Document:

Exhibit 10.1

 

EXECUTION COPY

 

LOGISTICS AND DISTRIBUTION SERVICES AGREEMENT

 

This Agreement, along with
each Annex attached hereto (collectively, the “Agreement”) is made as of this
17th day of June, 2010 by and between IDS USA Inc., a Delaware
corporation, having offices at 2 Panasonic Way, Secaucus, New Jersey 07096
(hereinafter referred to as “IDS”) and Rafaella Apparel Group, Inc., a
Delaware corporation, and its subsidiaries, having offices at 1411 Broadway,
New York, New York 10018 (hereinafter referred to as the “Client”).

 

WHEREAS, IDS
maintains and operates warehousing and distribution facilities in New Jersey,
California and Florida and additionally provides logistic services; and

 

WHEREAS, the Client
wishes to retain IDS to provide certain warehousing, distribution and logistic
services in New Jersey at IDS’s warehouses located at the two (2) addresses
listed in Section 1.1.1 on Annex 2 (such two (2) locations
hereinafter collectively referred to as the “Warehouse”, which defined term
shall also automatically be deemed to include the additional warehouse
locations set forth in Section 1.1.2 and Section 1.1.3 of Annex 2
in the event and to the extent such warehouse locations are utilized during the
term of this Agreement) in accordance with the terms and conditions of this
Agreement (hereinafter referred to as the “Services”).

 

NOW THEREFORE, in
consideration of the mutual covenants and the mutual agreements set forth
herein, the parties agree as follows:

 

1.     SCOPE OF
SERVICES.

 

The
Client shall use IDS as its exclusive provider in New Jersey of the Services,
and in connection therewith, IDS shall provide the Services set forth on Annex 2
in accordance with the terms and conditions of this Agreement, which Services
shall include, among other things, the time frames for shipment of the Client’s
merchandise upon IDS’s receipt of same. 
The Client agrees that IDS will provide the Services as set forth in Annex
2 and for 

 

 

agreed
to volumes which will be no less than the annual minimum volume of units set
forth on Annex 2 attached hereto. 
In addition to providing the Services, IDS may also provide certain
additional services from time to time, and upon the terms and conditions as may
be agreed upon in writing by the parties.

 

The
Client acknowledges that IDS intends to invest in its facilities,
infrastructure and personnel in order to increase its capability to provide
operations to service the Client in New Jersey, and as a result thereof, the
Client acknowledges that it may consider evaluating expanding the Client’s
relationship with IDS beyond New Jersey; provided, however, that it is
expressly acknowledged and agreed that the Client shall not be obligated in any
fashion whatsoever to expand its relationship beyond the scope of this
Agreement, and its decision to do so, for any reason, shall have no affect on
this Agreement.  In the event and to the
extent that Client wishes to expand the scope or territory of the Services to
be provided by IDS, any such expansion of Services, including but not limited to
any trucking services (which services are not currently included in the
Services), shall be subject to a separate agreement upon terms and conditions
to be mutually agreed upon by the Client and IDS.

 

2.     TERM.

 

This Agreement shall be for
a term commencing on the date first set forth above and shall continue for a
period of thirty-six (36) consecutive months, unless earlier terminated in
accordance with Section 6 of this Agreement.  Should each of the parties desire to renew
this Agreement, they shall use commercially reasonable efforts to agree upon
the renewal terms no later than six (6) months prior to the expiration of
the term hereof.

 

3.     COMPENSATION
AND PAYMENT TERMS

 

3.1.    COMPENSATION
FOR TRANSITION.  IDS
acknowledges that the Client will incur significant termination and transition
costs in connection with the termination of its 

 

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current
warehouse and distribution operations so as to enable the Client to enter into
this Agreement.  Accordingly, to
compensate Client for such termination and transition costs, simultaneously
upon the mutual execution hereof, IDS shall deliver to Client that certain
transition payment set forth on Annex 1 attached hereto (the “Transition
Payment”).  The Transition Payment shall
be deemed to cover a portion of the Client’s costs associated with the entering
into of this Agreement, including but not limited to the transport of product
from the existing facility to IDS’s facility, dismantling of the equipment in
the existing facility (the “Equipment”), severance payments to Client’s
employees, any IT costs related to the interface or integration to IDS WMS
system (EXceed) and the write-off of asset value of equipment no longer
required by Client.  Client agrees and
acknowledges that IDS may, at its sole discretion, take possession of any
removed Equipment from the Client’s present facility for no additional
charge.  The Transition Payment shall be
made by IDS to the Client pursuant to separate wire transfer instructions delivered
by Client to IDS and such Transition Payment shall, in all circumstances, be
irrevocable and non-refundable.

