MEMBERSHIP INTEREST PURCHASE AGREEMENT
 
This MEMBERSHIP INTEREST PURCHASE AGREEMENT dated as of March 9, 2010 (this
“Agreement”) by and between Iconix Brand Group, Inc., a Delaware corporation
(the “Buyer”), and Purim LLC (the “Seller”), a Delaware limited liability
company, all of the equity interests of which are owned by Madonna Ciccone
(“M”), and Guy Oseary (“G/O”).
 
WITNESSETH:
 
WHEREAS, the Seller is the owner of all of the issued and outstanding membership
interests of MG Icon LLC, a Delaware limited liability company (the “Company”);
 
WHEREAS, pursuant to that certain License and Services Agreement, entered into
by and between the Company and the Seller immediately prior to the Closing (as
hereinafter defined in Section 2) (the “License Agreement”), the Seller has,
among other things, granted to the Company certain name, likeness and other
publicity rights associated with Madonna Ciccone, p/k/a Madonna (collectively,
the “Licensed Rights”);
 
WHEREAS, in order to induce the Buyer to enter into this Agreement and the other
Transaction Documents (as hereinafter defined in Section 4.1) to which it is a
party, M has entered into a personal inducement letter agreement as of the date
hereof (the “Inducement Agreement”); and
 
WHEREAS, the Buyer has agreed to purchase a fifty percent (50%) membership
interest in the Company from the Seller, upon the terms and subject to the
conditions set forth herein and in the Amended and Restated Operating Agreement
of the Company dated as of the date hereof (the “Operating Agreement”).
 
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto do hereby agree as follows:
 
1.           Certain Defined Terms.  Capitalized defined terms used herein and
not otherwise defined have the meanings ascribed to them in the Operating
Agreement.
 
2.           Purchase and Sale of Purchased Interest.  Subject to the terms and
conditions set forth in this Agreement and simultaneously with the execution and
delivery of this Agreement (the “Closing”), the Seller is hereby selling,
conveying, assigning, transferring and delivering to the Buyer, and the Buyer is
hereby purchasing, units representing membership interests comprising,
immediately following the Closing, fifty percent (50%) of the aggregate
outstanding membership interests in the Company (collectively, the “Purchased
Interest”), free and clear of any and all liens, adverse claims, options,
security interests, restrictions, pledges, mortgages, charges, encumbrances and
third party rights of any kind or nature whatsoever, whether arising by Contract
(as hereinafter defined in Section 4.2), operation of law or otherwise
(collectively, “Liens”), other than Liens created by the Operating Agreement.
 

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3.           Payment of Purchase Price.
 
3.1.           Purchase Price.  In consideration of the sale, transfer,
conveyance and delivery of the Purchased Interest, the Buyer shall, in full
payment thereof, pay to the Seller aggregate consideration of Twenty Million
Dollars ($20,000,000) (the “Purchase Price”), in five (5) equal installments
(each, an “Annual Payment”) of Four Million Dollars ($4,000,000) payable to the
Seller at the Closing and on each subsequent annual anniversary date thereof;
provided, however, that (i) the Purchase Price, and each Annual Payment, shall
be subject to increase pursuant to Section 3.2 below, (ii) the payment of the
unpaid Purchase Price, and the unpaid Annual Payments, shall be accelerated as
provided in Section 3.3 below, and (iii) the Purchase Price and unpaid Annual
Payments, as applicable, shall be subject to decrease pursuant to Section 3.2(e)
and Section 3.2(f) below.  The Buyer’s obligations to make the Annual Payments
hereunder shall be secured by a pledge of the Purchased Interest in favor of the
Seller pursuant to the Pledge Agreement (as hereinafter defined in Section
4.1).  All payments of the Purchase Price made hereunder shall be made in cash
or by wire transfer of immediately available funds to an account designated in
writing by the Seller.
 
3.2.           Earn-Out Consideration.
 
(a)           Following the Closing, the Seller shall be entitled to additional
consideration (collectively, the “Earn-Out Consideration”) earned hereunder
contingent upon the occurrence of a Sublicense Event (as hereinafter defined) or
a Fragrance Event (as hereinafter defined); provided, however, that Earn-Out
Consideration shall only be payable in connection with up to two Sublicense
Events and one Fragrance Event (each, an “Earn-Out Event”).  For purposes of
this Agreement, (A) “Sublicense Event” shall mean, if Seller approves a
Designated Mark other than “Material Girl,” and such Designated Mark is approved
for exploitation under any Sublicense by the parties thereto (as such terms are
defined in the License Agreement); and (B) “Fragrance Event” shall mean, if
Seller approves a scent for a women’s fragrance (as listed on Schedule B to the
License Agreement) and such women’s fragrance is approved for exploitation under
any Sublicense by the parties thereto.
 
(b)           If an Earn-Out Event shall occur, then Earn-Out Consideration
shall be earned in respect thereof, and each of the Annual Payment amounts shall
be increased by an applicable “Incremental Annual Amount”, in the amount(s)
determined by reference to the following table:
 
Earn-Out Event
 
Earn-Out
Consideration
   
Incremental
Annual Amount
 
First Sublicense Event:
  $ 5,000,000     $ 1,000,000  
Second Sublicense Event:
  $ 2,000,000     $ 400,000  
Fragrance Event:
  $ 3,000,000     $ 600,000  

(c)           If one or more Annual Payments have theretofore been made the
Buyer shall, within thirty (30) days after the date of the applicable Earn-Out
Event, make an additional payment to the Seller in an aggregate amount equal to
the appropriate Incremental Annual Amount(s) for each Annual Payment theretofore
made.  In addition, any future Annual
 
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Payment shall be increased by the appropriate Incremental Annual Amount in
respect thereof at the time of payment.
 
