually received it,

 

(B) the Initial Instruction fails to have attached to it a copy of
this Agreement as fully executed, or

 

(C) the Initial Instruction contains minor errors but otherwise
substantially complies with the form of Initial Instruction set forth on
the Exhibit hereto.

 

(b)                                 Clause (F) of Section 4(a)(ii) shall
not apply to the Initial Instruction in so far as the Initial Instruction
eliminates the Debtor’s entitlement to direct the disposition of the funds in
the Deposit Account.

 

(c)                                  The Bank shall have no liability to the
Debtor, the Secured Party or the Collateral Agent under this Agreement:

 

(i)                                     for wrongful dishonor of any Items on account
of its following the Initial Instruction or any other instruction originated by
the Secured Party or the Collateral Agent, as the case may be, directing
disposition of the funds in the Deposit Account,

 

(ii)                                  for any claim, loss, cost or expense
resulting from the Bank’s failure to comply or delay in complying with the
Initial Instruction, any other instruction or any other provision of this
Agreement on account of any computer malfunction, interruption of communication
facilities, labor difficulties, acts of God, war, terrorist attacks, or other
causes, in each case beyond the Bank’s reasonable control,

 

(iii)                               for any other claim, loss, cost or expense
except to the extent directly caused by the gross negligence or willful
misconduct of the Bank, or

 

(iv)                              for any indirect, special, consequential or
punitive damages.

 

(d)                                 The Bank shall have no fiduciary duties under
this Agreement to the Secured Party, the Collateral Agent or the Debtor,
whether as trustee, agent or otherwise. The Bank shall have no duties to the
Secured Party or the Collateral Agent except as expressly set forth in this
Agreement. As to the Debtor, and notwithstanding anything to the contrary in the
Deposit 

 

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Agreement, the Bank shall
have no duty to inquire into or determine (i) the existence or
enforceability of the Debtor’s obligations to the Secured Party or the
Collateral Agent, as applicable, (ii) whether the Debtor’s obligations to
the Secured Party or the Collateral Agent, as applicable, are in default or (iii) whether
the Secured Party or the Collateral Agent, as applicable, is entitled, under
any separate agreement between the Debtor and the Secured Party or the
Collateral Agent, as applicable, to give the Initial Instruction or any other
instruction originated by the Secured Party or the Collateral Agent, as
applicable, directing disposition of the funds in the Deposit Account.

 

5.                                       Indemnification.

 

(a)                                  The Debtor agrees to indemnify the Bank from
and to hold the Bank harmless against any and all claims, losses, and
reasonable costs or expenses (other than to the extent directly caused by the
gross negligence or willful misconduct of the Bank) that the Bank may sustain
or incur arising out of, or otherwise related to, this Agreement.

 

(b)                                 The Secured Party agrees to indemnify the
Bank from and to hold the Bank harmless against (i) any and all claims,
losses, and reasonable costs or expenses (other than to the extent directly
caused by the gross negligence or willful misconduct of Bank) that Bank may sustain
or incur in acting upon the Initial Instruction or any other instruction
originated by the Secured Party directing the disposition of the funds in the
Deposit Account and which the Bank believes in good faith to be from the
Secured Party and (ii) any loss incurred by the Bank in respect of any
Permitted Debit for which there are insufficient funds in the Deposit Account
or for which the Bank otherwise does not have recourse to the Deposit Account
(it being understood, as set forth below, that at no time shall the Collateral
Agent have any obligation under this Article 5).

 

(c)                                  Costs or expenses of a party, for purposes of
Sections 5(a) and (b), include any reasonable out of pocket fees and
expenses incurred or payable by the party.

 

(d)                                 The Secured Party’s liability under clause (ii) of
Section 5(b) shall be limited to the extent of any funds transferred
from the Deposit Account as a result of the Bank’s acting upon instructions
originated by the Secured Party as to the disposition of the funds in the
Deposit Account, plus the amount of any funds which, but for collection
enforcement actions taken by the Secured Party, would have been received by the
Bank, for deposit to the Deposit Account, from the Debtor’s account debtors and
other persons liable on the Secured Party’s collateral. Any demand by the Bank
for indemnification under clause (ii) of Section 5(b) must be
made within the number of days following the termination of this Agreement set
forth on the Schedule hereto.

 

(e)                                  As a condition to the Bank’s making any claim
for indemnity against the Secured Party under Section 5(b), the Bank must
first have made a demand on the Debtor under Section 5(a) with
respect to the claim, and the Debtor shall not have satisfied the claim within
a period of 15 days following the Bank’s demand upon the Debtor. The foregoing
provision shall not apply if the Bank is enjoined, stayed or prohibited by
operation of law from making the demand upon the Debtor.