 

3.2.    COMPENSATION
FOR IDS.  IDS will
provide to the Client the Services at the specified rates agreed and set forth
on Annex 3 to this Agreement (collectively, the “Rates”), subject
to the provisions of Section 3.3, Section 3.4 and Section 3.5
below.

 

3.3.    COST
ADJUSTMENTS.  The charge
to Client for costs of materials and supplies purchased by IDS at Client’s
direction will be adjusted quarterly (upwards or downwards) based upon
(i) the actual dollar amount by which such materials and supplies have
increased or decreased, plus (ii) three percent (3%) of the new increased
or decreased dollar amount.  By way of
example, in the event that materials or supplies that initially cost $100
increased by $10, then the new cost of such materials or supplies 

 

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would
be $113.30.  Similarly, if such materials
or supplies that initially cost $100 decreased by $10, then the new cost for
such materials or supplies would be $92.70.

 

3.4.    MINIMUM
WAGE ADJUSTMENT.  Notwithstanding anything set forth herein to the
contrary, in the event the Federal and/or State’s minimum wage laws applicable
to IDS are increased during the term of this Agreement resulting in an increase
in the labor costs of IDS, then in such event the Rates shall be increased
accordingly; provided, however, that IDS provides notice (which notice may be
in the form of e-mail notice) within thirty (30) days prior to the time that
IDS institutes such increase, which notice shall include evidence of such
minimum wage increase.

 

3.5.    RATE
REVIEW.  Notwithstanding Clauses 3.3 and
3.4 herein, IDS shall reserve the right to increase the Rates upon thirty
(30) days prior written notice to the Client in the event that during the term
hereof IDS experiences an increase in (i) the real estate taxes or real
estate assessments on the property on which the Warehouse is presently located
or (ii) utility charges applicable to the Warehouse, and such increases in
immediately preceding subclauses (i) or (ii) are outside of the
direct control of IDS and represent an increase in such real estate taxes, real
estate assessment or utility charges in excess of ten percent (10%) of such
taxes, assessments or charges as then currently in effect (the “10% Increase”).  In such event, Client agrees that Client’s
Rates shall be increased by its pro rata share of fifty percent (50%) of any
such increase in real estate taxes, real estate assessment and/or utility
charges, as the case may be, in excess of the 10% Increase, such pro rata
amount to be based upon the then applicable percentage of Client’s usage of the
Warehouse.

 

3.6.    PAYMENT
TERMS.  All invoices for Services
rendered and not disputed will be due and payable thirty (30) days after
receipt of such invoice.  In the event
the Client wishes 

 

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to
dispute any invoice it shall give written notice thereof to IDS within thirty
(30) days of the receipt of said invoice (the “Dispute Notice”), in which event
the undisputed portion of such invoice shall be due and payable and the dispute
portion (the “Disputed Amount”) shall not be due and payable until a final
determination on the Disputed Amount is made based upon (i) mutual
agreement or (ii) if no mutual agreement can be reached, in accordance
with Section 19 hereof.

 

3.7.    RATE
ADJUSTMENT DISPUTE.  Any dispute
between the parties with respect to any proposed Rate adjustment in accordance
with Section 3.3, Section 3.4 or Section 3.5
above, if not resolved by the mutual agreement of the parties, shall be settled
in accordance with the provisions of Section 19 below.

 

3.8.    LATE
PAYMENT CHARGE.  IDS shall be
entitled to impose a late interest charge if the Client fails to pay any amount
invoiced by IDS within thirty (30) days after such payment was due and payable,
provided that if the Client has sent a Dispute Notice, such late payment shall
only be imposed on the Disputed Amount if it is later determined that the full
Disputed Amount was improperly withheld by Client.  The interest rate shall be 1% per month in
respect of any overdue period until date of payment.

 

4.     MINIMUM
HANDLING CHARGE

 

4.1.    Both parties agree to the
initial annual minimum volume of units as set forth on Annex 2 with
respect to Client’s 2011 “fiscal year.” 
As used herein, the term “fiscal year” shall mean the twelve (12) month
period commencing on July 1st and ending on June 30th.

