Execution Version

 

 
 

PURCHASE AGREEMENT

by and among

GB HOLDING I, LLC,

AM APPAREL HOLDINGS, INC.

and

G-III LEATHER FASHIONS, INC.

Dated as of February 11, 2008

 
 

 

 

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TABLE OF CONTENTS

 

 

Page

ARTICLE I. DEFINITIONS

1

Section 1.1.

 

Certain Definitions

1

Section 1.2.

 

Terms Generally

8

ARTICLE II. PURCHASE AND SALE OF SHARES

8

Section 2.1.

 

Purchase and Sale of Shares

8

Section 2.2.

 

Payment of Purchase Price

8

Section 2.3.

 

Closing

9

Section 2.4.

 

Closing Deliveries

9

Section 2.5.

 

Satisfaction of Conditions

11

Section 2.6.

 

Transfer Taxes

11

ARTICLE III. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY GROUP

11

Section 3.1.

 

Organization of the Company

11

Section 3.2.

 

Authorization

11

Section 3.3.

 

Organizational Documents; Books and Records

12

Section 3.4.

 

Noncontravention; Earnout Payments

12

Section 3.5.

 

Capitalization

12

Section 3.6.

 

Subsidiaries of the Company

13

Section 3.7.

 

Government Authorizations

13

Section 3.8.

 

Financial Statements

13

Section 3.9.

 

Undisclosed Liabilities

14

Section 3.10.

 

Absence of Certain Changes

14

Section 3.11.

 

Tax Matters

16

Section 3.12.

 

Real Property; Title to and Condition of Property

17

Section 3.13.

 

Intellectual Property

18

Section 3.14.

 

Environmental Matters

19

Section 3.15.

 

Contracts

20

Section 3.16.

 

Insurance

22

Section 3.17.

 

Litigation

22

Section 3.18.

 

Employee Matters

22

Section 3.19.

 

Labor Matters.

24

Section 3.20.

 

Legal Compliance

24

Section 3.21.

 

Brokers’ Fees

24

Section 3.22.

 

Licenses

24

Section 3.23.

 

Suppliers and Customers

25

Section 3.24.

 

Relationships with Related Persons; Intracompany Arrangements

25

Section 3.25.

 

Accounts Receivable; Inventory

25

 

 

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ARTICLE IV. REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER

25

Section 4.1.

 

Organization of the Seller

25

Section 4.2.

 

Authorization

26

Section 4.3.

 

Noncontravention

26

Section 4.4.

 

Brokers’ Fees

26

Section 4.5.

 

Government Authorizations

26

Section 4.6.

 

Litigation

26

Section 4.7.

 

Guarantee

27

ARTICLE V. REPRESENTATIONS AND WARRANTIES REGARDING BUYER

27

Section 5.1.

 

Organization of Buyer

27

Section 5.2.

 

Authorization

27

Section 5.3.

 

Noncontravention

28

Section 5.4.

 

Brokers’ Fees

28

Section 5.5.

 

Government Authorizations

28

Section 5.6.

 

Litigation

28

Section 5.7.

 

Information

28

Section 5.8.

 

Accredited Investor

29

Section 5.9.

 

Financial Capacity

29

Section 5.10.

 

Relationship with Parent

30

ARTICLE VI. COVENANTS

30

Section 6.1.

 

Commercially Reasonable Efforts

30

Section 6.2.

 

Public Announcements

30

Section 6.3.

 

Post-Closing Access; Preservation of Records

30

Section 6.4.

 

Further Assurances

31

Section 6.5.

 

Cooperation of Independent Accountants

31

Section 6.6.

 

Employees

31

Section 6.7.

 

Replacement Letter of Credit

31

ARTICLE VII. CONDITIONS TO CLOSING

32

Section 7.1.

 

Conditions Precedent to Obligations of the Parties

32

Section 7.2.

 

Conditions Precedent to Obligation of Seller

32

Section 7.3.

 

Conditions Precedent to Obligations of Buyer

32

ARTICLE VIII. LIMITATIONS

32

Section 8.1.

 

Waiver of Damages

32

Section 8.2.

 

No Consequential Damages

33

ARTICLE IX. INDEMNIFICATION

33

Section 9.1.

 

General Indemnification by Seller

33

 

 

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Section 9.2.

 

General Indemnification by Buyer

34

Section 9.3.

 

Certain Limitations

34

Section 9.4.

 

Indemnification Procedures

36

Section 9.5.

 

Exclusive Remedy

39

Section 9.6.

 

Cooperation

39

Section 9.7.

 

Tax Indemnification

39

Section 9.8.

 

Specified Party Claims

42

Section 9.9.

 

Specified Mark Claims

42

ARTICLE X. MISCELLANEOUS

43

Section 10.1.

 

Parties in Interest

43

Section 10.2.

 

Assignment

43

Section 10.3.

 

Notices

43

Section 10.4.

 

Amendments and Waivers

44

Section 10.5.

 

Exhibits and Disclosure Schedule

44

Section 10.6.

 

Headings

45

Section 10.7.

 

Construction

45

Section 10.8.

 

No Other Representations or Warranties

45

Section 10.9.

 

Effect of Due Diligence

45

Section 10.10.

 

Entire Agreement

46

Section 10.11.

 

Severability

46

Section 10.12.

 

Expenses

46

Section 10.13.

 

Governing Law

46

Section 10.14.

 

Consent to Jurisdiction; Waiver of Jury Trial

46

Section 10.15.

 

Counterparts

47

 

SCHEDULES

A1 – Seller and Company Knowledge

A2 – Buyer Knowledge

A3 – Retained Directors and Officers

A4 – Purchase Price Calculation

Disclosure Schedule

 

 

 

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PURCHASE AGREEMENT

This Purchase Agreement, dated as of February 11, 2008 (including the schedules
and exhibits hereto, this “Agreement”), is by and among AM Apparel Holdings,
Inc., a Delaware corporation (the “Company”), GB Holding I, LLC, a Delaware
limited liability company and the sole stockholder of the Company (“Seller”),
and G-III Leather Fashions, Inc., a New York corporation (“Buyer”). The Company,
Seller and Buyer are referred to collectively herein as the “Parties” and each
individually as a “Party.”

W I T N E S S E T H:

WHEREAS, Seller owns all of the issued and outstanding shares of common stock,
par value $0.01 per share, of the Company (the “Shares”);

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Shares on the terms and subject to the conditions set forth in this
Agreement; and

WHEREAS, concurrently with the execution of this Agreement, as a material
inducement to Buyer’s willingness to enter into this Agreement, Seller is
delivering a Guarantee Agreement, dated as of the date hereof (the “Guarantee”),
among Seller, the Guarantor named therein (the “Guarantor”) and Buyer;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
promises herein made, and in consideration of the representations and
warranties, herein contained, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Parties hereto,
intending to become legally bound, hereby agree as follows:

ARTICLE I.

 

DEFINITIONS

Section 1.1. Certain Definitions. As used in this Agreement, the following terms
shall have the following meanings:

“Action” means any action, suit or proceeding by or before any court or other
Governmental Authority or arbitration tribunal.

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

“Agreed Claims” has the meaning set forth in Section 9.4(d).

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Allowances” has the meaning set forth in Section 3.25.

“Balance Sheet Date” has the meaning set forth in Section 3.8.

 

 

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“Business Day” means any day other than Saturday, Sunday or any other day on
which banking institutions in New York or New Jersey are not open for the
transaction of normal banking business.

“Buyer” has the meaning set forth in the preamble to this Agreement.

“Buyer Group” has the meaning set forth in Section 9.1.

“Buyer Specified Representations” has the meaning set forth in Section 9.2.

“Claim” has the meaning set forth in Section 9.4(a).

“Claim Notice” has the meaning set forth in Section 9.4(a).

“Closing” has the meaning set forth in Section 2.3.

“Closing Date” means the date the Closing occurs pursuant to Section 2.3.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the preamble to this Agreement.

“Company Financial Statements” has the meaning set forth in Section 3.8.

“Company Group” means the Company and the Company’s Subsidiaries.

“Company Plan” has the meaning set forth in Section 3.18(a).

“Confidentiality Agreement” means the Confidentiality Agreement, dated October
3, 2007, between the Company, Seller and G-III Apparel Group, Ltd.

“Consents” means consents, approvals, exemptions, waivers, authorizations,
filings, registrations and notifications.

“Contribution Agreement” means the Contribution Agreement, dated October 8,
2004, among the Company, A. Marc & Co., Inc., Andrew & Suzanne Company Inc., Ash
Retail Corp., Ash Retail of Easthampton, Inc. and the Contributors named
therein.

“Control” means, with respect to any Person, the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or partnership
interests, by contract or otherwise.

“Damages” means all losses, claims, damages, payments, Taxes, costs and expenses
(including costs and expenses of Actions, amounts paid in connection with any
assessments, judgments or settlements relating thereto, interest and penalties
recovered by a third party with respect thereto and out-of pocket expenses and
reasonable attorneys’ fees and expenses reasonably incurred in defending against
any such Actions or in enforcing a Party’s rights hereunder).

 

 

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“Disclosure Schedule” means the disclosure schedule delivered by Seller to Buyer
on the date hereof.

“Earnout Prepayment Amount” has the meaning set forth in Section 2.2(a) of the
Contribution Agreement.

“Environmental Laws” means any Law existing on the date hereof which deals with
(i) pollution or protection of the environment; (ii) exposure of persons to
toxic or hazardous substances; or (iii) employee or worker safety (solely to the
extent related to exposure of Hazardous Materials).

“Environmental Liabilities” means any and all liabilities, claims, demands,
costs, damages, losses, expenses, penalties, fines, interest, attorneys’ fees,
court costs and other costs of suit incurred or imposed (i) pursuant to any
order, notice of responsibility, directive, injunction, judgment or similar act
(including settlements) by any Governmental Authority to the extent arising out
of a violation of Environmental Laws or (ii) pursuant to any claim or cause of
action by a Governmental Authority or other third Person for personal injury,
property damage, damage to natural resources or remediation or response costs to
the extent arising out of or attributable to any discharge, disposal or release
of Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” has the meaning set forth in Section 3.18(a).

“Equity Upside Payments” means the amounts payable to employees of the Company
Group pursuant to the agreements listed in Section 1.1(a) of the Disclosure
Schedule.

“Final Balance Sheet” has the meaning set forth in Section 3.8.

“GAAP” means United States generally accepted accounting principles.

“Governmental Authority” means any federal, state, local or foreign government,
court of competent jurisdiction, administrative agency or commission or other
governmental or regulatory authority or instrumentality.

“Guarantee” has the meaning set forth in the recitals to this Agreement.

“Guarantor” has the meaning set forth in the recitals to this Agreement.

“Hazardous Materials” means (i) asbestos, polychlorinated biphenyls, petroleum,
petroleum derived substances, by-products or wastes, (ii) any substance that is
defined, listed or identified as a “hazardous waste” or “hazardous substance”
thereunder, or (iii) any substance that is toxic, explosive, corrosive,
flammable, radioactive, or otherwise hazardous and is defined, regulated or
listed as such by any Governmental Authority under any applicable Environmental
Law.

“Indebtedness” means the sum (without duplication) of (i) the principal amount
of any indebtedness of the Company or any other member of the Company Group for
borrowed

 

 

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money, (ii) the principal amount of indebtedness of the Company or any other
member of the Company Group evidenced by promissory notes, bonds or debentures,
(iii) capitalized lease obligations of the Company or any other member of the
Company Group, (iv) all indebtedness of the type referred to in items (i), (ii)
and (iii) above of a Person other than a member of the Company Group which is
guaranteed by a member of the Company Group and (v) any unpaid interest owing on
any of the foregoing or prepayment penalties on any of the foregoing; provided,
that notwithstanding the foregoing, the Letters of Credit will not be considered
“Indebtedness” hereunder.

“Indemnified Claim” has the meaning set forth in Section 9.4(i).

“Indemnified Party” has the meaning set forth in Section 9.2.

“Indemnifying Party” has the meaning set forth in Section 9.2.

“Indemnity Reduction Amounts” has the meaning set forth in Section 9.3(c).

“Injunction” has the meaning set forth in Section 6.1.

“Intellectual Property” means (a) all patents, patent applications, and patent
disclosures, (b) all trademarks, service marks, trade dress, logos, trade names,
domain names, and corporate names, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, works of
authorship and all copyrights, and all applications, registrations, and renewals
in connection therewith, and (d) all trade secrets.

“Knowledge” means, with respect to Seller, the Company or the Company Group, the
actual knowledge of any individual set forth on Schedule A1 and, with respect to
Buyer, the actual knowledge of any individual set forth on Schedule A2.

“Laws” means all applicable laws, statutes, constitutions, rules, regulations,
judgments, rulings, orders, decrees and injunctions of Governmental Authorities.

“Leased Real Property” has the meaning set forth in Section 3.12(b).

“Letters of Credit” means the letters of credit outstanding on the Closing Date
issued pursuant to that certain Master Purchase Agreement, dated as of November
5, 2004, by and among Gordon Brothers Retail Partners, LLC, A. Marc & Co., Inc.
and Andrew & Suzanne Company, Inc.

“Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.

“Licenses” has the meaning set forth in Section 3.22.

“Lien” means any mortgage, pledge, lien, encumbrance, charge or other security
interest.

“Lock-Box Partial Period” has the meaning set forth in Section 9.7(a).

 

 

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“Material Adverse Effect” means (a) with respect to the Company Group,
a material adverse effect on the business, operations, assets or financial
condition of the Company Group, taken as a whole, excluding, in each case, any
such effect resulting from or arising out of or in connection with (i) acts of
God, calamities, national or international political or social conditions
including the engagement by any country in hostilities, whether commenced before
or after the date hereof, and whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or terrorist
attack, (ii) economic, industry or market events, occurrences, developments,
circumstances or conditions, whether general or regional in nature or limited to
any area in which the Company Group operates, in each case that do not have a
disproportionate effect on the Company Group relative to other Persons in the
specialty retail industry, (iii) changes in applicable Laws or accounting
standards, principles or interpretations, (iv) the negotiation (including
activities relating to due diligence), execution, delivery or public
announcement or the pendency of this Agreement or any of the transactions
contemplated herein or any actions taken or not taken in compliance herewith or
otherwise at the request or with the consent of Buyer, (v) any event,
occurrence, circumstance or fact that is set forth in the Disclosure Schedule or
(vi) any change in or effect on the assets or properties of the Company Group
which is cured (including the payment of money) by the Seller, (b) with respect
to Buyer, a material adverse effect on the ability of Buyer to perform its
obligations under, or to consummate the transactions contemplated by, this
Agreement and (c) with respect to Seller, a material adverse effect on the
ability of Seller to perform its obligations under, or to consummate the
transactions contemplated by, this Agreement.

“Material Contracts” has the meaning set forth in Section 3.15(a).

“New Jersey Lease” means the Real Property Lease for the Leased Real Property
located at 50 Enterprise Avenue, Secaucus, New Jersey.

“New Jersey Lease Consent” has the meaning set forth in Section 2.4(a)(xi).

“Other Parties” has the meaning set forth in Section 3.15(b).

“Parties” has the meaning set forth in the preamble to this Agreement.

“Payoff Letters” has the meaning set forth in Section 2.4(a)(iii).

