Document:

Factoring Agreement dated July 31, 2005

 Exhibit 10.8 
  
 FACTORING AGREEMENT 
  
 MILBERG FACTORS, INC. 
 99 Park Avenue 
 New York, NY 10016 
  
 Gentlemen: 
  
 We propose the following agreement with you, effective as of July 31, 2005 wherein we agree to retain you as our sole factor
in accordance with the terms, provisions and conditions as hereinafter stated: 
  
 1. The undersigned, hereby sells, assigns, transfers and sets over to you as absolute owner and you hereby agree to purchase from the undersigned, without recourse to the undersigned to the extent expressly set forth
below, all Receivables now or hereafter owned by us which are acceptable to you. You hereby agree to assume the risk of loss resulting from a customer’s nonpayment of an approved Receivable due to the customer’s financial inability at
maturity to pay such Receivable. You shall not be responsible, however, for nonpayment due to any reason other than such inability to pay. The term “Receivables” means and includes all accounts, accounts receivable, notes, bills,
acceptances and any and all other forms of obligations owing to us, whether secured or unsecured, all proceeds thereof and all of our rights to any merchandise which is represented thereby (delivered or undelivered), including all of our rights of
stoppage in transit, replevin and reclamation as an unpaid vendor or lienor. You shall be privileged to enjoy all of the rights and remedies of the seller of such goods and shall be and become subrogated to all guaranties, collateral and other
rights possessed by us or due to come into our hands, but you shall not be liable in any manner for exercising or refusing to exercise any rights thereby bestowed. From time to time we shall provide you with schedules describing all Receivables
created or acquired by us and shall execute and deliver to you at your offices in the City of New York written assignments of such Receivables to you and shall furnish at the same time copies of customers’ invoices or the equivalent, together
with original shipping or delivery receipts for all merchandise sold and/or all notes, bills, acceptances or other evidences of customer indebtedness duly endorsed in blank by us, and any other information or documents you may call upon us from time
to time to submit, all in form satisfactory to you. Receivables not approved by you as provided below in whole or in part (including any Receivables outstanding on the date hereof) shall bear the factoring charge described below, and are hereby
assigned to you with full recourse to the undersigned to the extent and in the respects not so approved. 
  
 2. The amounts and terms of each sale to our customers shall be submitted to you for your credit approval in writing and no sales or deliveries shall be
made without such written approval, which may be withdrawn at any time before delivery, but in no event shall you have any credit risk on any Receivable, whether or not approved by you, if the net face amount of such Receivable is less than $150.00,
or the invoice evidences charges for samples supplied to our customer. Your factoring charge, due and payable at time of purchase, shall be fifty-five one hundredths of one percent (0.55%) of the gross amount of the first $25,000,000 of Receivables
factored by you in any contract year, forty-five one hundredths of one percent (0.45%) of the next $25,000,000 of Receivables factored by you in any contract year, and forty one hundredths of one percent (0.40%) of Receivables factored by you in any
contract year in excess of $50,000,000, in each case, less any trade and cash discounts to customers (which shall be computed on the shortest terms where optional terms are given). In the event that the terms of any of our sales exceeds 60 days, you
shall receive as to such sales an additional 1⁄4 of one percent for each additional 30 days, or portion thereof, of extended terms or additional dating. In addition, with prior written notice to us, you may from time to time impose a surcharge
with respect to Receivables from customers who are debtors-in-possession under the Federal Bankruptcy Code, other high-risk customers or customers located outside the United States. The purchase price of Receivables accepted by you is to be the net
face amount thereof less your factoring charge. The term “net face amount” means the gross amount of Receivables, less trade and cash discounts to customers (which shall be computed on the shortest terms where optional terms are given) and
credits and allowances to customers of any nature. After purchase of Receivables by you, a 

  

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discount, credit or allowance may be claimed solely by the customer and the customer and the undersigned will not issue or grant any discounts, credits or
allowances to a customer without your prior consent. At the time of purchase of Receivables and periodically thereafter, you may in your sole and absolute discretion make advances to us which, in the aggregate and at anytime outstanding will not
exceed the lesser of (i) $20,000,000 (the “Maximum Revolving Amount”), or (ii) ninety percent (90%) of the purchase price, and you will credit to our account the balance of said purchase price less any monies remitted, paid or otherwise
advanced by you for our account and less returns, trade and cash discounts, credits or allowances of any nature at anytime issued, owed, granted or outstanding, upon the respective collection of such Receivables, after adding thereto three (3)
business days to cover mailing time, delays in remittances and clearance of checks, or, in the case of approved Receivables, upon their respective uncollectability because of the customer’s financial inability at maturity to pay same.
Notwithstanding the foregoing, it is understood that you may, at our request, from time to time advance a sum that is more or less than the sum determined by the application of the above percentage of the purchase price and may, in fact, make
advances in excess of the Maximum Revolving Amount but you are under no obligation to do so; all advances in excess of the aforesaid percentage, less all applicable deductions, charges, chargebacks and reserves, and all advances in excess of the
Maximum Revolving Amount, are repayable on demand. Amounts taken by customers for anticipation shall be charged to our account by you. The minimum aggregate factoring charges payable under this Agreement for each contract year hereof shall be
ninety-five thousand dollars ($95,000), which, to the extent of any deficiency, shall be chargeable to our account with you on a monthly basis. You shall be entitled to hold all sums and all property of the undersigned at any time to our credit or
in your possession, or upon or in which you have a lien or security interest, as security for all of our obligations at any time owing to you and to each corporation which is at any time your parent, affiliate, subsidiary or a co-subsidiary of your
parent. Such obligations shall include, without limitation, all obligations to you hereunder and all obligations for purchases made by the undersigned from any other client factored or financed by you or by any such parent, affiliate, subsidiary or
co-subsidiary, whether under this agreement or otherwise, no matter how or when arising and whether due or to become due, and you shall have the right to charge to our account the amount of all such obligations and pay over such amounts to such
parent, affiliate, subsidiary or co-subsidiary. Recourse to security shall not at any time be required, and we shall at all times remain liable to you and such parent, affiliate, subsidiary or co-subsidiary on demand for all loans and advances
(including any advances in excess of the net face amount of Receivables) to or for our account and for all of our other obligations to you. You may at your option reserve an amount of past sales (the “Reserve”), and revise said Reserve
from time to time, if in your sole judgment it is necessary to cover possible returns of merchandise, deductions or other claims or setoffs made by customers. 
  