 

4.2.    The Client shall provide IDS
with its then current volume projections for each fiscal year during the term
hereof, no later than August 15th of each such fiscal year.

 

4.3.    The minimum annual volume of
units for any fiscal year following the fiscal year 2011 shall be calculated
based upon the formula utilized for the initial annual minimum, i.e. 

 

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65%
of Client’s reasonable, estimated forecast for the applicable fiscal year.

 

5.     EMPLOYEES
AND RESPONSIBILITY.

 

5.1.    Employees.  Upon the execution hereof, IDS agrees
that it shall offer employment to and use its best efforts to hire those former
employees of the Client that meet the requirements of the business based on the
shared interests of Client and IDS and at the salaries, and upon such
other terms and conditions as mutually agreed upon and set forth on Schedule
A attached to Annex 2. 
 (Current employees of Client who accept offers from
and commence work at IDS to be referred to herein as the “Hired
Employees.”)  Client agrees that IDS shall have no liability or
obligation for any claim made against IDS by or on behalf of the Hired
Employees relating to or arising out of the Hired Employees’ employment with
or termination from the Client and that Client shall indemnify,
defend and hold harmless IDS from and against any such
claim.   IDS agrees that Client shall have no
liability or obligation for any claim made against Client by or on behalf
of the Hired Employees relating to or arising out of the Hired Employee’s
employment with or termination from IDS and that IDS shall
indemnify, defend and hold harmless Client from and against any such
claim.

 

5.2.    Quarterly Meeting.  There shall be a scheduled quarterly meeting
of the management representatives of the Client and IDS, at a mutually convenient
time, to review and discuss performance, distribution allocation, and any other
relevant issues with respect to this Agreement. 
A representative from the Client and IDS shall be jointly responsible
for preparing an agenda for, and the scheduling of, each quarterly meeting.

 

5.3.    Customer Deductions.  At the Client’s reasonable request, IDS
will promptly and diligently assist the Client, in good faith, in researching
and providing sufficient documentation to dispute any customer claims that are
related to the Services provided 

 

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hereunder.

 

5.4.    Client’s instructions.  The Client will be responsible to provide
reasonably detailed special shipping instructions on the pick tickets and
updates. Shipping documents must provide reasonably specific routing
requirements in accordance with industry norms, such as weight limits and
traffic requirements, and any special service requirements, such as ticketing
or hanger requirements.  All special
handling requirements must be provided by the Client to IDS in writing or
pursuant to the electronic data interchange system.

 

6.     TERMINATION.

 

6.1.    Notwithstanding anything set
forth herein to the contrary, this Agreement may be terminated:

 

6.1.1.  by either party
in the event that any party hereto shall make a general assignment for the
benefit of creditors, or any proceeding shall be instituted by or against any
party seeking to adjudicate it bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or for substantially all of its property (and, in the case of any such
proceeding instituted against it (but not instituted by it) that is being
diligently contested by it in good faith, either such proceeding shall remain
undismissed or unstayed for a period of 30 days) or any of the actions sought
in such proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or any substantial part of its property) shall occur,
or any party shall take any 

 

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corporate
action to authorize any of the actions set forth above in this Section 6.1.1;

 

6.1.2.  by IDS or the
Client at any time after default in any amounts due and payable by the other
party, after notice and the expiration of a thirty (30) calendar day
opportunity to cure.

 

6.1.3.  by either
party, if the other party commits a material breach of this Agreement and such
material breach has not been remedied (if capable of being remedied) within
thirty (30) “business days” (as defined in Section 17.2 below) from
date of written notification of such breach.

 

6.1.4.  by either party
immediately upon the giving of notice in the event that a “Force Majeure Event”
(as defined in Section 12 of this Agreement) persists for a period
of longer than seven (7) days. 
Notwithstanding the foregoing, in the event that the Warehouse has been
damaged by fire or other casualty and IDS reasonably determines that the
Warehouse cannot be expected to be restored to its condition prior to the
occurrence of the fire or other casualty within seven (7) days after such
fire or other casualty, such that IDS will not be able to perform the Services
at the Warehouse and IDS does not have a comparable, alternate facility that is
reasonably commercially acceptable to the Client at which IDS can provide the
same Services to Client upon substantially the same terms and conditions, at no
additional cost to Client (the “Alternative Warehouse”) within such seven (7) day
period, then Client may terminate this Agreement by written notice thereafter,
and any such termination shall be effective immediately.  In the event that IDS can and does provide an
Alternative Warehouse to Client, then all references hereinafter to Warehouse
shall mean the Alternative Warehouse, unless the context requires otherwise.