(d)           Additional Payments. If the Seller (or any of its members) is
required to pay an interest charge on any amounts payable hereunder in
accordance with Section 453A of the Internal Revenue Code of 1986, as amended
(the “Code”) or similar rule or regulation, then within ten (10) days after
receipt of written notice from the Seller that any such payment is due, the
Buyer shall pay to the Seller an amount equal to such interest charge plus such
additional amount which, after income taxes, leaves an amount equal to the
interest charge payable (the “Additional Payment”).  Except as otherwise
provided below, for purposes of calculating any such Additional Payments: (i)
the highest combined marginal federal, state and local effective income tax rate
applicable with respect to any payments required under this Section 3.2(d) shall
be utilized, and (ii) the assumed interest charge required under Section 453A of
the Code shall be equal to the “underpayment rate” described in Section
453A(c)(2)(B) of the Code applicable with respect thereto.  Notwithstanding the
foregoing, (i) as a prerequisite to receiving any Additional Payments, Seller
shall cause the tax preparers for the members of Seller to deliver to Buyer
schedules detailing the computations of the Additional Payment amounts, and (ii)
the federal income tax rate utilized for purposes of calculating any Additional
Payments shall not exceed the federal income tax rates applicable to the members
of Seller as reported, or as will be reported, on their federal income tax
returns with respect to payments received by Seller under the terms of this
Agreement.  For the avoidance of doubt, if the payment of any Annual Payments
and Earn-Out Consideration (to the extent payable) is accelerated as provided in
Section 3.3 below, Seller shall also be entitled to any Additional Payment due
in respect of the acceleration of such payments.
 
(e)           Macy’s Purchase Price Adjustment.  If pursuant to Section 9.5 of
the License Agreement by and between the Company and Macy’s Retail Holdings,
Inc. dated as of even date herewith (the “Macy’s Agreement”), Licensee (as
defined in the Macy’s Agreement) exercises its right to reduce the Minimum
Royalty (as defined in the Macy’s Agreement) payments (the “Macy’s Adjustment”)
with respect to any Annual Period (as defined in the Macy’s Agreement) occurring
during the Initial Term (as defined in the Macy’s Agreement), and the Macy’s
Adjustment results in the Company receiving royalty payments in respect of such
Annual Period that are less than the Minimum Royalty payments for such Annual
Period in effect prior to the Macy’s Adjustment (such difference being referred
to as the “Macy’s Shortfall”), then the Annual Payments thereafter due and
payable hereunder shall be reduced dollar for dollar until the total cumulative
reduction in such Annual Payments is equal to the aggregate Macy’s
Shortfall.  Notwithstanding anything to the contrary contained herein or in any
of the other Transaction Documents, the reduction of the Purchase Price pursuant
to this Section 3.2(e) shall be the sole and exclusive remedy of the Buyer
hereunder and under the other Transaction Documents in the event of a Macy’s
Adjustment.
 
(f)           D&G Purchase Price Adjustment.  The second Annual Payment due to
the Seller shall be reduced, dollar-for-dollar, by any non-refundable advances
and royalties paid to the Seller or its Affiliates (without duplication) on or
prior to the date hereof pursuant to the eyewear license previously granted
Dolce & Gabanna in December 2009 (the “D&G Agreement”).  Unless and until such
time as the D&G Agreement (or royalty payments thereunder) are assigned or
otherwise contributed to the Company, any additional non-refundable
 
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advances and royalties paid to Seller or its Affiliates (without duplication)
after the date hereof under the D&G Agreement shall reduce dollar-for-dollar the
Annual Payment to be made on the second anniversary of the Closing (i.e., the
third Annual Payment).
 
3.3.           Acceleration of Payments.  Upon the occurrence of an Event of
Default (as defined below), then, subject to the Buyer’s offset rights set forth
in this Agreement, the entire amount of the unpaid Purchase Price (i.e., any
unpaid Annual Payments and Earn-Out Consideration earned hereunder) shall be due
and payable to Seller, and the Buyer shall pay all unpaid Annual Payments,
Earn-Out Consideration (to the extent payable), and any accrued and unpaid
Additional Payments earned hereunder to the Seller if such Event of Default is
not cured or waived.  As used herein, “Event of Default” shall mean: (i) the
failure of the Buyer to make any of the following payments when due and payable
(x) Annual Payment, (y) Earn-Out Consideration payment or (z) Additional Payment
to the Seller, in the case of each of clauses (x), (y) and (z) not later than
five (5) days after receipt of notice in respect of any such failure; or (ii)
the occurrence of an Iconix Default Event (as such term is defined in, and
pursuant to, the Operating Agreement); provided, however, that if the Buyer
asserts a right to offset all or any portion of any such payment on or prior to
the date when due pursuant to Section 6.7 of this Agreement and the Seller
disputes Buyer’s exercise of such offset rights, the obligation to make such
payment shall be deemed to be satisfied upon the payment of such disputed amount
into escrow in accordance with the terms of Section 6.7 of this Agreement.  For
the avoidance of doubt, it is understood and agreed that Buyer’s obligations to
pay Annual Payments, Earn-Out Consideration (to the extent payable) and
Additional Payments (to the extent payable) shall continue notwithstanding the
occurrence of any Required Sale pursuant to the Operating Agreement or other
change of ownership of the Company, provided that, the payment of these amounts
remains subject to Buyer's right to offset in accordance with the terms of
Section 6.7 of this Agreement.
 
3.4.           Certain Additional Provisions Regarding Annual Payments, etc.
 
(a)           The Buyer shall have the right to offset the amount of any Damages
for which it seeks indemnification in accordance with the terms of Section
6.7.  Any such offset in respect of payments under this Section 3 shall be
treated as a Purchase Price adjustment for income tax purposes.
 
(b)           In addition, in the event that, prior to the payment in full of
the aggregate Purchase Price (as the same may be adjusted herein) and Additional
Payments, the Buyer shall have any distributions due and payable from the
Company pursuant to the Operating Agreement, the Buyer shall have the right (but
not the obligation) to cause a portion of such distribution, up to the amount of
the then outstanding aggregate Purchase Price (as the same may be adjusted
herein) and any Additional Payments to be paid to the Seller, each such payment
to be applied to the prepayment of the remaining installments of the aggregate
Purchase Price (as the same may be adjusted herein) and any Additional Payments
in order of maturity.  Any such amounts paid over to the Seller shall be deemed
to have been distributed to the Iconix Member and then paid to the MG Member as
an Iconix Payment in accordance with Section 3.07 of the Operating Agreement.
 
