EXHIBIT 10.50

 

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SECOND AMENDED AND RESTATED

INVENTORY RIDER (REVOLVING ADVANCE)

Borrower(s):        CYGNE DESIGNS, INC.

Borrower has entered into that certain Loan and Security Agreement (Accounts and
inventory) dated July 30, 2007 with Comerica Bank (“Bank”) as secured party (as
modified, supplemented, amended, revised or restated from time to time,
hereinafter the “Agreement”), The SECOND AMENDED AND RESTATED INVENTORY RIDER
(REVOLVING ADVANCE), dated as of May 5, 2008 (hereinafter, this “Rider”) (a) is
hereby made a part of and is incorporated into the Agreement and (b) amends and
restates, in its entirety, that certain Amended and Restated Inventory Rider
(Revolving Advance), dated November 7,2007, between Borrower and Bank. Unless
otherwise defined, all initially capitalized terms in this Rider shall be as
defined in the Agreement.

1. At the request of Borrower, made at any time and from time to time during the
term of the Agreement, and as long as no event of default under the Agreement
has occurred and Borrower is in full, faithful and timely compliance with each
and all of the covenants, conditions, warranties and representations contained
in the Agreement, this Rider and/or any other agreement between Bank and
Borrower, and subject to Borrower’s concurrent execution and delivery to Bank of
a Designation of Inventory, or Certification of Borrowing Base, in form
customarily used by Bank, Bank agrees to make loans to Borrower secured by
Borrower’s inventory up to a maximum advance outstanding at any one time not to
exceed the sum of:

a. The lesser of (i)(A) during the Increase Period (as such term in defined in
Section 1.6 of the Agreement seventy percent (70%) of the lower of cost or
market value of Eligible Finished Goods Inventory and (B) during the Standard
Period (as such term in defined in Section 1.6 of the Agreement), fifty percent
(50%) of the lower of cost or market value of Eligible Finished Goods Inventory
or (ii) One Million Two Hundred Fifty Thousand Dollars ($1,250,000); plus

b. The lesser of (i)(A) during the Increase Period, eighty percent (80%) of the
lower of cost or market value of Eligible In-Transit Inventory and (B) during
the Standard Period, fifty percent (50%) of the lower of cost or market value of
Eligible In-Transit Inventory, or (ii) One Million Five Hundred Thousand Dollars
($1,500,000).

Anything contained in the foregoing to the contrary notwithstanding, Bank may
adjust the Borrowing Base percentage(s) and the definition of Eligible Finished
Goods Inventory and Eligible in-Transit Inventory, in each case as provided for
under Section 6.7 of the Agreement.

2. As used in this Rider, the following terms shall have the following
definitions:

a. “Eligible Finished Goods Inventory” shall mean Borrower’s finished goods
inventory, as may be adjusted by Bank, in Bank’s discretion, for age and
seasonality or other factors affecting the value of such inventory, and that
have been validly pledged to Bank and strictly comply with all of Borrower’s
warranties and representations to Bank; but Eligible Finished Goods Inventory
shall not include the following: (a) supplies (e.g. packaging); (b) raw
materials or purchased parts; (c) work in process; (d) Inventory consigned to
sales representatives of consigned to Borrower by a vendor; (e) obsolete
inventory; (f) inventory reserve amounts; (g) finished goods with no/low
liquidation value; (h) inventory located or stored with a ballos, warehousemen
or other third party without Bank’s prior written consent and unless a bailment
agreement in form and substance satisfactory to Bank and any other documents
required in accordance with Section 6.5 of the Agreement are in place;
(i) defective or inventory under repair; (j) inventory not insured naming Bank
as loss payee; (k) inventory not located at an address set forth in Section 6.5
of the Agreement or any schedule provided in connection therewith; and (l) all
other inventory deemed ineligible by Bank.

b. “Eligible in Transit Inventory” shall mean and includes Borrower’s finished
goods inventory that does not qualify as Eligible Finished Goods Inventory
solely because it is in transit to a location set forth in Section 6.5 of the
Agreement, but that (a) has been purchased by Borrower; (b) payment for such
purchase has been made by Borrower to the seller of such inventory, (c) title to
such inventory has transferred to Borrower and (d) is not otherwise determined
from time to time by Bank, in its sole discretion, to be ineligible.

3. All Eligible inventory and all Eligible in Transit Inventory is in all
material respects of good and merchantable quality, free from all material
defects. All advances made and to be made pursuant to this Rider are solely and
exclusively to enable Borrower to acquire rights in and purchase new Inventory,
and Borrower represents and warrants that all advances by Bank pursuant to this
Rider will be used solely and exclusively for such purpose; and since such
advances will be used for the foregoing purposes; Bank’s security interest in
Borrower’s inventory is and shall be at all times a purchase-money security
interest as that term is described in Section 9103 of the California Uniform
Commercial Code.

4. Advances made by Bank to Borrower pursuant to this Rider shall be included as
part of the indebtedness of Borrower to Bank as the term “Indebtedness” is
defined in the Agreement; and at Bank’s option, advances pursuant to this Rider
may be evidenced by promissory note(s), In form and on terms satisfactory to
Bank. All such advances shall bear interest at the rate and be payable in the
manner specified in said promissory note(s) in the event Bank exercises the
aforementioned option, and in the event Bank does not, such advances shall bear
interest at the rate and be payable in the manner specified in the Agreement.

5. All of the terms, covenants, warranties, conditions, agreements and
representations of the Agreement are incorporated herein as though set forth in
their entirety and are hereby reaffirmed by Borrower and Bank as though fully
set forth herein.

 

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IN WITNESS WHEREOF, the parties have agreed as of May 5, 2008.

COMERICA BANK       CYGNE DESIGNS, INC.,       A Delaware corporation By:  

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    By:  

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Name:

Title:

 

Deborah Jenkins

Vice President – Western Market

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