 

6.1.5.  by the Client
or IDS immediately upon the giving of notice upon a breach by the 

 

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other
party of the provisions of Section 18 below.

 

6.1.6.  by either party
upon written notice to the other party delivered not earlier than 180 days
prior to the termination date set forth in such written notice.

 

7.     EFFECT OF
TERMINATION

 

7.1.    Termination or expiration of
this Agreement shall not relieve either party of any liabilities or obligations
it may have to the other party which liabilities or obligations accrued during
the term of the Agreement or that arises out of or is related to acts or
omissions occurring prior to such termination or expiration.

 

7.2.    The
parties agree that all amounts due and payable by either party to the other are
settled within twenty (20) business days upon termination or expiration of the
Agreement; provided, however, if either party disputes an amount
that the other party hereto believes to be due and payable upon the termination
or expiration hereof and such disputing party provides written notice of same
to the other party (the “Termination Payment Dispute Notice”), then the amount
that is the subject of the Termination Payment Dispute Notice shall not be due
and payable until the parties resolve same either by mutual agreement, or in
the absence thereof, in accordance with the provisions of Section 19
below.

 

7.3.    The
parties shall jointly conduct an inventory count of the stock stored or held by
IDS no later than five (5) business days from the termination or
expiration of this Agreement.  In
connection therewith, IDS shall give the Client and/or its agents access,
at mutually agreed upon times, to the Warehouse during the twenty (20) business
day period subsequent to termination or expiration of the Agreement (and
thereafter, if necessary) for the purpose of removing by Client, at its sole
cost and expense, all of its stock and merchandise located at the Warehouse; provided,
however, that Client shall not be entitled to remove all of its
inventory then located at the Warehouse if it is not then 

 

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current in its payment obligations with respect to
amounts due under this Agreement, other than amounts subject to a Dispute
Notice or a Termination Payment Dispute Notice.

 

8.     INSURANCE

 

8.1.    GENERAL
INSURANCE POLICY REQUIREMENTS.  Each party
shall maintain at its own expense such insurance coverage as is appropriate to
fully meet its obligations under this Agreement.

 

8.2.    INSURANCE COVERAGE

 

8.2.1.  IDS shall maintain at all
times during the term of this Agreement and for the period at least ninety (90)
business days thereafter, at its own expense, general liability and other
insurance, with such carrier, and in such form and substance, that is
reasonably satisfactory to the Client, and as set forth on IDS’s certificate of
insurance dated January 29, 2010 previously delivered to Client (the “Certificate
of Insurance”).  IDS agrees that upon the execution hereof
Client shall be listed as an additional insured on the Certificate of Insurance
and that such insurance shall provide such coverage, have such limits of
liability and deductibles, and such other terms and provisions as shall be
mutually agreed upon by the parties, but in no event shall it provide for
coverage of less than $5,000,000 per occurrence and $7,000,000 in the
aggregate.

 

8.2.2.  Client shall provide
evidence of primary property coverage of its merchandise including but not
limited to deterioration of its merchandise in relation to risks of physical
loss or damage of its merchandise.  Such
coverage shall be written on an “all risk” of loss basis.  Client shall release IDS from any and all
liability and responsibility to Client or to anyone claiming by it or under it
by way of subrogation

 

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or otherwise for all insured claims or insured demands whatsoever which
arise out of damage to or destruction of tangible or intangible property
occasioned by fire or other cause unless such damage or destruction shall have
been caused by the gross negligence or willful misconduct of IDS or IDS’s
partners, officers, directors, agents and employees or of anyone for whom IDS
may be responsible.

 

8.2.3.  Client shall maintain at all
times during the term of this Agreement and for the period at least thirty (30)
business days thereafter, at its own expense, general liability insurance, with
such carrier, and in such form and substance, that is reasonably satisfactory
to IDS, relating to Client and its employees physical entry upon the Warehouse.

 

8.2.4.  Client shall at all times
during the term of this Agreement, and for a period of at least ninety (90)
days thereafter, at its own expense, maintain its general liability insurance
coverage with respect to its stock and merchandise, which coverage shall be
reviewed by IDS prior to the execution hereof, and the execution hereof by IDS
shall represent its express approval of same.