4.           Representations and Warranties of the Seller.  The Seller
represents and warrants to the Buyer as follows:
 
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4.1.           Organization, Standing and Power.  Each of the Seller and the
Company is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware.  The Seller has the full
limited liability company power and authority to own and operate its properties,
and to own the outstanding membership interests in the Company.  Each of the
Seller and the Company has the full limited liability company power and
authority to execute, deliver and perform its obligations under the Transaction
Documents to which the Seller or the Company, as the case may be, is a
party.  There is no action or proceeding pending or contemplated to dissolve the
Seller or the Company.  For purposes of this Agreement, “Transaction Documents”
shall mean this Agreement, the License Agreement, the Inducement Agreement, the
Operating Agreement, the G/O Letter Agreement and the Membership Interest Pledge
Agreement between the Buyer and the Seller as of the date hereof (the “Pledge
Agreement”) and all other documents, instruments and certificates delivered
pursuant hereto or thereto or in connection herewith or therewith.
 
4.2.           Membership Interests.  The Seller is the sole member of the
Company, and is the sole legal and beneficial owner of all of the membership
interests of the Company, free and clear of all Liens, except for any Liens
created by the Operating Agreement, and has the right to transfer legal and
beneficial title to the Purchased Interest.  Immediately following the Closing,
the Purchased Interest will constitute a fifty percent (50%) membership interest
in the Company.  Except for the transactions contemplated by this Agreement,
there are no options, warrants or other rights (including conversion or
preemptive rights) or Contracts of any character relating to the issued or
unissued membership interests of the Company or obligating the Company to issue
or sell any membership interests of or other equity interests in the
Company.  Except for the transactions contemplated by this Agreement, there are
no outstanding Contracts of the Company to (a) repurchase, redeem or otherwise
reacquire any membership interest of or other equity interests in the Company
(or any interest therein), (b) provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other entity, (c)
issue or distribute to any Person (as defined below) any membership interest of
or other equity interests in the Company, or (d) issue or distribute to holders
of any of the membership interests of the Company or any other Person any
evidences of indebtedness, cash or other assets of the Company or to create any
Liens on the assets of the Company.  Other than the Operating Agreement (and the
operating agreement of Purim LLC), none of the Seller, the Company, M or G/O (or
any of their respective Affiliates (as defined in the Operating Agreement)) is a
party to or subject to any agreements or understandings of any kind, and there
are no agreements or understandings of any kind between any Persons, which
affect or relate to the acquisition, disposition or voting or giving of written
consents with respect to any membership interest of or other equity interests in
the Company.  For purposes of this Agreement, (i) “Contracts”, when described as
being those of or applicable to any Person, shall mean any and all written
contracts or agreements, including any amendment and other modifications
thereto, to which such Person is a party or by which such Person or its
properties or assets is subject or bound, and (ii) “Person” shall mean any
individual, sole proprietorship, joint venture, partnership, corporation,
limited liability company, association, joint stock company, unincorporated
organization, cooperative, trust, estate, government entity or authority
(including any branch, subdivision or agency thereof), administrative or
regulatory authority, or any other entity of any kind or nature whatsoever.
 
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4.3.           Interests in Other Entities.  The Company does not own or
control, directly or indirectly, any interest in any other Person.  The Company
has no obligation, agreement, understanding or arrangement to invest in any
entity.
 
4.4.           Authority; Binding Agreement.  The execution and delivery by the
Seller of this Agreement and the execution and delivery by the Seller, the
Company, M and G/O of each of the other Transaction Documents to which the
Seller, the Company, M and G/O, as applicable, is a party, the performance by
the Seller, the Company, M and G/O of their respective obligations hereunder and
thereunder, as applicable, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
action on the part of the Seller, the Company, M and G/O, as applicable, and the
Seller, the Company, M and G/O, as the case may be, have all necessary power and
authority with respect thereto.  Each of the Transaction Documents to which the
Seller, the Company, M and G/O are a party are the legal, valid and binding
obligations of such Persons, as applicable, enforceable against such Persons, as
applicable, in accordance with their respective terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the rights of creditors generally and subject to the rules of law
governing (and all limitations on) specific performance, injunctive relief, and
other equitable remedies (collectively, “Enforceability Exceptions”).
 
4.5.           Non-contravention.  None of the execution and delivery by the
Seller of this Agreement, the execution and delivery by the Seller, the Company,
M and G/O of any of the other Transaction Documents to which such Person is a
party, the consummation by the Seller, the Company, M and G/O of any of the
transactions contemplated hereby or thereby, or the performance by the Seller,
the Company, M and G/O of their respective obligations hereunder or thereunder
will (or with the giving of notice or the lapse of time or both would) (a)
conflict with or result in a breach of any provision of (x) any Contract
(including any Contract affecting the Licensed Rights) to which the Seller, the
Company, M or G/O is a party or bound or any other obligation of the Seller, the
Company, M or G/O to any Person that would have a material adverse effect on the
ability of any of such parties to execute, deliver and perform its obligations
under the Transaction Documents, or (y) the certificate of formation and limited
liability company agreement of the Company or the Seller, each as amended to
date, (b) obligate the Seller, the Company, M or G/O, or any of their respective
Affiliates, to pay any royalty or other compensation to any Person, (c) result
in the creation or imposition, or permit the enforcement, of any Lien upon the
Purchased Interest (except for any Liens created by the Operating Agreement or
the Pledge Agreement) or any of the Licensed Rights or any other assets of the
Seller, the Company, M or G/O, or (d) constitute a violation of any Legal
Requirement (as defined below) applicable to the Seller, the Company, M or G/O,
or any of their respective Affiliates, that would have a material adverse effect
on the ability of any of such parties to execute, deliver and perform their
obligations under the Transaction Documents.  For purposes of this Agreement,
“Legal Requirements” shall mean any and all laws (statutory, judicial or
otherwise), ordinances, regulations, judgments, orders, directives, injunctions,
writs, decrees or awards of, and any Contracts with, any Governmental Authority
(as hereinafter defined in Section 4.6).
 