 

(f)                                    The Collateral Agent shall at no time have
any obligation under this Article 5, even after it has given instructions
with respect to the Deposit Account in accordance with Article 3 hereof.

 

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6.                                       The Bank’s Recourse to the Deposit Account.

 

(a)                                  Except for amounts referred to in Section 6(b) and
so long as this Agreement remains in effect, the Bank hereby (i) subordinates
any security interest, lien or other encumbrance that the Bank may at
any time have against or in the Deposit Account to the Secured Party’s and the
Collateral Agent’s respective security interests therein, and (ii) except
with the Secured Party’s and the Collateral Agent’s prior written consent,
agrees not to exercise any right of recoupment, setoff or debit that the Bank may at
any time have against or in the Deposit Account. The subordination referred to
in the foregoing clause (i) shall not apply to any security interest that
the Bank has in an Item under UCC Article 4 as a collecting bank.

 

(b)                                 Notwithstanding Section 6(a), the Bank
at any time may, and is expressly permitted by this Agreement to, set off and
charge against the Deposit Account the amount of any Permitted Debit,
regardless of any agreement of the Debtor to compensate the Bank by means of
balances in the Deposit Account.

 

7.                                       Representations and Warranties of the Bank.

 

(a)                                  The Bank represents and warrants to the
Secured Party and the Collateral Agent that (i) the Bank is an organization
engaged in the business of banking, (ii) the Bank maintains the Deposit
Account in the ordinary course of the Bank’s business and (iii) the Debtor
is the Bank’s sole customer with respect to the Deposit Account.

 

(b)                                 The Bank represents and warrants to the
Secured Party and the Collateral Agent that the Bank has not entered into any
currently effective agreement with any other person under which the Bank is or
will be obligated to comply with instructions originated by any person other
than the Secured Party, the Collateral Agent or the Debtor directing the
disposition of the funds in the Deposit Account. The Bank covenants with the
Secured Party and the Collateral Agent that the Bank shall not, during the term
of this Agreement, enter into any agreement with any other person under which
the Bank is or will be obligated to comply with instructions originated by any
other person other than the Secured Party, the Collateral Agent or the Debtor
directing the disposition of the funds in the Deposit Account.

 

8.                                       Deposit Account Information; Order or Process.

 

(a)                                  If the Secured Party or the Collateral Agent
so requests (whether as a single or standing request), the Bank shall send to
the Secured Party and/or the Collateral Agent, as applicable, a copy of each
periodic account statement relating to the Deposit Account furnished in the
ordinary course by the Bank to the Debtor. The Bank’s liability for failure to
send any such account statement shall not exceed the cost of the Bank’s
providing the account statement.

 

(b)                                 The Debtor authorizes the Bank to provide to
the Secured Party and to the Collateral Agent any additional information
concerning the Deposit Account that the Bank may agree to provide to the
Secured Party or the Collateral Agent, as applicable, at such party’s request.

 

(c)                                  In the event that an Order or Process is
served upon the Bank by a party other than the Debtor, the Secured Party or the
Collateral Agent, the Bank shall notify the Secured Party and the Collateral
Agent thereof concurrently with any notification of the Order or Process
provided by the Bank to the Debtor. In any event, to the extent not prohibited
by applicable law, 

 

7

 

the Bank shall promptly
notify the Secured Party and the Collateral Agent of the Order or Process
promptly following such time as the person or persons or the department at the
Bank specified to receive the Initial Instruction has been notified of the
Order or Process and the Order or Process has been identified by that person or
persons or department as pertaining to the Deposit Account and the rights of
the Secured Party or the Collateral Agent, as applicable, under this Agreement.

 

9.                                       Termination; Closure of the Deposit Account.

 

(a)                                  This Agreement may not be terminated by
the Debtor without the prior written consent of the Secured Party and the
Collateral Agent, and notice to the Bank given jointly by the Debtor, the
Secured Party and the Collateral Agent.

 

(b)                                 This Agreement may be terminated jointly
by the Secured Party and the Collateral Agent at any time by notice to the Bank
and the Debtor; this Agreement may not be terminated by either the Secured
Party or the Collateral Agent except with the prior written consent of the
other party.

 

(c)                                  This Agreement may be terminated by the
Bank upon 30 days’ prior written notice to the Secured Party, the Collateral
Agent and the Debtor.

 

(d)                                 The termination of this Agreement shall not
affect any rights created or obligations incurred under this Agreement prior to
the termination. The provisions of Articles 4 and 5 shall survive the
termination of this Agreement with respect to any actions taken or omitted
before the termination of this Agreement.