 

9.     LIMITATION OF LIABILITY

 

9.1   Notwithstanding
any other provision in this Agreement, neither party will be liable to the
other party, regardless of form of action, whether in contract, tort (including
negligence or breach of statutory duty), strict liability, or otherwise
howsoever for loss or profit, business, contracts or revenues, or anticipated
savings, indirect or consequential losses or damages of any nature whatsoever
including indirect loss of profit or opportunity.

 

9.2   For
the avoidance of doubt, both parties agree that IDS’s limit of liability to
Client for any claim it may have against IDS arising from any loss or damages
suffered with respect 

 

11

 

to
its goods or merchandise, whether or not the result of the gross negligence or
willful misconduct of IDS, its employees, agents, contractors or
representatives, shall not exceed $5,000,000 per occurrence and $7,000,000 in
the aggregate.

 

10.  LIABILITY FOR STOCK LOSS/DAMAGE

 

10.1      RESPONSIBILITY
FOR STOCK LOSS/DAMAGE

 

10.1.1      IDS acknowledges that title to the merchandise and risks of ownership
thereof shall remain at all times with the Client.  Subject to Section 10.1.3 below,
the Client shall be fully liable for any loss or damage to its merchandise
while in Warehouse or otherwise in the custody or control of IDS unless such
loss or damage arises as a result of the gross negligence or willful misconduct
of IDS, its employees, agents, contractors or representatives.

 

10.1.2      The Client
shall have reasonable access during normal business hours to IDS’s inventory
records for the purpose of reconciliation between book records and physical quantities
and for any claims for lost inventory. 
IDS shall adhere to those inventory control practices as set out under
Section 4.3 of Annex 2 to the Agreement.

 

10.1.3      Inventory
Claims.

 

(a)   With respect to the annual
physical inventory count referenced in Section 4.3.1(f) of Annex 2, IDS
shall be responsible for unexplained inventory shortages that exceed 0.03% of
the actual units shipped by IDS during the applicable fiscal year (the “Excess
Inventory Shortage”), and IDS shall reimburse Client within thirty (30) days of
the determination of any Excess Inventory Shortage by paying to Client an
amount equal to the number of units that represent such Excess Inventory
Shortage multiplied by the 

 

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Client’s weighted average dollar cost of all of the Company’s units
shipped by IDS during the applicable fiscal year.  Notwithstanding the foregoing, any units
representing Excess Inventory Shortage for which Client realizes an insurance
recovery will not be counted towards any Excess Inventory Shortage (and any
such lost units shall not be counted towards Excess Inventory Shortage while
any insurance claim is pending).

 

10.1.4      IDS
shall not be responsible for:

 

(a)   loss
or damage to goods resulting from improper packing, breakage, boxing, crating
or concealed damage which occurs prior to the
merchandise being placed in IDS’s custody, or

 

(b)   stock
loss/damage allowance as set forth in Section 10.1.3(a) of the
Agreement.

 

10.2     STORE
DEDUCTION

 

10.2.1      Liability for
shipping errors shall be limited to IDS’s handling cost associated with the
processing of the order related to the claim, provided that in the event the
Client provided prior notice to IDS of the nature or type of the recurring
shipping errors caused by IDS, IDS’s liability shall be for all costs
incurred by the Client in connection therewith.

 

10.3        MISDIRECTION OF MERCHANDISE

 

IDS’s liability shall not
exceed the lesser of:

 

i)              the cost of
transporting the merchandise to the correct destination by the mode of
transport that would have applied in 

 

13

 

the
absence of such misdirection less the cost that would have been incurred in
transporting the merchandise to the correct destination in the absence of such
misdirection, or

 

ii)             the value of
the merchandise misdirected.

 

11      LIMITED
INDEMNIFICATION

 

The Client hereby
acknowledges that IDS shall not be liable in contract, tort or otherwise to any
customer of the Client or any third party in respect of the Client’s goods or
merchandise, provided that IDS notifies the Client within ten (10) business
days of becoming aware of any such third party claim (provided no notice shall
be required if said customer or third party serves notice of any claim
simultaneously on both IDS and the Client). 
The Client shall, provided appropriate notice was given, if required,
indemnify, save harmless and defend IDS against all or any liabilities, claims,
actions or demands made by its customer or any other third party, including all
costs and expenses incurred in connection herewith, which IDS may incur or
which may be made against IDS as a result of any such claims.  IDS acknowledges and agrees that the Client
shall control the defense and resolution (whether by litigation, arbitration,
mediation, settlement or otherwise) of any and all such third party actions and
claims for which Client is required to indemnify IDS hereunder.  In addition, the Client shall indemnify, save
harmless and defend IDS from any and all unpaid claims for unpaid
transportation charges, including undercharges, demurrage, detention or charges
of any nature, in connection with the Client’s merchandise shipped to or from
the Warehouse, other than due to shipping errors for which IDS is responsible
under Section 10.

