Document:

Restrictive Covenant Agreement dated July 31, 2005

 Exhibit 10.6 
  
 RESTRICTIVE COVENANT AGREEMENT 
  
 THIS RESTRICTIVE COVENANT AGREEMENT (this “Agreement”), dated July 31, 2005, by Hubert Guez
(“Stockholder”) in favor and for the benefit of Cygne Designs, Inc., a Delaware corporation (“Cygne”), and its subsidiaries (Cygne and such subsidiaries are collectively referred to herein as the “Cygne
Entities”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, Cygne is a manufacturer of private label women’s career and
casual apparel, including denim-related clothing products (such business of selling denim-related clothing products as conducted by Cygne prior to the Closing Date is herein referred to as the “Cygne Business”); 
  
 WHEREAS, pursuant to the terms and conditions of that certain Asset Purchase
Agreement, dated July 31, 2005 (the “Purchase Agreement”), by and among Commerce Clothing Company LLC, a California limited liability company (“Commerce”), Stockholder, 215 GZ Partners, Guez Living Trust dated
December 6, 1996, Griffin James Aron Guez Irrevocable Trust dated January 1, 1996, Stephan Avner Felix Guez Irrevocable Trust dated January 1, 1996, and Cygne, Cygne has purchased certain of the assets of Commerce relating to its business of selling
and distributing branded and private label denim clothing (capitalized terms used but not defined herein shall have the meanings given to such terms in the Purchase Agreement); 
  
 WHEREAS, as a member of Commerce, Stockholder has obtained extensive and valuable knowledge and confidential information
concerning the Acquired Business; and 
  
 WHEREAS, as a condition
to the obligation of Cygne to consummate the transactions contemplated by the Purchase Agreement, and to enable the Cygne Entities to secure more fully the benefits of the acquisition of the Assets and the Acquired Business, Cygne has required that
Stockholder enter into this Agreement, and Stockholder is entering into this Agreement in order to induce Cygne to consummate the transactions contemplated by the Purchase Agreement. 
  
 AGREEMENT 
  
 In order to induce Cygne to consummate the transactions contemplated by the Purchase Agreement, in consideration of the amounts to be received by
Stockholder herein, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, Stockholder, intending legally to be bound, agrees as follows: 
  
 1. Non-Disclosure of Confidential Information. Except for such
actions necessary to ensure the compliance by Stockholder of its obligations under the Purchase Agreement and the Transaction Documents, from and after the Closing Date, Stockholder covenants and agrees that, except as may be required by applicable
law, it shall not disclose any Confidential Information (as defined herein). This limitation upon disclosure does not apply to information (a) readily available to competitors of the Cygne Business and the Acquired Business (the Cygne Business and
the Acquired Business as conducted on the date of this Agreement are together referred to herein as the “Competitive Business”) through means other than as the result of unauthorized disclosure and without assistance of Stockholder
in violation of this Agreement, (b) which is 

 
publicly known at the time of disclosure to Stockholder, or (c) that becomes publicly known or available thereafter other than by means in violation of this
Agreement. For the purposes of this Agreement, “Confidential Information” means confidential information relating to the marketing strategies, pricing policies or characteristics, customers, suppliers and customer and supplier
information, customer and supplier lists, product or product specifications, Intellectual Property of any Cygne Entity (including the Purchased Intellectual Property), designs, manufacturing, testing or assembly processes or costs, costs of
materials, business or business prospects, plans, proposals, codes, marketing studies, research, reports, investigations, or other information of similar character which relate to the Competitive Business. 
  