 

(e)                                  The Bank may close the Deposit Account (i) immediately
upon notice to the Secured Party, the Collateral Agent and the Debtor in the
event of (x) the Bank’s reasonable suspicion that the Deposit Account is being
used for a fraudulent or illegal purpose or (y) receipt of a Collateral Agent
Notice, (ii) upon five Business Days’ prior notice to the Secured Party,
the Collateral Agent and the Debtor in the event that the Debtor is in material
breach of the Deposit Agreement or this Agreement and (iii) otherwise upon
30 days’ prior notice to the Secured Party, the Collateral Agent and the
Debtor.

 

(f)                                    Upon termination of this Agreement or the
closure of the Deposit Account, the Bank shall remit to, or hold at the
direction of, the Secured Party (or, if the Bank shall have received a
Collateral Agent Notice, not more than 15 days following the receipt of such
Collateral Agent Notice, the Collateral Agent), any funds then in the Deposit
Account. The Collateral Agent shall be entitled to receive direction from the
Debtor to establish any account that may be necessary to receive the funds
in the Deposit Account on behalf of the Collateral Agent.

 

10.                                 Communications.

 

(a)                                  All notices, instructions and other
communications under this Agreement shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail,
or sent by facsimile. to the party addressee. If the Schedule permits
a writing to include an electronic record, a notice, instruction or other
communication under this Agreement, other than the Initial Instruction, may be
sent by email.

 

(b)                                 For a notice, instruction or other
communication under this Agreement to be effective, it must be delivered or
sent, (i) in the case of the Initial Instruction, to the Bank at the 

 

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address of the Bank and to
the person or persons or department indicated on the Exhibit hereto
and (ii) in other cases, to the party to receive the notice, instruction
or other communication at its address indicated below the party’s signature to
this Agreement, in each case subject to any change in address provided in Section 10(c).

 

(c)                                  The Bank may at any time communicate to
the Secured Party and the Collateral Agent a change in the person or persons or
department to whom or which the Initial Instruction is required to be
addressed. and any party may communicate to the other parties a change in
its address to which notices, instructions and other communications under this
Agreement shall be sent.

 

(d)                                 All notices, instructions and other
communications under this Agreement given in accordance with the provisions of
this Agreement shall be effective when received.

 

11.                                 Successors and Assigns.

 

(a)                                  This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective successors and permitted
assigns or other transferees. Any voluntary transfer of a party’s rights or
duties under this Agreement shall be permitted as provided in this Section.
However, any other transfer by a party of its rights and obligations under this
Agreement shall be void without the written consent of the other parties.

 

(b)                                 The Debtor may transfer any of its
rights or duties under this Agreement only with the prior written consent of
the Secured Party, the Collateral Agent and the Bank.

 

(c)                                  The Bank may transfer its rights and
duties under this Agreement to a transferee to which, whether by contract or
operation of law, the Bank transfers substantially all of its rights and duties
under the Deposit Agreement. No such transfer of rights or duties by the Bank
shall be binding upon the Secured Party, the Collateral Agent or the Debtor
unless and until the Bank or the transferee has notified the Secured Party, the
Collateral Agent and the Debtor of the transfer. The notification shall include
the identity of the transferee and the transferee’s address for purposes of
providing the Initial Instruction and other communications under this Agreement
and shall state that the transferee is entitled to the benefit of the Bank’s
rights and has assumed all of the Bank’s duties under this Agreement. If
requested by the Secured Party, the Collateral Agent or the Debtor, the Bank or
the transferee shall provide reasonable proof of the transfer. At such time as
the transfer has become binding on the Secured Party, the Collateral Agent and
the Debtor, the transferring Bank shall be relieved of its obligations under
this Agreement accruing from and after that time.

 

(d)                                 Either the Secured Party or the Collateral may transfer
its rights and duties under this Agreement to (i) a transferee to which,
whether by contract or operation of law, the Secured Party or the Collateral
Agent, as applicable, transfers substantially all of its rights and duties
under the financing or other arrangements between the Secured Party or the
Collateral Agent, as applicable, and the Debtor for which the Deposit Account
acts as collateral security or (ii) if the Secured Party or the Collateral
Agent is acting as a trustee, indenture trustee, agent, collateral agent, or
other representative in whose favor a security interest is created or provided
for, a transferee which is a successor trustee, indenture trustee, agent,
collateral agent, or other representative. Notwithstanding the foregoing, in no
event shall the duty to indemnify under Article 5 be assumed by any
successor trustee, indenture trustee, agent, collateral agent, or other
representative succeeding the Collateral Agent. No such transfer of rights or
duties by the 