3. Subject to the provisions of this Agreement, upon our request, you shall remit (and at any time in your sole discretion you may remit) any money
standing to our credit on your books in excess of the Reserve. You may charge to our account interest on any monies remitted or otherwise advanced by you or charged to our account hereunder (the “Advances”) before the collection of
Receivables or in the case of approved Receivables, before their respective uncollectability because of the customer’s financial inability at maturity to pay same as above described, at a rate one-half of one percent (0.50%) per annum above the
highest publicly announced “reference”, “prime” or “base” interest rate of JPMorgan Chase Bank or The Bank of New York (the “Prime Rate”), (which is now six and one-quarter percent (6.25%) per annum) computed
on the basis of a 360 day year (the “Effective Rate”); provided, however, that interest on Advances which are in excess of ninety percent (90%) of the net face amount of outstanding Receivables purchased hereunder, less the reserve,
disputed accounts and unapproved Receivables will bear interest at a rate one percent (1%) per annum in excess of the Effective Rate. Said Effective Rate shall be increased or decreased effective the first day of the month following any month in
which there is an increase or decrease in the Prime Rate, such increase or decrease to be in an amount equal to the increase or decrease in such Prime Rate; provided, however, that in no event shall such Effective Rate be decreased below the rate of
four percent (4%) per annum. Such interest is due and payable at the close of each month. You will account to us monthly and each monthly accounting will be fully binding upon us unless we give you written notice of exceptions within sixty (60) days
from its date. 
  

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 4. We warrant and agree as to each such Receivable that at the time of the sale or assignment thereof to
you hereunder and at all times thereafter: it will be a bona fide existing obligation created by the absolute sale and delivery of merchandise or the rendition of services to customers in the ordinary course of business and will be paid and
performed according to the terms provided therein; all documents delivered to you in connection therewith are genuine; it will be enforceable against all parties thereto without credit, defense, offset or counterclaim, real or claimed, whether
arising out of the transaction creating such Receivable or otherwise; and it will be free and clear of liens and encumbrances. We further warrant and agree as to each such Receivable that at the time of the sale or assignment thereof to you
hereunder we will have good title thereto and good right to sell, assign, transfer and set over such Receivable to you. All invoices to customers shall state plainly on the face thereof that the accounts receivable represented by such invoices have
been assigned and are payable only to you. You may prepare and mail all customers’ invoices, and billings of such customers’ invoices by whomsoever done shall constitute an assignment to you of the Receivables represented thereby whether
or not the undersigned executes any other specific instrument of assignment. We hereby further warrant and agree that the customer in each instance has received and will accept the merchandise sold or the services rendered and the invoice therefor
without dispute or claim in any respect whatsoever, including, without limitation, disputes as to price, terms or quality and defenses based on force majeure. We will notify you promptly of and shall at our own cost and expense settle all disputes
and claims and will pay you promptly the amount of the Receivables affected thereby, as well as the amount of any unapproved Receivable if unpaid at its due date. If you so elect you are to have and are hereby granted the right and option at all
times to settle, compromise, adjust or litigate all disputes or claims directly with the customer or other complainant upon such terms and conditions as you deem advisable, and also the right to take possession of and to sell or cause to be sold
without notice any returned merchandise, at such prices, to such purchasers and upon such terms as you deem advisable, and in any case to charge the deficiencies, costs and expenses thereof (including attorneys’ fees) to us. In addition to all
other rights hereunder, you may charge against our account the full net face amount of any Receivable where there is such dispute, defense, offset, claim and/or counterclaim (regardless of the extent or nature thereof or whether arising out of the
transaction creating such Receivable or otherwise) or where the customer fails or refuses to pay the amount due for any reason other than the customer’s financial inability at maturity to pay, or if any unapproved Receivable is unpaid at its
due date, but such chargeback shall not be deemed a re-assignment thereof, and title to such Receivable shall remain in you until such Receivable is fully paid, settled or discharged. If monies are due and owing from a customer for both
credit-approved and non credit-approved Receivables, any payments or recoveries received on such Receivables will be applied first to any credit-approved Receivables. We hereby agree to indemnify and hold you harmless against and in respect of any
and all liability, loss or expense (including attorneys’ fees) arising out of or relating to any breach of warranty or covenant on our part. Any merchandise which is returned by customers or otherwise recovered shall be set aside, marked in
your name and held by us as your trustee. We exonerate you from any liability for any loss, depreciation or other damage to Receivables unless caused by your willful and malicious act. We agree to execute such further instruments as may be required
or permitted by any law relating to notices of or affidavits in connection with assignments of accounts receivable and to cooperate with you in the filing or recording and renewal thereof. As additional security for all of our obligations to you, as
hereinabove defined, the undersigned hereby grants you a continuing security interest in all Accounts, General Intangibles and Contract Rights (as said terms are defined in Article 9 of the Uniform Commercial Code) now existing or hereafter acquired
by us and all proceeds thereof. Each sale of Receivables hereunder shall constitute and be a transaction separate from and independent of each other, but all such transactions shall be subject to and governed by each and every of the terms,
provisions and conditions of this agreement. During the term of this agreement we shall not sell, negotiate, pledge or assign or grant any security interest in any Receivables, Accounts, General Intangibles, Contract Rights or inventory to any one
other than you without your prior consent, nor shall we grant or permit to exist without your prior consent any mortgage, pledge, security interest, encumbrance or lien of any kind upon any of our property, except liens for taxes not yet due, liens
incidental to our business which were not incurred in connection with the borrowing of money or obtaining of advances or credit and which do not in the aggregate materially detract from the value of our assets or impair the use thereof in the
operation of our business. Without limiting the generality of the foregoing, during the term of this agreement, we shall not pledge any equity 