 2. Non-Competition. Except for such actions necessary to ensure the
compliance by Stockholder of its obligations under the Purchase Agreement and the Transaction Documents, and except as otherwise set forth herein, Stockholder agrees that during the period commencing on the Closing Date and terminating on the fifth
anniversary of the Closing Date (the “Noncompetition Period”), Stockholder shall not directly or through any Affiliate (as defined below), whether for compensation or without compensation, directly or indirectly, as an owner,
principal, partner, member, shareholder, independent contractor, consultant, joint venturer, investor, licensor, lender or in any other capacity whatsoever, alone, or in association with any other Person, carry on, be engaged or take part in, or
render services (other than services which are generally offered to third parties and do not compete with the Competitive Business) or advice to, own, share in the earnings of, invest in the stocks, bonds or other securities of, or otherwise become
financially interested in, any Person engaged in the Competitive Business anywhere in the United States (including Puerto Rico), Canada, Latin America, Brazil, Mexico, the Caribbean, the United Kingdom, Japan or China. For purposes of this
Agreement, an “Affiliate” means an entity in which the Stockholder or his spouse or children owns or controls, directly or indirectly, individually or collectively, a majority of the outstanding voting securities of or other
ownership interests in such entity or otherwise has the right to appoint a majority of the board of directors, managers or other like governing body; provided that, notwithstanding the foregoing, the term “Affiliate” shall not include
Innovo Group, Inc., or any entity controlled by or affiliated with Stockholder’s brothers. Notwithstanding the foregoing, nothing herein shall prevent (i) AZT International S.A. de C.V., Apparel Distribution Services, Azteca or any affiliate
thereof or other entity in which Stockholder has an ownership interest from continuing to manufacture denim-related clothing products for and on behalf of any party, subject to its ability to fulfill its obligations under the Supply Agreement, (ii)
Stockholder from acting as a third party investment banker or advisor with respect to finding, buying, selling or otherwise packaging and marketing companies, including, without limitation, denim clothing product companies for purchase or sale; and
(ii) Stockholder from owning (A) less than or equal to five percent (5%) of the outstanding capital stock of a corporation whose stock is traded on an established stock exchange or quoted on NASDAQ or any other over the counter market, or (B) less
than or equal to twenty percent (20%) of the outstanding capital stock, partnership interest or membership interest in a privately-held corporation, limited liability company, partnership or other privately-held entity. Any activities by Stockholder
undertaken in connection with clause (ii) of this Section 2 shall not be deemed to be a violation or breach of Section 2, 3 or 4 of this Agreement. 
  
 3. Non-Diversion. Stockholder covenants and agrees that during the Noncompetition Period, he and his Affiliates shall not, directly or indirectly
through any representative or agent: (a) solicit, or contact for the purpose of soliciting, any customer of the 

  

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Competitive Business which has actively done business with any of the Cygne Entities during the Noncompetition Period or with Commerce (with respect to the
Acquired Business) in the last two years prior to the Closing Date (a “Customer”), for the purpose of the sale to or servicing of any Customer where such sale or servicing is in respect of products and services which are the same as
or substantially similar to the Competitive Business; (b) make use of any list of clients of the Competitive Business for the purpose of competing or attempting to persuade any Customer to discontinue or alter its relationship with any of the Cygne
Entities; or (c) attempt to persuade any supplier or distributor to the Competitive Business to discontinue or alter its relationship with any of the Cygne Entities. 
  
 4. Non-Recruitment. Stockholder agrees that during the Noncompetition Period, Stockholder shall not, directly or
indirectly, hire or initiate contact for the purpose of hiring away any executive employee of any Cygne Entity, provided, that this restriction shall not apply to any employee of a Cygne Entity who responds to solicitations made by means of
general advertisement (e.g. newspaper advertisements). 
  
 5.
Percentage Payments. In return for Stockholder’s covenants hereunder, during the Noncompetition Period, including any renewal thereof, Cygne will pay to Stockholder one percent (1%) of the net sales of the Cygne Entities, not including
non-denim sales to New York and Co. (Lerner) and not including sales of denim-related clothing products resulting from subsequent business acquisitions. For purposes of this Agreement, net sales shall mean net sales as reported in accordance with
GAAP on Cygne’s periodic reports filed from time to time with the Securities and Exchange Commission. Such payments shall be made to Stockholder quarterly, within sixty (60) days of the end of each applicable fiscal quarter. 
  
