Document:

Exhibit 10.24

 

EXECUTION COPY

 

AGREEMENT FOR CHAIRMAN OF BOARD OF DIRECTORS

 

This AGREEMENT FOR CHAIRMAN OF BOARD OF DIRECTORS
(this “Agreement”) is dated as of October 1, 2007, between Rafaella
Apparel Group, Inc. (the “Company”) and John Kourakos, an individual
(“Director”) (the Company and Director, together, the “Parties”).

 

WHEREAS, the Parties wish to establish the terms of
Director’s service as Chairman of the Board of Directors of the Company (the “Board”).

 

NOW, THEREFORE, in consideration of the premises and
of Director agreeing to serve the Company and intending to be legally bound
hereby, the Parties hereto agree as follows:

 

1.                                       Service as
Director.  Director
hereby agrees to be elected and to serve as Chairman of the Board of Directors
of the Company and to assume the following obligations and responsibilities:

 

1.1                                 Director shall provide active strategic
and management leadership and oversight for the Company (as opposed to having
responsibilities for the day-to-day operations of the Company) and shall
perform such other duties and responsibilities as may be reasonably requested
by the Board of Directors or as are normally related to the position of
Chairman of the Board in accordance with the Company’s bylaws and applicable
law, including those services described on Exhibit A (the “Services”).  Director hereby agrees to use reasonable
efforts to provide the Services. 
Director shall not allow any other person or entity to perform any of
the Services for or instead of Director. 
Director shall, based upon
advice from counsel to the Company, comply with the statutes, rules,
regulations and orders of any governmental or quasi-governmental authority,
which are applicable to the performance of the Services, and the Company’s
rules, regulations, and practices as they may from time-to-time be adopted or
modified.

 

1.2                                 Director may be employed by another
company, may serve on other Boards of Directors and may engage in any other
business activity (whether or not pursued for pecuniary advantage), as long as
such outside activities do not violate Director’s obligations under this
Agreement or Director’s fiduciary obligations to the shareholders.  The ownership of less than a five percent
(5%) interest in a public Company, by itself, shall not constitute a violation
of this duty.  Except as set forth in Exhibit B,
Director represents that he has no outstanding agreement or obligation that is
in conflict with any of the provisions of this Agreement, and Director agrees
to use reasonable efforts to avoid or minimize any such conflict and agrees not
to enter into any agreement or obligation that could create such a conflict,
without the approval of a majority of the Board of Directors, which shall not
be unreasonably withheld, conditioned or delayed.  If, at any time, Director is required to make
any material disclosure or take any action that may conflict with any of the
provisions of this Agreement, Director will promptly notify the Board of such
obligation, prior to making such disclosure or taking such action.

 

1

 

1.3                                 Except as set forth in Section 1.2
and Exhibit B, Director will not engage in any activity that
creates an actual conflict of interest with the Company, regardless of whether
such activity is prohibited by the Company’s conflict of interest guidelines or
this Agreement, and Director agrees to notify the Board before engaging in any
activity that creates a potential conflict of interest with the Company.  Specifically and except as set forth in Section 1.2
and Exhibit B of this Agreement, Director shall not engage in any
activity that is in direct competition with the Company or serve in any
capacity (including, but not limited to, as an employee, consultant, advisor or
director) in any company or entity that competes directly with the Company, as
reasonably determined by a majority of the Company’s disinterested board
members, without the approval of the Board.

 

2.                                       Term.

 

2.1                                 Subject to earlier termination pursuant
to Section 4, this Agreement shall commence on October 1, 2007
(the “Effective Date”) and continue until the first (1st)
anniversary of the Effective Date and thereafter as long as Director shall
continue to be elected as Chairman of the Board.

 

2.2                                 Notwithstanding the foregoing, and
provided that Director does not voluntarily resign and is not removed from his
position pursuant to Section 4 below, the Company agrees to use its
best efforts to reelect Director to the Board at each Meeting of the
Shareholders for an aggregate period of four (4) years (the “Term”).

