Document:

Security Interest in Inventory Factoring Contract dated July 31, 2005

 Exhibit 10.10 
  
 SECURITY INTEREST IN INVENTORY UNDER UNIFORM 
 COMMERCIAL CODE SUPPLEMENT TO FINANCING OR 
 FACTORING CONTRACT 

 

	To:	Milberg Factors, Inc. 

 99 Park Avenue 
 New York, NY 10016 
  
 Gentlemen: 
  
 This is a supplement to our Factoring Agreement with you bearing the effective date of July 31, 2005. It is hereby incorporated therein, shall have a term concurrent therewith and is deemed in all respects a part
thereof. 
  
 1. In addition to your other security, we hereby
grant you a continuing security interest under the Uniform Commercial Code in all Inventory now and hereafter owned by us. The term “Inventory” means and includes all merchandise intended for sale by us and all raw materials, goods in
process, finished goods, materials and supplies of every nature used or useable in connection with the manufacture, packing, shipping, advertising or sale of such merchandise, all of which may be described generally (but without limitation) as:

  
 Jeans and other apparel and all materials incidental to the
manufacturing, packaging, and shipping thereof 
  
 We warrant that (a) all
Inventory is and will be owned by us, free of all other liens, encumbrances and security interests; and (b) the Inventory is presently located at 11 West 42nd Street, New York, NY 10036, and 5804 East Slauson Avenue, Commerce, CA 90040, and we will notify you promptly of any new location where Inventory may be located. 
  
 2. Your security interests in the Inventory shall continue through all stages
of manufacture and shall, without further act, attach to goods in process, to the finished goods, to the accounts receivable or other proceeds resulting from the sale or other disposition thereof and to all such Inventory as may be returned to us by
customers. 
  
 3. The Inventory shall be security for all Advances
made pursuant to the Financing Agreement and/or loans and advances to the undersigned under the Factoring Agreement, as originally existing and as hereby and at any time heretofore or hereafter supplemented or amended as well as for all other loans
and advances to us or for our account by you or your subsidiaries and for all commissions, obligations, indebtedness, interest, charges and expenses chargeable to our account or due from us from time to time, however arising, and whether or not
evidenced by notes or other instruments. Until all such obligations have been paid in full, your security interest in the Inventory and all proceeds thereof, shall continue in full force and effect and you will at all times have the right to take
possession of the Inventory and to maintain such possession on our premises or to remove the Inventory or any part thereof to such other places as you may desire. If you exercise your right to take possession of the Inventory, we shall, upon your
demand, assemble the Inventory and make it available to you at a place reasonably convenient to you. In addition, with respect to all Inventory as well as all Receivables and other security, you shall be entitled to all of the rights and remedies
set forth in the Financing Agreement or Factoring Agreement and all of the rights provided by said Uniform Commercial Code. 
  
 4. Upon our request, you may make Advances to us prior to our sale of Inventory. Any such Advances will be made at your sole discretion, will be charged
by you to our account and will bear interest payable in the manner and at the rate specified in the Financing Agreement or Factoring Agreement. All such Advances shall be payable by us on demand and recourse to the security therefor will not be
required at any time. Their amounts and the relation thereof to the value of the Inventory will be determined by you alone. 
  

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 5. Except for sales made in the regular course of our business, we shall not sell, encumber or dispose of
or permit the sale, encumbrance or disposal of any Inventory without your prior written consent. As sales are made in the regular course of business, we shall, in accordance with the provisions of the Financing Agreement or Factoring Agreement,
immediately execute and deliver to you schedules and assignments of all Receivables created thereby. If sales are made for cash, we shall immediately deliver to you the identical checks, cash or other forms of payment which we receive. All payments
received by you on account of cash sales of Inventory as well as on account of Receivables will be credited to our account in accordance with the provisions of the Financing Agreement or Factoring Agreement. 
  
 6. We shall perform any and all steps requested by you to perfect your
security interest in the Inventory, such as leasing warehouses to you, placing and maintaining signs, appointing custodians, executing and filing financing or continuation statements in form and substance satisfactory to you, maintaining stock
records and transferring Inventory to warehouses. 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. If any Inventory remains in the possession or control of any of our agents or processors, we shall notify such agents or processors of your security interest therein, and upon request,
instruct them to hold all such Inventory for your account and subject to your instructions. A physical listing of all Inventory, wherever located, shall be taken by us at least every three months and also whenever requested by you, and a copy of
each such physical listing shall be supplied to you. You may examine and inspect the Inventory at any time. 
  
 7. We shall have the Inventory insured in your name against loss or damage by fire, theft, burglary, pilferage, loss in transportation and such other
hazards as you shall specify, by insurers, in amounts and under policies 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
us. 
  

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

  

 2Guaranty dated July 31, 2005

 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

	 	By:	 	 /s/ Bernard M. Manuel

	 	 	 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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