“Permitted Liens” means any (a) mechanic’s, materialmen’s, laborer’s, workmen’s,
repairmen’s, carrier’s and similar Liens, including all statutory Liens, arising
or incurred in the ordinary course of business, (b) Liens for Taxes, assessments
and other governmental charges (i) not yet delinquent or (ii) being contested in
good faith through appropriate proceedings, (c) purchase money Liens and Liens
securing rental payments under capital lease arrangements, (d) pledges or
deposits under workers’ compensation legislation, unemployment insurance Laws or
similar Laws, (e) good faith deposits in connection with bids, tenders, leases,
contracts or other agreements, including rent security deposits, (f) pledges or
deposits to secure public or statutory obligations or appeal bonds, (g) Liens
referred to in the Company Financial Statements, (h) other Liens not incurred in
connection with the borrowing of money which do not interfere with or impair, in
any material respect, the present operation of the business of the Company
Group, (i) in the case of property held by the Company Group, easements,
covenants and other restrictions which do not materially impair the current use,

 

 

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occupancy or value of the property subject thereto, (j) any landlord’s lien
arising under contract or statute, (k) as to any Leased Real Property, any Lien
affecting the interest of the lessor thereof that would not, individually or in
the aggregate, adversely affect the ability of the Company Group to conduct its
businesses in the ordinary course at the Leased Real Property or (l) any Liens
arising to secure Indebtedness of the Company Group identified to be paid off at
Closing in the Payoff Letters.

“Person” means an individual, partnership, limited liability partnership,
corporation, limited liability company, association, joint stock company, trust,
estate, joint venture, unincorporated organization, or governmental entity (or
any department, agency, or political subdivision thereof).

“Pre-Closing Period” has the meaning set forth in Section 9.7(d).

“Pre-Lock-Box Period” has the meaning set forth in Section 9.7(a).

“Purchase Price” means an amount equal to $19,147,835.14

“Real Property Leases” has the meaning set forth in Section 3.12(b).

“Remedies Exception” means (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other Laws of general application, heretofore or
hereafter enacted or in effect, affecting the rights and remedies of creditors
generally, and (ii) the exercise of judicial or administrative discretion in
accordance with general equitable principles, particularly as to the
availability of the remedy of specific performance or other injunctive relief.

“Reorganization” means the reorganization of the Company Group consummated in
April 2007.

“Replacement Letter of Credit” has the meaning set forth in Section 2.4(b)(vi).

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Seller” has the meaning set forth in the preamble to this Agreement.

“Seller Group” has the meaning set forth in Section 9.2.

“Seller Specified Representations” has the meaning set forth in Section 9.1.

“Shares” has the meaning set forth in the recitals to this Agreement.

“Solvent” means when used with respect to any Person, means that, as of any date
of determination, (a) the amount of the “fair saleable value” of the assets of
such Person will, as of such date, exceed (i) the value of all “liabilities of
such Person, including contingent and other liabilities,” as of such date, as
such quoted terms are generally determined in accordance with applicable federal
laws governing determinations of the insolvency of debtors, and (ii) the

 

 

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amount that will be required to pay the probable liabilities of such Person on
its existing debts (including contingent liabilities) as such debts become
absolute and matured, (b) such Person will not have, as of such date, an
unreasonably small amount of capital for the operation of the businesses in
which it is engaged or proposed to be engaged following such date, and (c) such
Person will be able to pay its liabilities, including contingent and other
liabilities, as they mature. For purposes of this definition, “not have an
unreasonably small amount of capital for the operation of the businesses in
which it is engaged or proposed to be engaged” and “able to pay its liabilities,
including contingent and other liabilities, as they mature” means that such
Person will be able to generate enough cash from operations, asset dispositions
or refinancing, or a combination thereof, to meet its obligations as they become
due.

“Specified Mark Claims” has the meaning set forth in Section 9.9.

“Specified Marks” has the meaning set forth in Section 3.13(c).

“Specified Parties” has the meaning set forth in Section 9.1(e).

“Specified Party Claims” has the meaning set forth in Section 9.8.

“Specified AR Proceeding” means the matter described in Section 1.1(b) of the
Disclosure Schedule.

“Specified HS Proceeding” means the matter described in Section 1.1(c) of the
Disclosure Schedule.

“Stay Bonuses” has the meaning set forth in Section 3.18(a).

“Straddle Period” has the meaning set forth in Section 9.7(a).

“Subsidiary,” when used with respect to any Person, means any other Person of
which (a) in the case of a corporation, at least (i) a majority of the equity
and (ii) a majority of the voting interests are owned or Controlled, directly or
indirectly, by such first Person, by any one or more of its Subsidiaries, or by
such first Person and one or more of its Subsidiaries or (b) in the case of any
Person other than a corporation, such first Person, one or more of its
Subsidiaries, or such first Person and one or more of its Subsidiaries (i) owns
a majority of the equity interests thereof and (ii) has the power to elect or
direct the election of a majority of the members of the governing body thereof.

“Tax” means any federal, state, local, or foreign tax, charge, duty, fee, levy
or other assessment, including income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, escheat or other tax, fee or like assessment or charge
imposed by any Governmental Authority or arising under any Law, and including
any interest, penalty, or addition thereto.

“Tax Contest” has the meaning set forth in Section 9.7(f).

 

 

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“Tax Return” means any return, declaration, report, claim for refund, form, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, required to be filed
with any Governmental Authority.

“Third Party Claim” has the meaning set forth in Section 9.4(e).

“Transaction Documents” means this Agreement, the Guarantee and all other
documents delivered or required to be delivered by any Party pursuant to this
Agreement.

“Transfer Taxes” means all transfer, sales, real property or personal property
transfer or gains, use, excise, stock transfer, stamp, documentary, filing,
recording, registration, and similar Taxes incurred as a result of the
transactions contemplated by this Agreement.

“US Leased Real Property” has the meaning set forth in Section 3.12(b).

“US Real Property Leases” has the meaning set forth in Section 3.12(b).

Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation.” The words “herein”, “hereof” and
“hereunder” and words of similar import refer to this Agreement (including the
Exhibits to this Agreement and the Disclosure Schedule) in its entirety and not
to any part hereof unless the context shall otherwise require. All references
herein to Articles, Sections, Exhibits and the Disclosure Schedule shall be
deemed references to Articles and Sections of, and Exhibits and the Disclosure
Schedule to, this Agreement unless the context shall otherwise require. Unless
the context shall otherwise require, any references to any agreement or other
instrument or statute or regulation are to it as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any successor
provisions). Any reference to any federal, state, local, or foreign statute or
Law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Any reference in this
Agreement to a “day” or a number of “days” (without explicit reference to
“Business Days”) shall be interpreted as a reference to a calendar day or number
of calendar days. If any action is to be taken or given on or by a particular
calendar day, and such calendar day is not a Business Day, then such action may
be deferred until the next Business Day.

ARTICLE II.

 

PURCHASE AND SALE OF SHARES

Section 2.1. Purchase and Sale of Shares. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller
agrees to sell to Buyer, all of the Shares at the Closing, for aggregate
consideration equal to the Purchase Price, as payable pursuant to Section 2.2.

Section 2.2. Payment of Purchase Price. At Closing, Buyer shall pay an amount in
immediately available funds by wire transfer to an account or accounts that have
been designated by Seller to Buyer prior to the Closing equal to the Purchase
Price.

 

 

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Section 2.3. Closing. Subject to the satisfaction or, when permissible, waiver
of the conditions set forth in Article VII, the closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the offices
of Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022, commencing
at 10:00 a.m. local time on the date hereof.

Section 2.4. Closing Deliveries.

(a) At the Closing, Seller is delivering or causing to be delivered to Buyer the
following:

(i) original stock certificate representing the Shares, duly endorsed in blank
or accompanied by a stock power with all stock transfer stamps necessary to
transfer the Shares to Buyer and original stock certificates representing all of
the outstanding shares of capital stock of each of the Company’s Subsidiaries;

(ii) resignations or terminations of the executive officers, directors and
managers of each member of the Company Group appointed or designated by Seller
or its Affiliates to such positions from their positions as executive officers,
directors and managers effective as of the Closing (other than those Persons
listed on Schedule A3 or identified by Buyer prior to Closing with respect to
whom such resignation or termination is not required);

(iii) letters, in customary form and substance, with respect to the satisfaction
in full of any Indebtedness of the Company Group outstanding as of the Closing
Date, the full and unconditional discharge of all obligations of any member of
the Company Group under all agreements or instruments relating to such
Indebtedness (including guaranties), and the release of any Liens relating
thereto and termination of any UCC, Patent and Trademark Office or other filings
evidencing such Liens (collectively, the “Payoff Letters”);

(iv) a properly executed statement from Seller that it is not a “foreign person”
as defined in Section 1445 of the Code;

(v) estoppel certificate from the landlord under the New Jersey Lease, in form
and substance reasonably satisfactory to Buyer;

(vi) good standing certificate of each member of the Company Group, from the
Secretaries of State of its state of organization and each jurisdiction in which
it is qualified to do business as a foreign corporation;

(vii) a copy of the certificate of incorporation of each member of the Company
Group, as in effect on the Closing Date, certified by the Secretary of State of
its state of incorporation as of a recent date;

(viii) a copy of the bylaws of each member of the Company Group, certified by
the secretary of such member of the Company Group;

 

 

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(ix) the stock books and minute books of the Company and its Subsidiaries
(including, without limitation, all attachments to all minutes and written
consents contained therein);

(x) the written consents to the transactions contemplated by this Agreement by
the licensors under the license agreements specified in Section 2.4(a)(x) of the
Disclosure Schedule, in form and substance reasonably satisfactory to Buyer;

(xi) the written consent to the transactions contemplated by this Agreement by
the landlord under the New Jersey Lease in form and substance reasonably
satisfactory to Buyer (the “New Jersey Lease Consent”);

(xii) letters executed by each of Financo, Inc. and FTI Consulting certifying as
to the termination, as of the Closing, of all engagement of Financo, Inc. and
FTI Consulting to render services to or with respect to any member of the
Company Group and the payment in full of all fees and expenses owed to Financo,
Inc. and FTI Consulting with respect to any such services;

(xiii) evidence of the full and unconditional discharge and release by Seller
and Seller’s Affiliates (other than any member of the Company Group) and the
Company Group of all intracompany accounts, receivables, payables, contracts,
agreements, guarantees, suretyships, deposits, bonds, letters of credit or
security between, for the benefit of or provided by, Seller and Seller’s
Affiliates (other than any member of the Company Group), on the one hand, and
any member or members of the Company Group, on the other hand, which
arrangements are identified in Section 3.24(b) of the Disclosure Schedule, in
each case, other than the Letters of Credit;

(xiv) assignment to the applicable member of the Company Group of all inventory
to which the outstanding Letters of Credit relate;

(xv) the Guarantee executed by the Guarantor; and

(xvi) all other documents required to be delivered by Seller to Buyer at the
Closing pursuant to this Agreement.

(b) At the Closing, Buyer is delivering or causing to be delivered the
following:

(i) cash in immediately available funds as provided in Section 2.2;

(ii) payment in full discharge of any and all Indebtedness of the Company Group
outstanding as of the Closing Date, by wire transfer of immediately available
funds in the amounts and to the accounts set forth in the Payoff Letters;

(iii) evidence of termination of the Company’s guaranty with respect to the New
Jersey Lease;

(iv) guaranty with respect to the New Jersey Lease by G-III Apparel Group, Ltd.;

 

 

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(v) the New Jersey Lease Consent;

(vi) blanket letter of credit in favor of Gordon Brothers Retail Partners, LLC
with respect to the Letters of Credit (such blanket letter of credit delivered
at Closing, the “Replacement Letter of Credit”);

(vii) evidence of Buyer’s payment for a prepaid, non-cancelable six (6) year
director’s and officers’ liability insurance tail policy for the persons
currently covered by the Company’s directors’ and officers’ liability insurance
policy; and

(viii) all other documents required to be delivered by Buyer to Seller at the
Closing pursuant to this Agreement.

Section 2.5. Satisfaction of Conditions. All conditions to the obligations of
Seller and Buyer to proceed with the Closing under this Agreement will be deemed
to have been fully and completely satisfied or waived for all purposes upon the
Closing.

Section 2.6. Transfer Taxes. All Transfer Taxes will be borne fifty percent
(50%) by Buyer and fifty percent (50%) by Seller.

ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY GROUP

Seller represents and warrants to Buyer, except as set forth in the Disclosure
Schedule, as follows:

Section 3.1. Organization of the Company. The Company is a corporation, validly
existing and in good standing under the laws of Delaware, and the Company has
all requisite corporate power and authority to carry on its business as it is
currently conducted and to own, lease and operate its properties where such
properties are now owned, leased or operated. Each other member of the Company
Group (a) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and (b) has all requisite
organizational power and authority to carry on its respective business as it is
currently conducted and to own, lease and operate its properties where such
properties are now owned, leased or operated, except in all cases where any
failures of the representations in this sentence to be true would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
Group. Each member of the Company Group is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or license necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed or in good standing would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company Group.

Section 3.2. Authorization. The Company has all requisite corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents to which it is or will be party and to perform its obligations
hereunder and thereunder. The execution, delivery and performance by the Company
of this Agreement and the other Transaction Documents to which the Company is or
will be a Party and the consummation of the transactions

 

 

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contemplated hereby and thereby have been duly authorized by the Company’s Board
of Directors and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement, such Transaction Documents or the
consummation of the transactions contemplated hereby or thereby. This Agreement
has been duly executed and delivered by the Company and (assuming this Agreement
constitutes a valid and binding obligation of Buyer and Seller) constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the Remedies Exception. Except
as provided in Section 3.2 of the Disclosure Schedule, the Reorganization was
duly authorized by the Board of Directors, approved by the requisite vote of the
stockholders of the members of the Company Group party thereto and consummated
in accordance with applicable Law.

Section 3.3. Organizational Documents; Books and Records. The copies of the
organizational documents of each entity comprising the Company Group delivered
to Buyer are complete and correct and represent the presently effective
organizational documents of each member of the Company Group. No member of the
Company Group is in violation of its respective organizational documents. The
minute books of each member of the Company Group delivered to the Buyer at the
Closing contain, in all material respects, complete and correct records of all
meetings held of, and corporate action taken by, the shareholders, boards of
directors and committees of the boards of directors of each such member of the
Company Group.

Section 3.4. Noncontravention; Earnout Payments. Neither the execution and
delivery of the Transaction Documents by the Company, nor the consummation of
the transactions contemplated thereby will (a) conflict with any provision of
the organizational documents of any member of the Company Group or any
resolution adopted by the board of directors or shareholders of any member of
the Company Group, (b) materially conflict with, result in the material breach
of any provision of, or constitute a material default under any Material
Contract, except for Material Contracts to be terminated at Closing as provided
in Section 2.4 or the contracts set forth on Section 2.4(a)(x) of the Disclosure
Schedule, or (c) violate in any material respect any laws, regulations, orders
or judgments applicable to any member of the Company Group. Neither the
execution and delivery of this Agreement by the Company or the Seller, nor the
consummation of the transactions contemplated hereby, gives rise to any
obligation of the Company to pay an Earnout Prepayment Amount. Notwithstanding
anything to the contrary contained herein, the Parties agree that the Company
makes no representation or warranty under this Section 3.4 with respect to any
Real Property Lease.