 

3.                                       Compensation
and Benefits.  In
consideration for the Services, the Company shall provide Director with the
following during the Term:

 

3.1                                 Director’s Fee. 
In consideration of the Services, the Company shall pay Director a fee
as follows:

 

(a)                                  from the Effective Date through June 30,
2008, Director shall be paid a fee at the annualized rate of One Hundred Fifty
Thousand Dollars ($150,000) per year, and

 

(b)                                 commencing on July 1, 2008, Director
shall be paid a fee at the annualized rate of Two Hundred Thousand Dollars
($200,000).

 

All amounts paid pursuant to this Section 3.1
shall be paid in accordance with the Company’s regularly established practices
regarding the payment of Directors’ fees, but in no event less frequently than
in quarterly installments.

 

3.2                                 Transaction Bonus. 
Director shall receive an amount equal to one percent (1.0%) of the
Appreciated Value and Net Dividends available to the Company’s Common
Stockholders in connection with certain transactions involving the Company
pursuant to the terms and conditions attached hereto as Exhibit C.

 

3.3                                 Participation in Employee Benefit Plans. 
Director shall be entitled, if and to the extent eligible, to
participate in the Company’s group health plan on the same terms as other directors
and executives of the Company.  The
Company may at any time or from time to time 

 

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amend,
modify, suspend or terminate any such 
plan, program or arrangement for any reason without Director’s consent
if such amendment, modification, suspension or termination is consistent with
the amendment, modification, suspension or termination for executives of the
Company.

 

3.4                                 Expense Reimbursement. 
Director shall be entitled to receive reimbursement for all appropriate
business expenses incurred by him in connection with his duties under this
Agreement in accordance with the policies of the Company as in effect from time
to time.

 

4.                                       Termination.

 

4.1                                 Right to Terminate. 
At any time, Director may be removed as Chairman, and Director may
resign as Chairman or Director, in each instance as provided in the Company’s
Certificate of Incorporation, as amended, bylaws, as amended, and applicable
law.  Notwithstanding anything to the
contrary contained in or arising from this Agreement or any statements,
policies, or practices of the Company, neither Director nor the Company shall
be required to provide any advance notice or any reason or cause for
termination of Director’s status as Chairman, except as provided in the Company’s
Certificate of Incorporation, as amended, the Company’s bylaws, as amended, and
applicable law.

 

4.2                                 Effect of
Termination.  Upon a
termination of Director’s status as Chairman under circumstances in which
Director remains a director, this Agreement will terminate, and the Company and
Director will sign a mutually agreed upon superseding Director’s
Agreement.  Upon a termination of
Director’s status as Chairman under circumstances in which Director does not
continue as a director, this Agreement will terminate; the Company shall pay to
Director all compensation and benefits to which Director is entitled up through
the date of termination, and, thereafter, all of the Parties’ rights and
obligations under this Agreement shall cease, except for such rights and
obligations that expressly survive such termination.  Upon termination of this Agreement, Director shall be
deemed to have resigned from all offices then held with the Company by virtue
of his position as Chairman.  Director
agrees that following any termination of this Agreement, he shall, at the
Company’s sole cost and expense, cooperate with the Company in the winding up
or transferring to other directors any pending work and shall also cooperate
with the Company (to the extent allowed by law, and at the Company’s expense)
in the defense of any action brought by any third party against the Company
that relates to the Services.