4.6.           Consents.  No consent, approval, waiver, notice, order, or
authorization of, or registration, qualification, designation, declaration,
recording or filing with, any federal,
 
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state, local, municipal or foreign governmental authority, quasi-governmental
authority (including any trademark registry or office or other governmental
agency, commission, public authority, branch, department or official, and any
court or other tribunal) or body exercising, or entitled to exercise, any
governmentally derived administrative, executive, judicial, legislative, police,
regulatory or taxing authority, or any self-regulatory organization,
administrative or regulatory agency, commission, tribunal or authority (each, a
“Governmental Authority”) or any other Person is required in connection with the
execution and delivery by the Seller, the Company, M or G/O of this Agreement or
any of the other Transaction Documents to which the Seller, the Company, M and
G/O, as applicable, is a party, the performance by the Seller, the Company, M
and G/O of their respective obligations hereunder and thereunder, or
consummation by the Seller, the Company, M and G/O of the transactions
contemplated hereby (including the sale by the Seller of the Purchased Interest)
or thereby, that would have a material adverse effect on the ability of any of
such parties to execute, deliver and perform their obligations under the
Transaction Documents.
 
4.7.           No Actions.  No claim, action, suit, arbitration, inquiry,
litigation or investigation or other proceeding (a “Proceeding”) is pending or,
to the knowledge of the Seller, threatened against the Seller, the Company, M or
G/O (or any of their respective Affiliates) (i) which questions the validity of
the Transaction Documents to which such Person is bound or is a party or the
right of the Seller or the Company (or any of their respective Affiliates) to
enter into any Transaction Document to which such Person is bound or is a party
or to perform such Person’s obligations thereunder, or which questions the
validity of the License Agreement or the right of the Seller, the Company or M
to enter into the License Agreement or the Inducement Agreement, as applicable,
or to perform such Person’s obligations thereunder, or (ii) which would, either
individually or in the aggregate, reasonably be expected to have a material
adverse effect on any of the Seller, the Company, M or G/O (or any of their
respective Affiliates) or have a material adverse effect on the ability of the
Seller, the Company, M or G/O (or any of their respective Affiliates) to perform
such Person’s obligations under any of the Transaction Documents to which such
Person is bound or is a party.  None of the Seller, the Company, M or G/O is a
party to or subject to any writ, order, decree, injunction or judgment of any
Governmental Authority that would materially adversely affect such Person or the
performance by such Person of such Person’s obligations under any of the
Transaction Documents to which such Person is a party.  There is no Proceeding
pending or contemplated to dissolve the Seller or the Company.  Neither the
Seller nor the Company is insolvent or otherwise unable to pay its debts as they
fall due and no proceedings against the Seller or the Company are pending or, to
the knowledge of the Seller, contemplated under applicable bankruptcy,
insolvency, reorganization and moratorium laws and principles of equity,
affecting enforcement of creditors’ rights generally.
 
4.8.           Absence of Undisclosed Liabilities.  Except as provided on
Schedule 4.8, the Company does not have any Liabilities (as defined below), and
the Company is not a guarantor or otherwise responsible for any Liabilities of
any other Person.  For purposes of this Agreement, “Liabilities” shall mean any
and all indebtedness, liabilities and obligations of any nature whatsoever,
whether accrued, absolute, fixed, contingent, determined, determinable, known,
unknown, matured or unmatured or otherwise, and whether or not of a nature
required to be reflected or reserved against in a balance sheet in accordance
with U.S. generally accepted accounting principles.
 
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4.9.           No Business Operations.
 
(a)           Except as provided on Schedule 4.8, the Company has not engaged in
any activities since its formation other than those incidental to its
organization.
 
(b)           The Company does not have any employees.
 
(c)           The Company does not own any real property.
 
4.10.        Brokerage.  No investment banker, broker, finder or other
intermediary was engaged by or dealt with the Company, the Seller, M or G/O or
any of their respective Affiliates in connection with any of the transactions
contemplated by this Agreement.
 
4.11.        Constitutional Documents.  The Operating Agreement will, at
Closing, be the only constitutional document in force in relation to the Company
and there are no other documents or agreements that will bind the Buyer in its
capacity as member of the Company or which contain rights, restrictions or
obligations with respect to the equity or debt capital of the Company.
 
5.           Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller as follows:
 
5.1.           Organization, Standing and Power.  The Buyer is a Delaware
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.  The Buyer has the full corporate power and authority
to own and operate its properties, and the Buyer has the full corporate power
and authority to execute, deliver, and perform its obligations under, this
Agreement and each of the other Transaction Documents to which the Buyer is a
party.
 
5.2.           Authority; Binding Agreement.  The execution and delivery by the
Buyer of this Agreement and each of the other Transaction Documents to which the
Buyer is a party, the performance by the Buyer of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary action on the
part of the Buyer, and the Buyer has all necessary power and authority with
respect thereto.  This Agreement is, and each of the other Transaction Documents
to which the Buyer is a party will be, when executed and delivered by the Buyer,
the legal, valid and binding obligation of the Buyer, enforceable against the
Buyer in accordance with its respective terms, except as the same may be limited
by the Enforceability Exceptions.
 