Section 3.5. Capitalization. The authorized capital stock of the Company
consists of 250,000 shares of common stock, par value $0.01 per share, of which
200,000 shares are issued and outstanding as of the date hereof and 50,000
shares of preferred stock, par value $0.01 per share, no shares of which are
issued and outstanding as of the date hereof. Seller is the record and
beneficial owner of all of the Shares. All of the Shares have been duly
authorized and validly issued and are fully paid and nonassessable and were not
issued in violation of any preemptive rights. Other than the Shares, no shares
of capital stock of the Company are issued and outstanding, or may become
required to be issued by reason of any options, warrants, rights to subscribe
to, calls or commitments of any character, relating to, or securities or rights
convertible into or exchangeable or exercisable for, shares of any capital stock
of the Company, and there are no contracts, commitments, understandings or
arrangements by which the Company is or may be bound to issue, redeem, purchase
or sell additional shares of capital stock

 

 

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of the Company or securities convertible into or exchangeable for any capital
stock of the Company. All outstanding shares of capital stock of each member of
the Company Group are free of any Liens other than Permitted Liens, and are not
subject to preemptive rights or rights of first refusal. Since November 5, 2004,
the shares of capital stock of each member of the Company Group have been issued
in compliance with the Securities Act and applicable state securities Laws and
all dividends and distributions by each member of the Company Group have been
made in compliance with their respective organizational documents and applicable
Laws. No instrument of Indebtedness of any member of the Company Group confers
upon the holder thereof the right to vote (or is convertible into securities
having the right to vote) on any matters on which shareholders of the applicable
member of the Company Group may vote. There are no other contracts, commitments,
powers of attorney or agreements relating to voting or the purchase or sale of,
the outstanding capital stock of any member of the Company Group.

Section 3.6. Subsidiaries of the Company. Section 3.6 of the Disclosure Schedule
sets forth for each of the Company’s Subsidiaries (a) its name and jurisdiction
of organization, (b) its form of organization and (c) the capital stock or
membership interests held by the Company, directly or indirectly, in such
Subsidiary. The Company is the direct or indirect beneficial and record owner of
all of the issued and outstanding shares of capital stock or membership
interests in such Subsidiaries, free and clear of all Liens, except (x) as may
be created by this Agreement, (y) for any restrictions on sales of securities
under the Securities Act or other applicable Laws or (z) for Permitted Liens.
Section 3.6 of the Disclosure Schedule sets forth a complete list of the
officers and directors of each member of the Company Group as of the date
hereof. No member of the Company Group owns, directly or indirectly, any equity
securities of any Person, except that the Company owns the equity securities of
its Subsidiaries listed in Section 3.6 of the Disclosure Schedule.

Section 3.7. Government Authorizations. Except for Consents that, if not
obtained or made, would not, individually or in the aggregate, have a Material
Adverse Effect on the Company Group, no Consent of, with or to any Governmental
Authority is required to be obtained or made by the Company in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, other than any such requirement that is
applicable as a result of any facts that specifically relate to the business or
activities in which Buyer or its Affiliates is or proposes to be engaged, other
than the business currently conducted by the Company Group.

Section 3.8. Financial Statements. Set forth in Section 3.8 of the Disclosure
Schedule are (a) the audited consolidated balance sheets of the Company Group as
of December 31, 2006 and December 31, 2005, and the related consolidated
statements of operations and cash flows for the fiscal years then ended, (b) the
unaudited consolidated balance sheet of the Company as of December 31, 2007 (the
“Balance Sheet Date”), and the related consolidated statements of operations and
cash flows for the twelve (12) months ended on the Balance Sheet Date, and (c)
the unaudited consolidated balance sheet of the Company as of January 31, 2008
(the “Final Balance Sheet”, and (a), (b) and (c) collectively, the “Company
Financial Statements”). Except to the extent set forth therein, each of the
Company Financial Statements presents fairly, in all material respects, the
assets, liabilities, consolidated financial position, results of operations and
cash flows of the Company Group, at the respective dates set forth therein and
for the respective periods covered thereby, and were prepared in accordance with

 

 

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GAAP (except, in the case of the unaudited financial statements, for the absence
of footnotes and any year-end adjustments), consistently applied. Except to the
extent set forth in the Company Financial Statements, (i) the unaudited Company
Financial Statements reflect all adjustments necessary to present fairly, in all
material respects, the financial condition of the Company for the applicable
periods and (ii) except as would not be required to be disclosed in accordance
with GAAP, the statements of operations included in the Company Financial
Statements do not contain any material items of special or non-recurring income
or other material amounts of income not earned in the ordinary course of
business.

Section 3.9. Undisclosed Liabilities. As of January 31, 2008, the Company Group
had no Liabilities of a kind that would be required to be reflected on or
reserved against on a consolidated balance sheet of the Company Group (including
the notes thereto) prepared in accordance with GAAP, except for Liabilities
(a) set forth in, reflected in, reserved against or disclosed in the Final
Balance Sheet (including the notes thereto), (b) under Material Contracts or
other contracts or agreements of the Company or its Subsidiaries not required by
the terms hereof to be disclosed in the Disclosure Schedule (in each case, other
than Liabilities arising as a result of a breach thereunder by a member of the
Company Group), (c) that have been discharged or paid in full in the ordinary
course of business, (d) disclosed in the Disclosure Schedule or (e) that do not
exceed $250,000 in the aggregate. Notwithstanding anything to the contrary
contained herein, the Parties agree that the Company makes no representation or
warranty under this Section 3.9 with respect to any subject matter to which
another section of this Agreement contains a specific representation or warranty
relating thereto.

Section 3.10. Absence of Certain Changes.

(a) Since the Balance Sheet Date through the date hereof, except as contemplated
by or disclosed pursuant to this Agreement, the Company Group has conducted its
business only in the ordinary course, and there has not been (i) to the
Company’s Knowledge, any event or development that would, as of the date hereof,
individually or in the aggregate, have a Material Adverse Effect on the Company
Group or (ii) any material change in accounting methods, principles or practices
affecting the Company Group, except as required by GAAP.

(b) During the period commencing on February 1, 2008 and ending at the Closing,
except (i) as otherwise contemplated by this Agreement (including as described
on Section 3.10(b) of the Disclosure Schedule and the other matters contemplated
by the other Schedules and Exhibits hereto) and the other Transaction Documents
or (ii) as required by applicable Law, the Company has not, and each other
member of the Company Group has not, taken any of the following actions:

(A) incurred damage or destruction or loss of any asset or property, whether or
not covered by insurance, in an amount in excess, individually or in the
aggregate, of $150,000 (excluding, for the avoidance of doubt, operating losses
incurred in the ordinary course of business);

(B) (1) amended its organizational documents; or (2) authorized for issuance,
issued, granted, sold, delivered, disposed of, pledged or otherwise encumbered
any shares of its capital stock or issued any options, warrants or other rights
to subscribe for or acquire any shares of its capital stock;

 

 

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(C) redeemed, purchased or acquired any Shares or declared or paid any dividends
with respect to the capital stock of the Company;

(D) except as required by GAAP, adopted or materially changed any accounting
methods, principles or practices;

(E) entered into, terminated or materially modified any Material Contract
(excluding, for the avoidance of doubt, any purchase order entered into,
terminated or modified in the ordinary course of business consistent with past
practices);

(F) sold, transferred, licensed or otherwise disposed of or encumbered any of
the material assets pertaining to the business of the Company Group, other than
sales or inventory in the ordinary course of business consistent with past
practices;

(G) acquired by merger or consolidation with, or merged or consolidated with, or
purchased substantially all of the equity interests or assets of, or otherwise
acquired, any material business of any corporation, partnership, association or
other business organization or division thereof;

(H) (1) taken any action with respect to the grant of any severance, retention,
change of control or termination pay (other than pursuant to any plans, policies
or agreements listed in Section 3.10(b)(H) of the Disclosure Schedule) which
will become due and payable on or after the Closing Date or entered into,
renewed or amended any employment, consulting, severance, change of control or
separation contracts with any Company Group Employee; (2) made any change in the
key management structure of the Company Group, including, without limitation,
the hiring of additional officers or the termination of existing officers; or
(3) adopted, entered into or amended any Company Plan, or announced or agreed to
the adoption of any new agreement, arrangement or plan which, if adopted, would
be a Company Plan;

(I) except for borrowings under existing lines of credit in the ordinary course
of business consistent with past practices, (1) created, incurred or assumed any
Indebtedness, (2) assumed, guaranteed, endorsed or otherwise became liable or
responsible (whether directly, contingently or otherwise) for any material
obligations of any Person, (3) made any loans, advances or capital contributions
to or investments in any Person other than any member of the Company Group or
(4) paid any principal or interest on any Indebtedness;

(J) cancelled any third party Indebtedness owed to any member of the Company
Group,

(K) except in the ordinary course of business, made any capital expenditures;

(L) settled any material Tax liability or changed any existing, or made any new,
material Tax election;

 

 

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(M) amended or modified any term or provision of any of the Real Property
Leases; or

(N) agreed to do any of the foregoing.

Section 3.11. Tax Matters.

(a) Each member of the Company Group has timely filed or caused to be filed all
Tax Returns required to be filed by it on or before the Closing Date. All such
Tax Returns are correct and complete in all material respects. The Company has
made available to Buyer copies of all federal, state, foreign and local income
Tax Returns filed by any member of the Company Group since January 1, 2004. Each
member of the Company Group has either (i) paid or caused to be paid all
material Taxes due and payable by it (whether or not shown on any Tax Returns)
or (ii) as of January 31, 2008, established an adequate reserve in accordance
with GAAP for the payment of all material Taxes accrued by it but not yet due
and payable. There are no Liens for Taxes on any assets of any member of the
Company Group other than Permitted Liens. No claim has ever been made by a
Governmental Authority in a jurisdiction where a member of the Company Group
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction.

(b) No federal, state, local or foreign Tax audits or administrative or judicial
proceedings relating to Taxes are pending with respect to any member of the
Company Group. With respect to Taxes for which the statute of limitations
remains open, no member of the Company Group has received from any Governmental
Authority (including jurisdictions where the member has not filed Tax Returns)
any (i) written notice indicating an intent to open a Tax audit or other review,
(ii) request for information related to Tax matters, or (iii) notice of
deficiency or proposed adjustment for any amount of Tax.

(c) No member of the Company Group has waived any statute of limitations in
respect of the assessment and collection of Taxes or agreed to any extension of
time which is in effect as of the date hereof with respect to a Tax assessment
or deficiency. There are no outstanding powers of attorney enabling any party to
represent any member of the Company Group with respect to Tax matters.

(d) No member of the Company Group has, within the past two years, distributed
stock of another Person, or has had its stock distributed by another Person, in
a transaction that purported or was intended to be governed in whole or in part
by Section 355 of the Code.

(e) No member of the Company Group (i) is a party to or bound by any Tax
allocation, Tax sharing or Tax indemnity agreement or any other agreement of a
similar nature (other than any customary commercial contract not primarily
related to Taxes and other than any such agreement the only parties to which are
the Company and/or any of the Company’s Subsidiaries) or (ii) has any liability
for the Taxes of any Person (other than the Company or any of its Subsidiaries)
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign Law), as a transferee or successor or by contract.

 

 

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(f) No member of the Company Group will be required to include any material item
of income in, or exclude any item of deduction from, taxable income for any Tax
period (or portion thereof) ending after the Closing Date as a result of any (i)
change in method of accounting for a Tax period ending on or prior to the
Closing Date, (ii) “closing agreement” as described in Section 7121 of the Code
(or any similar provision of state, local, or foreign Law) executed on or prior
to the Closing Date, (iii) intercompany transactions or any excess loss account
described in Treasury Regulations under Section 1502 of the Code (or any similar
provision of state, local, or foreign Law), (iv) installment sale or open
transaction disposition made on or prior to the Closing Date, or (v) prepaid
amount received on or prior to the Closing Date.

(g) No member of the Company Group has entered into any “listed transaction” as
defined in Treas. Reg. Section 1.6011-4(b)(2).

(h) The Company and each of its Subsidiaries has withheld and paid all material
Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party.

(i) There is not currently in effect an extension of time within which any
member of the Company Group is required to file any Tax Return (including,
without limitation, any information return) which has yet to filed with the
relevant Governmental Authority.

(j) No member of the Company Group has requested or received any ruling from any
Governmental Authority, or signed any binding agreement with any Governmental
Authority (including, without limitation, any advance pricing agreement), that
would impact the amount of Taxes due from any member of the Company Group or
Buyer after the date hereof.

(k) No member of the Company Group is a party to any joint venture or
partnership.

(l) Except as expressly provided in paragraphs (f) and (j) of this Section 3.11,
the representations of the Company made in this Section 3.11 refer only to the
past activities of the Company Group and are not intended to serve as
representations to, or a guarantee of, nor can they be relied upon with respect
to, Taxes attributable to any Tax periods (or portions thereof) beginning after,
or Tax positions taken after, the Closing Date.

Section 3.12. Real Property; Title to and Condition of Property.

(a) No member of the Company Group owns any real property.

(b) Section 3.12(b)(i) of the Disclosure Schedule sets forth a list of all
leases and subleases of real property used in the business of the Company Group
under which any member of the Company Group or an employee thereof is a lessee
or sublessee and all amendments thereto and assignments thereof (the “Real
Property Leases”). The real property subject to the Real Property Leases is
hereinafter referred to as the “Leased Real Property.” A member of the Company
Group or an employee thereof is in possession of the Leased Real Property. True
and correct copies of the Real Property Leases have been made available to Buyer
prior to the date hereof. To the Company’s Knowledge, no member of the Company

 

 

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Group (including the tenant under each of the Real Property Leases set forth in
Section 3.12(b)(ii) of the Disclosure Schedule (the “US Real Property Leases,”
and the Leased Real Property subject thereto, the “US Leased Real Property”)) is
subject to a claim materially adverse to its rights thereunder, including its
rights to continued occupation, possession and use of any US Leased Real
Property. No member of the Company Group (including the tenant under each of the
US Real Property Leases) and, to the Company’s Knowledge, no landlord is in
default under any material provision of any US Real Property Lease. All
structures and improvements built by a member of the Company Group (including
the tenant under each of the US Real Property Leases) on the real property
subject to the Real Property Leases were built, and have been maintained in all
material respects, in accordance with applicable Laws. The US Leased Real
Property is all of the real property necessary for the conduct of the businesses
of the Company Group as conducted on the date hereof. To the Company’s
Knowledge, the landlord under the New Jersey Lease does not owe the tenant
thereunder any reimbursements or other sums pursuant to the New Jersey Lease.

(c) Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company Group, to the
Company’s Knowledge, (i) the members of the Company Group have good and valid
title to, or a valid leasehold interest in or other valid contractual right to
use, the real and personal tangible property reasonably necessary for the
conduct of the business of the Company Group as currently conducted on the date
hereof, free and clear of all Liens, except for Permitted Liens and (ii) the
personal tangible property of the Company Group reasonably necessary to the
operation of the business of the Company Group as conducted on the date hereof
is in good operating condition and repair, subject to normal wear and tear.

(d) All base rent, additional rent and other sums due and payable under each of
the leases set forth in Section 3.12(d) of the Disclosure Schedule has been paid
through the date hereof and the applicable tenant thereunder has not taken any
affirmative action with the intent to terminate such lease.

Section 3.13. Intellectual Property.

(a) Section 3.13(a) of the Disclosure Schedule sets forth a list of (i) all
patents, trademarks, service marks, trade names and copyrights (including, as
applicable for each item listed, the record owner, the jurisdiction, the
application and registration numbers, the filing date and the issuance or
registration date) registered or applied for in the name of any member of the
Company Group with the United States Patent and Trademark Office, the United
States Copyright Office or corresponding state or international Governmental
Authorities and (ii) all internet domain names registered in the name of any
member of the Company Group (including, for each item listed, the registrar and
the expiration date). Each such registration or application has been maintained
effective by all requisite filings, renewals and payments, and remains in full
force and effect. Except as indicated therein, none of the Intellectual Property
identified in Section 3.13(a) of the Disclosure Schedule has been abandoned or
cancelled. Immediately subsequent to the Closing, the Intellectual Property
owned by the Company Group will be owned by such member of the Company Group on
identical terms and conditions as existed immediately prior to the Closing.