 

12       FORCE
MAJEURE

 

Acts of God, fires, or other
catastrophes, epidemics or quarantine restrictions, or other cause(s) beyond
the reasonable control of a party, not reasonably foreseeable, not caused 

 

14

 

by acts or omissions of the
party affected which prevent IDS from providing or procuring the Services, or
the Client from receiving or using Services (“Force Majeure Event”), shall
suspend such affected party’s obligations, including obligations of performance
(and payment with respect thereto) during the period required to remove such
Force Majeure Event; provided that such Force Majeure Event shall not effect
any payment obligations that arose prior to the Force Majeure Event. Such
affected party shall promptly notify the other party of the Force Majeure Event
and the nature of such Force Majeure Event and if such Force Majeure Event is a
fire or other casualty, such that IDS is unable to provide the Services at the
Warehouse or the Alternative Warehouse within seven (7) days after the
occurrence of the Force Majeure Event, then Client shall have the right to
immediately terminate this Agreement in accordance with the provisions of Section 6.1.4
above.

 

13       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PARTIES.

 

13.1        Each of the
parties hereto represents and warrants to the other that (i) it has read
this Agreement, (ii) it has had the benefit of consultation with competent
legal counsel in connection with considering and agreeing with this Agreement,
(iii) that all necessary corporate action to enter into this Agreement has
been taken and such party is duly authorized to enter into this Agreement and
be fully bound by all of the terms hereof, subject to the execution and
delivery by the other party hereto, (iv) it will conduct its business and
operations in compliance with all applicable laws, rules and regulations,
including but not limited to all applicable labor, safety, and environmental
laws and regulations, and (v) it hereby reaffirms the representation and
warranty set forth in Section 8.1 above.

 

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13.2        Simultaneously
upon the execution hereof, IDS shall deliver to Client (i) the
Certificate of Insurance naming Client as an additional insured, and
(ii) the secured party waiver and consent in the form annexed hereto as Exhibit A.

 

14       SEVERABILITY.

 

If
any provision, covenant, term, or condition of this Agreement is held to be
invalid, illegal or unenforceable for any reason, such invalidity, illegality
or unenforceability, shall not affect the validity, legality, or enforceability
of any other provisions, covenants, terms or conditions of this Agreement.

 

15       ENTIRE AGREEMENT.

 

This
Agreement and each Annex attached hereto sets forth the entire understanding of
the parties with respect to the subject matter of this Agreement, and
supersedes any prior written or oral representation, agreements, or
understandings with respect hereto, including but not limited to that certain
memorandum of understanding between the parties dated as of April 27, 2010
(but it does not supersede that certain confidentiality agreement between the
parties dated as of April 9, 2010 (the “Confidentiality Agreement”), which
shall remain in full force and effect). 
No party has relied on any representation, assurances, or understandings
other than as expressly set forth herein. 
This Agreement (or any Annex) can only be modified by written documents
signed by all of the parties hereto.

 

16       ATTORNEYS’ FEES/COST AND EXPENSES.

 

Each
party to this Agreement shall bear all of its own attorneys’ fees, costs and
expenses incurred in the negotiation and execution of this Agreement.

 

17       NOTICES; MISCELLANEOUS.

 

17.1      Any and all notices, demands
or requests required or permitted to be given under this 

 

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Agreement
shall be given in writing and sent, by registered or certified U.S. mail,
return receipt requested, by hand, or by overnight courier, addressed to the
parties hereto at their addresses set forth below or such other addresses as
they may from time-to-time designate by written notice, given in accordance
with the terms of this Section, together with copies thereof as follows:

 

In the case of the Client
to:

 

Rafaella
Apparel Group, Inc.