 

9

 

Secured Party or the
Collateral Agent, as applicable, shall be binding upon the Secured Party, the
Collateral Agent, the Bank or the Debtor unless and until the Secured Party or
the Collateral Agent, as applicable, or the transferee has notified the
non-transferring Secured Party or Collateral Agent, as applicable, and the
Debtor of the transfer and the Bank has consented in writing to the transfer,
such consent not to be unreasonably withheld or delayed. The notification shall
include the identity of the transferee and the transferee’s address for
purposes of providing communications under this Agreement and shall state that
the transferee is entitled to the benefit of the Secured Party’s or the
Collateral Agent’s rights, as applicable, and has assumed all of the Secured
Party’s or the Collateral Agent’s duties, as applicable, under this Agreement.
If requested by the Bank, the Debtor or the non-transferring Secured Party or
Collateral Agent, the Secured Party or the Collateral Agent, as applicable, or
the transferee shall provide reasonable proof of the transfer. At such time as
the transfer has become binding on the Bank, the Debtor and the
non-transferring Secured Party or Collateral Agent, the transferring Secured
Party or Collateral Agent, as applicable, shall be relieved of its obligations
under this Agreement accruing from and after that time.

 

12.                                 Entire Agreement; Relation to Other
Agreements.

 

(a)                                  This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all previous and contemporaneous negotiations, understandings and
agreements in respect thereof, all of which have become merged and finally
integrated into this Agreement.

 

(b)                                 In the event of any conflict between this
Agreement and the Deposit Agreement or any other agreement between the Bank and
the Debtor relating to the Deposit Account, the terms of this Agreement shall
control. However, this Agreement shall not derogate from any claim or defense
which the Bank may have against the Debtor under the Deposit Agreement or
other agreement.

 

(c)                                  This Agreement does not amend or otherwise
modify any of the agreements between or among the Debtor, the Secured Party and
the Collateral Agent or provide any rights for the Debtor to direct the
disposition of the funds in the Deposit Account in contravention of any of the
agreements between or among the Debtor, the Secured Party and the Collateral
Agent.

 

13.                                 Governing Law, Depositary Bank’s
Jurisdiction; Consent to Jurisdiction and Waiver of Jury Trial.

 

(a)                                  Except as otherwise required by Article 9
of the UCC, this Agreement shall be governed by and construed in accordance
with the laws of the State without giving effect to any conflict of laws which
would require the application of the law other than the State.

 

(b)                                 The Deposit Agreement is hereby amended to
provide that, for purposes of part 3 of Article 9 of the UCC, the
Bank’s jurisdiction is the jurisdiction set forth on the Schedule hereto.

 

(c)                                  Each party hereto agrees that any suit for
the enforcement of this Agreement may be brought in the courts of the
State or any federal court sitting in the State and consents to the
non-exclusive jurisdiction of such court. Each party hereto waives any
objection that it may now or hereafter have to the venue of any such suit
or any such court or that such suit is brought in an inconvenient court.

 

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(d)                                 TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, CLAIM OR PROCEEDING (INCLUDING ANY COUNTERCLAIM) OF ANY TYPE ARISING
OUT OF OR DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE BREACH, PERFORMANCE OR ENFORCEMENT OF SUCH RIGHTS
OR OBLIGATIONS.

 

14.                                 Miscellaneous.

 

(a)                                  Section headings in this Agreement are
for convenience of reference only, are not part of this Agreement, and
shall not affect the construction of, or be taken into consideration in
interpreting, this Agreement.

 

(b)                                 No amendment or modification of this
Agreement or waiver of any right hereunder shall be binding on any party hereto
unless it is in writing and is signed by each of the parties affected thereby.

 

(c)                                  In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby, it being understood that the invalidity of an affected
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction.

 

(d)                                 Each of this Agreement and the Schedule may be
executed in multiple counterparts, and all of such counterparts taken together
shall constitute one and the same instrument. Each fully executed counterpart of
this Agreement or the Schedule shall be a duplicate original.
Transmission by facsimile of an executed counterpart of this Agreement or
the Schedule shall constitute due and sufficient delivery of such
counterpart.

 

(e)                                  The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event that an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.