 

 

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(b) Except as disclosed in Section 3.13(b) of the Disclosure Schedule, (i) the
applicable member of the Company Group, as identified in Section 3.13(a) of the
Disclosure Schedule, is the sole owner of all rights, title and interest in and
to the Intellectual Property identified in Section 3.13(a) of the Disclosure
Schedule, free and clear of any Lien; (ii) the Company Group has not granted to
any Person, and no other Person has, any license, option or other rights in or
to such Intellectual Property; (iii) the Company Group has not received notice
of any pending or threatened action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand that challenges the legality, validity,
enforceability, registrations, use or ownership of such Intellectual Property,
other than office actions in connection with the prosecution of applications for
the registration or issuance of such Intellectual Property, (iv) the Company
Group is not a party to any co-existence, consent, settlement or similar
agreements, limiting or modifying the rights of the Company Group in such
Intellectual Property in North America, or to the Company’s Knowledge, anywhere
else in the world, (v) since November 5, 2004, the Company Group has neither
brought any Action against any Person, nor provided notice to any Person
(including by cease and desist letters), that such Person is infringing such
Intellectual Property, and the Company Group has no Knowledge that any Person is
infringing Property or intends to infringe such Intellectual and (vi) to the
Company’s Knowledge, there are no Persons that use or claim any right to use any
name or mark in the United States or Canada that creates a likelihood of
confusion with any of the Intellectual Property identified in Section 3.13(a) of
the Disclosure Schedule.

(c) To the Company’s Knowledge, the Specified Parties have not asserted that (i)
they retain any right, title or interest in any Intellectual Property identified
in Section 3.13(a) of the Disclosure Schedule or (ii) they have any rights to
use the ANDREW MARC or MARC NEW YORK trademarks or any trademark confusingly
similar thereto (the “Specified Marks”), in any jurisdiction throughout the
world.

(d) To the Company’s Knowledge, the Company Group is not infringing any
Intellectual Property rights of any Person. During the past two (2) years (or
earlier if not resolved), the Company Group has received no notice alleging that
any member of the Company Group has infringed the Intellectual Property rights
of any Person, including from the Specified Parties or their representatives or
agents.

(e) The Company Group has in place commercially reasonable measures, consistent
with industry standards (including entering into appropriate confidentiality,
nondisclosure, and noncompete agreements), to reasonably safeguard and maintain
the secrecy and confidentiality of the trade secrets included in its
Intellectual Property. The Company Group has no Knowledge of any material breach
of such confidentiality, nondisclosure, or noncompete agreements by any party
thereto.

(f) The Company Group’s use and dissemination of any and all data and
information in connection with use of its web sites by users is in compliance
with all applicable privacy policies, terms of use and Laws. The transactions
contemplated hereunder will not violate the Company Group’s policies, terms of
use, or Laws relating to the use, dissemination or transfer of such data or
information.

Section 3.14. Environmental Matters. Notwithstanding anything else in this
Agreement to the contrary, this Section 3.14 shall constitute the sole
representations and

 

 

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warranties of the Company with respect to environmental matters. Except as would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company Group:

(a) since November 5, 2004, no member of the Company Group has been in violation
of any Environmental Law applicable to such member of the Company Group and no
member of the Company Group has received any written notice from any
Governmental Authority, which remains uncured, alleging that such member of the
Company Group is in violation of any Environmental Law;

(b) no member of the Company Group is (i) subject to any outstanding consent
decree, compliance order or administrative order issued by any Governmental
Authority pursuant to any Environmental Law or (ii) in receipt of any written
notice, complaint or claim seeking to impose an Environmental Liability against
such member of the Company Group; and

(c) to the Company’s Knowledge, no Hazardous Material has been released into or
from any Leased Real Property in violation of any Environmental Law or so as to
result in any Environmental Liabilities to a member of the Company Group.

Section 3.15. Contracts.

(a) Section 3.15(a) of the Disclosure Schedule lists the following written
contracts or agreements to which a member of the Company Group is party and
which are in effect on the date hereof, other than any Real Property Leases or
Company Plans (which are addressed in Sections 3.12 and 3.18, respectively):

(i) any contract to which any Specified Party, or an Affiliate of a Specified
Party, is a party;

(ii) any contract or agreement (including, without limitation, agreements with
customers, suppliers, licensors, marketers, manufacturers and distributors)
reasonably likely to require expenditures (including capital expenditures) or
payments to or from a member of the Company Group in excess of $150,000 in any
calendar year, other than those that can be terminated without material penalty
by such member of the Company Group upon not more than one hundred eighty (180)
days’ notice;

(iii) any contract or agreement under which a member of the Company Group is
obligated to sell or lease as lessor real property having a value in excess of
$150,000;

(iv) any contract or agreement under which a member of the Company Group is
obligated to sell or lease as lessor personal property having a value in excess
of $150,000;

(v) any contract or agreement that contains a covenant not to compete applicable
to a member of the Company Group or any of its Affiliates by virtue of such
Affiliation;

(vi) any contract or agreement under which a member of the Company Group has (A)
created, incurred, assumed or guaranteed (or may create, incur, assume or

 

 

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guarantee) Indebtedness, (B) granted a Lien on its assets, whether tangible or
intangible, to secure such Indebtedness or (C) extended credit to any Person in
an amount in excess of $150,000;

(vii) any contract or agreement between or among a member of the Company Group,
on the one hand, and any of its Affiliates (other than a member of the Company
Group), on the other hand;

(viii) any collective bargaining, labor or similar contracts or agreements;

(ix) any stock purchase agreement relating to the acquisition or disposition by
a member of the Company Group of any capital stock or other equity interests of
any Person;

(x) any asset purchase and other acquisition or divestiture agreements relating
to the acquisition, lease or disposition by a member of the Company Group of
assets or properties of any Person (other than inventory or supplies purchased
in the ordinary course of business);

(xi) any agreement providing for any indemnification, guaranty or surety
obligation of a member of the Company Group that is reasonably likely, to the
Company’s Knowledge, to result in a payment or Liability in excess of $150,000;

(xii) any stockholders’ or similar contracts or agreements, or material contract
or agreement establishing any joint venture, strategic alliance or other
collaboration;

(xiii) any contract or agreement the termination of which would have a Material
Adverse Effect on the Company Group;

(xiv) agreements pertaining to material transactions involving any member of the
Company Group on the one hand and any stockholder, director or officer thereof
on the other hand, including any such share purchase agreements, lease
agreements, management agreements, indemnity agreements and loans to or by any
such officer, stockholder or director;

(xv) confidentiality agreements which restrict a member of the Company Group,
other than any such agreements entered into in connection with this Agreement,
the Transaction Documents or any transaction contemplated hereby or thereby,
other than any agreement whose principal purpose does not relate to
confidentiality;

(xvi) license agreements, royalty agreements, and other agreements to which any
member of the Company Group is granted a license or other right to use the
Intellectual Property rights of any Person (except licenses for off-the-shelf,
click-wrap, “shrink wrap” or other commercially available software with annual
aggregate license, maintenance or other fees of $150,000 or less); and

 

 

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(xvii) agreements with finders, brokers or underwriters, other than any such
agreements entered into in connection with this Agreement or the transactions
contemplated hereby.

All contracts and agreements required to be set forth in Section 3.15 of the
Disclosure Schedule are referred to herein as “Material Contracts.”

(b) Each Material Contract is in full force and effect and is the legal, valid
and binding obligation of the member of the Company Group party thereto and, to
the Company’s Knowledge, the other parties thereto (the “Other Parties”), in
each case, subject to the Remedies Exception. No member of the Company Group or,
to the Company’s Knowledge, any of the Other Parties is in material breach,
material violation or material default under, and no event has occurred which
with notice or lapse of time or both would constitute a material breach,
material violation or material default under, or permit termination, material
modification, or acceleration by the Other Parties under, any Material Contract,
except that, in order to avoid a breach, violation or default under any Material
Contract, the Consent of the Other Parties to the contracts referenced in
Section 3.4 of the Disclosure Schedule may be required in connection with the
transactions contemplated hereby.

(c) Section 3.15(c) of the Disclosure Schedule attaches true, correct and
complete copies of each of the agreements listed in Section 2.4(a)(x), including
all amendments, exhibits, schedules and other annexes thereto.

Section 3.16. Insurance. Section 3.16 of the Disclosure Schedule sets forth a
summary of all material terms of the insurance policies owned or held by the
Company Group or otherwise covering the Company Group or its assets or
employees, as well as any self-insurance arrangement by or affecting the Company
Group, including any reserves established thereunder. To the Company’s
Knowledge, (i) such policies are in full force and effect, (ii) such policies
are issued by insurers that are financially sound, (iii) no member of the
Company Group is in material default under any of such policies and (iv) no
member of the Company Group has received written notice of non-renewal,
cancellation or intent to cancel or not renew with respect to such insurance
policies. Section 3.16 of the Disclosure Schedule also contains a list of all
pending claims (other than health, medical and dental insurance claims of
employees) under the Company Group’s insurance policies. No member of the
Company Group has received written notice from the insurer under any insurance
policy applicable to such member of the Company Group disclaiming coverage or
reserving material rights with respect to a particular claim or such policy in
general or canceling or materially amending any such policy.

Section 3.17. Litigation. There are no (a) Actions pending or threatened before
any Governmental Authority against the Company or its Subsidiaries which are
reasonably likely to result in any Liability of the Company Group that would,
individually or in the aggregate, have a Material Adverse Effect on the Company
and its Subsidiaries, taken as a whole and (b) outstanding injunctions,
judgments, orders, decrees, rulings, or charges to which the Company is a party
or by which it is bound by or with any Governmental Authority that would,
individually or in the aggregate, have a Material Adverse Effect on the Company
Group.

 

 

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Section 3.18. Employee Matters.

(a) Section 3.18(a) of the Disclosure Schedule lists each material “employee
benefit plan” (as defined in Section 3(3) of ERISA), whether or not subject to
ERISA, and each other material employment, incentive, severance, retention,
change in control, fringe benefit, perquisite or other compensatory agreement,
policy, plan or arrangement provided or maintained by the Company or any entity
that, together with the Company, would be treated as a single employer under
Section 414 of the Code (an “ERISA Affiliate”) to, with or for the benefit of
any current or former employee, director or consultant of the Company or any of
its Subsidiaries or any of their respective dependents or beneficiaries (a
“Company Plan”). In addition, Section 3.18(a) of the Disclosure Schedule
identifies all stay bonuses and other payments and benefits due to the employees
of the Company Group (collectively, the “Stay Bonuses”) under and in accordance
with the terms of all employment agreements, letter agreements and other similar
agreements, each of which is listed in Section 3.18(a) of the Disclosure
Schedule and identified as the basis for any such Stay Bonus.

(b) The Company Group has paid all Equity Upside Payments to the employees of
the Company Group under and in accordance with the terms of all employment
agreements, letter agreements and other similar agreements with any member of
the Company Group relating thereto.

(c) With respect to each Company Plan, the Company has furnished or made
available to Buyer true and complete copies of the governing Company Plan
document(s) and, where applicable, (1) the trust agreement(s), insurance
contract(s) or other instrument for the related funding vehicle, (2) the current
summary plan descriptions and summaries of material modifications, (3) the most
recent determination or opinion letter issued by the IRS and any pending
application for an IRS determination letter, and (4) the most recent Form 5500
filings, annual financial statements, annual valuation reports and PBGC-1
filings.

(d) No Company Plan is subject to Section 412 of the Code or Section 302 or
Title IV of ERISA and, within the preceding six years, neither the Company nor
any ERISA Affiliate was a participating employer in or had any obligation under
or with respect to any “employee pension plan” (within the meaning of Section
3(2) of ERISA) that is or was subject to Title IV of ERISA, including, without
limitation, a “multiemployer plan” as that term is defined in Section 3(37) of
ERISA. No Company Plan covers solely or primarily employees of the Company or
any ERISA Affiliate who reside permanently outside the United States. No
non-exempt transaction prohibited by Section 406 of ERISA or Section 4975 of the
Code has occurred with respect to any Company Plan covered by Title I of ERISA.

(e) Except as required by COBRA, no Company Plan provides post-termination group
health or other welfare benefits to any current or former employee, director or
consultant (or any of their dependents or beneficiaries).

(f) Each Company Plan is and has been administered and operated in all material
respects in compliance with its terms and the requirements of applicable Law.
Each Company Plan that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter as to its qualification, and
nothing has occurred that could reasonably be expected to adversely affect such
qualification. There are no pending or, to the Company’s Knowledge, threatened
claims, governmental audits or investigations with respect to any Company Plan,
other than routine claims for benefits.

 

 

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(g) Except as set forth in Section 3.18(g) of the Disclosure Schedule or as
contemplated by this Agreement, the consummation of the transactions
contemplated by this Agreement will not, either alone or in combination with any
other event, (1) entitle any current or former employee, director or officer of
the Company or any Subsidiary to severance pay or any retention, transaction
incentive or other payment or benefit, (2) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee, director
or officer, (3) require the Company or a Subsidiary to place in trust or
otherwise set aside any amounts in respect of severance pay or any other payment
or benefit, or (4) result in any payment under the Company Plans that would
constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the
Code.

(h) No material compensation paid or required to be paid under any Company Plan
is or will be subject to material additional tax under Section 409A(1)(B) of the
Code. Neither the Company nor any Subsidiary has mischaracterized the employment
status of any of its or their service providers to an extent that would
reasonably be expected to result in the disqualification of any Company Plan or
the imposition of material penalties or excise taxes by the Internal Revenue
Service, the Department of Labor or any other governmental authority.

Section 3.19. Labor Matters.

(a) Except as set forth in Section 3.19 of the Disclosure Schedule, no member of
the Company Group is or has ever been a party to or is or has ever been bound by
any collective bargaining agreement, nor has any of them experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. To the Company’s Knowledge, there are no labor unions or
other organizations purporting or attempting to represent any employees employed
by any member of the Company Group.

(b) Except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company Group, (i) there is no labor strike, material
labor dispute, or concerted work stoppage pending or, to the Company’s
Knowledge, threatened, and (ii) since January 1, 2005, (A) no member of the
Company Group has experienced any labor strike or material concerted labor
dispute and (B) each member of the Company Group has complied with all
applicable labor Laws in connection with the employment of its employees.

Section 3.20. Legal Compliance. Each member of the Company Group is now in
compliance with, all laws, rules, regulations, orders, judgments and decrees of
any Governmental Authority applicable to it in all material respects.
Notwithstanding anything to the contrary contained herein, the Parties agree
that the Company makes no representation or warranty under this Section 3.20
with respect to any subject matter to which another section of this Agreement
contains a specific representation or warranty relating thereto.

Section 3.21. Brokers’ Fees. No member of the Company Group has incurred any
Liability relating to any brokerage or finder’s commission, fee or similar
compensation in connection with the transactions contemplated by this Agreement.

Section 3.22. Licenses. Each member of the Company Group possesses each
franchise, license, permit, authorization, certification, consent, variance,
permission, order or approval of or from any Governmental Authority, and has
filed all filings, notices or recordings

 

 

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with any such Governmental Authority material to, or necessary for the conduct
of, its business as conducted on the date hereof (collectively, “Licenses”).
Each such License is in full force and effect and is identified on Section 3.22
of the Disclosure Schedule. No proceeding or other action is pending or, to the
Company’s Knowledge, threatened, to revoke, amend, or limit any such License.

Section 3.23. Suppliers and Customers. Section 3.23 of the Disclosure Schedule
sets forth, for the years ended December 31, 2006 and 2007, the names of (i) the
top ten (10) customers, as determined by revenue, of the Company Group and the
approximate revenues generated by each such customer in each such period and
(ii) each supplier that accounted for more than $150,000 of the costs of goods
sold and operating expenses of the Company Group during any such period and the
dollar amount of goods purchased by each such supplier.