 6. Remedies. 
  
 (a) Stockholder acknowledges that should it violate any of the covenants
contained in Sections 1 through 4 of this Agreement (collectively, the “Restrictive Covenants”), it will be difficult to determine the resulting damages to the Cygne Entities and, in addition to any other remedies the Cygne Entities
may have, the Cygne Entities shall be entitled to temporary injunctive relief without being required to post a bond and permanent injunctive relief without the necessity of proving actual damages. Stockholder shall be liable to pay all costs,
including reasonable attorneys’ fees and expenses, that the Cygne Entities may incur in enforcing or defending any of the Restrictive Covenants against Stockholder where the Cygne Entities succeed in enforcing any of the Restrictive Covenants.
The Cygne Entities may elect to seek one or more of these remedies at their sole discretion on a case by case basis. Failure to seek any or all remedies in one case shall not restrict the Cygne Entities from seeking any remedies in another
situation. Such action by the Cygne Entities shall not constitute a waiver of any of their rights. 
  
 (b) In the event that the Cygne Entities, or any of them, shall at any time fail to make timely and proper payment of the percentage payments to
Stockholder pursuant to Section 5 of this Agreement, including under the Promissory Note or in the event any Event of Default occurs (as defined in such Promissory Note), other than by reason of that Subordination Agreement, dated as of July 31,
2005, between Cygne and Guez made in favor of Milberg Factors, or breaches the Supply Agreement or the Transfer Restriction Agreement, and the 

  

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Cygne Entities fail to cure the applicable breach, violation or failure, if curable, within 45 days after receipt of written notice from Stockholder or, if
such breach is not curable within 45 days, have not begun the process to cure such breach, then in addition to all other rights and remedies Stockholder may have at law or in equity, Stockholder shall have the right, at its option, to (i) terminate
this Agreement effective immediately without further notice; or (ii) toll and suspend the running of the period of restriction contained in this Agreement for the duration of such breach, which shall automatically recommence when such breach is
remedied. In no event shall Stockholder be under any obligation to refund any portion of the percentage payments previously received from the Cygne Entities pursuant to Section 5 of this Agreement. 
  
 7. Severability and Modification of Any Unenforceable Covenant. It is
the intent of Stockholder that each of the Restrictive Covenants be read and interpreted with every reasonable inference given to its enforceability. However, it is also Stockholder’s intent that if any term, provision or condition of the
Restrictive Covenants is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions thereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Finally,
it is also Stockholder’s intent that if a court should determine any of the Restrictive Covenants are unenforceable because of over-breadth, then the court shall modify said covenant so as to make it reasonable and enforceable under the
prevailing circumstances. 
  
 8. Agreement Not to
Challenge. Stockholder acknowledges that Cygne, in executing the Purchase Agreement and the Transaction Documents, placed significant reliance on Stockholder’s compliance with the Restrictive Covenants. Accordingly, Stockholder (a) will not
make any claim that any of the Restrictive Covenants is unenforceable, and (b) will not challenge or commence or institute any claim, lawsuit or action (or assert any counterclaim or cross claim) seeking to invalidate or reduce the scope of any of
the Restrictive Covenants. 
  
 9. Tolling; Renewal. In the
event of any breach by Stockholder of any Restrictive Covenant, the running of the period of restriction shall be automatically tolled and suspended for the duration of such breach, and shall automatically recommence when such breach is remedied in
order that the Cygne Entities shall receive the full benefit of the compliance by Stockholder with each of the Restrictive Covenants. This Agreement may be renewed by Stockholder (and the Noncompetition Period extended) for one additional five year
period upon at least 90 days prior written notice to Cygne; provided that such notice is given prior to the 90th day prior to the expiration of the initial Noncompetition Period. 
  
 10. No Other Defenses. Stockholder agrees that the Restrictive Covenants shall be enforced independently of any other obligations between Cygne and Stockholder, and that the existence of any other claim or
defense shall not affect the enforceability of the Restrictive Covenants or the remedies provided herein. The Restrictive Covenants shall be in addition to and shall not replace any other agreement relating to the subject matter hereof that
Stockholder may have at any time with any Cygne Entity. 
  
 11.
Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. 
  

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 12. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF STOCKHOLDER AND
CYGNE HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
  
 13. Forum Selection and Consent to Jurisdiction. EACH OF STOCKHOLDER AND CYGNE AGREES THAT ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN STATE OR FEDERAL COURTS OF LOS ANGELES COUNTY, CALIFORNIA. EACH OF STOCKHOLDER, CYGNE AND EACH OF CYGNE’S AFFILIATES HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF LOS ANGELES COUNTY, CALIFORNIA. EACH OF STOCKHOLDER AND CYGNE HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 
  
 14. Waiver. No failure on the part of any Cygne Entity to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part of any Cygne Entity in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and
no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. No Cygne Entity shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of the Person
from whom such waiver is sought; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given. 
  