 

5.                                       Restrictions
and Obligations of Director.

 

5.1                                 Confidentiality.

 

(a)                                  During the Term, Director will have
access to certain trade secrets and confidential information relating to the
Company and its subsidiaries (the “Protected Parties”) which is not
readily available from sources outside the Company.  The confidential and proprietary information
and, in any material respect, trade secrets of the Protected Parties are among
their most valuable assets, including but not limited to, their customer,
supplier and vendor lists, databases, competitive strategies, computer
programs, frameworks, or models, their marketing programs, their sales,
financial, 

 

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marketing,
training and technical information, their product development (and proprietary
product data) and any other information, whether communicated orally,
electronically, in writing or in other tangible forms concerning how the
Protected Parties create, develop, acquire or maintain their products and
marketing plans, target their potential customers and operate their retail and
other businesses.  The Protected Parties
invested, and continue to invest, considerable amounts of time and money in
their process, technology, know-how, obtaining and developing the goodwill of
their customers, their other external relationships, their data systems and
data bases, and all the information described above (hereinafter collectively
referred to as “Confidential Information”), and any misappropriation or
unauthorized disclosure of Confidential Information in any form, would
irreparably harm the Protected Parties.

 

(b)                                 Director acknowledges that such
Confidential Information constitutes valuable, highly confidential, special and
unique property of the Protected Parties. 
Director shall hold in a fiduciary capacity for the benefit of the
Protected Parties all Confidential Information obtained by Director during the
Term of this Agreement.  Except as
required by law, an order of a court or governmental agency with jurisdiction,
or a subpoena or other lawful process, Director shall not, during the Term or
at any time thereafter, disclose any Confidential Information, directly or
indirectly, to any person or entity for any reason or purpose whatsoever, nor
shall Director use it in any way, except in the course of providing the
Services or to enforce any rights or defend any claims hereunder or under any
other agreement to which Director is a party, provided that such disclosure is
relevant to the enforcement of such rights or defense of such claims and is
only disclosed in the formal proceedings related thereto.  Director shall take reasonable steps to
safeguard the Confidential Information and to protect it against disclosure,
misuse, corporate espionage, loss and theft. 
Director understands and agrees that Director shall acquire no rights to
any such Confidential Information.

 

(c)                                  All files, records, documents, drawings,
specifications, data, computer programs, evaluation mechanisms and analytics
and similar items relating thereto or to the Company’s business, as well as all
customer lists, specific customer information, compilations of product research
and marketing techniques of the Company and its subsidiaries, whether prepared
by Director or otherwise coming into Director’s possession, shall remain the
exclusive property of the Company and its subsidiaries, and Director shall not
remove any such items from the premises of the Company and its subsidiaries,
except in furtherance of Director’s duties under this Agreement.

 

(d)                                 As requested by the Company and at the
Company’s expense, from time to time and upon the termination of this
Agreement, Director will promptly deliver to the Company all copies and
embodiments, in whatever form, of all Confidential Information in Director’s
possession or within his control (including, but not limited to, memoranda,
records, notes, plans, photographs, manuals, notebooks, documentation, program
listings, flow charts, magnetic media, disks, diskettes, tapes and all other
materials containing any Confidential Information) irrespective of the location
or form of such material.  If requested
by the Company, Director will provide the Company with written confirmation
that all such materials have been delivered to the Company as provided herein.

 

4

 

5.2                                 Director will
not at any time (whether during or after the Term) publish or communicate to any person or
entity any Disparaging Remarks (as defined below) concerning the Company or
Cerberus Capital Management, L.P., or their parents, subsidiaries and
affiliates, and their respective present members, partners, directors, officers,
shareholders, successors and assigns (including any person who held any such
position during the Term).  “Disparaging
Remarks” are remarks, comments or statements that impugn the character,
honesty, integrity or morality or business acumen or abilities in connection
with any aspect of the operation of business of the individual or entity being
disparaged.

 

6.                                       Liability
Insurance.  The Company
shall continue to maintain an insurance policy or policies providing directors’
and officers’ liability insurance in an amount and on terms at least as
favorable as those in effect on the date hereof or that may be obtained by the
Company hereafter.  Director shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any other director of the
Company.