 

[remainder of page intentionally left blank]

 

11

 

IN
WITNESS WHEREOF, the parties hereto 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

Address:

 

Attention:

Facsimile Number:

Electronic mail address (to
be used if the Schedule so permits):

 

HSBC BANK USA, NATIONAL
ASSOCIATION, as Agent

 

 

	
  By:

  	
  /s/ Douglas Talaterro

  	
   

  

Name: Douglas Talaterro

Title: Senior Vice President

Address:

 

Attention:

Facsimile Number:

Electronic mail address (to
be used if the Schedule so permits):

 

HSBC BANK USA, NATIONAL
ASSOCIATION

 

 

	
  By:

  	
  /s/ Lisa H. Augustus

  	
   

  

Name: Lisa H. Augustus

Title: Vice President

Address:

 

Attention:

Facsimile Number:

Electronic mail address (to
be used if the Schedule so permits):

 

 

THE BANK OF NEW YORK, as
Collateral Agent

 

 

	
  By:

  	
  /s/ Beata Hryniewicka

  	
   

  

Name: Beata Hryniewicka

Title: Assistant Treasurer

Address:        101
Barclay St. 8W

New York, New York 10286

 

Attention:

Facsimile Number:

Electronic mail address (to
be used if the Schedule so permitsExhibit 10.9

 

TRADEMARK
COLLATERAL SECURITY AGREEMENT

 

THIS AGREEMENT is made on
the 20 day of June, 2005, by and between RAFAELLA APPAREL GROUP, INC., a
Delaware corporation having a mailing address at 1411 Broadway, New York, New
York 10018 (“Borrower”) and HSBC BANK USA, NATIONAL ASSOCIATION, as agent for
Lenders (as defined below) having a mailing address at 452 Fifth Avenue, New
York, New York 10018 (“Agent”).

 

BACKGROUND

 

Borrower and one or more
other companies (collectively with Borrower, the “Company”) have entered into a
Financing Agreement of even date herewith (as amended, modified, restated or
supplemented from time to time, the “Financing Agreement”) with the various
financial institutions named therein or which hereafter become a party thereto
(each a “Lender” and collectively, “Lenders”) and Agent providing for financial
accommodations by Agent to Company. In order to induce Agent and Lenders to
execute and deliver the Financing Agreement, Borrower agreed to execute and
deliver to Agent for its benefit and for the ratable benefit of Lenders this
Trademark Collateral Security Agreement (as amended, modified, restated or
supplemented from time to time, this “Agreement”).

 

NOW, THEREFORE, in
consideration of the premises, Borrower and Agent hereby agree as follows:

 

1.         Defined Terms. All
capitalized terms used herein which are not otherwise defined herein shall have
the meanings given to them in the Financing Agreement and the following terms
shall have the following meanings, unless the context otherwise requires:

 

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

 

“Collateral” shall have
the meaning assigned to it in Section 2 of this Security Agreement.

 

“Licenses” shall mean the
written trademark license agreements of Borrower designated on Schedule I
hereto, as any of the same may from time to time be amended, modified or
supplemented.

 

“Proceeds” shall have the
meaning assigned to it under Section 9-306 of the Code, and in any event, shall
include, but not be limited to, (i) any and all proceeds of any insurance,
indemnity, warranty or guarantee payable to Borrower from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to Borrower from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any governmental body, authority, bureau or
agency (or any person acting under color of governmental authority), and (iii)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.

 

 

“Trademarks” shall mean
the registered trademarks and pending applications shown in the attached Schedule
A, and those trademarks which are hereafter adopted or acquired by
Borrower, and all right, title and interest therein and thereto, and all
registrations, applications, and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof, or any foreign country, all whether now owned or
hereafter acquired by Borrower.

 

2.         Grant of Security
Interest. As collateral security for the prompt payment of the Obligations,
Borrower hereby grants and conveys to Agent for its benefit and for the ratable
benefit of Lenders a security interest in and to (a) the entire right, title
and interest of Borrower in and to the Trademarks, including the registrations
and applications appurtenant thereto, listed in Schedule A hereto (as
the same may be amended pursuant hereto from time to time), and in and to any
and all trademarks, and registrations and applications appurtenant thereto,
hereafter acquired or filed by Borrower, including without limitation all
renewals thereof, all proceeds of infringement suits, the rights to sue for
past, present and future infringements and all rights corresponding thereto and
the goodwill of the business to which each of the Trademarks relates and (b)
all of Borrower’s right, title and interest in, to and under the following:

 

(i)         all Licenses;

 

(ii)        all Receivables, contract
rights and General Intangibles arising under or relating to each and every
License (including, without limitation, (A) all moneys due and to become due
under any License, (B) any damages arising out of or for breach or default in
respect of any such License, (C) all other amounts from time to time paid or
payable under or in connection with any such License, and (D) the right of
Borrower to terminate any such License or to perform and to exercise all
remedies thereunder); and,

 

(iii)       to the extent not otherwise
included, all Proceeds and products of any or all of the foregoing. All of the
property referred to in this paragraph 2 is hereafter collectively called the “Collateral.”