  

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interest held by us in any of our subsidiaries or permit any of our subsidiaries to pledge any equity interest held by them in any of our indirect
subsidiaries; provided that, we agree to pledge such equity interests to you, in a manner in form and substance acceptable to you, upon your request any time during the term of this agreement. We authorize you to file such financing statements under
the Uniform Commercial Code as you may deem necessary or advisable to perfect the security interests we have granted to you under or in connection with this Agreement or otherwise. We appoint Stephen R. Murphy or any other person whom you may
designate as our attorney with power: to endorse our name on any checks, notes, acceptances, money orders, drafts or other forms of payment or security that may come in your possession; to sign our name on any invoice or bill of lading relating to
any Receivable, on drafts against customers, on schedules of assignment of Receivables, on notices of assignment and public records, on verification of accounts and on notice to customers; to notify the post office authorities to change the address
for delivery of our mail to an address designated by you; to receive, open and dispose of all mail addressed to us; to send requests for verification of accounts to customers; and to do all other things you deem necessary to carry out this
Agreement. We hereby ratify and approve all acts of the attorney and neither you nor the attorney will be liable for any acts of commission or omission, nor for any error of judgment or mistake of fact or law. This power, being coupled with an
interest, is irrevocable so long as any Receivable sold to you remains unpaid or any money remains due to you from us. We shall immediately place notations upon our books of account to disclose the assignment of all Receivables, accounts, general
intangibles and contract rights to you. 
  
 Notwithstanding anything to the
contrary, we shall be permitted to grant the subordinate and junior security interest granted to Commerce Clothing Company LLC pursuant to the Security Agreement dated the date hereof (the “Subordinated Lien”); provided that, at all times
during which this agreement is in effect or during which we have any outstanding obligations to you, whether pursuant to this agreement or otherwise, we represent and warrant to, and agree with, you that the Subordinated Lien shall be subordinate,
junior and inferior and postponed in priority, operation and effect to the security interests granted to you hereunder and pursuant to certain supplemental security agreements dated as of the date hereof. 
  
 5. The undersigned will repay upon demand all our obligations to you and in
addition thereto all costs and expenses, including without limitation reasonable attorneys’ fees, incurred to obtain or enforce payment of any obligation of the undersigned to you, or in the prosecution or defense of any action or proceeding
either against you or us concerning any matter arising out of or relating to this Agreement, the Receivables, any collateral pledged in your favor and/or any of our obligations to you, including, without limitation, to defend successfully, in whole
or in part, any and all actions or proceedings brought by the undersigned. In addition, we agree to reimburse you for the amount of all filing and search fees, reasonable attorneys’ fees, costs and expenses incurred by you in connection with
the negotiation, preparation, closing, administration and enforcement of this agreement and any ancillary documents issued in connection herewith and modifications and additions to any of them. We shall also pay your customary charges for all
services performed by you for us at our request and all banking facility charges incurred in connection with the opening and operation of our account with you, and we shall also pay you your customary charges for any field examination, collateral
analysis or other business analysis, the need for which is determined by you, plus all costs and disbursements incurred by you in the performance of such examinations or analysis. If any remittances are made directly to us, we shall hold the same as
your property and immediately deliver them to you in their original form. We hereby waive presentment and protest of any instrument and notice thereof, notice of default and any other notices to which we might otherwise be entitled. All sales of
Receivables to you by us shall be deemed to include all of our right, title and interest to all of our books, records, files and all other data and documents relating to each Receivable. If any tax by any governmental authority is imposed on any
transaction between us, or in respect to sales or the merchandise affected by such sales, which you are or may be required to withhold or pay, we agree to indemnify and hold you harmless in respect of such taxes, and we will repay you the amount of
any such taxes, which may be charged to our account. 
  