 

7.                                       Indemnification.

 

(a)                                  The Company agrees, to the extent
permitted by applicable law and its organizational documents, to indemnify,
defend and hold harmless Director from and against any and all losses, suits,
actions, causes of action, judgments, damages, liabilities, penalties, fines,
costs or claims of any kind or nature (“Indemnified Claim”), including
reasonable legal fees and related costs incurred by Director in connection with
the preparation for or defense of any Indemnified Claim, whether or not
resulting in any liability, to which Director may become subject (including
without limitation as a witness) or liable or which may be incurred by or
assessed against Director, relating to or arising out of his engagement by the
Company or the Services to be performed pursuant to this Agreement, provided
that the Company shall only defend, but not indemnify or hold Director
harmless, from and against an Indemnified Claim in the event there is a final,
non-appealable, determination that Director’s liability with respect to such
Indemnified Claim resulted from Director’s willful misconduct or gross
negligence.

 

(b)                                 At Director’s request, the Company shall
advance to Director the cost of all reasonable legal fees and related costs
incurred by Director arising out of or relating to any Indemnified Claim,
provided as a condition to any such advance the Company may require that
Director agree to repay the funds advanced to the extent it is determined by a
final, non-appealable judgment of a court of competent jurisdiction that
Director is not entitled to indemnification for such reasonable legal fees and
related costs.

 

(c)                                  Notwithstanding the foregoing, Director’s
attorneys’ hourly billing rates shall not be deemed unreasonable as long as
such rates are consistent with the hourly billing rates of the Company’s other
outside counsel.

 

(d)                                 The Company’s obligations under this
section shall be in addition to any other right, remedy or indemnification which
Director may have or be entitled to at common law or otherwise.  The provisions of this Section 8
shall survive the termination of this Agreement for any reason.

 

5

 

8.                                       Other
Provisions.

 

8.1                                 Notices.  Any notice or
other communication required or which may be given hereunder shall be in
writing and shall be delivered personally, sent by facsimile transmission or
sent by certified, registered or express mail, postage prepaid or overnight
mail and shall be deemed given when so delivered personally, or sent by
facsimile transmission or, if mailed, four (4) days after the date of
mailing or one (1) day after overnight mail, as follows:

 

	
   

  	
  (a)

  	
  If the Company, to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Rafaella Apparel Group, Inc.

  
	
   

  	
   

  	
  1411 Broadway

  
	
   

  	
   

  	
  New York, New York 10018

  
	
   

  	
   

  	
  Attention: 

  	
  Secretary

  
	
   

  	
   

  	
  Telephone: 

  	
  (212) 403-0300

  
	
   

  	
   

  	
  Fax: 

  	
  (212) 764-9275

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With copies to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Milbank, Tweed, Hadley & McCloy LLP

  
	
   

  	
   

  	
  One Chase Manhattan Plaza

  
	
   

  	
   

  	
  New York, NY 10005

  
	
   

  	
   

  	
  Attention:

  	
  Roland Hlawaty

  
	
   

  	
   

  	
  Telephone:

  	
  (212) 530-5735

  
	
   

  	
   

  	
  Fax:

  	
  (212) 822-5735

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cerberus Capital Management, L.P.

  
	
   

  	
   

  	
  299 Park Avenue

  	
   

  
	
   

  	
   

  	
  New York, NY 10171

  
	
   

  	
   

  	
  Attention:

  	
  George Kollitides

  
	
   

  	
   

  	
  Fax:

  	
  (212) 284-7916

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  If Director, to Director’s home address reflected in
  the Company’s records,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ken Gardner

  
	
   

  	
   

  	
  Gardner Weiss and Rosenblum LLP

  
	
   

  	
   

  	
  100 Park Avenue, 18th floor

  
	
   

  	
   

  	
  New York, New York 10017

  
	
   

  	
   

  	
  Telephone:

  	
  212-907-0600

  
	
   

  	
   

  	
  Fax:

  	
  212-907-0610

  

 

6

 

8.2                                 Section 409A. 
It is intended that all payments hereunder shall comply with Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and the
regulations and other guidance issued thereunder (in aggregate, “Section 409A”)
so as not to subject Director to payment of interest or any additional tax
under Section 409A.  In furtherance
thereof, the parties agree to the following:

 

(a)                                  If payment or provision of any amount or
benefit hereunder that is subject to Section 409A at the time specified
herein would subject such amount or benefit to any additional tax under Section 409A,
the payment or provision of such amount or benefit shall be postponed to the
earliest commencement date on which the payment or provision of such amount or
benefit could be made without incurring such additional tax.