 15. Successors and Assigns. Each Cygne Entity may freely assign any or all of its rights under this Agreement, at any time, in whole or in part, to
any Person without obtaining the consent or approval of Stockholder or of any other Person. This Agreement shall be binding upon Stockholder and his heirs, executors, estate, personal representatives, successors and assigns, and shall inure to the
benefit of each Cygne Entity. 
  
 16. Further Assurances.
Stockholder shall execute and/or cause to be delivered to each Cygne Entity such instruments and other documents, and shall take such other actions, as Cygne or any such affiliate of Cygne may reasonably request at any time for the purpose of
carrying out or evidencing any of the provisions of this Agreement. 
  
 17. Interpretation. The headings preceding the text of Sections included in this Agreement and the headings to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in
interpreting this Agreement. The use of the masculine, feminine or neuter gender herein shall not limit any provision of this Agreement. The 

  

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use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include,
without limitation,” respectively. Unless otherwise indicated, references to Sections shall refer to those portions of this Agreement. 
  
 18. No Presumption Against Drafter. Both Cygne and Stockholder have jointly participated in the negotiation and drafting of this Agreement. In the
event of any ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by Cygne and Stockholder and no presumptions or burdens of proof shall arise favoring any party hereto by virtue of the
authorship of any of the provisions of this Agreement. 
  
 19.
Amendment. This Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered on behalf of Stockholder and Cygne. 
  
 IN WITNESS WHEREOF, Stockholder has duly executed and delivered this
Agreement as of the date first above written. 
  

	
	STOCKHOLDER:
	
	 /s/ Hubert Guez

	 Hubert Guez

	 5804 E. Slauson Avenue

	 Commerce, California 90040

	 Telephone No.: (    )

	 Facsimile: (    )

  

			
	CYGNE DESIGNS, INC.
		
	By:	 	 /s/ Bernard Manuel

	Name:	 	Bernard Manuel
	Title:	 	CEO
	Telephone No.:	 	  

	Facsimile:	 	  

  

 6Distribution Agreement dated July 31, 2005

 Exhibit 10.7 
  
 DISTRIBUTION AGREEMENT 
  
 This DISTRIBUTION AGREEMENT (the “Agreement”) is made and entered into this 31st day of July, 2005 (the “Effective Date”), by and between Cygne Designs, Inc., a Delaware corporation
(“Cygne”), with its principal executive office at 11 West 42nd Street, New York, New York
10036), and Commerce Clothing Company, LLC, a California limited liability company (“Commerce”) with its principal executive office at 5804 East Slauson Avenue, Commerce, California 90040. 
  
 WITNESSETH: 
  
 WHEREAS, Cygne is, among other things, a seller of apparel products;
and 
  
 WHEREAS, the parties have entered into a separate
Asset Purchase Agreement dated the same date as this Agreement, pursuant to which Cygne has acquired from Commerce certain assets and properties formerly used by Commerce in the operation of its business of selling and distributing branded and
private label denim-related products; and 
  
 WHEREAS, the
parties now desire to enter into this exclusive Agreement whereby Commerce will provide certain Services (as defined herein) for Cygne under the terms and conditions set forth in this Agreement. 
  
 NOW THEREFORE, in consideration of the mutual promises, covenants,
representations and good and valuable consideration hereinafter set forth, the adequacy of which is hereby acknowledged, the parties hereto agree as follows: 
  

1. Term. 
  
 (a) Initial Term. The term of this Agreement shall commence as of the Effective Date and shall continue until the earlier of (i) two (2) years
after the Effective Date and (ii) the date this Agreement is otherwise terminated in accordance with the provisions hereof (such period referred to herein as the “Initial Term”). 
  
 (b) Renewal Term. This Agreement will automatically renew for
consecutive one (1) year terms under the same terms and conditions set forth herein (each a “Renewal Term”) unless terminated by either party upon delivering written notice to the other party at least ninety
(90) days but not more than one hundred twenty (120) days prior to the end of the then existing term. The Renewal Term(s), if any, and the Initial Term are collectively referred to herein as the “Term.” 
  