5.3.           Non-contravention.  Neither the execution and delivery by the
Buyer of this Agreement or any of the other Transaction Documents to which the
Buyer is a party, the consummation by the Buyer of any of the transactions
contemplated hereby or thereby, nor the performance by the Buyer of any of its
obligations hereunder or thereunder, will (nor with the giving of notice or the
lapse of time or both would) (a) conflict with or result in a breach of any
provision of any Contract to which the Buyer is a party or the certificate of
incorporation or by-laws of the Buyer, each as amended to date, (b) obligate the
Company or the Seller to pay any royalty or other compensation to any Person,
(c) result in the creation or imposition, or permit
 
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the enforcement of any Lien (except for any Liens created by the Operating
Agreement or the Pledge Agreement) upon the Purchased Interest, or (d)
constitute a violation of any Legal Requirement applicable to the Buyer.
 
5.4.           Consents.  No consent, approval, waiver, notice, order, or
authorization of, or registration, qualification, designation, declaration,
recording or filing with, any Governmental Authority on the part of the Buyer is
required (other than the filing of a UCC-1 financing statement in respect of the
Pledged Collateral (as defined in the Pledge Agreement) with the Secretary of
State of the State of Delaware), and no other consents or waivers of any other
Person are necessary to be obtained by the Buyer, in connection with the
execution and delivery by the Buyer of this Agreement and each of the other
Transaction Documents to which the Buyer is a party, the performance by the
Buyer of its obligations hereunder and thereunder or consummation by the Buyer
of the transactions contemplated hereby (including the acquisition by the Buyer
of the Purchased Interest) or thereby.
 
5.5.           No Actions.  No claim, action, suit, arbitration, inquiry,
litigation or investigation or other proceeding is pending or, to the Buyer’s
knowledge, threatened against the Buyer (i) which questions the validity of the
Transaction Documents to which the Buyer is a party, or the right of the Buyer
to enter into any such Transaction Document, or to perform its obligations
thereunder, or (ii) which would, either individually or in the aggregate,
reasonably be expected to have a material adverse effect on the Buyer or impair
the ability of the Buyer to perform its obligations under any such Transaction
Documents.  The Buyer is not a party to or subject to any writ, order, decree,
injunction or judgment of any Governmental Authority which would materially
adversely affect the Buyer or the performance of its obligations hereunder.
 
5.6.           Investment Intent.  The Buyer understands that the Purchased
Interest has not been registered under the Securities Act of 1933, as amended
(the “Act”), and that the Purchased Interest may not be sold, transferred or
otherwise disposed of, without registration under the Act and any other
applicable state securities laws (“Other Securities Laws”), or pursuant to an
exemption therefrom.  The Buyer is an “accredited investor” within the meaning
of Rule 501(a) of Regulation D promulgated under the Act.  The Buyer has
substantial experience in evaluating investments such as the Purchased Interest
and is capable of evaluating the merits and risks of an investment in the
Purchased Interest.  The Buyer is acquiring the Purchased Interest for its own
account for investment and not with a view to the resale or distribution of any
part thereof within the meaning of the Act or any Other Securities Laws.
 
5.7.           Brokerage.  No investment banker, broker, finder or other
intermediary was engaged by or dealt with the Buyer in connection with any of
the transactions contemplated by this Agreement.
 
6.           Indemnification Provisions.
 
6.1.           Survival of Representations and Warranties.  The representations
and warranties of the parties in this Agreement shall survive the Closing until
the expiration of the applicable statute of limitations.
 
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6.2.           Indemnification by Buyer. Subject to the provisions set forth in
this Section 6, the Buyer shall indemnify, defend and hold harmless the MG
Parties and their respective Representatives as indemnitees (collectively, the
“Seller Indemnified Parties”) from and against any and all Damages, whether or
not involving a Third Party Claim (as hereinafter defined), including reasonable
attorneys’ fees, to the extent resulting from:
 
(a)           any breach of or inaccuracy in a representation or warranty of an
Iconix Party contained in this Agreement or in any other Transaction Document;
 
(b)           any breach of or default in the performance of a covenant or an
agreement contained in this Agreement or in any other Transaction Document by an
Iconix Party or by the Company caused by an Iconix Party; or
 
(c)           any Extraordinary Iconix Parties Matter.
 
6.3.           Indemnification by the Seller.  Subject to the provisions set
forth in this Section 6, the Seller shall indemnify, defend and hold harmless
the Iconix Parties and their respective Representatives as indemnitees
(collectively, the “Buyer Indemnified Parties”) from and against any and all
Damages, whether or not involving a Third Party Claim, including reasonable
attorneys’ fees, to the extent resulting from:
 
(a)           any breach of or inaccuracy in a representation or warranty of an
MG Party contained in this Agreement or any other Transaction Document;
 
(b)           any breach of or default in the performance of a covenant or an
agreement contained in this Agreement or in any other Transaction Document by an
MG Party or by the Company caused by an MG Party; provided, however, that the
Seller shall not be required to indemnify, defend and hold harmless the Buyer
Indemnified Parties for an Ordinary Purim Parties Matter in respect of a Claim
arising under the License Agreement, which Claim relates to any actions or
omissions by the MG Manager in its capacity as Creative Manager which does not
arise out of the willful misconduct, bad faith or gross negligence of any of the
MG Parties);
    
(c)           any (i) Extraordinary Purim Parties Matters, and (ii) Ordinary
Purim Parties Matters to the extent such matter arises out of the willful
misconduct, bad faith or gross negligence of any of the MG Parties.
 
6.4.          Notice of Claim; Right to Participate in and Defend Third Party
Claim.
 
(a)          Notice.  If any indemnified party receives notice of the assertion
of any  claim, the commencement of any suit, action or proceeding, or the
imposition of any penalty or assessment by a Third Party in respect of which
indemnity may be sought under this Section 6 (a “Third Party Claim”), and the
indemnified party intends to seek indemnity hereunder, then the indemnified
party shall promptly provide the indemnifying party with written notice of the
Third Party Claim, but in any event not later than thirty (30) calendar days
after receipt of such notice of Third Party Claim.  The failure by an
indemnified party to notify an indemnifying party of a Third Party Claim shall
not relieve the indemnifying party of any indemnification responsibility under
this Agreement, unless such failure materially prejudices the ability of the
indemnifying party to timely defend such Third Party Claim.
 