 

(b)                                 In addition, to the extent that any
regulations or other guidance issued under Section 409A (after application
of the previous provisions of this Section 8.2 would result in Director’s
being subject to the payment of interest or any additional tax under Section 409A,
the parties agree, to the extent reasonably possible, to amend this Agreement
in order to avoid the imposition of any such interest or additional tax under Section 409A,
which amendment shall have the minimum economic effect necessary and be
reasonably determined in good faith by the Company and Director.

 

8.3                                 Entire Agreement. 
This Agreement contains the entire agreement between the Parties with
respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto. 
To the extent that any provision of this Agreement conflicts with any
current or future policy or procedure of the Company, the provisions of this
Agreement shall prevail.

 

8.4                                 Waiver and Amendments. 
This Agreement may be amended, modified, superseded, canceled, renewed
or extended, and the terms and conditions hereof may be waived, only by a
written instrument signed by the Parties or, in the case of a waiver, by the
party waiving compliance.  No delay on
the part of any Party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
right, power or privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.

 

8.5                                 Governing Law, Dispute Resolution and
Venue.

 

(a)                                  This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and not to be performed entirely within such state, without
regard to conflict of law principles.

 

(b)                                 The parties agree irrevocably to submit
to the exclusive jurisdiction of the federal courts or, if no federal
jurisdiction exists, the state courts, located in the City of New York, Borough
of Manhattan, for the purposes of any suit, action or other proceeding brought
by any party arising out of this Agreement and hereby waive, and agree not to
assert by way of motion, as a defense or otherwise, in any such suit, action, 

 

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or proceeding, any
claim that it is not personally subject to the jurisdiction of the above-named
courts, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
the provisions of this Agreement may not be enforced in or by such courts.  In addition, the parties agree to the waiver
of a jury trial.

 

8.6                                 Counterparts. 
This Agreement may be executed in counterparts, each of which shall be
deemed an original but both of which shall constitute one and the same
instrument.

 

8.7                                 Headings.  The headings
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of terms contained herein.

 

8.8                                 Severability. 
If any term or provision of this Agreement, or any part thereof, is held
by a court of competent jurisdiction of any foreign, federal, state, county or
local government or any other governmental, regulatory or administrative agency
or authority to be invalid, void, unenforceable or against public policy for
any reason, the remainder of the terms and provisions of this Agreement shall
remain in full force and effect and shall in no way be affected or impaired or
invalidated.

 

[Signatures on following
page.]

 

8

 

IN WITNESS WHEREOF, the Parties hereto, intending to
be legally bound hereby, have executed this Agreement as of the day and year
first above mentioned.

 

	
   

  	
  DIRECTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ John Kourakos

  
	
   

  	
  Name:

  	
  John Kourakos

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RAFAELLA APPAREL GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ George
  Kollitides

  
	
   

  	
  Name:

  	
  George Kollitides

  
	
   

  	
  Title:

  	
  Authorized Person

  

 

9

 

EXHIBIT A

 

DESCRIPTION OF SERVICES
 
The Services shall include, but shall not be limited to, the following:
 
1.                                       Strategic Planning.  Leading and overseeing the development, implementation and assessment of the Company’s strategic plan and annual budgets and forecasts.
 
2.                                       Management Development.  Participating in annual and other periodic management assessments; providing executive coaching to management; and promoting professional development of management.
 
3.                                       Business Reviews.  Overseeing the preparation of annual, quarterly and monthly operational business reviews and leading the presentation thereof to the Board of Directors.
 