 6. We
warrant that we are solvent and will so remain during the terms of this Agreement. We agree to furnish to you (A) year-end financial statements certified by our regularly employed Certified 

  

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Public Accountant, (B) as soon as available and in any event no later than December 1 and June 1 of each year, six-month cash flow projections
(incorporating, for the avoidance of doubt, any scheduled payment of principal and/or interest to be made during such period) all in reasonable detail, prepared on a consistent basis and in form and substance reasonably satisfactory to you (the
“Cash Flow Projections”), (C) such unaudited financial statements and financial information as you shall reasonably request, (D) copies of each filing made by us with the Securities and Exchange Commission (including, without limitation,
Forms 10-Q, 10-K and 8-K, and all registration statements) and each press release issued by us, within two business days of such filing or issuance, and (E) on each anniversary hereof, a list of our shareholders, officers and directors. We hereby
represent, warrant and covenant to you that: (a) the execution, delivery and performance of this Agreement, any supplements hereto and all related documents, the sale of Receivables hereunder, the borrowing of loans and advances hereunder and
thereunder, if any, and the grants of security interests hereunder and thereunder, do not and will not (i) violate in any material respect the provisions of any applicable law, statute, rule, regulation, order or decree to which we are subject, (ii)
conflict with, result in a breach of, or constitute a default under, our certificate of incorporation or by-laws, or, in any material respect, any indenture, agreement or other instrument to which we are a party, or by which we or any of our
property may be bound, or (iii) result in the creation or imposition of any security interest, mortgage, pledge or other lien upon any property now owned or hereafter acquired by us, other than the security interests granted to you hereunder; (b)
the operation of our business is and will remain in compliance in all material respects with all applicable laws including all applicable environmental laws and regulations and all applicable state and federal laws and regulations; (c) based upon
the Employee Retirement Income Security Act of 1974 (“ERISA”) and the regulations and published interpretations thereunder (i) we have not engaged in any Prohibited Transactions as defined in Section 406 of ERISA and Section 4975 of the
Internal Revenue Code, as amended, (ii) we have met all applicable minimum funding requirements under Section 302 of ERISA in respect of our plans, (iii) we have no knowledge of any event or occurrence which would cause the Pension Benefit Guaranty
Corporation to institute proceedings under Title IV of ERISA to terminate any employee benefit plan(s), (iv) we have no fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than our employees
and (v) we have not withdrawn, completely or partially, from any multiemployer pension plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980; (d) we are a corporation duly incorporated, validly existing and in
good standing under the laws of the state of our incorporation and are and will remain duly licensed and qualified to do business and are in good standing in all other states wherein the nature of our business makes licensing or qualification as a
foreign corporation necessary and wherein the failure to be so licensed or qualified could have a material adverse effect on our condition, business or operations; (e) except as disclosed on Schedule A hereto, there are no pending or threatened
investigations, actions or proceedings before or by any court, governmental department, commission, board, bureau or administrative agency which if adversely determined would materially affect our condition, business or operations; (f) except for
the Subordinated Lien, we own and have good and marketable title to all of the Receivables, goods and chattels and other assets real and personal in which a lien or security interest is given to you under your security agreements free and clear of
all liens, charges and encumbrances; (g) except as disclosed on Schedule A hereto, we have filed all material tax returns and paid all material United States federal, state and local taxes, and non-U.S. taxes, other than taxes not yet due or which
may hereafter be paid without penalty, and have no knowledge of any deficiency or additional assessment in connection therewith not provided for on our books, and will continue to do so during the term hereof; (h) we are (i) in compliance with, and
(ii) have procured and are now in possession of, all material licenses or permits required by any applicable United States federal, state or local or non-U.S. law or regulation for the operation of our business in each jurisdiction wherein we are
now conducting or propose to conduct business; (i) we are not in default in the payment of the principal of or interest on any indebtedness for borrowed money or, in any material respect, under any instrument or agreement under and subject to which
any indebtedness for borrowed money has been issued and no event has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event
of default thereunder; (j) we will promptly inform you of: (i) the commencement of all proceedings and investigations by or before any governmental or nongovernmental body and all actions and proceedings in any court or before any arbitrator against
or in 

  

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any way concerning any of our properties, assets or business, which might singly or in the aggregate, have a materially adverse effect on us, (ii) any
amendment of our certificate of incorporation or by-laws, (iii) any change in our business, assets, liabilities, financial condition, results of operations or business prospects which has had or might have any materially adverse effect on us, (iv)
any default or Event of Default hereunder or any event which with the passage of time or giving of notice or both would constitute a default or Event of Default, (v) any default or any event which with the passage of time or giving of notice or both
would constitute a default under any agreement for the payment of money to which we are a party or by which we or any of our properties may be bound or which would have a material adverse effect on our business, operations, property or financial
condition, (vi) any change in the location of our places of business, and (vii) any change in our corporate name; (k) all financial projections prepared by us or at our direction and delivered to you will represent, at the time of delivery to you,
our best estimate of our future financial performance and will be based upon assumptions which are valid in light of the then current business conditions; (l) all balance sheet and income statements which have been delivered to you fairly,
accurately and properly state our financial condition and there has been no material adverse change in our financial condition as reflected in such statements since the date of the latest thereof and such statements do not fail to disclose any fact
or facts which might materially and adversely affect our financial condition; (m) we will not hereafter incur indebtedness for borrowed money, except to (i) you and (ii) pursuant to the Subordinated Secured Promissory Note issued on July 31, 2005,
by us in favor of Commerce Clothing Company LLC (the “Subordinated Promissory Note”); (n) we will not guarantee or endorse the obligations of any person, firm or corporation, except in the ordinary course of business, enter into any merger
or consolidation, or purchase or otherwise acquire the stock or any material obligations or assets of any person, firm, corporation or other enterprise; (o) we will not pay any management fees or make any similar payments or declare any dividends,
except dividends payable exclusively in our stock, or redeem any of our stock or make any other payments in respect of our stock that are the equivalent to dividends or stock redemption payments, to any shareholder or affiliate as long as any debts
and obligations hereunder remain outstanding without your express prior written consent; and (p) except for our guarantee of Commerce Clothing Company LLC’s obligations to you, we will not issue any guarantees of the obligations of any third
person or entity as long as any debts and obligations hereunder remain outstanding, without your express prior written consent. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York applicable to
contracts to be performed wholly within the State of New York and shall have an initial term of one year from its effective date and thereafter shall be automatically renewed for successive periods of one year unless terminated by us at the
conclusion of its initial term or any renewal term by giving you at least sixty (60) days prior written notice: provided, however, that you may terminate it at any time during the initial term or any renewal term by giving us at least sixty (60)
days prior written notice. If the aggregate purchase price of approved Receivables you credit to our account in any contract year as a result of their respective uncollectability because of the customer’s financial inability at maturity to pay
same (net of recoveries thereon) exceeds fifty percent (50%) of the aggregate factoring charges (i.e., commissions) posted to our account with respect to such contract year, then you shall have the option to extend the term of this Agreement for an
additional one (1) year period beyond the expiration of the term during which such event occurs. As so extended, the renewal and termination provisions of this paragraph will continue to apply. You will endeavor to give us timely written notice of
such extension, but your failure to do so will not constitute a breach of, or otherwise impair your ability to extend, this Agreement. The mailing of a registered or certified letter of notice addressed by one party to the other at its usual address
shall constitute sufficient notice which shall be effective for the purposes set forth therein on the appropriate date specified in such letter. 
  