(b)          Procedures.  The indemnifying party shall have the right to assume
and control the defense, compromise or settlement of the Third Party Claim with
its own counsel
 
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(reasonably satisfactory to the indemnified party) if the indemnifying party
delivers written notice to the indemnified party within thirty (30) days
following the indemnifying party’s receipt of notice of the Third Party Claim
from the indemnified party acknowledging its obligations to indemnify the
indemnified party with respect to such Third Party Claim in accordance with this
Section 6; provided, however, that the indemnifying party shall not enter into
any settlement of any Third Party Claim unless such settlement (1) involves only
the payment of money damages by the indemnifying party, (2) does not require the
indemnified party to pay any monies in connection therewith, (3) does not
involve any admission of liability on the part of the indemnified party, and (4)
provides for a full release in favor of the indemnified party with respect to
the matter or claim at issue.  In its defense, compromise or settlement of any
Third Party Claim, the indemnifying party shall timely provide the indemnified
party with such information with respect to such defense, compromise or
settlement as the indemnified party shall request, and shall not assume any
position or take any action that would impose an obligation of any kind on, or
restrict the actions of, the indemnified party.  The indemnified party shall
retain the right to employ its own counsel and to participate in the defense of
any Third Party Claim, the defense of which has been assumed by the indemnifying
party pursuant hereto, but the indemnified party shall bear and shall be solely
responsible for its own costs and expenses in connection with such
participation, unless (1) the indemnified party has been advised by counsel that
representation of the indemnified party and the indemnifying party by the same
counsel presents a conflict of interest under applicable standards of
professional conduct, (2) the indemnified party has been advised by counsel that
there may be legal defenses available to it which are different from or in
addition to the defenses available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for the indemnified party to
employ separate counsel or (3) the indemnifying party shall have failed to
prosecute such defense actively, diligently and in good faith.
 
(c)          Failure to Defend.  In the event that the indemnifying party does
not undertake the good faith defense, compromise or settlement of a Third Party
Claim in accordance with Section 6.4(b), the indemnified party shall have the
right to control the defense or settlement of such Third Party Claim with
counsel of its choosing; provided, however, that the indemnified party shall not
settle or compromise any Third Party Claim without the indemnifying party’s
prior written consent, which shall not be unreasonably withheld.  The
indemnifying party shall be entitled (at the indemnifying party’s expense) to
participate in the defense of any Third Party Claim with its own counsel.
 
(d)          Non Third Party Claims.  Any indemnifiable claim hereunder that is
not a Third Party Claim shall be asserted by the indemnified party by promptly
delivering notice thereof to the indemnifying party.  If the indemnifying party
does not respond to such notice within sixty (60) days after its receipt, it
shall have no further rights to contest the validity of such claim.
 
6.5.          Limitations on Indemnification.  Notwithstanding anything to the
contrary in this Section 6:
 
(a)          Any Damages for which indemnification is provided to an indemnified
party under this Agreement shall be reduced to give effect to any insurance
proceeds, indemnity, contribution or other payments or recoveries of a like
nature received by such indemnified party
 
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in connection with such Damages, net of any reasonable costs of collection with
respect to such amounts (e.g. attorneys’ fees) and the costs associated with the
net present value of any increase in the premiums with respect to such insurance
if directly caused by such recovery of insurance proceeds.
 
(b)          In determining the amount of indemnification due under this Section
6, all payments shall be net of any net tax credit, deduction, reduction or
other comparable benefit actually realized by the Company or the indemnified
party in connection with or related to Damages or the circumstances giving rise
to Damages.
 
(c)          An indemnified party shall not be entitled to multiple recoveries
for the same Damages which are the subject of indemnification under this
Agreement and under any other Transaction Document.
 
(d)          For the avoidance of doubt, with respect to any Damages hereunder
or under any of the other Transaction Documents, Section 14.08 of the Operating
Agreement is incorporated herein by reference, mutatis mutandis.
 
6.6.           Exclusive Remedy.  The parties hereto acknowledge and agree that
the sole and exclusive remedy of the indemnified parties and the Company in
respect of any and all claims relating to, in connection with, or arising out of
this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby, including, without limitation, any claims for
Damages under this Section 6, shall be satisfied solely through (i) the
indemnification provisions set forth in this Section 6 and the corresponding
indemnification provisions set forth in the other Transaction Documents, as
applicable, and (ii) the Inducement Agreement.
 
6.7.           Offset.
 
(a)           In the event that the Buyer (or any other Buyer Indemnified Party)
asserts an indemnification claim for Damages pursuant to this Section 6, then,
prior to the Buyer (or any such Buyer Indemnified Party) exercising any of its
other rights and remedies with respect to such Damages (whether under this
Agreement or any of the other Transaction Documents), the Buyer shall seek to
recover an amount equal to such Damages (the “Offset Amount”): (i) first, from
any unpaid Annual Payment, Earn-Out Consideration payments earned (whether in
each case, then payable or payable in the future) or Additional Payment payable
in the future until all of such payments have been offset in full; and (ii)
second, from any distributions to the MG Member under the Operating Agreement
which are reasonably expected by both Managers to be due and payable within the
then current fiscal quarter or the next succeeding fiscal quarter of the
Company, an amount equal to such Damages.  In connection with the exercise of
any offset right, Buyer shall deliver to Seller a notice of Buyer’s intent to
offset (an “Offset Notice”).  Each Offset Notice shall (x) allege the
circumstances under which indemnification under Section 6 of the Buyer or other
Buyer Indemnified Party is appropriate and (y) state the Offset Amount.  The
exercise of the right of offset by the Buyer in good faith, in connection with a
good faith claim for indemnification (regardless of the outcome of such claim)
shall not constitute a breach of this Agreement or any other Transaction
Document. Such right
 
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of offset shall be exercisable by the Buyer without regard to any assignment,
transfer or disposition of any membership interests in the Company by the Seller
(or any Permitted Transferee).
 