4.                                       Meetings of the Board.  Chairing meetings of the Board, of which the Company intends to have (A) one in-person Board meeting per quarter, (b) one telephonic Board meeting per month in which there is no in-person Board meeting, and (c) such additional number of Board meetings as are otherwise required by the business and affairs of the Company.
 
5.                                       Promoting Business.  Using reasonable efforts to promote the business of the Company.
 
6.                                       Act as a Fiduciary.  Representing the stockholders and the interests of the Company as a fiduciary.
 
7.                                       Participation.  Participating as a full voting member of the Company’s Board of Directors in setting overall objectives, approving plans and programs of operation, formulating general policies, offering advice and counsel, serving on Board Committees and reviewing management performance.

 

10

 

EXHIBIT B

 

AUTHORIZED ACTIVITIES
 
[None listed.]

 

11

 

EXHIBIT C

 

TRANSACTION BONUS
 

Director
shall receive a cash payment equal to one percent (1.0%) of the Appreciated
Value in connection with a Sale Transaction and one percent (1.0%) of the Net
Dividends paid other than in connection with a Sale Transaction (in either
case, a “Sale/Dividend Payment”), subject to vesting as described below.

 

DEFINITIONS

 

1.                                       SALE
TRANSACTION

 

For purposes of this
Agreement, “Sale Transaction” shall mean:

 

i)                 a Change in Control (as defined below);
and

 

ii)              other than in connection with a “Change
in Control”, (A) all transactions (determined cumulatively from the Effective
Date) by the common or preferred stockholders of the Company on the Effective
Date (the “Common Stockholders”) or any affiliates of such Common
Stockholders resulting in the sale of common or preferred securities of the
Company to one or more Third Parties (as defined in the definition of “Change
in Control”) and (B) the sale by the Company of its common securities
pursuant to an initial public offering.

 

For purposes of this
section, “Change in Control” shall mean, in one or a series of related transactions:
(i) a transaction(s) resulting in the sale of all or substantially
all of the assets of the Company (other than in connection with financing
transactions, sale and leaseback transactions or other similar transactions) to
a person or entity who is not a Common Stockholder or an affiliate of such
Common Stockholder (such person or entity being a “Third Party”); or (ii) a
transaction(s) resulting in the sale by any persons or entities who are
stockholders of the Company immediately prior to the date of such sale, or any
of their affiliates, or a merger or other extraordinary corporate transaction
or business combination involving the Company, resulting in more than fifty
percent (50%) of the voting stock of the Company being held by a Third Party.

 

2.                                       APPRECIATED
VALUE

 

For purposes of this
Agreement, “Appreciated Value” shall mean:

 

i)                 the “net value” of all cash,
securities and other consideration in any form paid by a Third Party to the
Company and/or the Common Stockholders in connection with Sale Transactions
(including the aggregate amount of any Dividends in connection with or in
contemplation of a Sale Transaction) and taking into account the Net Dividends
calculated in connection with any Dividends paid after the Effective Date to
the Common Stockholders or any affiliates of such Common Stockholders; minus

 

12

 

ii)              in the case of a Sale Transaction in
which the Company receives consideration from the Third Party, the sum of (x) the
amount of any debt or preferred stock (based upon its aggregate liquidation
preference plus any accrued and unpaid dividends or other preferred return)
assumed, acquired, redeemed or repaid (directly or indirectly) in connection
with the Sale Transaction, or which remains on the Company’s financial
statements at the time of the Sale Transaction and (y) $53,333,333 (the “Floor
Amount”); or

 

iii)           in the case of a Sale Transaction in
which the Common Stockholders receive consideration from the Third Party, the
sum of (x) the amount of any preferred stock of the class or series issued
and outstanding on the Effective Date (based upon its aggregate liquidation
preference plus any accrued and unpaid dividends or other preferred return)
that is issued and outstanding as of the time of such Sale Transaction and (y) the
Floor Amount minus (A) the number of shares of such preferred stock
issued and outstanding as of the time of such Sale Transaction multiplied by (B) the
original issue price thereof.