 Notwithstanding anything to the contrary herein, we shall not make any payment in respect of the Subordinated Promissory Note, including, without limitation, any
scheduled payment of principal and/or interest or any prepayment, except as follows: 
  
 (a) We shall not make any scheduled payment of principal and/or interest pursuant to the Subordinated Promissory Note unless (i) immediately prior to, and after giving effect to, such payment (A) we have not, and will have not, breached any
term, condition or covenant in this Agreement, including, 

  

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without limitation, the Tangible Net Worth and Working Capital minimums set forth below in this Section 6, (B) the Advances are not in excess, and will not
exceed, the lesser of (x) the Maximum Revolving Amount and (y) ninety percent (90%) of the net face amount of outstanding Receivables purchased hereunder, less the reserve, disputed accounts and unapproved Receivables, (C) for each of (x) the
quarterly period with respect to which such payment is being made and (y) the period beginning on the date hereof through the date of such payment, we shall have net income (as opposed to a net deficit) (as is customarily determined under GAAP), (D)
no Event of Default has occurred prior to, or will occur as a result of, such payment (the conditions set forth in (A), (B), (C) and (D) above are collectively referred to as the “Company Payment Conditions”); (ii) no notice of termination
of this agreement and/or demand for repayment has been delivered by you prior to the date of such scheduled payment (together with the Company Payment Conditions, the “Payment Conditions”); and (iii) we have delivered to you not less than
10 business days prior to such scheduled payment, a certification from our chief financial officer (a “Payment Certification”) stating the amount of the proposed payment and certifying the satisfaction by us of each of the Company Payment
Conditions; provided further that, in the event that such payment is, in whole or in part, a payment of principal, the amount of such principal payment shall not exceed the lesser of (x) the difference between (I) our net income (as is customarily
determined under GAAP) during the period beginning on the date hereof through the date of such payment and (II) the sum of the aggregate amount of all prior regularly scheduled payments of principal made pursuant to the Subordinated Promissory Note
and any dividends or other distributions made to holders of equity securities of Cygne Designs, Inc. and (y) the amount of principal payable on such date as set forth in Section 2.1 of the Subordinated Promissory Note (as in effect on the date
hereof); 
  
 (b) We shall not make any payment in respect of a Prepayment Event
(as defined in the Subordinated Promissory Note) or any other prepayment in respect of the Subordinated Promissory Note unless (i) immediately prior to, and after giving effect to, such payment each of the Payment Conditions shall be satisfied; and
(ii) not less than 20 business days prior to any Prepayment Event, we deliver a Payment Certification (A) stating the amount under the Subordinated Promissory Note that we would like to prepay with the proceeds from the proposed Prepayment
Event, (B) certifying that (x) the proposed Prepayment Event will be a sale or issuance of our common stock representing not more than thirty percent (30%) of our capital stock on a fully diluted basis and (y) not more than fifty percent (50%) of
the proceeds of such sale or issuance will be used to prepay the Subordinate Promissory Note, and (C) certifying the satisfaction by us of each of the Company Payment Conditions (the certifications set forth in (B) and (C) are collectively referred
to as the “Prepayment Event Certifications”). 
  
 In the event that (i)
any Payment Condition has not been satisfied or (ii) a Payment Certification is not timely delivered or the chief financial officer is unable to deliver a Payment Certification, we shall not make any payment in respect of the Subordinated Promissory
Note other than by capitalizing such payments and adding them to the aggregate principal amount of the Subordinated Promissory Note. 
  
 Notwithstanding the foregoing, you may terminate this Agreement, without notice, upon the occurrence of any one or more of the following events (an “Event of
Default”): (a) default in the payment or performance, when due or payable, of any payment required under this Agreement or under any future agreement or supplement with you or under any agreement to which we are a party with third parties; (b)
any warranty, representation, or other statement made or furnished to you by us or on our behalf or by any guarantor of our obligations hereunder or in connection herewith or in any instrument furnished in compliance with or in reference to this
Agreement proves to have been false or misleading in any material respect when made or furnished or becomes false in any material respect; (c) we fail or neglect to perform, keep or observe any term, provision, condition, covenant, warranty or
representation contained in this Agreement or in any other agreement between us or any rider or supplement which is required to be performed, kept or observed by us; (d) any statement, report, financial statement, or certificate made or delivered by
us, or by any of our officers, employees or agents, to you is not true and correct in any material respect; (e) except for the Subordinated Lien, the imposition of a lien or encumbrance on any of our assets, including the Receivables, or the making
of any levy, seizure, or attachment on all or any of our assets, including the Receivables; (f) any material adverse change in our financial condition or the 