 2. Warehouse Facilities. The Services, defined below, will be rendered
by Commerce at the following facilities: 
  
 5804 E. Slauson
Avenue 
 Commerce, California 90040 
  
 ITC 
 309 Nafta Boulevard 
 Loredo, Texas 78045 

 3. Services and Performance. In accordance with the terms of this Agreement, during the Term of
this Agreement, Commerce shall, upon Cygne’s request, provide services, as described in Annex A attached hereto and incorporated into this Agreement, to Cygne with respect to Cygne’s apparel products (the
“Services”). Commerce shall be the sole and exclusive provider of Services to Cygne and Cygne agrees that, during the Term of this Agreement, it shall not utilize any third party to provide such Services to Cygne without the
prior written consent of Commerce. 
  
 4. Consideration.

  
 (a) Distribution and Operations Services. As
consideration for the Services provided hereunder, Cygne will pay Commerce a fixed rate per apparel unit of Fifty Cents ($0.50) (the “Unit Rate”). 
  
 (b) On an annual basis, Commerce may increase the Unit Rate based upon economic factors. Any requests for increases in the
Unit Rate that Commerce submits to Cygne shall be accompanied by supporting documentation and shall be determined upon the mutual agreement of the parties; provided, that in no event shall the Unit Rate be increased by more than the lesser of five
percent (5%) per annum or the annual increase in the Consumer Price Index (CPI) for the corresponding year. In the event that the parties, after good faith negotiation, are unable to agree upon the increase to the Unit Rate, the matter shall be
submitted to arbitration. The arbitration award shall be final and binding upon the parties and shall be enforceable in accordance with its terms. Pending the final decision of the arbitrator, this Agreement shall stay in full force and effect.

  
 5. Auditing Procedures. 
  
 (a) During the Term, Cygne’s personnel and/or its agents and
representatives, shall have the right to inspect Commerce’s records relating to this Agreement and the Services provided herein, and perform inventory audits with respect to the inventory held by Commerce on behalf of Cygne, upon at least ten
(10) days prior written notice to Commerce, during regular business hours, and not more frequently than once per each of Cygne’s fiscal quarters. Commerce shall provide reasonable assistance and access to its facilities, personnel and materials
for such purposes. Without limiting the foregoing, Cygne shall, at the end of each of the second and fourth quarters, take an accounting of the inventory held by Commerce on behalf of Cygne. Overages and shortages will be balanced to a net result at
the end of each fiscal year of Cygne during the Term. 
  
 (b) If
there is a net shortage of units after the overages and shortages have been balanced to a net result, then, within 10 tens after the parties’ mutual agreement on the determination of the net shortage determination, Commerce shall pay to Cygne
an amount equal to the direct and invoiced manufacturing costs actually incurred by Cygne in connection with the units included in such net shortage (the “Shortage Payment”). 
  
 (c) In the event there is a net shortage of units pursuant to subsection (b)
above and any of the units included in such shortage are subsequently located causing a net overage of units after the overages and shortages have been balanced to a net result at the end of any fiscal year pursuant to subsection (a) above, then
Cygne shall reimburse Commerce for that portion of the Shortage Payment made to Cygne by Commerce applicable to the units included in such net overage, with reasonable deductions for the aging of the units. 
  

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 6. Fees, Expenses and Payment Conditions. 
  
 (a) Services Fees. The fees for Services will be invoiced on a
monthly basis and will be computed based on the actual number of units processed for that month multiplied by the Unit Rate. 
  
 (b) Packaging Costs. Purchases of packaging and shipping materials shall be invoiced monthly and paid by Cygne based on the actual cost of
materials purchased that month. 
  
 (c) Other Costs.
Purchases of all other items associated with the provision of the Services contemplated herein, including, but not limited to freight, office supplies, and postage, shall be invoiced monthly and paid by Cygne based on the actual cost of any such
items purchased that month. 
  