Section 3.24. Relationships with Related Persons; Intracompany Arrangements.

(a) Except as set forth in the Disclosure Schedule, to the Company’s Knowledge,
neither Seller nor any Affiliate of Seller (i) owns a material interest in
(other than the record or beneficial ownership of less than (A) $100,000 or (B)
one percent (1%) of the shares of any Person whose shares or interests are
publicly traded on a national securities exchange, the Nasdaq Stock Market or
the OTC Bulletin Board), or is an officer or director of any Person which is, or
is engaged in business as, a competitor, lessor, lessee, supplier, distributor,
subcontractor, customer or client of the Company Group, (ii) owns a material
interest in any property (whether real, personal, or mixed and whether tangible
or intangible) of the Company Group, or (iii) is a party to any Material
Contract.

(b) Section 3.24(b) of the Disclosure Schedule identifies all intracompany
accounts, receivables, payables, contracts, agreements, guarantees, suretyships,
deposits, bonds, letters of credit or security between, for the benefit of or
provided by, Seller and Seller’s Affiliates (other than any member of the
Company Group), on the one hand, and any member or members of the Company Group,
on the other hand.

Section 3.25. Accounts Receivable; Inventory. The gross face amount of the
accounts receivables of the Company Group reflected in the Final Balance Sheet,
without taking into account any reserves, settlements, mark-downs, write-downs,
returns-to-vendors or other allowances (collectively “Allowances”) in respect
thereof, are presented fairly, in all material respects, in accordance with
GAAP. The cost basis and aggregate number of units of inventory reflected in the
Final Balance Sheet, without taking into account any Allowances in respect
thereof, are presented fairly, in all material respects, in accordance with
GAAP.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER

Seller represents and warrants to Buyer, except as set forth in the Disclosure
Schedule, as follows:

Section 4.1. Organization of the Seller. Seller is a limited liability company,
validly existing and in good standing under the laws of Delaware, and Seller has
all requisite limited liability company power and authority to carry on its
business as it is currently conducted

 

 

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and to own, lease and operate its properties where such properties are now
owned, leased or operated. Seller is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or license necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on Seller.

Section 4.2. Authorization. Seller is the sole record and beneficial owner of
all of the Shares, and has good and valid title to the Shares, free and clear of
all Liens. Seller has all requisite power and authority to execute and deliver
this Agreement and the other Transaction Documents to which it is or will be
party and to perform its obligations hereunder and thereunder. The execution,
delivery and performance by Seller of this Agreement (including the provisions
of Article IX hereof) and the other Transaction Documents to which Seller is or
will be party and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite limited liability company
proceedings on the part of Seller and no other limited liability company
proceedings on the part of Seller as are necessary to authorize this Agreement
(including the provisions of Article IX hereof), such Transaction Documents or
the consummation of the transactions contemplated hereby or thereby. This
Agreement has been duly executed and delivered by Seller and (assuming this
Agreement constitutes a valid and binding obligation of the other Parties)
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, subject to the Remedies Exception.

Section 4.3. Noncontravention. Neither the execution and delivery of this
Agreement by Seller, nor the consummation of the transactions contemplated
hereby will (a) conflict with any provision of the Certificate of Formation or
Limited Liability Company Agreement of Seller, (b) violate or result in a breach
of any material agreement, contract, lease, license, instrument or other
arrangement to which Seller is a party or (c) subject to the Consents of
Governmental Authorities described in Section 3.7, to Seller’s Knowledge,
violate any Law to which Seller is subject, except, in the case of clauses (b)
and (c), for such violations or breaches which would not, individually or in the
aggregate, have a Material Adverse Effect on Seller.

Section 4.4. Brokers’ Fees. Except as set forth in Section 4.4 of the Disclosure
Schedule, Seller has not incurred any Liability relating to any brokerage or
finder’s commission, fee or similar compensation in connection with the
transactions contemplated by this Agreement.

Section 4.5. Government Authorizations. Except for (i) compliance with any
applicable requirements of the Securities Act or other applicable securities
Laws and (ii) Consents that, if not obtained or made, would not, individually or
in the aggregate, have a Material Adverse Effect on Seller, no Consent of, with
or to any Governmental Authority is required to be obtained or made by Seller in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, other than any such requirement that is
applicable as a result of any facts that specifically relate to the business or
activities in which Buyer or its Affiliates is or proposes to be engaged, other
than the business currently conducted by the Company.

Section 4.6. Litigation. To Seller’s Knowledge (a) there are no Actions pending
or threatened before any Governmental Authority against Seller which are
reasonably likely to result in any Liability of Seller that would, individually
or in the aggregate, have a

 

 

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Material Adverse Effect on Seller and (b) there are no outstanding injunctions,
judgments, orders, decrees, rulings, or charges to which Seller is a party or by
which it is bound by or with any Governmental Authority that would, individually
or in the aggregate, have a Material Adverse Effect on Seller.

Section 4.7. Guarantee. The Guarantor has all requisite power and authority to
execute and deliver the Guarantee and to perform its obligations thereunder. The
execution, delivery and performance by the Guarantor of the Guarantee and the
consummation of the transactions contemplated thereby have been duly authorized
by all requisite proceedings of the Guarantor and no other proceedings on the
part of the Guarantor are necessary to authorize the Guarantee or the
consummation of the transactions contemplated thereby. The Guarantee has been
duly executed and delivered by the Guarantor and (assuming the Guarantee
constitutes a valid and binding obligation of Buyer) constitutes a legal, valid
and binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, subject to the Remedies Exception. The Guarantor (or
its permitted successors and assigns) has, and for the time periods for which
indemnification may be payable by Seller pursuant to Article IX, will have
sufficient cash, available lines of credit or other sources of immediately
available funds to pay in cash in accordance with the terms of Article IX any
amounts that may be payable thereunder.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES REGARDING BUYER

Buyer represents and warrants to Seller and the Company as follows:

Section 5.1. Organization of Buyer. Buyer is a corporation, validly existing and
in good standing under the laws of the State of New York, and Buyer has all
requisite power and authority to carry on its business as it is currently
conducted and to own, lease and operate its properties where such properties are
now owned, leased or operated. Buyer is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or license necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed or in good standing would
not, individually or in the aggregate, have a Material Adverse Effect on Buyer.

Section 5.2. Authorization. Buyer has all requisite power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is or will be party and to perform its obligations hereunder and thereunder.
The execution, delivery and performance by Buyer of this Agreement and the other
Transaction Documents to which the Buyer is or will be a Party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite proceedings of Buyer and no other proceedings on the
part of Buyer are necessary to authorize this Agreement, such Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby. This Agreement has been duly executed and delivered by the Buyer and
(assuming this Agreement constitutes a value and binding obligation of the
Company and Seller) constitutes a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to the Remedies
Exception.

 

 

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Section 5.3. Noncontravention. Neither the execution and delivery of this
Agreement by Buyer, nor the consummation of the transactions contemplated hereby
will (a) conflict with any provision of the organizational documents of Buyer,
(b) violate or result in a breach of any material agreement, contract, lease,
license, instrument or other arrangement to which Buyer is a party, or
(c) subject to the Consents of Governmental Authorities described in Section
3.7, to Buyer’s Knowledge, violate any Law to which Buyer is subject, except, in
the case of clauses (b) and (c), for such violations or breaches which would
not, individually or in the aggregate, have a Material Adverse Effect on Buyer.

Section 5.4. Brokers’ Fees. Buyer has not incurred any Liability relating to any
brokerage or finder’s commission, fee or similar compensation in connection with
the transactions contemplated by this Agreement.

Section 5.5. Government Authorizations. Except for (i) compliance with any
applicable requirements of the Securities Act or other applicable Securities
Laws, and (ii) Consents that, if not obtained or made, would not, individually
or in the aggregate, have a Material Adverse Effect on Buyer, no Consent of,
with or to any Governmental Authority is required to be obtained or made by
Buyer in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, other than any such
requirement that is applicable as a result of any facts that specifically relate
to the business or activities in which Buyer or its Affiliates is or proposes to
be engaged, other than the business currently conducted by the Company.

Section 5.6. Litigation. To Buyer’s Knowledge (a) there are no Actions pending
or threatened before any Governmental Authority against Buyer or its
Subsidiaries that would, individually or in the aggregate, have a Material
Adverse Effect on Buyer, and (b) there are no outstanding injunctions,
judgments, orders, decrees, rulings, or charges to which Buyer is a party or by
which it is bound by or with any Governmental Authority that would, individually
or in the aggregate, have a Material Adverse Effect on Buyer.

Section 5.7. Information. The Company has provided Buyer with such access to the
facilities, books, records and personnel of the Company and its Affiliates as
Buyer has deemed necessary and appropriate in order for Buyer to investigate to
its satisfaction the business and properties of the Company sufficiently to make
an informed investment decision to enter into this Agreement and consummate the
acquisition of the Shares hereunder. Without limiting the foregoing, Buyer
acknowledges that Buyer, together with its advisors, has made its own
investigation of the Company Group, and except as contained in this Agreement,
is not relying on any implied warranties or, except as contained in this
Agreement, upon any representation or warranty whatsoever as to the prospects
(financial or otherwise) or the viability or likelihood of success of the
business of the Company conducted after the Closing, as contained in any
materials provided by the Company or any of its Affiliates or any of their
respective directors, officers, employees, stockholders, partners, members or
representatives or otherwise, including any projections, forecasts or business
plans. Buyer does not know of the existence or non-existence or occurrence or
non-occurrence of any event, condition or circumstance which does or would cause
any representation or warranty of the Company or Seller contained in this
Agreement to be untrue or inaccurate in any respect or would excuse Buyer from
its timely performance of its obligations hereunder.

 

 

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Section 5.8. Accredited Investor.

(a) Buyer qualifies as an “accredited investor” as such term is defined in Rule
501(a) promulgated pursuant to the Securities Act and is not acquiring the
securities of the Company with the intention of distributing such securities.

(b) Buyer acknowledges that (i) it has knowledge, experience and expertise in
business and financial matters and the retail industry and (ii) it has the
capability of understanding and evaluating the risks and merits associated with
transactions contemplated by this Agreement.

(c) Buyer acknowledges that the Shares have not been registered under the
Securities Act or any state or foreign securities laws and that the Shares may
not be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of unless such transfer, sale, assignment, pledge, hypothecation or
other disposition is pursuant to the terms of an effective registration
statement under the Securities Act and is registered under any applicable state
or foreign securities laws or pursuant to an exemption from registration under
the Securities Act and any applicable state or foreign securities laws.

(d) Buyer acknowledges that: (i) it has read this Agreement; (ii) it has been
represented in the preparation, negotiation and execution or this Agreement by
legal counsel of its own choice or has voluntarily declined to seek such
counsel; and (iii) it understands the terms and consequences of this Agreement
and is fully aware of the legal and binding effect of this Agreement. Buyer
acknowledges that it is not in a disparate bargaining position with the Company
or Seller.

(e) Buyer acknowledges that it has been represented or advised by advisors of
its own choice, including financial advisors and Tax advisors, that have
assisted it in understanding and evaluating the risks and merits associated with
the transactions contemplated by this Agreement.

(f) After giving effect to the transactions contemplated by this Agreement,
including the receipt of financing relating to such transactions, any other
repayment or refinancing of debt contemplated in this Agreement or such
financing, payment of all amounts required to be paid in connection with the
consummation of the transactions contemplated hereby, and payment of all related
fees and expenses, Buyer and the Company will be Solvent as of the Closing and
immediately after the consummation of the transactions contemplated hereby.

(g) Buyer can bear the economic risk of an investment in the Company and
acquisition of the Shares pursuant to this Agreement and can afford a complete
loss of such investment.

Section 5.9. Financial Capacity. Buyer has and at Closing will have sufficient
cash, available lines of credit or other sources of immediately available funds
to pay in cash the Purchase Price in accordance with the terms of Article II and
any other amounts to be paid by it hereunder.

 

 

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Section 5.10. Relationship with Parent. Buyer is the principal operating
Subsidiary of G-III Apparel Group, Ltd., a Delaware corporation.

ARTICLE VI.

 

COVENANTS

Section 6.1. Commercially Reasonable Efforts. Subject to the terms and
conditions of this Agreement and applicable Law, each of the Parties hereto
shall use its commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement as soon as practicable, including such actions or things as any
other Party hereto may reasonably request in order to cause any of the
conditions to such other Party’s obligation to consummate such transactions
specified in Article VII to be fully satisfied. Without limiting the generality
of the foregoing, the Parties shall (and shall cause their respective directors,
officers and Subsidiaries, and use their commercially reasonable efforts to
cause their respective Affiliates, employees, agents, attorneys, accountants and
representatives, to) consult and fully cooperate with and provide reasonable
assistance to each other in (a) obtaining all necessary Consents or other
permission or action by, and giving all necessary notices to and making all
necessary filings with and applications and submissions to, any Governmental
Authority or other Person, (b) lifting any permanent or preliminary injunction
or restraining order or other similar order issued or entered by any court or
Governmental Authority (an “Injunction”) of any type referred to in
Section 7.1(a) and (c) in general, consummating and making effective the
transactions contemplated hereby as expeditiously as possible. Buyer and its
Affiliates shall not enter into or complete any transactions that could
reasonably be expected to delay, hinder or prohibit the consummation of the
transactions contemplated hereby, including causing the failure of the closing
conditions set forth in Article VII to be satisfied.

Section 6.2. Public Announcements. Except to the extent otherwise required by
applicable Law (and then only after consultation with Seller or Buyer), none of
the Parties will issue any press release or make any other public announcements
concerning the transactions contemplated hereby or the contents of this
Agreement without the prior written consent of the other Parties.

Section 6.3. Post-Closing Access; Preservation of Records. From and after the
Closing, Buyer will make or cause to be made available to Seller all books,
records, Tax Returns and documents of the Company Group (and the assistance of
employees responsible for such books, records and documents) during regular
business hours as may be reasonably necessary for (a) investigating, settling,
preparing for the defense or prosecution of or defending or prosecuting any
Action, (b) preparing reports to stockholders and Governmental Authorities or
(c) such other purposes for which access to such documents is believed by Seller
to be reasonably necessary, including preparing and delivering any accounting or
other statement provided for under this Agreement or otherwise, preparing Tax
Returns or responding to or disputing any Tax audit; provided, however, that
access to such books, records, documents and employees will not interfere with
the normal operations of the Company Group and the reasonable out-of-pocket
expenses of the Company Group incurred in connection therewith will be paid by
Seller. Buyer will cause the Company Group to maintain and preserve all such Tax
Returns, books, records and other documents for the greater of (i) seven (7)
years after the Closing Date or (ii) any

 

 

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applicable statutory or regulatory retention period, as the same may be extended
and, in each case, shall offer to transfer such records to Seller at the end of
any such period.

Section 6.4. Further Assurances. Each Party agrees that from time to time after
the Closing Date, it will execute and deliver or cause its respective Affiliates
to execute and deliver such further instruments, and take or cause their
respective Affiliates to take such other action, as may be reasonably necessary
to carry out the purposes and intents of this Agreement and the other
Transaction Documents.

Section 6.5. Cooperation of Independent Accountants. From and after the Closing,
Seller shall at Buyer’s sole cost and expense use its commercially reasonable
efforts to cause the independent public accountants for the Company Group to
provide reasonable cooperation with respect to Buyer’s and Buyer’s accountants’
preparation of (1) financial statements of the Company Group for the year ended
December 31, 2007 and (2) such financial statements and schedules of the Company
Group with respect to periods prior to the Closing Date as Buyer may reasonably
require in connection with the satisfaction of the Securities and Exchange
Commission’s disclosure requirements.