  

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financial condition of any guarantor of our obligations hereunder; (g) we or any guarantor of our obligations hereunder become insolvent, or unable to meet
our debts as they mature, or fail, suspend or go out of business or a case is commenced under the Bankruptcy Code or an order for relief in a case under the Bankruptcy Code is entered with respect to us or any such guarantor, or a custodian or
receiver (or other court designee performing the functions of a receiver) is appointed for or takes possession of either our or any such guarantor’s assets or affairs; (h) we or any guarantor of our obligations hereunder cease to conduct our
business as now conducted or are enjoined, restrained or in any way prevented by court, governmental or administrative order from conducting all or any material part of our business affairs; (i) a notice of any lien, levy or assessment is filed of
record with respect to all or any of our assets by the United States, or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency, including, without limitation, the Pension Benefit Guaranty
Corporation, or if any taxes or debts owing at any time or times hereafter to any one of them becomes a lien or encumbrance upon any of the Receivables or any of our other assets and the same is not released within thirty (30) days after the same
becomes a lien or encumbrance; (j) you shall in good faith deem yourself insecure or unsafe; (k) any guaranty given you with respect to our obligations is limited or terminated or otherwise deemed unenforceable or invalid; (1) death of a guarantor
of our obligations hereunder or in connection herewith which guaranty is not replaced by a guarantor, acceptable to you in your sole discretion; (m) we shall fail to pay our taxes when due unless such taxes are being contested in good faith by
appropriate proceeding and with respect to which adequate reserves have been provided on our books; (n) should there be a sale or transfer of all or substantially all of our assets or any material change in our shareholdings; or (o) should our
Tangible Net Worth (as customarily defined under GAAP but including debt expressly subordinated to you in writing) be (A) at anytime during the period from the date hereof through January 31, 2006, less than $1,000,000 or (B) at anytime thereafter,
less than $3,000,000; or (p) should our Working Capital (as customarily defined under GAAP) be (A) at anytime during the period from the date hereof through January 31, 2006, less than $1,000,000 or (B) at anytime thereafter, less than $3,000,000.
Upon the effective date of termination for whatever reason, all moneys chargeable to our account under this Agreement shall be immediately due and payable without further notice or demand. Notwithstanding termination, until all your rights and all
our obligations hereunder (including without limitation the payment in full of all moneys chargeable to our account under this Agreement and the provision of an indemnity as provided in the last sentence of this Agreement) have been fully satisfied,
(i) we shall continue to assign to you and grant you a security interest in all Receivables then existing or thereafter arising, shall not factor or assign Receivables, or grant a security interest therein, to any other person or entity, shall state
on the face of all invoices that the Accounts Receivable represented by such invoices have been assigned and are payable only to you, and shall immediately deliver any remittances to you in their original form, (ii) all of our obligations and all of
your rights and powers with respect to Receivables then existing or thereafter arising, with respect to other security then existing or thereafter arising or acquired, and with respect to transactions or events occurring prior to the effective date
of such termination shall be unaffected and unimpaired by such termination, and (iii) all of our representations, warranties, covenants and agreements and all other provisions binding upon us contained herein shall survive and continue in full force
and effect, and shall be fully operative. 
  
 7. Failure by you to
exercise any right, remedy or option under this Agreement or delay by you in exercising the same will not operate as a waiver; no waiver or consent by you will be effective unless it is in writing and then only to the extent specifically stated.
This Agreement cannot be changed or terminated other than by a writing signed by the party to be charged, is our entire contract, and is for the benefit of and binding upon the parties hereto and their respective successors and assigns, heirs,
executors, administrators and personal representatives. You may at any time assign your rights and delegate your duties under this Agreement to any of your direct or indirect subsidiaries. Your rights and remedies under this agreement will be
cumulative and not exclusive of any other right or remedy which you may have. Both parties agree that all actions and proceedings directly or indirectly relating to this Agreement will be litigated exclusively in the federal or state courts located
in the County and State of New York and that such courts are convenient forums and both parties submit to the personal jurisdiction of such courts. Both you and we waive all right to a trial by jury in any litigation relating to transactions
under this Agreement, supplements hereto and any related agreements, and we agree not to assert any  

  

 8 

 
counterclaim of any nature in such litigation. In the event that you cease to act as factor for us hereunder, we agree to furnish to you an
indemnity satisfactory to you against any item which could be charged to us under the terms hereof which may in your sole and absolute discretion include the retention of any property held by you or the holding by you without interest from the date
of termination of any balance standing to our credit, as security for our obligations hereunder. 
  
 [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] 
  

 9 

					
	 	 	Very truly yours,
		
	ATTEST:	 	CYGNE DESIGNS, INC.
			
	 /s/ Roy E. Green

	 	By:	 	 /s/ Bernard. M. Manuel

	Roy E. Green, Chief Financial Officer,	 	 	 	Bernard M. Manuel, Chairman
	Treasurer and Secretary	 	 	 	and Chief Executive Officer
			
	(Seal)	 	Date:	 	July 31, 2005
			
	 	 	Address:	 	11 West 42nd Street
	 	 	 	 	New York, NY 10036
		
	 	 	Accepted at New York, N.Y.
		
	ATTEST:	 	MILBERG FACTORS, INC.
			