 (d) Special Handling Fees.
Special activities such as quality control, annual inventory, customized repairs, customized finishing, labeling, tagging or packaging, and specialized administrative and management projects shall be performed by Commerce only after receipt of a
written authorization from Cygne containing mutually agreed upon fixed hourly rates for such special activities. These activities will be invoiced monthly, based on the actual number of hours worked. 
  
 (e) Payment Conditions. Cygne shall pay each invoice net 30 (thirty)
days from the date of the invoice, by either cash or letter of credit, provided however, that Cygne may, in its discretion, make such payments prior to the end of such 30-day period to the extent sufficient funds are available therefore. Invoices
shall be sent by mail or by courier within five (5) days after the invoice date. 
  
 7. Insurance and Indemnification. 
  
 (a) All of Cygne’s products which are subject to the Services provided for herein (the “Products”) shall be insured by Cygne while in the custody and under the control of Commerce, for the
benefit of both Cygne and Commerce. Commerce represents that it is insured for professional and third party liabilities on standard business conditions. Commerce shall be liable for property damage and/or loss caused during the performance of
Services due to its proven gross negligence or willful misconduct. 
  
 (b) Each party to this Agreement shall defend and indemnify the other and hold it harmless from and against any and all liability, damages, costs and expenses (including attorneys’ fees), arising from any willful misconduct or gross
negligence of the indemnifying party, or any of its officers, contractors, licensees, agents, servants or employees. 
  
 (c) Each party shall, upon the request of the other party, furnish such other party with copies of all insurance policies concerning its standard
business liability coverage. Each party shall ensure that premiums due with respect to such insurance policies are made when due and fully paid and are in full force and effect. 
  

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 (d) Damage Limitations. NEITHER PARTY NOR ANY OF ITS RESPECTIVE AFFILIATES, SHALL BE LIABLE TO
THE OTHER PARTY OR TO ANY OTHER INDIVIDUAL OR ENTITY FOR ANY INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL, OR INCIDENTAL LOSS OR DAMAGE OF ANY KIND OR NATURE, RELATING TO OR ARISING OUT OF THIS AGREEMENT INCLUDING BUT NOT LIMITED TO ANY
LOSS OF REVENUES, ANTICIPATED PROFITS OR SAVINGS, OR LOSS BY REASON OF SHUTDOWN IN OPERATION OR FOR INCREASED EXPENSES OF OPERATION. 
  
 8. Security, Safety and Environmental Matters. 
  
 (a) As soon as practicable after the execution of this Agreement, Cygne will provide Commerce with a listing of its representatives and any other
authorized third parties who may enter the warehouse and act on behalf of Cygne. Commerce will only allow employees or agents of Commerce, Cygne and/or third parties authorized by Cygne to enter the warehouse as necessary to administer the terms of
this Agreement. Cygne’s authorized personnel, including the personnel of third parties authorized by Cygne, shall have access to the warehouse at all reasonable times upon notice to Commerce and without notice in the event of emergencies. In no
event shall Cygne’s authorized personnel located at the warehouse be considered employees, representatives or agents of Commerce for any purpose whatsoever. Cygne’s authorized personnel shall be subject to the same general rules and
regulations regarding safety, security and environmental procedures and processes that generally apply to non-Cygne authorized personnel at the warehouse. 
  
 (b) Commerce shall, at its sole cost, provide and maintain adequate and customary security measures, including, but not limited to, alarms, gates and
locks, relating to the warehouse facilities. Cygne shall, at its sole cost, provide any additional security personnel it deems necessary relating to protection of the Products at the warehouse facilities. 
  
 (c) Commerce shall, at its sole cost, apply for and maintain during the Term
of this Agreement all licenses and authorizations required for performing the Services. Commerce shall comply with all federal, state and local applicable laws and regulations in performing the Services, including, but not limited to, those
regarding safety, health and environmental matters. 
  