 

Amounts paid into escrow and
contingent payments in connection with any Sale Transaction, if paid within
five (5) years of the consummation of any Sale Transaction, will be
included as part of the Appreciated Value if and when paid to the Common
Stockholders.  If the Appreciated Value is
a negative number, no Sale/Dividend Payment shall be due.

 

For the avoidance of doubt,
the deduction with respect to the Floor Amount shall be applied only once with
respect to the determination of the Appreciated Value and Net Dividends and
there shall be no duplication with respect to any preferred stock or debt.

 

3.                                       NET DIVIDENDS

 

For purposes of this
Agreement, “Net Dividends” shall mean:

 

i)                 the aggregate value of all cash,
securities and other consideration paid after the Effective Date by the Company
to the Common Stockholders or any affiliates of such Common Stockholders (other
than in connection with a Sale Transaction) in the form of dividends, other
distributions or as a repurchase of any common securities of the Company
(collectively, “Dividends”) and taking into account the “Appreciated
Value” calculated in connection with prior Sale Transactions; minus

 

ii)              the sum of (x) the amount of any
preferred stock of the class or series issued and outstanding on the Effective
Date (based upon its aggregate liquidation preference plus any accrued and
unpaid dividends or other preferred return) that is issued and outstanding as
of the time of such Dividend and (y) the Floor Amount minus (A) the
number of shares of such preferred stock issued and outstanding as of the time
of such Dividend multiplied by (B) the original issue price thereof.

 

If Net Dividends is a
negative number, no Sale/Dividend Payment shall be due.

 

13

 

Calculations of Appreciated
Value or Net Dividends shall be made in connection with any Sale Transaction or
Dividend payment and shall be calculated, without duplication, on a cumulative
basis taking into account all Dividends and Sale Transactions from the
Effective Date.

 

For the avoidance of doubt,
the deduction with respect to the Floor Amount shall be applied only once with
respect to the determination of the Appreciated Value and Net Dividends and
there shall be no duplication with respect to any preferred stock or debt.

 

VESTING AND PAYMENT OF
TRANSACTION BONUS

 

1.                                       FULL VESTING

 

Notwithstanding any
provision contained herein to the contrary, in the event a Change in Control is
consummated prior to full vesting of the Sale/Dividend Payment and provided
Director’s status as Chairman of the Board has not terminated as of the date of
such Change in Control, Director shall be one hundred percent (100%) vested in
the entire Sale/Dividend Payment, which shall be payable in a lump sum within
thirty (30) days of such Change in Control.

 

2.                                       VESTING
SCHEDULE

 

Provided that Director
remains Chairman of the Board on each applicable anniversary as described
below, Director shall vest in a percentage of the Sale/Dividend Payment as
indicated below:

 

	
  Vesting Date: On the
  following anniversaries of the Effective Date:

  	
   

  	
  The following percent of
  the Sale/Dividend Payment shall vest:

  
	
  3 month

  	
   

  	
  4%

  
	
  6 month

  	
   

  	
  4%

  
	
  9 month

  	
   

  	
  4%

  
	
  12 month

  	
   

  	
  4%

  
	
  15 month

  	
   

  	
  5%

  
	
  18 month

  	
   

  	
  5%

  
	
  21 month

  	
   

  	
  5%

  
	
  24 month

  	
   

  	
  5%

  
	
  27 month

  	
   

  	
  6%

  
	
  30 month

  	
   

  	
  6%

  
	
  33 month

  	
   

  	
  6%

  
	
  36 month

  	
   

  	
  6%

  
	
  39 month

  	
   

  	
  10%

  

 

14

 

	
  42 month

  	
   

  	
  10%

  
	
  45 month

  	
   

  	
  10%

  
	
  48 month

  	
   

  	
  10%

  

 

3.                                       TERMINATIONS
AND FORFEITURES

 

If Director’s position as
Chairman of the Board terminates for any reason prior to the consummation of a
Change in Control, any then-unvested portion of the Sale/Dividend Payment shall
immediately be cancelled, and Director (and Director’s estate, designated
beneficiary or other legal representative, as applicable) shall forfeit any
rights or interests in and with respect to any such unvested portion of the
Sale/Dividend Payment; provided, however, that the foregoing cancellation and
forfeiture shall not apply if Director’s position as Chairman of the Board
terminated within three (3) months prior to a Change in Control, under
circumstances reasonably indicating that such termination was in anticipation
of the Change of Control.

