Exhibit 10.11

 

GUARANTY

 

MILBERG FACTORS, INC.

99 Park Avenue

New York, NY 10016

 

Gentlemen:

 

In order to induce you to refrain at this time from terminating a certain
Factoring Agreement bearing the effective date of May 25, 2004, with Commerce
Clothing Company LLC at 5804 East Slauson Avenue, Commerce, CA 90040
(hereinafter referred to as the “Client”) and/or in consideration of any loans,
advances, payment, extensions of credit, benefits or financial accommodations
heretofore or hereafter made, granted or extended by you or which you have or
will become obligated to make, grant or extend to or for the account of the
Client, the undersigned (and each of them if more than one) guarantees without
deduction by reason of set-off, defense, or counterclaim of any party, or loss
of contribution from any co-guarantor hereunder, the due performance of all of
the Client’s contracts and agreements with you, both present and future and any
and all subsequent renewals, extensions, continuations, modifications,
supplements and amendments thereof, and the prompt payment to you with interest
of any and all sums which may be presently due and owing or which shall in the
future become due and owing to you from the Client, whether incurred by the
Client as maker, endorser, drawer, acceptor, guarantor, accommodation party or
otherwise, and whether due or to become due, secured or unsecured, absolute or
contingent, joint or several, and however or whenever acquired by you. This
joint and several primary liability shall include but not be limited to any and
all amounts charged or chargeable to the account of the Client and any and all
existing and future obligations and indebtedness of the Client, whether acquired
by you by assignment, transfer, or otherwise, and whether or not such
obligations and indebtedness shall arise under the aforesaid Factoring Agreement
or under any other contract or agreement or any renewal, modification,
supplement or amendment thereof, or shall be represented by or payable under
instruments of indebtedness or otherwise, and whether or not such obligations
and indebtedness shall be acquired by you from any concern which is your parent
or subsidiary or the co-subsidiary of your parent or for which you may now or in
the future act as a factor and/or lender (all of the foregoing obligations and
indebtedness hereinafter referred to as the “Obligations”), and in addition, the
undersigned shall be liable to you for reasonable attorneys’ fees and expenses,
if any claim hereunder is referred to an attorney for collection or in
connection with any amendment of this Guaranty. The undersigned shall be liable
to you for the payment of such obligations and indebtedness irrespective of the
genuineness, validity, regularity or enforceability of such obligations or
indebtedness, or of any instrument evidencing any of such obligations or
indebtedness or any collateral therefor or of the existence or extent of such
collateral, and irrespective of the allowability, allowance or disallowance of
any or all of such obligations or indebtedness in any case commenced by or
against the Client under any Debtor Relief Law, including, without limitation,
obligations or indebtedness of the Client for post-petition interest, fees,
costs and charges that would have accrued or been added to such obligations or
indebtedness but for the commencement of such case. For purposes hereof, “Debtor
Relief Law” means any applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, insolvency, reorganization or similar debtor relief
law affecting the rights of creditors generally from time to time in effect.

 

The undersigned hereby waives notice of acceptance hereof and of all notices and
demands of any kind to which the undersigned may be entitled, including without
limitation, notice of adverse change in Client’s financial condition or of any
other fact which might materially increase the risk of the undersigned; all
demands of payment on, and notice of nonpayment, protest and dishonor to the
undersigned, or the Client, or the makers, or endorsers of any notes or other
instruments for which the undersigned is or may be liable hereunder. The
undersigned waives all suretyship defenses. All sums at any time to the credit
of the undersigned and any property of the undersigned in your possession shall
be deemed held by you as security for any and all of the undersigned’s
obligations to you and to any company or companies which may now or at any time
be your parent or subsidiary, or the co-subsidiary of your parent, no matter how
or when arising and whether under this or any other instrument, agreement or
otherwise. The undersigned

 