(b)           Upon Seller’s receipt of the Offset Notice, (i) if the Seller and
Buyer have agreed in writing to the Buyer’s or other Buyer Indemnified Party’s
entitlement to the Offset Amount or the Buyer’s or other Buyer Indemnified
Party’s entitlement to the Offset Amount has otherwise been determined in
accordance herewith, such amounts shall be applied to the payment to the
respective Buyer Indemnified Party of any such indemnification obligation,
and/or (ii) if the Seller and the Buyer have not agreed in writing to the Buyer
Indemnified Party’s entitlement to the Offset Amount or the Buyer Indemnified
Party’s entitlement to the Offset Amount has not otherwise been determined in
accordance with this Agreement, the Offset Amount shall be paid to an escrow
agent reasonably acceptable to both the Seller and the Buyer, with such amounts
to be held by such escrow agent.  If Seller and Buyer do not agree on an escrow
agent within five Business Days, Buyer shall be entitled to deposit such amount
in escrow with a bank, trust company or savings and loan association which is
organized under the laws of the United States or any state thereof having
combined capital and surplus aggregating in excess of $50 million.  Any escrow
agreement shall provide for the disposition of funds in a manner consistent with
the terms of this Agreement, so that upon resolution of the indemnification
claim, the escrowed funds shall be disbursed to the appropriate party.
 
7.           Certain Covenants.
 
7.1.           Cooperation/Further Assurances.  From and after the date hereof,
each of the parties hereto hereby agrees: (a) to fully cooperate with the other
parties hereto in preparing and filing any notices, applications, reports and
other instruments and documents and (b) to execute, acknowledge, deliver, file
and/or record, or cause such other parties to the extent permitted by law to
execute, acknowledge, deliver, file and/or record such other documents, which
may be required by this Agreement, or which are necessary in the reasonable
opinion of any of the parties hereto or their respective legal counsel, to
consummate the transactions contemplated by this Agreement.
 
8.           General Provisions.
 
8.1.           Fees and Expenses.  Except as set forth in this Agreement, each
of the parties hereto shall bear its own expenses in connection with the
transactions contemplated hereby.   Notwithstanding anything to the contrary
contained herein, the Company shall not bear any transaction costs, including
attorneys’ fees, relating to the negotiation and execution of the Transaction
Documents other than filing fees, registration fees, and other similar
out-of-pocket costs relating to limited liability company and intellectual
property matters.
 
8.2.           Confidentiality.   Each of the Seller and the Buyer shall
maintain the terms and conditions of this Agreement in confidence and except in
accordance with the immediately succeeding sentence, shall not disclose any such
information to a third party, other than (i) to its officers, directors,
employees, advisors, attorneys or accountants who need to know and who agree to
keep such information confidential, (ii) any rating agency, (iii) to its actual
or proposed lenders or other financing sources having been made aware of the
restrictions set forth in this Section 8.2 and who agree to keep such
information confidential, (iv) to the extent
 
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disclosure is required by law, statute, rule, regulation or judicial process
(including, but not limited to, applicable securities laws) or (v) upon the
lawful demand of any court or agency or regulator having jurisdiction over such
Person (including, but not limited to, any securities regulatory authority,
including rating agencies and national securities exchanges, to which the
disclosing Member is subject) or make any unauthorized use thereof.  If any
party breaches, or threatens to commit a breach of, any of the provisions of
this Section 8.2, the other party shall have all rights and remedies available
to such Persons at law or in equity under this Agreement or otherwise,
including, without limitation, the right and remedy of injunctive relief
(without the necessity of posting any bond or security) and to have each and
every one of the restrictive covenants in this Section 8.2 specifically enforced
by any court of competent jurisdiction, it being agreed that any breach or
threatened breach of these restrictive covenants would cause irreparable injury
and that money damages would not provide an adequate remedy.  Notwithstanding
the foregoing, Buyer may disclose this Agreement in its reports, registration
statements and other documents required to be filed with the Securities and
Exchange Commission and may file this Agreement as an exhibit to such applicable
regulatory agencies or any national securities exchange in connection therewith.
 
8.3.           Publicity.  The parties shall consult with each other before
issuing any press release with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such press release or make any such
public statement without the prior consent of the other parties, which shall not
be unreasonably withheld, conditioned or delayed; provided, however, that any
party may, without the prior consent of the other parties (but after prior
consultation, to the extent practicable in the circumstances) issue such press
release or make such public statement as may upon the advice of outside counsel
be required by law or the rules and regulations of the NASDAQ or the rules of
any other applicable exchange, or applicable law.
 
8.4.           Legal Fees in Event of Dispute.  In the event of any dispute
between the parties to enforce or interpret any provision or right hereunder,
the unsuccessful party to such dispute covenants and agrees to pay to the
successful party all costs and expenses reasonably incurred, including, without
limitation, reasonable attorneys’ fees and disbursements, it being understood
and agreed that the determination of the “successful party” shall be included in
the matters which are the subject of such dispute.
 
8.5.           Notices.  All notices and other communications (collectively,
“Communications”) given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made as of the date of receipt or failure to
accept receipt if delivered personally, by overnight courier or mailed by
registered or certified mail (postage prepaid, return receipt requested) or by
facsimile transmittal, confirmed by certified or registered mail, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
 
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If to the Buyer:
Iconix Brand Group, Inc.
1450 Broadway, 4th Floor
New York, New York 10018
Attn: Neil Cole, CEO
Fax: (212) 391-0127
   
with copies to:
Blank Rome LLP
405 Lexington Avenue
New York, New York 10174
Attn: Robert J.  Mittman, Esq.
Fax: (212) 885-5001
   
If to the Seller:
Purim LLC
c/o Nigro Karlin Segal & Feldstein, LLP
810 Seventh Ave, Suite 1701
New York, NY 10019
Attn:  Richard Feldstein
Fax:  (212) 765-3299
   
with copies to:
Grubman Indursky & Shire, PC
152 West 57th Street
New York, New York 10019
Attn:                      David R. Toraya, Esq. and
Michael K. Goldsmith, Esq.
Facsimile:  (212) 554-0444

 
All Communications required or permitted hereunder shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed facsimile if sent during normal business hours of the recipient, or if
not during such hours, then on the next Business Day, (c) five (5) Business Days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) three (3) Business Days after deposit with
FedEx or other overnight courier, specifying delivery by such date, with written
verification of receipt.  The designation of the Person to receive such
Communications on behalf of a party or the address of any such Person for the
purposes of such Communications may be changed from time to time by written
notice given to the other party pursuant hereto.