1411 Broadway

New York, NY 10018

Facsimile No.:  (212) 764-9275

Attn:  Lance Arneson, Chief Financial
Officer

 

With
a copy simultaneously by like means to:

 

Zukerman
Gore Brandeis & Crossman, LLP

875 Third Avenue

New York, New York 10022-4728

Facsimile No.:  (212) 223-6433

Attention:  Clifford A. Brandeis, Esq.

 

In
the case of IDS to:

 

2
Panasonic Way

Secaucus,
New Jersey 07096

 

With
a copy simultaneously by like means to:

 

Salans
LLP

620
Fifth Avenue

New
York, New York 10020

Facsimile
No.:  (212) 307-3345

Attention:  Robert K. Smits, Esq.

17.2      As used herein, the term “business
day” means any day when commercial banks in New York City and New Jersey are
open for business except Saturdays, Sundays and holidays.

 

17.3      At all reasonable times
during the term hereof the Client shall with sufficient advance 

 

17

 

notice,
have the right to enter and be present at IDS’s Warehouse (provided at all
times Client be escorted by a representative of IDS) in New Jersey for purposes
of inspection and observation.  Client
may request, if it reasonably believes it to be necessary, to inspect the
Warehouse at times when it is not in operation, provided that it gives
sufficient advance notice to IDS and at all times Client is escorted by a
representative of IDS when inspecting the Warehouse.

 

17.4      The entering into and the
terms and conditions of this Agreement shall be subject to the terms of the
Confidentiality Agreement; provided, however, IDS
acknowledges that the Client is a reporting company under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and as such, files such
reports as required by the Exchange Act. 
Accordingly, IDS agrees that, notwithstanding anything set forth
herein or in the Confidentiality Agreement to the contrary, upon the advice of
outside counsel, the Client may make public disclosures with respect to this
Agreement in accordance with the provisions of the Exchange Act.

 

17.5      Upon the execution hereof, IDS
shall provide the Client with dedicated office space within its Warehouse in
order to accommodate such number of individuals who will be employed by the
Client as described on Schedule B to be attached to Annex 2
of this Agreement.

 

17.6      During the term of this
Agreement and for one (1) year thereafter, IDS shall keep accurate
and complete books and records with respect to the provision of the
Services.  Subject to maintaining the
confidentiality of records of any customers other than Client, during the term
of this Agreement and for one (1) year thereafter, Client and its
authorized representatives shall have the right, at its own cost and expense,
to inspect and commence an audit of the relevant books and records of IDS
relating to IDS’s 

 

18

 

provision
of Services to confirm the accuracy of the Rates being charged under this
Agreement; provided  that, in the event any such audit reveals a
discrepancy in Client’s favor in excess of five percent (5%), IDS shall
bear all of Client’s reasonable documented costs of such audit, including but
not limited to the costs of all third party professionals, including
auditors.  In addition, in the event of
any discrepancy revealed as a result of the audit, whether in IDS’s or Client’s
favor, the party in whose favor there is a discrepancy shall receive full
payment therefor from the other party within thirty (30) days upon the parties
agreeing to the amount of the discrepancy, either by mutual agreement, or
pursuant to the provisions of Section 19 below.

 

18       SUCCESSORS/ASSIGNS.

 

This
Agreement shall not be assigned by IDS or Client without the express prior
written approval of the other party, and any assignment by either party in
violation of the foregoing shall give the other party the right to terminate
this Agreement immediately upon notice thereof; provided, however,
no approval to assignment shall be required in the event of the sale to a third
party of all the assets or stock of either party or in the event either party
merges or consolidates with or into a third party, provided that the acquirer
or surviving entity assumes in writing all obligations and liabilities
hereunder.  This Agreement shall be
binding upon each of the parties and each of the parties’ permitted successors
and assigns.

 

19       GOVERNING LAW; BINDING ARBITRATION.

 

This
Agreement will be construed, interpreted and enforced in accordance with and
will be governed by the laws of the State of New York applicable to agreements
to be wholly performed therein without reference to principles of conflicts of
law.  Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination,
enforcement, interpretation or validity thereof, including the determination of
the scope or 

 

19

 

applicability
of this agreement to arbitrate, shall be determined by arbitration in New York
City before three (3) arbitrators. The arbitration shall be administered
by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures.
Judgment on the Award may be entered in any court having jurisdiction. This
clause shall not preclude parties from seeking provisional remedies in aid of
arbitration from a court of appropriate jurisdiction.  The arbitrators may, in the award, allocate
all or part of the costs of the arbitration, including the fees of the
arbitrator and the reasonable attorneys’ fees of the prevailing party.