 

3.         Representations and
Warranties. Borrower covenants and warrants that:

 

(a)       The Trademarks are
subsisting and have not been adjudged invalid or unenforceable in whole or in
part;

 

(b)       Except as set forth on Schedule
A, to the best of Borrower’s knowledge, each of the Trademarks is valid and
enforceable;

 

(c)       There is no outstanding
claim that the use of any of the Trademarks violates the rights of any third
person;

 

(d)       To the best of Borrower’s
knowledge, Borrower is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Trademarks, free
and clear of any liens, charges and encumbrances (including without limitation
pledges, assignments, licenses, registered user agreements and covenants by
Borrower not to sue

 

 

third persons), except for the Licenses or other agreements disclosed
on Schedule I attached hereto;

 

(e)       Borrower has the right to enter
into this Agreement and perform its terms;

 

(f)        Borrower has used, and
will continue to use for the duration of this Agreement, proper statutory
notice, where appropriate, in connection with its use of the material
Trademarks; and

 

(g)       Borrower has used, and will
continue to use for the duration of this Agreement, consistent standards of
quality in its manufacture of products sold under the Trademarks.

 

4.         New Trademarks.

 

(a)       If, before the Obligations
shall have been irrevocably paid in full, Borrower shall obtain rights to any
new Trademarks, or become entitled to the benefit of any trademark application
or trademark for any renewal or extension of any Trademark, the provisions of
paragraph 2 shall automatically apply thereto and Borrower shall give Agent
prompt written notice thereof.

 

(b)       Borrower grants Agent a
power-of-attorney, irrevocable so long as the Financing Agreement is in
existence, to modify this Agreement by amending Schedule A to include
any future trademarks, including trademark registrations or applications
appurtenant thereto covered by this Agreement.

 

5.         Covenants.
Borrower covenants and agrees with Agent that from and after the date of this
Agreement and until the Obligations are fully satisfied:

 

(a)       Further Documentation;
Pledge of Instruments. Upon the reasonable written request of Agent,
Borrower will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as Agent may reasonably
deem desirable in obtaining the full benefits of this Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Code with respect to the
liens and security interests granted hereby. Borrower also hereby authorizes
Agent to file any such financing or continuation statement without the
signature of Borrower to the extent permitted by applicable law. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note or other instrument, such note or instrument
shall be immediately pledged to Agent hereunder, duly endorsed in a manner
satisfactory to Agent.

 

(b)       Maintenance of
Trademarks. Borrower will not do any act, or omit to do any act, whereby the
Trademarks or any registration or application appurtenant thereto, are
reasonably likely to become abandoned, invalidated, unenforceable, avoided,
avoidable, or will otherwise diminish in value, and shall notify Agent
immediately if it knows of any reason or has reason to know of any ground under
which this result may occur. Borrower shall take commercially appropriate
action at its expense intended to halt the infringement of the

 

 

Trademarks and shall properly exercise its duty to control the nature and
quality of the goods offered by any licensees in connection with the Licenses. Notwithstanding
anything herein to the contrary, so long as no Event of Default has occurred
and is continuing, the Borrower shall not have an obligation to use or to
maintain any Trademark, (A) that
relates solely to any product, brand or work that has been, or is in the process of being, discontinued, abandoned
or terminated, (B) that is being replaced with a Trademark substantially
similar to the Trademark that may be abandoned or otherwise become invalid, so
long as the failure to use or
maintain such Trademark does not materially adversely affect the validity of
such replacement Trademark, and so long as such replacement Trademark is
subject to the Lien and security interest created by this Agreement, (C) that
is substantially the same as another Trademark that is in full force, so long as the failure to use or maintain
such Trademark does not materially adversely affect the validity of such other
Trademark, and so long as such other Trademark is subject to the Lien and security
interest created by this Agreement or (D) that is or becomes the subject of any
formal or informal dispute and/or any administrative or legal proceeding
(whether ex parte or inter partes)
or other circumstances such that the Borrower, using good faith business
judgment, reasonably determines it to be imprudent to maintain or continue use
of such Trademark.