	 /s/ Stephen R. Murphy

	 	By:	 	 /s/ William A. Zisfein

	Stephen R. Murphy, Senior Vice President,	 	 	 	William A. Zisfein, Senior Vice President
	Secretary & Treasurer	 	 	 	 
	 	 	Date:	 	July 31, 2005
			
	(Seal)	 	 	 	 

  

 10 

 Schedule A 
  

	1.	Investigations, Actions and Proceedings (Section 6(e)) 

  

	2.	Tax matters (Section 6(g)) 

  

 11Security Agreement - Goods & Chattels dated July 31, 2005

 Exhibit 10.9 
  
 SECURITY AGREEMENT—GOODS AND CHATTELS 
  

	To:	MILBERG FACTORS, INC. 

 99 Park Avenue 
 New York, NY 10016 
  
 Gentlemen: 
  
 1. To secure the payment of all debts, liabilities, obligations, covenants and duties owing by us to you under that certain Factoring Agreement bearing the effective date of July 31, 2005 as well as to secure the
payment in full of the other Obligations referred to herein, we hereby grant to you a continuing security interest in all goods and general intangibles (as defined in Article 9 of the Uniform Commercial Code) whether now owned or hereafter acquired
by us and wherever located, all replacements and substitutions therefor or accessions thereto and all proceeds thereof, including, without limitation, the machinery and equipment described in the annexed Schedule “A” (all herein referred
to collectively as “Collateral”). Inventory is specifically excluded from the Collateral. 
  
 2. The term “Obligations” as used herein shall mean and include the indebtedness owing by us to you as hereinabove specifically set forth and
also any and all other loans, advances, extensions of credit, endorsements, guaranties, benefits or financial accommodations heretofore or hereafter made, granted or extended by you to us or which you have or will become obligated to make, grant or
extend to or for our account and any and all interest, commissions, obligations, liabilities, indebtedness, charges or expenses heretofore or hereafter chargeable against us or owing by us to you or upon which we may be or have become liable as
endorser and guarantor and any and all renewals or extensions of any of the foregoing, no matter how or when arising, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether under any present or future agreement or
instrument between us or otherwise and the amount due upon any notes or other obligations given to or received by you for or on account of any of the foregoing and the performance and fulfillment by us of all of the terms, conditions, promises,
covenants, provisions and warranties contained in this Security Agreement and any note or notes secured hereby or in any present or future agreement or instrument between us. 
  
 3. Unless expressly limited by the provisions of paragraph “1”, your security interest granted and created in the
Collateral shall extend and attach to the entire Collateral whether the same constitutes personal property or fixtures, including, without limitation, to all dyes, jigs, tools, benches, tables, substitutions, accretions, component parts,
replacements thereof and additions thereto, as well as to all accessories, motors, engines, auxiliary parts used in connection with or attached to the Collateral and any packing material in which the Collateral may be contained. We shall furnish you
from time to time upon request with written statements and schedules identifying and describing the Collateral and any additions thereto and substitutions thereof in such detail as you may require. 
  
 4. We hereby warrant and covenant to you that: 
  
 (a) the Collateral is presently located at 
  
 11 West 42nd Street, New York, New York 10036; and 
 5804 East
Slauson Avenue, Commerce, CA 90040 
  
 and we will notify you promptly of any new
location where Collateral may be located; 
  
 (b) we are the lawful owner of the
Collateral free from any adverse lien, security or encumbrance whatsoever (other than the security interest created by this Agreement and the security interest granted on July 31, 2005 to Commerce Clothing Company LLC pursuant to the Security
Agreement dated the same date, which security interest is expressly junior and subordinate to the security interests granted to you hereunder (the “Subordinate Security Interest”)) and have the sole right to grant a security interest
therein and will defend the Collateral against all claims and demands of all persons; 
  

 1 

 (c) we will keep the Collateral free and clear of all attachments, levies, taxes, liens, security interests and
encumbrances of every kind and nature (other than the security interest created by this Agreement and the Subordinate Security Interest); 
  
 (d) we will at our own cost and expense keep the Collateral in good state of repair and will not waste or destroy the same or any part thereof; 
  
 (e) we will not without your prior written consent, sell, exchange, lease or otherwise
dispose of the Collateral or any of our rights therein or permit any lien or security interest to attach to same, except that created by this Agreement and the Subordinate Security Interest; 
  
 (f) we will insure the Collateral in your name against loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as you shall specify in amounts and under policies by insurers acceptable to you and all premiums thereon shall be paid by us and the policies delivered to you. If we fail to do so, you may
procure such insurance and charge the cost to our account; 
  
 (g) we will not
permit any Collateral to be removed from its present location without your prior written consent, and we will at all times allow you or your representatives free access to and the right of inspection of the Collateral; 
  
 (h) we shall comply with the terms and conditions of any leases covering the premises wherein
the Collateral is located and any orders, ordinances, laws or statutes of any city, state, or governmental department having jurisdiction with respect to such premises or the conduct of business thereon, and, when requested by you, we will execute
any written instruments and do any other acts necessary to effectuate more fully the purposes and provisions of this Agreement; 
  
 (i) if any of the Collateral is or in your opinion may become part of any real estate, we will obtain and deliver to you a written waiver by the record owner and any
mortgagees of said real estate of all interest in the Collateral and a written subordination by any person who has a lien on said real estate which is or may be superior to the security interest granted hereby; 
  
 (j) we will not permit anything to be done that may impair or lessen the value of any
Collateral or the security intended to be afforded by this Agreement; 
  
 (k) we
will indemnify and save you harmless from all loss, costs, damage, liability or expense, including reasonable attorneys’ fees, that you may sustain or incur to enforce payment, performance, or fulfillment of any of the debts or obligations
secured hereby or in the enforcement of this Agreement and the priority thereof or in the prosecution or defense of any action or proceeding either against you or us concerning any matter growing out of or in connection with this Agreement and/or
any of the Obligations secured hereby and/or any of the Collateral; 
  
 (1) the
execution of this Agreement has been duly approved by the undersigned in any manner required by law. 
  