 

In the event any Sale
Transaction is consummated, or any Net Dividend is paid, on or prior to the
first (1st) anniversary of the termination of Director’s position as
Chairman of the Board, Director shall be entitled to the portion of the
Sale/Dividend Payment that had vested on or prior to the effective date of
termination.  Such amount shall be
payable to Director in a lump sum within sixty (60) days of the date of such
Sale Transaction or Net Dividend payment.

 

In the event any Sale
Transaction is consummated, or any Net Dividend is paid, after such first (1st)
anniversary, any rights or interests in the entire Sale/Dividend Payment
(whether vested or unvested) shall be cancelled and Director (and Director’s
estate, designated beneficiary or other legal representative, as applicable)
shall forfeit any rights or interests in and with respect to the entire
Sale/Dividend Payment.

 

Notwithstanding anything
herein to the contrary, the Board may, in its sole discretion, accelerate the
vesting of any portion of the unvested portion of a Sale/Dividend Payment at
any time.

 

15Exhibit 10.25

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This
AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”)
is made and entered into as of the 28th day of August, 2008, by and between
RAFAELLA APPAREL GROUP, INC., a Delaware corporation (the “Company”), and
Husein Jafferjee (the “Executive”).

 

WHEREAS, the Company and the Executive entered
into an employment agreement, dated as of January 8, 2008 (the “Employment Agreement”); and

 

WHEREAS, the Company and the Executive have
agreed to amend certain provisions of the Employment Agreement in accordance
with the terms of this Amendment in order to clarify the intent of the parties;

 

NOW,
THEREFORE, in
consideration of the premises and the mutual covenants contained herein and for
other good and valuable consideration, the Company and the Executive agree to
the following amendment to the Employment Agreement:

 

1.                                       The effective date of this Amendment
shall be the date first written above.

 

2.                                       The first paragraph of Section 1
of Exhibit A is hereby amended and restated in its entirety as
follows:

 

1.                                       SALE
TRANSACTION

 

For purposes of this Agreement, “Sale
Transaction” shall mean:

 

i.                  a “Change in Control”, as defined in the
Employment Agreement; and

 

ii.               other than in connection with a “Change in Control”,
(A) all transactions (determined cumulatively from the Effective Date) by
the common or preferred stockholders of the Company on the Effective Date (the “Common
Stockholders”) or any affiliates of such Common Stockholders resulting in
the sale of common or preferred securities of the Company to one or more Third
Parties (as defined in the definition of “Change in Control”) and (B) the
sale by the Company of its common securities pursuant to an initial public
offering.

 

3.                                       Capitalized terms not otherwise defined
in this Amendment shall have the meanings set forth in the Employment
Agreement.

 

4.                                       Except as expressly amended by this
Amendment, all other terms and provisions of the Employment Agreement,
including any prior amendments thereto, shall remain unaltered and shall
continue in full force and effect.

 

1

 

5.                                       This Amendment may be executed in
counterparts, each of which shall be deemed an original and both of which shall
constitute one and the same document, with the same effect as if all parties
had signed on the same page.

 

2

 

IN
WITNESS WHEREOF,
the undersigned have executed this Amendment as of the date first written
above.

 

	
   

  	
  RAFAELLA APPAREL GROUP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christa Michalaros

  
	
   

  	
   

  	
  Name: Christa
  Michalaros

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Husein Jafferjee

  
	
   

  	
  Husein Jafferjee

  

 

3

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