 

20       COUNTERPARTS.

 

This
Agreement may be executed in one or more original, facsimile or electronic
counterparts and, once counterparts have been exchanged, they shall be of full
force and effect.

 

21       SURVIVAL.

 

Notwithstanding anything set
forth herein to the contrary, the following Sections shall survive the
expiration or termination of this Agreement: 
3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 4.1, 5.1, 5.3, 6, 7, 8, 9, 10, 11,
13, 14, 15, 17, 18, 19 and 21.

 

[Rest
of Page Intentionally Left Blank]

 

20

 

IN WITNESS WHEREOF, the
parties hereto have interchangeably set their hands and seals and caused the
proper corporate officers to execute the within Agreement on the day and year
first above written.

 

	
   

  	
  IDS USA INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Simon Oxley

  
	
   

  	
   

  	
  Simon Oxley, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  IDS USA INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Sandham

  
	
   

  	
   

  	
  Peter Sandham, Director of
  Finance and Commercial

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RAFAELLA APPAREL
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christa Michalaros

  
	
   

  	
   

  	
  Christa Michalaros,

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RAFAELLA APPAREL
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lance Arneson

  
	
   

  	
   

  	
  Lance Arneson,

  
	
   

  	
   

  	
  Chief Financial Officer

  

 

21Exhibit
10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT — AMENDMENT NO. 3

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT — AMENDMENT NO. 3 (this “Agreement”)
is made and entered into effective June 17, 2010, by and between Granite
City Food & Brewery Ltd. (the “Company”) and Steven J. Wagenheim (“Executive”).

 

RECITALS

 

A.                                   Executive is
employed by the Company pursuant to an employment agreement made and entered
into June 15, 2005, as amended October 5, 2009 (the “Employment
Agreement”).

 

B.                                     Whereas it is
desirable to amend the Employment Agreement to extend the term of Executive’s
employment and to confirm certain severance arrangements in connection
therewith.

 

NOW, THEREFORE, in consideration of the premises, the
parties hereto agree as follows:

 

1.                                       Defined Terms.  All capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Employment Agreement.

 

2.                                       Term of
Agreement.  Article 3
of the Employment Agreement is hereby amended and restated to read as follows:

 

3.01                           Executive’s
employment pursuant to this Agreement shall continue for a term ending on October 6,
2012 (the “Termination Date”).  The term
of the Executive’s employment shall automatically be extended for successive
one year periods unless the Company or Executive elects not to extend
employment by giving written notice to the other not less than sixty (60) days
prior to the Termination Date or the end of any extension periods.  If Executive’s employment continues beyond
the Termination Date after either party has given notice not to extend for an
additional year, such employment shall continue on an at-will basis under the
remaining terms and conditions of this Agreement, as amended hereby, and as the
same may be amended from time to time with the consent of the Company and
Executive, except that Section 4.02 shall be inapplicable and incentive
compensation payable to Executive, if any, shall be only as fixed by the
Company’s Compensation Committee (“Committee”). 
Executive’s base compensation under this Agreement shall continue at Executive’s
current monthly base compensation rate for each month worked and prorated for
any partial month during which employment continues.

 

3.                                       Severance
Benefit.  For avoidance of doubt, if
Executive’s employment is terminated without Cause or by Executive for Good
Reason, Executive shall be entitled to receive the Severance Payment provided
in Section 7.01(a)-(c) and receive his Base Salary through the
Termination Date.  If the Company elects
to not extend Executive’s employment beyond the Termination Date or any
extension thereof and terminates Executive’s employment, such termination shall
be a termination without Cause for the purposes of Section 7.01 and
Executive shall receive his Base Salary as provided in Section 6.05
through the Termination Date.

 

 

4.                                       Remainder of
Employment Agreement to Continue.  Except as provided herein, the remainder of
the Employment Agreement is not affected by the foregoing amendments and shall
continue in full force and effect.

 

IN WITNESS WHEREAS, the parties have executed
this Agreement effective the date first above written.

 

	
   

  	
  GRANITE
  CITY FOOD & BREWERY LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James G. Gilbertson

  
	
   

  	
   

  	
  James
  G. Gilbertson, Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Steven J. Wagenheim

  
	
   

  	
   

  	
  Steven
  J. Wagenheim

  

 

2

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