 9.
Confidential Information. Each party acknowledges and agrees that it may have access to information, including, but not limited to, intellectual property, trade secrets, business information, ideas and expressions, which are proprietary to
and/or embody the substantial creative efforts of the other party (“Confidential Information”). The parties agree that Confidential Information will remain the sole and exclusive property of the disclosing party
(“Disclosing Party”), and the receiving party (“Receiving Party”) agrees to maintain and preserve the confidentiality of such information, including, but without limitation, taking such steps to
protect and preserve the confidentiality of the Confidential Information as it takes to preserve and protect the confidentiality of its own confidential information. All materials and information disclosed by either party to the other will be
presumed to be Confidential Information and will be so regarded by the Receiving Party unless, the Receiving Party can prove that the materials or information are not Confidential Information. For the purposes of this section: 
  
 (a) The parties agree that the Confidential Information will be disclosed
for use by the Receiving Party only for the limited and sole purpose of carrying out the terms of this Agreement. 
  

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 (b) The Receiving Party agrees not to disclose or permit any other person or entity access to the
Confidential Information, except that such disclosure will be permitted to an employee, agent, representative or independent contractor of the Receiving Party requiring access to the same. 
  
 (c) The Receiving Party agrees: (i) not to alter or remove any
identification of any copyright, trademark or other proprietary rights notice which indicates the ownership of any part of the Confidential Information, and (ii) to notify the Disclosing Party of the circumstances surrounding any possession, use or
knowledge of the Confidential Information by any person or entity other than those authorized by this Agreement. 
  
 (d) Confidential Information will exclude any information that (i) has been or is obtained by the Receiving Party from a source independent of the
Disclosing Party and not receiving such information from the Disclosing Party, (ii) is or becomes generally available to the public other than as a result of an unauthorized disclosure by the Disclosing Party or its personnel, or (iii) is
independently developed by the Receiving Party without reliance in any way on the Confidential Information provided by the Disclosing Party; or (iv) the Receiving Party is required to disclose under judicial order, regulatory requirement, or
statutory requirement, provided that the Receiving Party provides written notice and an opportunity for the Disclosing Party to take any available protective action prior to such disclosure. 
  
 10. Assignment of Duties. This Agreement may not be assigned by any
party hereto to any other person, firm, or entity without the express written approval of the other party hereto and any attempt at assignment in violation of this section will be null and void; provided that, notwithstanding the foregoing, Commerce
shall have the right to assign this Agreement to an affiliate of Commerce upon written notice to Cygne, without being required to obtain the consent or approval of Cygne. 
  
 11. Termination. This Agreement may be immediately terminated by either party upon (i) failure of the other party to
comply with laws and regulations which materially affect such party’s contracting rights or reputation and where such failure is not cured within thirty (30) days of receipt of written notice thereof; (ii) any material breach of this Agreement
by the other party which is not cured within thirty (30) days of receipt of written notice thereof, or (iii) the mutual agreement of the parties. 
  
 12. Governing Law. This Agreement shall be interpreted in accordance with the laws of the State of California, without regard to the conflicts of
laws principles thereof. The parties agree that jurisdiction over and venue in any legal proceeding arising out of or relating to this Agreement will exclusively be in the state or federal courts located in Los Angeles County, California.

  

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 13. Submission to Jurisdiction; Service of Process. 
  
 (a) Commerce hereby irrevocably agrees that any lawsuit commenced by
Commerce against Cygne or any of its affiliates in connection with any dispute arising out of or relating to this Agreement (each, a “Commerce Lawsuit”) shall be brought by Commerce solely in a federal or state court located
within the County of Los Angeles, State of California, and, in connection with each Commerce Lawsuit, each of the parties hereto irrevocably agrees to submit to the exclusive jurisdiction of any federal or state court located within the County of
Los Angeles, State of California and irrevocably agrees to waive, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of venue of any Commerce Lawsuit brought in such court or any defense
of inconvenient forum for the maintenance of such Commerce Lawsuit in such court. 
  
 (b) Cygne hereby irrevocably agrees that any lawsuit commenced by Cygne against Commerce in connection with any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby
(each, a “Cygne Lawsuit”) shall be brought by Cygne, as the case may be, solely in a federal or state court located within the County of Los Angeles, State of California, and, in connection with each Cygne Lawsuit, each of
the parties hereto irrevocably agrees to submit to the exclusive jurisdiction of any federal or state court located with the County of Los Angeles, State of California and irrevocably waives, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to the laying of venue of any Cygne Lawsuit brought in such court or any defense of inconvenient forum for the maintenance of such Cygne Lawsuit in such court. 
  