Section 6.6. Employees. From and after the Closing Date, Buyer shall, or shall
cause the Company Group to, pay each Stay Bonus listed in Section 3.18(a) of the
Disclosure Schedule in accordance with the terms of the agreement granting the
rights to such Stay Bonus.

Section 6.7. Replacement Letter of Credit. Buyer shall use its best efforts to
cause as promptly as practical following Closing the termination of the Letters
of Credit in full discharge and release of any and all obligations or Liability
of Gordon Brothers Retail Partners, LLC and its Affiliates thereunder.
Notwithstanding any other provision of this Agreement to the contrary, prior to
such termination of the Letters of Credit, Buyer shall (a) keep and maintain the
Replacement Letter of Credit in full force and effect at all times, (b) cause
the prompt payment of funds under the Replacement Letter of Credit immediately
upon any drawing under the Letters of Credit in the amount of such drawing and
(c) immediately upon demand pay and reimburse to Gordon Brothers Retail
Partners, LLC (without offset or deduction), by wire transfer of immediately
available funds, any amounts drawn under the Letters of Credit if and to the
extent not then immediately available to Gordon Brothers Retail Partners, LLC
under the Replacement Letter Credit (it being understood and agreed, for the
avoidance of doubt, that in no event shall Seller or Gordon Brothers Retail
Partners, LLC be entitled to draw funds under the Replacement Letter of Credit
in respect of any drawing under the Letters of Credit for which and to the
extent Buyer has previously paid and reimbursed Seller pursuant to this Section
6.7) and any costs, fees or expenses (including attorneys’ and other third
parties’ costs, fees and expenses) related to the collection or enforcement, or
any delay in performance, of any payment obligation under the Replacement Letter
of Credit or this Section 6.7. Upon termination in accordance with this Section
6.7, or expiration, of any Letter of Credit, Seller shall reasonably cooperate
with Buyer, at Buyer’s sole cost and expense, to reduce the face amount of the
Replacement Letter of Credit by the amount by which the aggregate face amount of
the Letters of Credit, taken as a whole, was reduced by virtue of such
termination. Seller shall return to Buyer the Replacement Letter of Credit upon
termination in accordance with this Section 6.7, or expiration, of all the
Letters of Credit.

 

 

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ARTICLE VII.

CONDITIONS TO CLOSING

Section 7.1. Conditions Precedent to Obligations of the Parties. The respective
obligations of the Parties to consummate the transactions contemplated by this
Agreement are subject to the satisfaction (or, where legally permissible, waiver
by such Party) at or prior to the Closing of the following condition:

(a) No Adverse Order. There shall be no Injunction, restraining order or decree
of any nature of any Governmental Authority of competent jurisdiction that is in
effect that prohibits the consummation of the transactions contemplated hereby,
or permits such consummation subject to any condition or restriction that would,
individually or in the aggregate, have a Material Adverse Effect on the Company
Group.

Section 7.2. Conditions Precedent to Obligation of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the satisfaction (or waiver by Seller) at or prior to the Closing of each of
the following additional conditions:

(a) Purchase Price. Buyer shall have made or caused to be made all deliveries
required pursuant to Section 2.4(b), including delivery of the Purchase Price as
provided in Section 2.2.

Section 7.3. Conditions Precedent to Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated by this Agreement is subject
to the satisfaction (or waiver by Buyer) at or prior to the Closing of each of
the following additional conditions:

(a) Seller shall have made or caused to be made all of the deliveries required
pursuant to Section 2.4(a).

(b) The Consents to the transactions contemplated by this Agreement of the
counterparties to the contracts and agreements listed in Section 7.3(b) of the
Disclosure Schedule shall have been received to the extent required thereunder.

(c) The Company Group shall have paid all Equity Upside Payments under and in
accordance with the terms of all employment agreements, letter agreements and
other similar agreements with any member of the Company Group with respect
thereto and furnished written evidence of such payments to Buyer.

ARTICLE VIII.

 

LIMITATIONS

Section 8.1. Waiver of Damages. Notwithstanding anything to the contrary
contained in this Agreement, each Party agrees that in no event shall any Party
have any Liability to any other Party in respect of Damages arising from a
breach of this Agreement or any other Transaction Document (except as may
otherwise expressly be set forth in any other Transaction Document) except as
expressly provided in Article IX.

 

 

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Section 8.2. No Consequential Damages. Notwithstanding anything contained herein
to the contrary and in furtherance of and without limiting the foregoing, no
member of the Seller Group and no member of Buyer Group will be entitled, after
the Closing, to any recovery under this Agreement for its own special,
exemplary, punitive, consequential, incidental or indirect damages or lost
profits (including any Damages on account of lost opportunities); provided,
however, that nothing herein shall prevent any member of the Seller Group or
Buyer Group from being indemnified pursuant to Article IX for all components of
awards against them in claims by third parties for which indemnification is
provided pursuant to Article IX, including special, exemplary, punitive,
consequential, incidental or indirect damages or lost profits components of such
claims.

ARTICLE IX.

 

INDEMNIFICATION

Section 9.1. General Indemnification by Seller. Following the Closing and
subject to the terms and conditions of Article VIII and this Article IX, Seller
will indemnify, defend and hold harmless Buyer, its Affiliates and each of their
respective employees, directors and officers (collectively, the “Buyer Group”)
from and against any and all Damages actually incurred by any member of the
Buyer Group based upon or arising out of (a) any breach of any covenant of
Seller contained in this Agreement or any breach prior to Closing of any
covenant of the Company contained in this Agreement (except for any breach of
any covenant relating to Taxes, indemnification for which shall be covered by
Section 9.7(a)), (b) any breach of any of Seller’s representations and
warranties contained in Sections 3.1 (Organization of the Company), 3.2
(Authorization), 3.5 (Capitalization), 3.6 (Subsidiaries of the Company) or 3.21
(Brokers’ Fees) or Sellers’ representations and warranties contained in Sections
4.1 (Organization of Seller), 4.2 (Authorization), 4.4 (Brokers’ Fees) and 4.7
(Guarantee) (such representations and warranties, collectively, the “Seller
Specified Representations”), (c) any breach of any of Seller’s representations
and warranties contained in Article III or of any of the Seller’s
representations and warranties contained in Article IV, in each case, other than
(i) Seller’s representations and warranties contained in Section 3.11 (Tax
Matters), indemnification for which shall be covered by Section 9.7(a), (ii) the
Seller Specified Representations and (iii) the representations and warranties
described in Section 9.1(d), (d) any breach of Seller’s representations and
warranties contained in Sections 3.9 (Undisclosed Liabilities), 3.10(b)
(Compliance with Operating Representations since February 1, 2008), 3.18(b)
(Equity Upside Payments) or 3.25 (Accounts Receivable; Inventory), (e) any
claims by the parties listed in Section 9.1(e) of the Disclosure Schedule (the
“Specified Parties”) relating to the ownership and operation of the Company
Group or the conduct of its business prior to the Closing, including, without
limitation, the Reorganization or the Specified AR Proceeding (but excluding,
for the avoidance of doubt, any claims relating to the performance or breach of
any contract or agreement with any Specified Party following Closing) and any
claims by any Specified Party in respect of any payment owing to such Specified
Party pursuant to the terms of any employment or consulting agreement between a
member of the Company Group and such Specified Party, as in effect immediately
prior to the Closing, to the extent not reflected in Schedule A4, (f) any
Earnout Prepayment

 

 

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Amount payable pursuant to the Contribution Agreement, (g) the matter described
in item 1 of Section 3.12(c) of the Disclosure Schedule and (h) any out of
pocket costs and expenses of the Company Group following Closing relating to the
Specified HS Proceeding to the extent arising out of and attributable to
products, goods and services of the Company Group prior to Closing (it being
understood and agreed, for the avoidance of doubt, that in no event shall Seller
have any Liability under this Section 9.1(h) for any Damages relating to any
conduct, injunctive, operational or similar remedy that may be imposed upon any
member of the Company Group in connection with the Specified HS Proceeding).

Section 9.2. General Indemnification by Buyer. Following the Closing and subject
to the terms and conditions of Article VIII and this Article IX, Buyer will
indemnify, defend and hold harmless Seller, its Affiliates and each of its
respective employees, directors and officers (collectively, the “Seller Group”)
from and against, any and all Damages actually incurred by any member of the
Seller Group based upon or arising out of (a) any breach of any covenant of
Buyer contained herein, (b) any breach of any of Buyer’s representations and
warranties contained in Sections 5.1 (Organization of Buyer), 5.2
(Authorization), 5.4 (Brokers’ Fees), 5.7 (Information) and 5.8 (Accredited
Investor) (collectively, the “Buyer Specified Representations”), (c) any breach
of any of Buyer’s representations and warranties contained in Article V, other
than the Buyer Specified Representations, (d) except as otherwise provided in
this Article IX, the ownership and operation of the Company Group, or the
conduct of its business, from and after the Closing Date (including, for the
avoidance of doubt, any claims relating to the post-Closing performance or
breach of any contract or agreement with any Specified Party) and (e) any claims
by any Specified Party in respect of any payment owing to such Specified Party
pursuant to the terms of any employment or consulting agreement between a member
of the Company Group and such Specified Party, as in effect immediately prior to
the Closing, to the extent reflected in Schedule A4. Any party providing
indemnification pursuant to this Article IX is referred to herein as an
“Indemnifying Party”, and any member of the Buyer Group or Seller Group seeking
indemnification pursuant to this Article IX is referred to herein as an
“Indemnified Party.”

Section 9.3. Certain Limitations.

(a) Notwithstanding anything contained herein to the contrary, the maximum
aggregate Liability of Seller to all members of the Buyer Group pursuant to (i)
Section 9.1(c) and Section 9.1(h) shall be limited to, and shall not exceed,
$6,250,000 and (ii) this Agreement shall be limited to, and shall not exceed,
$8,000,000; provided, however, that such limitations shall not be applicable in
the event of intentional and willful fraud as further described in Section 9.5.
Notwithstanding anything contained herein to the contrary, the maximum aggregate
Liability of Buyer to all members of the Seller Group pursuant to Section 9.2(c)
shall be limited to, and shall not exceed, $6,250,000; provided, however, that
such limitation shall not be applicable in the event of intentional and willful
fraud as further described in Section 9.5.

(b) Notwithstanding anything contained herein to the contrary, (i) Seller shall
not be obligated to make any payment under Section 9.1(a), Section 9.1(c) or
Section 9.1(h) (A) in respect of any individual Claim for Damages unless such
individual claim is for $50,000 or more and (B) unless and until the amount of
all such Damages exceeds $250,000 on an aggregate basis, in which case Seller
shall be liable solely to the extent of such excess, provided, for the avoidance
of doubt, that in no event shall this Section 9.3(b)(i) be deemed to apply to
Section 9.9

 

 

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and (ii) Buyer shall not be obligated to make any payment under Section 9.2(c)
(A) in respect of any individual Claim for Damages unless such individual claim
is for $50,000 or more and (B) unless and until the amount of all such Damages
exceeds $250,000 on an aggregate basis, in which case Seller shall be liable
solely to the extent of such excess.

(c) The amount which an Indemnifying Party is or may be required to pay to an
Indemnified Party in respect of Damages for which indemnification is provided
under this Agreement will be reduced by any amounts actually received (including
amounts received under insurance polices) by or on behalf of the Indemnified
Party from third parties (including, for the avoidance of doubt, the Specified
Parties and any amounts recovered pursuant to Section 9.8) and any Tax benefits
actually recognized by such Indemnified Party arising in connection with the
accrual, incurrence or payment of any such Damages (such amounts and Tax
benefits are collectively referred to herein as “Indemnity Reduction Amounts”).
For this purpose, the Indemnified Party shall be deemed to recognize a Tax
benefit if, and to the extent that, the Indemnified Party’s cumulative liability
for Taxes, calculated by excluding any Tax items attributable to the Damages,
exceeds the Indemnified Party’s actual cumulative liability for Taxes through
the end of the Tax year for which such calculation is being made, calculated by
taking into account any Tax items attributable to the Damages (to the extent
permitted by relevant Tax Law and treating such Tax items as the last items
claimed for any Tax year). If any Indemnified Party receives or recognizes any
Indemnity Reduction Amounts in respect of an Indemnified Claim for which
indemnification is provided under this Agreement after the full amount of such
Indemnified Claim has been paid by an Indemnifying Party or after an
Indemnifying Party has made a partial payment of such Indemnified Claim and such
Indemnity Reduction Amounts exceed the determined remaining unpaid balance of
such Indemnified Claim, then the Indemnified Party will promptly remit (without
offset or deduction) to the Indemnifying Party an amount equal to the excess (if
any) of (i) the amount theretofore paid by the Indemnifying Party in respect of
such Indemnified Claim, less (ii) the amount of the indemnity payment that would
have been due if such Indemnity Reduction Amounts in respect thereof had been
received before the indemnity payment was made. An insurer or other third party
who would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provisions hereof, have any subrogation rights with respect thereto, it being
expressly understood and agreed that no insurer or any other third party shall
be entitled to any benefit they would not be entitled to receive in the absence
of the indemnification provisions by virtue of the indemnification provisions
hereof. Each Party will, or will cause each Indemnified Party to, as
appropriate, use its commercially reasonable efforts to pursue promptly any
claims or rights it may have against all third parties which would reduce the
amount of Damages for which indemnification is provided under this Agreement.

(d) Each and every of the respective representations and warranties of Seller,
the Company and Buyer contained in this Agreement or any other Transaction
Document (except as may otherwise expressly be set forth in any other
Transaction Document) other than the Company’s representations and warranties in
Section 3.11 (Tax Matters), which shall survive as provided in Section 9.7(g),
Section 3.18 (Employee Plans), which shall survive until the expiration of the
applicable statute(s) of limitations, and the Seller Specified Representations,
in the case of Seller and the Company, and the Buyer Specified Representations,
in the case of Buyer, shall expire upon, and shall not survive, the two year
anniversary of the Closing Date;

 

 

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and none of Seller, the Company or Buyer, as applicable, shall have any
Liability whatsoever with respect to any such representations and warranties
thereafter, except as to any matter with respect to which a bona fide written
claim shall have been made or action at law or in equity shall have been
commenced before such date, in which event survival shall continue (but only
with respect to, and to the extent of, such claim until resolution of such
claim). The Seller Specified Representations and the Buyer Specified
Representations shall survive the Closing Date indefinitely. Each and every
covenant contained in this Agreement will survive the Closing Date and will
expire on, the later of the applicable statute of limitations or the date on
which such covenant is required to be performed in accordance with this
Agreement, as the case may be; and none of Seller, the Company or Buyer shall
have any Liability whatsoever with respect to any such covenant thereafter.

(e) The obligations of each Party to indemnify, defend and hold harmless the
other Party and other Persons pursuant to this Article IX shall terminate with
respect to Sections 9.1 and 9.2 upon the expiration of the applicable survival
periods as set forth in Section 9.3(d).

(f) Notwithstanding anything contained in this Agreement to the contrary, any
amounts payable pursuant to the indemnification obligations under Article IX
shall be paid without duplication, and in no event shall any Party be
indemnified under different provisions of this Agreement for the same Damages.

(g) Except as set forth in the proviso to this sentence, but otherwise
notwithstanding anything contained in this Article IX or elsewhere in this
Agreement to the contrary, the Parties acknowledge and agree that the Purchase
Price was mutually determined based upon the calculations set forth in Schedule
A4 and in no event shall any Party be indemnified or otherwise entitled to any
recovery for any Damages pursuant to any provision of this Agreement to the
extent the subject matter, event or circumstance giving rise to such Damages was
a component of, or was taken into account in, the determination and calculation
of the Purchase Price; provided, that this Section 9.3(g) shall not apply to any
claims under Section 9.1(d) based upon or arising out of any breach of Seller’s
representations and warranties contained in Section 3.25 (Accounts Receivable;
Inventory).