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further waives notice of and hereby consents to any agreement or arrangements
whatever with the Client or any one else including, without limitation,
agreements and arrangements for payment extension, subordination, composition,
arrangement, discharge or release of the whole or any part of the Obligations,
contracts or agreements or other guarantors, or of the making of any election of
rights or remedies you may deem desirable under any Debtor Relief Law, or for
the change or surrender of any and all security, or for compromise, whether by
way of acceptance of part payment or of dividends or in any other way
whatsoever, and the same shall in no way impair the undersigned’s liability
hereunder. Nothing shall discharge or satisfy the liability of the undersigned
hereunder except the full performance and payment of the said obligations and
indebtedness with interest. The undersigned acknowledges that no oral
representations, including any representations to extend credit or provide other
financial accommodations to the Client, have been made to induce the undersigned
to enter into this Guaranty. Notwithstanding any payment or payments made by the
undersigned hereunder, or any setoff or application of funds of the undersigned
by you, the undersigned shall not be entitled to be subrogated to any of your
rights against the Client or against any collateral or guarantee or right of
offset held by you for the payment of the Obligations, nor shall the undersigned
seek or be entitled to seek any contribution or reimbursement from the Client in
respect of payments made by the undersigned hereunder, until all amounts owing
to you by the Client on account of the Obligations are paid in full and any
agreement between the Client and you pursuant to which financial accommodations
are made, granted or extended by you to the Client has been terminated. If,
notwithstanding the foregoing, any amount shall be paid to the undersigned on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full and all such agreements shall not have been
terminated, such amount shall be held by the undersigned in trust for you,
segregated from other funds of the undersigned, and shall forthwith upon, and in
any event within two (2) business days of, receipt by the undersigned, be turned
over to you in the exact form received by the undersigned (duly endorsed by the
undersigned to you, if required), to be applied against the Obligations, whether
matured or unmatured, in such order as you may determine, subject to the
provisions of any applicable agreement. Any and all present and future debts and
obligations of the Client to any of the undersigned are hereby waived and
postponed in favor of, and subordinated to, the full payment and performance of
all the Obligations of the Client to you. The undersigned agrees that if the
Client or any of the undersigned should at any time become insolvent, or make a
general assignment, or if a proceeding in bankruptcy or any insolvency or
reorganization proceeding shall be filed or commenced by, or in respect of the
Client or any of the undersigned, any and all obligations of the undersigned
shall, at your option, forthwith become due and payable without notice. If you
receive any payment or payments on account of the liabilities guaranteed hereby,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver, or any other party under any bankruptcy act or
code, state or federal law, common law or equitable doctrine, then to the extent
of any sum not finally retained by you, our obligations to you shall be
reinstated and this Agreement shall remain in full force and effect (or be
reinstated) until we shall have made full payment to you, which payment shall be
due on demand.

 

Your books and records showing the account between you and the Client shall be
admissible in evidence in any action or proceeding, shall be binding upon the
undersigned for the purpose of establishing the items therein set forth and
shall constitute prima facie proof thereof. This instrument is and shall be
construed to be an absolute, irrevocable, continuing, unconditional and
unlimited guaranty of payment, and shall continue in full force and effect,
until terminated by the actual receipt by you from the undersigned by registered
mail of written notice of termination; such termination shall be applicable only
to transactions having their inception thereafter, and rights and obligations
arising out of transactions having their inception prior to such termination
shall not be affected. Termination by one or more of the undersigned shall not
affect the liability of such of the undersigned who do not give such notice of
termination.

 

This guaranty shall be enforceable before or after proceeding against the Client
or simultaneously therewith, and without recourse to any security, and shall be
effective regardless of the subsequent incorporation, merger, consolidation or
other change, restructuring or termination of the structure or existence of the
Client or any affiliate thereof, or any change in the composition, nature,
personnel or location of the Client or any taking, exchange, release or
non-perfection of any collateral or any manner of application of collateral, or
proceeds thereof, to all or any of the Obligations of Client guaranteed hereby,

 

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or any manner of sale or other disposition of any collateral or any other assets
of Client or any affiliate. The obligations of the undersigned hereunder are
independent of the Obligations guaranteed hereby, and a separate action or
actions may be brought and prosecuted against any or all of the undersigned to
enforce this Guaranty, irrespective of whether any action is brought against the
Client or any other person liable in whole or in part for the Obligations
guaranteed hereby. This guaranty shall inure to and shall be enforceable by you,
any concern which is or may at any time be your parent or subsidiary or the
co-subsidiary of your parent and your and their successors and assigns and shall
be binding upon the successors and assigns of the undersigned. This instrument
cannot be changed or terminated orally. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCLUSIVE OF ITS
CONFLICT OF LAWS PROVISIONS. WE AGREE THAT ALL ACTIONS AND PROCEEDINGS RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT SHALL BE LITIGATED IN THE FEDERAL
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK OR, AT YOUR OPTION, IN ANY
OTHER COURT LOCATED IN NEW YORK STATE OR ELSEWHERE AS YOU MAY SELECT AND THAT
SUCH COURTS ARE CONVENIENT FORUMS AND WE SUBMIT TO THE PERSONAL JURISDICTION OF
SUCH COURT. WE WAIVE PERSONAL SERVICE OF PROCESS AND CONSENT THAT SERVICE OF
PROCESS UPON US MAY BE MADE BY CERTIFIED MAIL OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO US AT OUR ADDRESS APPEARING ON YOUR RECORDS, AND SERVICE
SO MADE SHALL BE DEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO
MAILED. BOTH PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BETWEEN US AND WE WAIVE THE RIGHT TO ASSERT IN ANY ACTION OR
PROCEEDING INSTITUTED BY YOU WITH REGARD TO THIS AGREEMENT ANY IMMUNITIES,
OFFSETS OR COUNTERCLAIMS WHICH WE MAY HAVE.

 

Dated: July 31, 2005                

CYGNE DESIGNS, INC.

(Corporate Guarantor)

Attest:  

/s/ Roy E. Green

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  By:  

/s/ Bernard M. Manuel

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Roy E. Green, Chief Financial Officer,

Treasurer and Secretary

     

Bernard M. Manuel, Chairman

and Chief Executive Officer

 

(Corporate Guarantors should also furnish appropriate Certified Resolution of
the Board of Directors.)

 

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