 (c) Each of the parties hereto agrees that a judgment in any Commerce
Lawsuit or Cygne Lawsuit may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties hereto hereby consents to process being served by either party to this Agreement in any suit, action
or proceeding by the mailing of a copy thereof in accordance with Section 13 below. 
  
 (d) All expenses (including, without limitation, legal fees and expenses) incurred by the prevailing party in any Commerce Lawsuit or Cygne Lawsuit in connection with, or in prosecuting or defending, any such claim or
controversy shall be paid by the other party. 
  
 14.
Notices. All notices, demands or requests which are required or permitted to be given pursuant to this Agreement shall be in writing and shall be delivered personally, sent by telecopy or mailed by prepaid registered mail to the affected
party at the address indicated for such party on the first page hereof or to such other address as such party may from time to time advise the other party hereto. 
  
 15. Force Majeure. Whenever a period of time is provided for in this Agreement for any of the parties to do or
perform any act or obligation, none of the parties shall be liable for any delays or inability to perform due to causes beyond the reasonable control of said party, such as war, riot, insurrection, rebellion, strike, lockout, unavoidable casualty,
or damage to personnel, material or equipment, fire, flood, storm, earthquake, tornado, act of terror or any act of God; provided, that such time period shall be extended for only the actual amount of time said party is so delayed; and provided
further, that any payment obligation under this Agreement shall not be extended. In the event Commerce is so delayed, Cygne may obtain Services elsewhere during the time of such delay. 
  

 -6- 

 16. Amendments. This Agreement may not be amended, modified, supplemented or waived orally, and
may only be so amended, modified, supplemented or waived by an instrument in writing executed by the parties hereto. 
  
 17. Binding Effect. This Agreement and all the terms and provisions hereof shall be binding upon and inure solely to the benefit of the parties
hereto and their respective permitted successors and assigns. 
  
 18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which, when taken together, shall constitute one and the same instrument. 
  
 19. Entire Agreement. This Agreement contains the entire understanding
and Agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, whether written or oral, between the parties. Cygne agrees that the terms of any purchase orders issued by it which are inconsistent
with the terms hereof shall be inapplicable unless expressly accepted in writing by Commerce. 
  
 20. Survival. Sections 7(b) and 7(e) of this Agreement shall survive the termination or expiration of this Agreement. 
  
 21. Severability. In the event that in any legal proceedings before a competent tribunal it is determined that any of the sections of this
Agreement or any subsection, provision or, part thereof is invalid, such section, subsection, provision or part thereof shall be deemed to be severed from this Agreement for the purposes only of particular legal proceedings in question, and this
Agreement, and the said section, subsection, provision or part thereof, shall in every other respect continue in full force and effect. 
  
 [SIGNATURE PAGES FOLLOW] 
  
  

 -7- 

 IN WITNESS WHEREOF, the parties have executed this Distribution Agreement as of the day and year first
above written. 
  

			
	COMMERCE CLOTHING COMPANY, LLC
		
	By:	 	 /s/ Hubert Guez

	Name:	 	Hubert Guez
	Title:	 	President
	
	CYGNE DESIGNS, INC.
		
	By:	 	 /s/ Bernard Manuel

	Name:	 	Bernard Manuel
	Title:	 	President

  
  

 -8- 

 ANNEX A 
  
 DISTRIBUTION SERVICES TO BE PROVIDED BY COMMERCE: 
  

	 	•	 	All warehousing functions: 

  

	 	•	 	receiving 

  

	 	•	 	storage 

  

	 	•	 	shipping 

  

	 	•	 	order processing 

  

	 	•	 	maintenance of perpetual inventory 

  

	 	•	 	all direct labor and management services 

  

	 	•	 	space 

  

	 	•	 	utilities 

  

	 	•	 	maintenance and repair 

  

	 	•	 	medical insurance 

  
 OPERATIONS SERVICES TO BE PROVIDED BY COMMERCE: 
  

	 	•	 	Order Entry 

  

	 	•	 	Customer Service 

  

	 	•	 	MIS 

  

	 	•	 	Order Allocation 

  

	 	•	 	Billing 

  

	 	•	 	Office Supplies 

  
  

 -9-

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