8.6.           Knowledge.  For purposes of this Agreement, “knowledge” and any
other words or phrases bearing on the knowledge or awareness as to any specified
matters of: (a) the Buyer, shall mean the actual knowledge of any of Neil Cole,
Andrew Tarshis, and Warren Clamen as to the existence or absence of facts or
circumstances that are the subject of such representations and warranties
without any additional inquiry required or presumed, whether individually or
collectively, and (b) the Seller, shall mean the actual knowledge of any of M or
G/O as to the existence or absence of facts or circumstances that are the
subject of such representations and warranties without any additional inquiry
required or presumed, whether individually or collectively; provided, that, with
respect to any existing agreements to which any MG Party or Iconix Party, as the
case may be, is a party, “actual knowledge” shall mean the actual knowledge of
the applicable Persons listed above, after reasonable inquiry.
 
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8.7.           Dollar Amounts.  All dollar amounts in this Agreement are stated,
and shall be interpreted to be, in United States dollars.
 
8.8.           Amendment.  This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
 
8.9.           Severability.  If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party.  Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the greatest extent possible.
 
8.10.          Entire Agreement.  This Agreement (together with the Exhibits and
Schedules annexed hereto and incorporated herewith) and the Transaction
Documents constitute the entire agreement, and supersede all prior agreements
and undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and thereof.
 
8.11.          No Assignment.  This Agreement and each and every provision
hereof shall be binding and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.  This Agreement (including any
right to receive, or obligation to make, any Annual Payments, Earn-Out
Consideration and Additional Payments) shall not be assigned by any party
hereto, and any such assignment shall be null and void, unless the non-assigning
party consents to such assignment in writing, except that (i) the Buyer may
assign its rights, interests and obligations hereunder to a Controlled Affiliate
or other Permitted Transferee thereof without prior written consent (A) so long
as such Controlled Affiliate or other Permitted Transferee agrees in writing
with the Seller that it is bound by the obligations of the Buyer hereunder and
(B) provided that no such assignment shall discharge Buyer from its liabilities
and obligations under Section 3 hereunder, as to which Buyer shall remain
primarily liable, and (ii) the Seller may assign its rights, interests and
obligations hereunder to a Controlled Affiliate or other Permitted Transferee
thereof without prior written consent so long as such long as such Controlled
Affiliate or Permitted Transferee agrees in writing with the Buyer that it is
bound by the obligations of the Seller hereunder.
 
8.12.          Headings.  Headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
 
8.13.          Schedules.  All references in this Agreement to Schedules shall
mean the schedules identified in this Agreement, which are incorporated into
this Agreement and shall be deemed a part of the representations and warranties
to which they relate.  For purposes of this Agreement, information which is
necessary to make a given Schedule complete and accurate, but is omitted
therefrom, shall nevertheless be deemed to be contained therein if it is
contained on any other Schedule attached hereto; but only if such information
appears on such other Schedule in such form and detail that it is responsive to
the requirements of such given Schedule.
 
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8.14.           Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York applicable to
agreements made and performed wholly therein, without regard to its choice of
law principles.  Each party hereby irrevocably and unconditionally consents to
submit to the jurisdiction of the courts of the State of New York and of the
United States located in the County of New York, State of New York for any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating thereto
except in such courts), waives any objection to the laying of venue of any such
litigation in such courts and agrees not to plead or claim that such litigation
brought in any such courts has been brought in an inconvenient forum.  Each
party hereby waives any right it may have to a trial by jury with respect to any
action or proceeding arising out of or relating to this Agreement.
 
8.15.           Gender and Number.  Where appropriate, the masculine gender
shall be deemed to include the feminine, the feminine gender shall be deemed to
include the masculine, the singular number shall be deemed to include the
plural, and the plural number shall be deemed to include the singular.
 
8.16.           Counterparts.  This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.  Telefacsimile
transmissions of any executed original document and/or retransmission of any
executed telefacsimile transmission shall be deemed to be the same as the
delivery of an executed original.  At the request of any party hereto, the other
parties hereto shall confirm telefacsimile transmissions by executing duplicate
original documents and delivering the same to the requesting party or parties.
 
8.17.           Waivers and Amendment.  All rights and remedies hereunder and
under the other Transaction Documents are cumulative and not alternative.  No
failure or delay on the part of the Buyer or the Seller in the exercise of any
power, right or privilege hereunder or thereunder shall impair such power, right
or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.  Each amendment, modification or waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given.

 
-Signature Page Follows-
 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first written above.
 

 
BUYER:
 
ICONIX BRAND GROUP,  INC.
         
  
By:
/s/ Neil Cole       Name: Neil Cole       Title: President and Chief Executive
Officer  

 

 
SELLER:

PURIM LLC
         
  
By:
/s/ Madonna Ciccone       Name: Madonna Ciccone       Title: Managing Member  

 
[Signature Page To Membership Interest Purchase Agreement]
 
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Schedule 4.8
Liabilities and Business Operations
 
Liabilities

The Company has incurred liabilities in the ordinary course of business in
connection with its formation, and certain registrations of intellectual
property.  At or about the time of the execution and delivery of this Agreement,
the Company will be entering into the Transaction Documents to which it is a
party and the Macy’s Agreement.
 
Business Operations
 
The Company has engaged in negotiations relating to the Transaction Documents
and, in connection therewith, is entering into the License Agreement and the
Macy’s Agreement.
 
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