 

            (c)       Indemnification.
(A) Borrower assumes all responsibility and liability arising from the use of
the Trademarks, and Borrower hereby indemnifies and holds Agent and Lenders harmless from and against any claim,
suit, loss, damage or reasonable expense (including reasonable attorneys' fees)
arising out of Borrower's operations of its business from the use of the
Trademarks, except for Agent's gross negligence and willful misconduct (B) In
any suit, proceeding or action brought by Agent or any Lender under any License
for any sum owing thereunder, or to enforce any provisions of such License,
Borrower will indemnify and keep Agent and Lenders harmless from and against
all reasonable expense, loss or damage suffered by reason of any defense, set
off, counterclaim, recoupment or reduction or liability whatsoever of the
obligee thereunder, arising out of a breach of Borrower of any obligation
thereunder or arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such obligee or its successors from Borrower, and all
such obligations of Borrower shall be and remain enforceable against and only
against Borrower and shall not be enforceable against Agent or any Lender.

 

(d)       Limitation of Liens on Collateral.
Borrower will not create, permit or suffer to exist, and will defend the
Collateral against and take such
other action as is necessary to remove any lien, security interest,
encumbrance, claim or right, in or to the Collateral, and will defend the right,
title and interest of Agent in and to any of Borrower's rights under any
License and to the Proceeds thereof
against the claims and demands of all persons whomever.

 

(e)       Limitations on Modifications of
Licenses. Borrower will not amend, modify, terminate or waive any material
provision of any License in any manner which would reasonably be expected to
materially adversely affect the value of such License as Collateral without the approval of Agent, not to be
unreasonably withheld or delayed.

 

(f)        Notices. Borrower will advise
Agent promptly, in reasonable detail, (i) of any lien or claim made or asserted
against any of the Collateral, (ii) of any material change in the composition
of the Collateral and (iii) of the occurrence of any other event which would
have a material adverse effect on the value of any of the Collateral or on the
security

 

 

interests created hereunder.

 

(g)       Limitation on Further Uses of
Trademarks. Borrower will not assign, sell, mortgage, lease, transfer,
pledge, hypothecate, grant a security interest in or lien upon, encumber, grant
an exclusive or non-exclusive license, or otherwise dispose of any of the
Collateral, without prior written consent of Agent not to be unreasonably
withheld or delayed; provided that Borrower can grant an exclusive or
non-exclusive license in the ordinary course of business upon written notice to
Agent.

 

(h)       Exercise of Rights: Delivery of
Notices. Borrower shall (i) exercise promptly and diligently each and every
material right which it may have under each License (other than any right of
termination) and (ii) deliver to Agent a copy of each material demand, notice
or document sent or received by it relating in any way to any License or Trademark.

 

6.         Agent's Appointment as Attorney-in-Fact.

 

(a)       Borrower hereby irrevocably constitutes
and appoints Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Borrower and in the name of Borrower
or in its own name, from time to time in Agent's discretion, for the purposes
of carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and,
without limiting the generality of the foregoing, hereby gives Agent the power
and right, on behalf of Borrower, to do the following:

 

(i)         Upon the occurrence and continuance of
an Event of Default, to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due under any License and, in
the name of Borrower or its own name or otherwise, to take possession of and
endorse and collect any checks, drafts, notes, acceptances or other instruments
for the payment of moneys due under any License and to file any claim or to take
any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by Agent for the purpose of collecting any and all such
moneys due under any License whenever payable;

 

(ii)        To pay or discharge taxes, liens,
security interests or other encumbrances levied or placed on or threatened
against the Collateral, to effect any repairs or any insurance called for by the terms of this Agreement and to pay all
or any part of the premiums therefore and the costs thereof; and

 

(iii)       Upon the occurrence and continuance of an
Event of Default, (A) to direct any party liable for any payment under any of
the Licenses to make payment of any and all moneys due and to become due
thereunder directly to Agent or as Agent shall direct; (B) to receive payment
of and receipt for any and all money,
claims and other amounts due and to become due at any time in respect of or arising out of any Collateral, (C) to commence
and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral; (D) to defend any suit, action or proceeding brought
against 

 

 

Borrower with respect to any Collateral; (E) to settle, compromise, or
adjust any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as Agent may deem appropriate;
and (F) generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Agent were the absolute owner thereof for all purposes, and to do, at Agent’s
option all acts and things which Agent deems necessary to protect, preserve or
realize upon the Collateral and Agent’s security interest therein, in order to
effect the intent of this Agreement, all as fully and effectively as Borrower
might do.

 

(b)       This power of attorney is a
power coupled with an interest and shall be irrevocable. Notwithstanding the
foregoing, Borrower further agrees to execute any additional documents which
Agent may reasonably require in order to confirm this power of attorney, or
which Agent may reasonably deem necessary to enforce any of its rights
contained in this Agreement.