 5. We shall be in default under this Agreement upon the happening of any of the following events or conditions: 
  
 (a) we shall fail to pay when due or punctually perform any of the Obligations; 

 
 (b) any covenant, warranty, representation or statement made or furnished to you by us or
on our behalf was false in any material respect when made or furnished; 
  

 2 

 (c) the loss, theft, substantial damage, destruction, sale or encumbrance to or of any of the Collateral or the making of
any levy, seizure or attachment thereof or thereon; 
  
 (d) we shall become
insolvent, cease operations, dissolve, terminate our business existence, make an assignment for the benefit of creditors, suffer the appointment of a receiver, trustee, liquidator or custodian of all or any part of our property; 
  
 (e) any proceedings under any bankruptcy or insolvency law shall be commenced by or against
us or any guarantor or endorser of the Obligations; or 
  
 (f) any guarantor or
endorser of the Obligations shall die, make an assignment for the benefit of creditors, or suffer the appointment of a receiver of any part of such guarantor’s or endorser’s property. 
  
 6. Upon any such default and at any time thereafter, you may declare all
Obligations secured hereby immediately due and payable and you shall have the remedies of the secured party provided in the Uniform Commercial Code, and in addition, those provided by other provisions of law and in this Agreement. You will at all
times have the right to take possession of the Collateral and to maintain such possession on our premises or to remove the Collateral or any part thereof to such other premises as you may desire. Upon your request, we shall assemble the Collateral
and make it available to you at a place designated by you. If any notification of intended disposition of any Collateral is required by law, such notification, if mailed, shall be deemed properly and reasonably given if mailed at least five days
before such disposition, postage prepaid, addressed to us either at our address shown herein or at any address appearing on your records for us. Any proceeds of any disposition of any of the Collateral shall be applied by you to the payment of all
expenses in connection with the sale of the Collateral, including reasonable attorneys’ fees and other legal expenses and disbursements and the reasonable expense of retaking, holding, preparing for sale, sale, and the like, and any balance of
such proceeds may be applied by you toward the payment of the Obligations secured hereby in such order of application as you may elect, and we shall be liable for any deficiency. 
  
 7. If we default in the performance or fulfillment of any of the terms, conditions, promises, covenants, provisions or
warranties on our part to be performed or fulfilled under or pursuant to this Agreement, you may at your option without waiving your right to enforce this Agreement according to its terms, immediately or at any time thereafter and without notice to
us, perform or fulfill the same or cause the performance or fulfillment of the same for our account and at our sole cost and expense, and the cost and expense thereof (including reasonable attorneys’ fees) shall be added to the Obligations
secured hereby and shall be payable on demand with interest thereon at the rate charged upon the Obligations secured hereby, but not in excess of that permitted by law. 
  
 8. No delay or failure on your part in exercising any right, privilege or option hereunder shall operate as a waiver of such
or of any other right, privilege, remedy or option, and no waiver whatever shall be valid unless in writing, signed by you and then only to the extent therein set forth, and no waiver by you of any default shall operate as a waiver of any other
default or of the same default on a future occasion. Your books and records containing entries with respect to the Obligations secured hereby shall be admissible in evidence in any action or proceeding, shall be binding upon us for the purpose of
establishing the items therein set forth and shall constitute prima facie proof thereof. You shall have the right to enforce any one or more of the remedies available to you, successively, alternately or concurrently. We agree to join with you in
executing financing statements or other instruments pursuant to the Uniform Commercial Code in form satisfactory to you and in executing such other documents or instruments as may be required or deemed necessary by you for purposes of affecting or
continuing your security interest in the collateral. In addition, we hereby authorize you to file such financing statements under the Uniform Commercial Code as you deem necessary or advisable to perfect the security interests we have granted to you
under or in connection with this agreement or otherwise. 
  

 3 

 9. This Agreement cannot be terminated orally. All of the rights, remedies, options, privileges and
elections given to you hereunder shall enure to the benefit of your successors and assigns. The term “you” as herein used shall include your company, any parent of your company, any of your subsidiaries and any co-subsidiaries of your
parent, whether now existing or hereafter created or acquired, and all of the terms, conditions, promises, covenants, provisions and warranties of this Agreement shall enure to the benefit of and shall bind the representatives, successors and
assigns of each of us and them. 
  

					
	 	 	Very truly yours,
		
	ATTEST:	 	CYGNE DESIGNS, INC.
			
	 /s/ Roy E. Green

	 	By:	 	 /s/ Bernard M. Manuel

	Roy E. Green, Chief Financial Officer,	 	 	 	Bernard M. Manuel, Chairman
	Treasurer and Secretary	 	 	 	and Chief Executive Officer
			
	(Seal)	 	On:	 	July 31, 2005
		
	 	 	Accepted at New York, N.Y.
			
	 	 	On:	 	July 31, 2005
		
	ATTEST:	 	MILBERG FACTORS, INC.
			
	 /s/ Stephen R. Murphy

	 	By:	 	 /s/ William A. Zisfein

	 Stephen R. Murphy, Senior Vice President,
 Secretary
& Treasurer
	 	 	 	William A. Zisfein, Senior Vice President
	 	 	 	 	 
	(Seal)	 	 	 	 

  

 4

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