(h) The limitations on indemnification set forth in Sections 9.3(a) and 9.3(d)
shall be inapplicable to claims for indemnification pursuant to Section 9.1(e).

Section 9.4. Indemnification Procedures.

(a) If an Indemnified Party becomes aware of any matter, circumstance or event
giving rise to a claim for indemnification from Damages (a “Claim”) against an
Indemnifying Party, the Indemnified Party shall give written notice (a “Claim
Notice”) as soon as practicable (but in any event within the relevant period
specified in Section 9.3(d)), to (i) Seller, in the event the Indemnifying Party
is Seller, or (ii) Buyer, in the event the Indemnifying Party is Buyer;
provided, however, that no delay on the part of the Indemnified Party in
delivering a Claim Notice pursuant to this Section 9.4(a) within the relevant
period specified in Section 9.3(d) will relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent that) the
Indemnifying Party is actually prejudiced as a result thereof; it being
understood and agreed that (x) in no event shall any Indemnifying Party have any
Liability in respect of any Claim for which a Claim Notice is delivered after
the expiration of the relevant

 

 

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period specified in Section 9.3(d) and (y) the failure of the Indemnified Party
to deliver a Claim Notice pursuant to this Section 9.4(a) prior to settling a
Third Party Claim (whether by paying a claim or executing a binding settlement
agreement with respect thereto) or the entry of a judgment or issuance of an
award with respect to a Third Party Claim shall constitute actual prejudice to
the Indemnifying Party’s ability to defend against such Third Party Claim.

(b) The Claim Notice shall (i) state that Indemnified Party has paid or properly
accrued Damages or anticipates that it will incur Liability for Damages for
which the Indemnified Party is entitled to indemnification pursuant to this
Agreement and (ii) specify in reasonable detail, to the extent then reasonably
practicable (A) each item of Damages included in the amount of Damages set forth
in the Claim Notice, (B) the date such item was paid or properly accrued (if
applicable), (C) the basis for any anticipated Liability and the nature of the
misrepresentation, breach of warranty, breach of covenant or agreement or other
claim to which such item is related and (D) the computation of the actual or
estimated amount of Damages to which such Indemnified Party is entitled
hereunder. Without limiting the other provisions of this Agreement, the
information provided in a Claim Notice shall in no way limit the Liability of
the Indemnifying Party to the Indemnified Party with respect to such claim.

(c) In the event that the Indemnifying Party shall object to the indemnification
of an Indemnified Party in respect of any Claim specified in any Claim Notice,
the Indemnifying Party shall, within thirty (30) days after receipt by the
Indemnifying Party of such Claim Notice, deliver to the Indemnified Party a
notice of objection to such Claim Notice, and the Indemnifying Party and the
Indemnified Party shall, within the thirty (30) day period beginning on the date
of receipt by the Indemnified Party of such notice of objection, attempt in good
faith to agree upon the rights of the respective parties with respect to each of
the Claims set forth in the Claim Notice to which the Indemnifying Party shall
have so objected. If the Indemnified Party and the Indemnifying Party shall
succeed in reaching agreement on their respective rights with respect to any of
such Claims, the Indemnified Party and the Indemnifying Party shall promptly
prepare and sign a memorandum setting forth such agreement. Should the
Indemnified Party and the Indemnifying Party be unable to agree as to any
particular item or items or amount or amounts in a Claim Notice, then the
Indemnified Party and the Indemnifying Party shall submit such dispute to a
court of competent jurisdiction. The party that receives a final judgment in
such dispute shall be indemnified and held harmless for all fees or expenses
(including attorney and consultant’s fees) by the other party.

(d) Claims for Damages specified in any Claim Notice to which an Indemnifying
Party shall not object in writing within thirty (30) days of receipt of such
Claim Notice, Claims for Damages agreed to be paid by an Indemnifying Party in a
memorandum described in Section 9.4(c) and Claims for Damages payable by an
Indemnifying Party the validity and amount of which have been the subject of
judicial determination described in Section 9.4(c) are hereinafter referred to
collectively as “Agreed Claims.” Within ten (10) Business Days of the
determination of any Agreed Claims, the Indemnifying Party shall pay to the
Indemnified Party an amount equal to the Damages that are the subject of the
Agreed Claims (by wire transfer in immediately available funds).

(e) If any Claim Notice is delivered by an Indemnified Party with respect to any
Agreed Claim arising out of a claim or demand made or threatened against such
Indemnified Party by any Person who is not a Party (or an Affiliate thereof) (a
“Third Party Claim”), the Indemnified Party will deliver to the Indemnifying
Party, promptly after the Indemnified Party’s receipt thereof, copies of all
notices and documents (including court papers) received or transmitted by the
Indemnified Party relating to the Third Party Claim.

 

 

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(f) The Indemnifying Party will have the right to participate in or to assume
the defense of the Third Party Claim (in either case at the expense of the
Indemnifying Party) with counsel of its choice reasonably satisfactory to the
Indemnified Party. The Indemnifying Party will be liable for the reasonable fees
and expenses of counsel employed by the Indemnified Party for any period during
which the Indemnifying Party has failed to assume the defense thereof (other
than during any period in which the Indemnified Party shall have failed to give
notice of the Third Party Claim as provided above). Should the Indemnifying
Party so elect to assume the defense of a Third Party Claim, the Indemnifying
Party will not be liable to the Indemnified Party for any legal or other
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof; provided, however, that, if the Indemnified Party reasonably
concludes upon the written advice of legal counsel that an actual conflict of
interest exists with the Indemnifying Party in respect of such claim, such
Indemnified Party will have the right to employ separate counsel reasonably
satisfactory to the Indemnifying Party to represent such Indemnified Party and
in that event the reasonable fees and expenses of such separate counsel (but not
more than one separate counsel for all Indemnified Parties) shall be paid by
such Indemnifying Party. If the Indemnifying Party is conducting the defense of
the Third Party Claim, the Indemnified Party, at its sole cost and expense, may
retain separate counsel, and participate in the defense of the Third Party
Claim, it being understood that the Indemnifying Party will control such
defense.

(g) No Indemnifying Party will consent to any settlement, compromise or
discharge (including the consent to entry of any judgment) of any Third Party
Claim without the Indemnified Party’s prior written consent (which consent will
not be unreasonably withheld or delayed); provided, that, if the Indemnifying
Party assumes the defense of any Third Party Claim, the Indemnified Party will
agree to any settlement, compromise or discharge of such Third Party Claim which
the Indemnifying Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of Damages (other than any amount that
the Indemnifying Party is not obligated to pay pursuant to Section 9.3(b)) in
connection with such Third Party Claim and unconditionally releases the
Indemnified Party completely from all Liability in connection with such Third
Party Claim (other than with respect to the payment of any amount of Damages
that the Indemnifying Party is not obligated to pay pursuant to Section 9.3(b)).
Whether or not the Indemnifying Party shall have assumed the defense of a Third
Party Claim, the Indemnified Party will not admit any Liability, consent to the
entry of any judgment or enter into any settlement or compromise with respect to
the Third Party Claim without the prior written consent of the Indemnifying
Party (which consent will not be unreasonably withheld or delayed).

(h) If the Indemnifying Party assumes the defense of any Third Party Claim, the
Indemnifying Party will keep the Indemnified Party informed of all material
developments relating to or in connection with such Third Party Claim. If the
Indemnifying Party chooses to defend a Third Party Claim, the Parties will
cooperate in the defense thereof (with the Indemnifying Party being responsible
for all reasonable out-of-pocket expenses of the Indemnified Party (other than
for the fees and expenses of its counsel) in connection with such

 

 

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cooperation), which cooperation will include the provision to the Indemnifying
Party of records and information which are reasonably relevant to such Third
Party Claim, and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder.

(i) In the event of payment in full (subject to Section 9.3) by an Indemnifying
Party to any Indemnified Party in connection with any Claim (an “Indemnified
Claim”), such Indemnifying Party will be subrogated to and will stand in the
place of such Indemnified Party as to any events or circumstances in respect of
which such Indemnified Party may have any right or claim relating to such
Indemnified Claim against any claimant or plaintiff asserting such Indemnified
Claim or against any other Person. Such Indemnified Party will cooperate with
such Indemnifying Party in a reasonable manner, and at the cost and expense of
such Indemnifying Party, in prosecuting any subrogated right or claim.

(j) Any payments made pursuant to the provisions of this Article IX shall be
deemed to be and treated, to the extent permitted by Law, as an adjustment to
the Purchase Price.

Section 9.5. Exclusive Remedy. In the absence of intentional and willful fraud,
the remedies set forth in this Article IX and Section 6.7 shall be the sole and
exclusive remedy with respect to any and all claims relating, directly or
indirectly, to the subject matter of this Agreement or any other Transaction
Document (except as may otherwise expressly be set forth in any other
Transaction Document). With respect to actions grounded in intentional and
willful fraud, (A) the right of member of the Buyer Group or the Seller Group to
be indemnified and held harmless pursuant to Article IX shall be in addition to
and cumulative of any other remedy of such member of the Buyer Group of the
Seller Group at law or in equity and (B) no such member of the Buyer Group or
the Seller Group shall, by exercising any remedy available to it under Article
IX, be deemed to have elected such remedy exclusively or to have waived any
other remedy, whether at law or in equity, available to it. Subject to the
preceding sentence, Article VIII and the other provisions of this Article IX,
each Party hereby waives, to the fullest extent permitted under applicable Law,
any and all rights, claims and causes of action it or any of their respective
Affiliates may have against any other Party or its Affiliates with respect to
the subject matter of this Agreement, whether arising under or based upon any
Federal, state, provincial, local or foreign statute, Law, ordinance, rule,
regulation or common law.

Section 9.6. Cooperation. The Parties shall cooperate with one another with
respect to resolving any Claim or Liability with respect to which one Party is
obligated to provide indemnification hereunder, including by using commercially
reasonable efforts to mitigate or resolve any such Claim or Liability.

Section 9.7. Tax Indemnification.

(a) Seller shall indemnify, defend and hold harmless the Buyer Group from and
against (i) all Taxes of the Company Group (or the non-payment thereof) with
respect to all periods ending on or prior to January 31, 2008 (a “Pre-Lock-Box
Period”), (ii) all Taxes of the Company Group (or the non-payment thereof) with
respect to any period beginning before January 31, 2008 and ending after January
31, 2008 (a “Straddle Period”), but only with respect to the portion of such
period up to and including January 31, 2008 (such portion, a “Lock-Box Partial
Period”), and (iii) without duplication of any amounts payable under Section
9.1(c), all

 

 

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Taxes of the Company Group (or the non-payment thereof) or of the Buyer Group
payable as a result of a breach of any representation or warranty set forth in
Section 3.11 (Tax Matters), except to the extent such Taxes have been taken into
account in the Parties’ mutual determination and calculation of the Purchase
Price as set forth in Schedule A4; provided, that Seller shall have no liability
to the Buyer Group under this Section 9.7(a) or any other provision of this
Agreement for any Taxes attributable to any actions outside of the ordinary
course of business taken by or with respect to any member of the Company Group
after the Closing (including the making of any election under Section 338 of the
Code). For the avoidance of doubt, Section 9.3(a) and Section 9.3(b) shall not
apply to indemnification for Taxes or for breaches of the representations and
warranties set forth in Section 3.11 (Tax Matters).

(b) In the case of Taxes (other than Transfer Taxes) that are payable with
respect to any Straddle Period, the portion of any such Tax that is attributable
to a Lock-Box Partial Period shall be:

(i) in the case of income Taxes or any other Taxes resulting from, or imposed
on, sales, receipts, uses, transfers or assignments of property or other assets,
payments or accruals to other Persons (including, without limitation, wages), or
any other similar transaction or transactions, the amount that would be payable
for the Lock-Box Partial Period if the Company Group filed a separate Tax Return
with respect to such Taxes solely for the Lock-Box Partial Period; and

(ii) in the case of all other Taxes, an amount equal to the amount of Taxes for
the entire Straddle Period multiplied by a fraction the numerator of which is
the number of calendar days in the Lock-Box Partial Period and the denominator
of which is the number of calendar days in the entire Straddle Period.

For purposes of clause (i), any item determined on an annual or periodic basis
(including amortization and depreciation deductions and the effects of graduated
rates) shall be allocated to the Lock-Box Partial Period based on the relative
number of calendar days in such period as compared to the number of calendar
days in the entire Straddle Period.

(c) Any Tax refunds, amounts credited against Taxes in lieu of such Tax refunds,
or indemnity payments pursuant to Article 9 of the Contribution Agreement that
are received by any member of the Buyer Group relating to Taxes of any member of
the Company Group (i) for a Pre-Lock-Box Period or Lock-Box Partial Period or
(ii) for which Seller is liable pursuant to this Agreement (other than to the
extent any such refund or credit arises from the carryback of a net operating
loss) shall be for the account of Seller (without offset or reduction) except to
the extent such refund or credit was taken into account in the Parties’ mutual
determination and calculation of the Purchase Price, and Buyer shall pay over to
Seller (without offset or reduction) any such Tax refund or indemnity payment or
the amount of any such credit within two (2) Business Days after receipt thereof
or entitlement thereto. For the avoidance of doubt, the procedures set forth in
Section 9.4 shall not apply to this Section 9.7(c).

(d) Buyer shall file or cause to be filed all Tax Returns of all members of the
Company Group required to be filed after the Closing Date, which Tax Returns, to
the extent they relate to periods or portions thereof ending on or prior to the
Closing Date (each, a “Pre-Closing Period”), shall be timely filed, and shall
timely pay or cause to be timely paid all Taxes

 

 

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shown to be due on such Tax Returns. Buyer shall also timely pay or cause to be
timely paid all Taxes due with respect to periods or portions thereof beginning
after the Closing Date to any Canadian taxing authority with respect to any
member of the Company Group. In the event Seller is liable under this Agreement
for Taxes due at the time of filing any Tax Return described in this Section
9.7(d), Seller shall pay the amount of such liability to Buyer two (2) Business
Days after Seller’s receipt of written request therefor by Buyer or at least
three (3) Business Days prior to the filing of the Tax Return, whichever is
later. With respect to any Tax Return required to be filed by Buyer pursuant to
this Section 9.7(d) for which Seller has any liability for Taxes due (including
pursuant to its indemnity obligations under Section 9.7(a)), a copy of such Tax
Return shall be submitted by Buyer to Seller for review at least thirty (30)
days prior to the due date (including extensions) for filing such Tax Return,
and Buyer shall make such necessary or advisable revisions to such Tax Return as
are reasonably requested by Seller. Seller’s consent to the filing of such Tax
Return shall be presumed if Seller fails to respond to Buyer within fifteen (15)
days following Buyer’s submission of such Tax Return to Seller for review. Buyer
and Seller shall use their respective best efforts to resolve any disagreement
regarding such Tax Return prior to the due date for filing thereof. Any
disagreement regarding such Tax Return which is not resolved prior to the due
date for the filing thereof shall be promptly resolved by a nationally
recognized independent accounting firm mutually acceptable to Buyer and Seller,
whose determination of the issue on which there is disagreement shall be final
and binding on Buyer and Seller. If the independent accounting firm is unable to
make a determination with respect to the issue on which there is disagreement by
the due date for the filing of the Tax Return in question, then such Tax Return
shall be filed on the due date therefor in a manner consistent with Buyer’s
positions and such Tax Return shall be amended to the extent necessary to
reflect the independent accounting firm’s determination. Upon resolution or
determination of such issue, there shall be made a payment, if necessary,
between Buyer and Seller in order to take into account the results of such
resolution or determination. The fees and expenses of such accounting firm shall
be borne equally by Buyer and Seller.