 

(c)       The powers conferred on
Agent hereunder are solely to protect its interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its officers, directors,
employees or agents shall be responsible to Borrower for any act or failure to
act, except for its own gross (not mere) negligence or willful misconduct.

 

(d)       Borrower also authorizes
Agent to execute, in connection with the sale provided for in paragraph 10(b)
of this Agreement, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.

 

7.         Execution of Power of
Attorney. Concurrently with the execution and delivery hereof, Borrower
shall execute and deliver to Agent, in the form of Exhibit I hereto, ten
(10) originals of a Power of Attorney for the implementation of the assignment,
sale or other disposal of the Trademarks pursuant to paragraph 7 hereof.

 

8.         Performance by Agent
of Borrower’s Obligations. If Borrower fails to perform or comply with any
of its agreements contained herein and Agent, as provided for by the terms of
this Agreement, shall itself perform or comply, or otherwise cause performance
or compliance, with such agreement, the reasonable expenses of Agent incurred
in connection with such performance or compliance shall be payable by Borrower
to Agent on demand and shall constitute Obligations secured hereby.

 

9.         Remedies, Rights Upon
Event of Default.

 

(a)       If an Event of Default
shall occur and be continuing:

 

(i)         All payments received by
Borrower under or in connection with any of the Collateral shall be held by
Borrower in trust for Agent and Lenders, shall be segregated from other funds of
Borrower and shall forthwith upon receipt by Borrower, be turned over to Agent,
in the same form as received by Borrower (duly indorsed by Borrower to Agent,
if required); and

 

 

(ii)        Any and all such payments so received by
Agent (whether from Borrower or otherwise) may, in the sole discretion of
Agent, be held by Agent as collateral security for, and/or then or at any time
thereafter applied in whole or in part by Agent against all or any part of the
Obligations in such order as Agent
shall elect. Any balance of such payments held by Agent and remaining after
payment in full of all the Obligations shall be paid over to Borrower or to
whomsoever may be lawfully entitled to receive the same.

 

(b)       If any Event of Default shall occur and
be continuing, Agent and Lenders may exercise in addition to all other rights
and remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the Code. Borrower shall remain liable for
any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Agent and Lenders are entitled.
Borrower shall also be liable for the reasonable fees of any attorneys employed
by Agent and Lenders to collect any such deficiency and also as to any reasonable attorney's fees
incurred by Agent and Lenders with respect to the collection of any of the
Obligations and the enforcement of any of Agent's respective rights hereunder.

 

10.       Termination. At such time as the Obligations are irrevocably
satisfied in full and the Financing Agreement is irrevocably terminated, this
Agreement shall terminate and Agent shall execute and deliver to Borrower all such releases, deeds and other
instruments as may be necessary
or proper to re-vest in Borrower full title to the Trademarks, subject to any disposition
thereof which may have been made by Agent pursuant hereto.

 

11.       Notices. Any notice to Agent or
Borrower under this Agreement shall be given in the manner and to the parties
designated in the Financing Agreement.

 

12.       No Waiver. No course of dealing
between Borrower, Agent or any Lender, nor any failure to exercise, nor any
delay in exercising, on the part of Agent or any Lender, any right, power or
privilege hereunder or under the Financing Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.

 

13.       Cumulative Remedies. All of
Agent's and Lenders' rights and remedies with respect to the Collateral,
whether established hereby or by the Financing Agreement, or by any other
agreements or by law, shall be cumulative and may be exercised singularly or
concurrently.

 

14.       Severability. The provisions of
this Agreement are severable, and if any clause or provision shall be held
invalid and unenforceable in whole or in part in any jurisdiction, then such invalidity
or unenforceability shall affect only such clause or provision, or part
thereof, in such jurisdiction, and shall not in any manner affect such clause
or provision in any other jurisdiction, or any other clause or provision of
this Agreement in any jurisdiction.

 

15.       No Modification Except in Writing.
Except as provided in paragraphs 5 and 7, no amendment or waiver of any
provision of this Agreement shall be effective unless the same shall be in
writing executed by the parties hereto.

 

 

16.       Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of Borrower and
Agent, all future holders of the Obligations and their respective successors
and assigns, except that Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of Agent.

 

17.       Governing Law. This
Agreement and the rights and obligations of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of New York applicable
to agreements made and wholly performed therein (without giving effect to
principles of conflicts of law).

 

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

 

 

19.       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.

 

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

 

	
  WITNESS:

  	
   

  	
  RAFAELLA APPAREL GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn Palmer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Glenn Palmer

  
	
   

  	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  HSBC BANK USA, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lisa H. Augustus

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Lisa H. Augustus

  
	
   

  	
   

  	
   

  	
  Title: Vice President

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