(e) Buyer and Seller shall reasonably cooperate, and shall cause their
respective affiliates, officers, directors, employees, and agents to cooperate,
in preparing and filing all Tax Returns, including maintaining and making
available to each other all records necessary in connection with Taxes and in
resolving all disputes and audits or other examinations relating to Taxes with
respect to all Tax periods. Seller shall cooperate with Buyer to provide any
information that Buyer reasonably requests to allow Buyer to comply with Section
6043A of the Code or any other information reporting requirements under the Code
or other applicable Law.

(f) Buyer and Seller agree to give prompt notice to each other of any proposed
adjustment to Taxes of the Company Group for any Pre-Closing Period.
Notwithstanding anything to the contrary in Section 9.4, Buyer shall control any
examinations, investigations, audits or other proceedings in respect of any Tax
Return or Taxes involving the Company Group (a “Tax Contest”), provided that
Buyer shall not settle or otherwise resolve any Tax Contest with respect to
Taxes for which Seller could be liable pursuant to this Section 9.7 without the
consent of Seller, such consent not to be unreasonably withheld. All costs, fees
and expenses paid to third parties in the course of any Tax Contest relating to
any Pre-Closing Period shall be borne by the parties in the same ratio as the
ratio in which, pursuant to the terms of this Agreement, the parties would share
the responsibility for payment of the Taxes asserted by the Governmental
Authority in such claim or assessment if such claim or assessment were sustained
in its entirety.

 

 

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(g) The Company’s representations and warranties in Section 3.11 (Tax Matters)
and the obligations of the Parties set forth in this Section 9.7 shall remain in
effect for the applicable statute of limitations (after giving effect to any
waivers or extensions thereof), plus sixty (60) days.

Section 9.8. Specified Party Claims. Notwithstanding anything in this Agreement
to the contrary, the Parties agree that subject to the terms of this Section
9.8, from and after the Closing, Seller shall retain the exclusive right to
conduct and control (including through its Affiliates and counsel) all dealings
with the Specified Parties including the prosecution, defense and/or settlement
of any claims (“Specified Party Claims”) by or against any of the Specified
Parties relating to the ownership and operation of the Company Group prior to
Closing, including with respect to the matters described in Section 9.1(e),
Section 9.7(c), the Specified AR Proceeding and any Specified Party Claims
arising under the Contribution Agreement, but excluding any Specified Mark
Claims and any claims by any Specified Party in respect of any payment owing to
such Specified Party pursuant to the terms of any employment or consulting
agreement between a member of the Company Group and such Specified Party, as in
effect immediately prior to the Closing, to the extent reflected in Schedule A4.
Buyer shall promptly assign or cause to be assigned to Seller at and after
Closing any rights (contractual, legal or otherwise) of any member of the
Company Group with respect to the conduct and control of any Specified Party
Claims; provided that Seller shall not, without Buyer’s written consent, direct
or enter into any settlement in respect of any Specified Party Claim that
provides for injunctive relief or other non-monetary relief enforceable against
Buyer or any member of the Company Group. From and after Closing, Buyer shall,
and shall cause each member of the Company Group to (i) promptly upon discovery
thereof, notify Seller of the existence of, or any change or development in, any
Specified Party Claim, (ii) cooperate with Seller and its Affiliates in
connection with the conduct of any Specified Party Claim and (iii) take any and
all actions reasonably necessary to allow Seller and its Affiliates to
effectively control and conduct any Specified Party Claim following Closing,
including promptly making available any notices, correspondence, filings,
records and documentation relating to any Specified Party Claim and furnishing
reasonable access to such employees of the Company Group as may be necessary or
advisable for the conduct of any Specified Party Claim; provided, that Seller
shall reimburse Buyer for its reasonable out-of-pocket expenses in connection
with the actions described in the foregoing clauses (i) through (iii). To the
extent Known by Seller not to be Known to Buyer, Seller will keep Buyer updated
and informed with respect to all material developments relating to or in
connection with any Specified Party Claim, including promptly making available
to Buyer any notices, correspondence, filings, records and documentation
relating thereto to the extent Known by Seller not to be provided to Buyer.

Section 9.9. Specified Mark Claims. Following the Closing and subject to the
terms and conditions of Article VIII and this Article IX, Seller will indemnify,
defend and hold harmless any member of the Buyer Group from and against fifty
percent (50%) of any and all Damages actually incurred by such member of the
Buyer Group based upon or arising out of any claim or action brought by any (a)
Specified Party challenging such member’s registration, ownership or use of any
Specified Mark in connection with apparel, fashion accessories and

 

 

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reasonably related goods, or (b) member of the Company Group alleging
infringement of any Specified Mark by a Specified Party with respect to apparel,
fashion accessories and reasonably related goods (such claims or actions
described in the foregoing clauses (a) and (b), “Specified Mark Claims”);
provided, that in no event shall the maximum aggregate Liability of Seller to
all members of the Buyer Group pursuant to this Section 9.9 or otherwise based
upon or arising out of any Specified Mark Claim (including pursuant to any other
provision of this Agreement) exceed $500,000. Notwithstanding anything in
Section 9.4 to the contrary, (x) solely for purposes of the application of
Section 9.4 to this Section 9.9, all references to thirty (30) days shall be
deemed instead to be references to ten (10) Business Days and (y) Buyer shall
retain the exclusive right to conduct and control (including through its
Affiliates and counsel) all dealings with the Specified Parties with respect to
the prosecution, defense and/or settlement of any Specified Mark Claims. Buyer
will keep Seller updated and informed with respect to all material developments
relating to or in connection with any Specified Mark Claim, including promptly
making available to Seller any notices, correspondence, filings, records and
documentation relating thereto.

ARTICLE X.

 

MISCELLANEOUS

Section 10.1. Parties in Interest. Nothing in this Agreement, whether express or
implied, shall be construed to give any Person, other than the Parties or their
respective successors and permitted assigns, any legal or equitable right,
remedy, claim or benefit under or in respect of this Agreement.

Section 10.2. Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns. No
Party may assign (by contract, stock sale, operation of Law or otherwise) either
this Agreement or any of its rights, interests, or obligations hereunder without
the express prior written consent of the other Parties, and any attempted
assignment, without such consent, shall be null and void; provided, that Buyer
may transfer or assign (including by way of pledge), in whole or in part, its
rights under this Agreement to its lenders or other financing sources as
collateral security; provided, that no such transfer or assignment shall relieve
Buyer of any obligation hereunder.

Section 10.3. Notices. All notices and other communications required or
permitted to be given by any provision of this Agreement shall be in writing and
mailed (certified or registered mail, postage prepaid, return receipt requested)
or sent by hand or overnight courier, or by facsimile transmission (with
acknowledgment received), charges prepaid and addressed to the intended
recipient as follows, or to such other addresses or numbers as may be specified
by a Party from time to time by like notice to the other Parties:

 

 

If to Seller:

GB Holding I, LLC
c/o Gordon Brothers Group
101 Huntington Avenue, 10th Floor
Boston, MA 02199
Attn.: Michael Rand
Facsimile: (617) 531-7946

 

 

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and a copy to:

Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
Attn.: David M. Schwartzbaum, Esq.
Telecopy No.: (212) 751-4864

 

 

 

 

If to the Company

 

 

prior to Closing:

AM Apparel Holdings, Inc.
c/o Seller

 

 

 

 

following Closing:

AM Apparel Holdings, Inc.
c/o Buyer

 

 

 

 

If to Buyer:

G-III Leather Fashions, Inc.
512 Seventh Avenue
New York, New York 10018
Attn.: Wayne S. Miller
Facsimile: (212) 719-0921

 

 

 

 

with a copy to:

Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attn.: Neil Gold, Esq.
Facsimile: (212) 318-3400

All notices and other communications given in accordance with the provisions of
this Agreement shall be deemed to have been given and received when delivered by
hand or transmitted by facsimile (with acknowledgment received), three (3)
Business Days after the same are sent by certified or registered mail, postage
prepaid, return receipt requested or one (1) Business Day after the same are
sent by a reliable overnight courier service, with acknowledgment of receipt.

Section 10.4. Amendments and Waivers. This Agreement may not be amended,
supplemented or otherwise modified except in a written instrument executed by
each of the Parties. No waiver by any of the Parties of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence. No waiver by any of the Parties of any of the provisions hereof
shall be effective unless explicitly set forth in writing and executed by the
Party sought to be charged with such waiver.

Section 10.5. Exhibits and Disclosure Schedule.

(a) All Exhibits, Schedules and the Disclosure Schedule attached hereto are
hereby incorporated herein by reference and made a part hereof. Any matter
disclosed pursuant to any Section of or Schedule or Exhibit to this Agreement or
the Disclosure Schedule (or any section of any Schedule or Exhibit to this
Agreement or the Disclosure Schedule) or in the Company Financial Statements
whose relevance or applicability to any representation or warranty made
elsewhere in this Agreement or to the information called for by any other

 

 

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Section of or Schedule or Exhibit to this Agreement or the Disclosure Schedule
(or any other section of any Schedule or Exhibit to this Agreement or the
Disclosure Schedule) is reasonably apparent shall be deemed to be an exception
to such representations and warranties and to be disclosed with respect to all
Sections of and Schedules and Exhibits to this Agreement and the Disclosure
Schedule (and all sections of all Schedules and Exhibits to this Agreement and
the Disclosure Schedule), notwithstanding the omission of a reference or
cross-reference thereto.

(b) Neither the specification of any dollar amount in any representation or
warranty nor the mere inclusion of any item in a Schedule or in the Disclosure
Schedule as an exception to a representation or warranty shall be deemed an
admission by a Party that such item represents an exception or material fact,
event or circumstance or that such item would, individually or in the aggregate,
result in a Material Adverse Effect on the Company Group, Seller or Buyer.

Section 10.6. Headings. The table of contents and section headings contained in
this Agreement are for reference purposes only and shall not be deemed a part of
this Agreement or affect in any way the meaning or interpretation of this
Agreement.

Section 10.7. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement.

Section 10.8. No Other Representations or Warranties. Except for the
representations and warranties expressly set forth in this Agreement, Buyer
acknowledges that none of Seller, the Company or any of their respective
Affiliates makes any representation or warranty, express or implied, at law or
in equity, with respect to Seller, the Company Group or their respective
Affiliates, the Shares or any of the assets or Liabilities of the Company Group
and its Affiliates, or with respect to any other information provided to Buyer,
whether on behalf of Seller, the Company or such other Persons, including as to
the probable success or profitability of the Company Group after the Closing,
and Seller acknowledges that neither Buyer nor any of its Affiliates makes any
representation or warranty, express or implied, at law or in equity, with
respect to Buyer or its Affiliates or with respect to any other information
provided to Seller, whether on behalf of Buyer or its Affiliates. No party
hereto or any other Person will have or be subject to any Liability or
indemnification obligation to the other party or any other Person resulting from
the distribution to such other party, or such other party’s use of, any such
information, including any information, document or material made available to
such other party in certain “data rooms,” management presentations or in any
other form in expectation or contemplation of the transactions contemplated by
this Agreement.

Section 10.9. Effect of Due Diligence. Without limiting the express terms of
this Agreement, no investigation by or on behalf of Buyer into the business,
operations, prospects, assets or condition (financial or otherwise) of the
Company Group or Seller shall diminish in any way the effect of any
representations or warranties made by Seller in this Agreement or shall relieve
Seller of any of its obligations under this Agreement and no investigation by or
on behalf of Seller into the business, operations, prospects, assets or
condition (financial or otherwise) of the Buyer shall diminish in any way the
effect of any representations or warranties made by Buyer in this Agreement or
shall relieve Buyer of any of its obligations under this Agreement.

 

 

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Section 10.10. Entire Agreement. This Agreement (including the Disclosure
Schedule and the other Schedules and Exhibits hereto), the Transaction Documents
and the Confidentiality Agreement constitute the entire agreement among the
Parties with respect to the subject matter hereof and thereof and supersede any
prior understandings, negotiations, agreements, or representations among the
Parties of any nature, whether written or oral, to the extent they relate in any
way to the subject matter hereof or thereof.

Section 10.11. Severability. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be
declared by any court of competent jurisdiction to be invalid, illegal, void or
unenforceable in any respect, all other provisions of this Agreement, or the
application of such provision to Persons or circumstances other than those as to
which it has been held invalid, illegal, void or unenforceable, shall
nevertheless remain in full force and effect and will in no way be affected,
impaired or invalidated thereby. Upon such determination that any provision, or
the application of any such provision, is invalid, illegal, void or
unenforceable, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
greatest extent possible.

Section 10.12. Expenses. Unless otherwise provided herein, each Party agrees to
pay, without right of reimbursement from the other Parties, all costs and
expenses incurred by it incident to the performance of its obligations
hereunder, including, without limitation, the fees and disbursements of counsel,
accountants, financial advisors, experts and consultants employed by the
respective Parties in connection with the transactions contemplated hereby,
whether or not the transactions contemplated by this Agreement are consummated.
For the avoidance of doubt, Seller shall pay, without right of reimbursement
from any member of the Company Group, all fees and disbursements of Financo,
Inc. and Latham & Watkins LLP incurred in connection with the proposed sale of
the Company to Buyer and each other prospective buyer with respect to which
costs and expenses were incurred.

Section 10.13. Governing Law. This Agreement and all claims arising out of or
relating to this Agreement and the transactions contemplated hereby shall be
governed by the Laws of the State of New York, without regard to the conflicts
of law principles that would result in the application of any Law other than the
Law of the State of New York.

Section 10.14. Consent to Jurisdiction; Waiver of Jury Trial.

(a) Each of the Parties irrevocably submits to the exclusive jurisdiction of
(i) state courts of the State of New York and (ii) the United States District
Court for the State of New York for the purposes of any suit, Action or other
proceeding arising out of or relating to this Agreement or any transaction
contemplated hereby (and agrees not to commence any Action, suit or proceeding
relating hereto except in such courts). Each of the Parties further agrees that
service of any process, summons, notice or document hand delivered or sent by
U.S. registered mail to such Party’s respective address set forth in
Section 10.3 will be effective service of process for any Action, suit or
proceeding in New York with respect to any matters to

 

 

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which it has submitted to jurisdiction as set forth in the immediately preceding
sentence. Each of the Parties irrevocably and unconditionally waives any
objection to the laying of venue of any Action, suit or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby in
(i) state courts of the State of New York or (ii) the United States District
Court for the State of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Action, suit or proceeding brought in any such court has been brought
in an inconvenient forum. Notwithstanding the foregoing, each Party agrees that
a final judgment in any Action or proceeding so brought shall be conclusive and
may be enforced by suit on the judgment in any jurisdiction or in any other
manner provided in law or in equity.

(b) EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

Section 10.15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

*    *    *    *   *

 

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date first above written.

 

 

 

GB HOLDING I, LLC

 

By: 

/s/ Mark J. Schwartz

 

 

 

Name: Mark J. Schwartz

 

 

 

Title: Manager

 

 

 

AM APPAREL HOLDINGS, INC.

 

By: 

/s/ Michael Rand

 

 

 

Name: Michael Rand

 

 

 

Title: Director

 

 

 

G-III LEATHER FASHIONS, INC.

 

By: 

/s/ Wayne S. Miller

 

 

 

Name: Wayne S. Miller

 

 

 

Title: Senior Vice President

 

 

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