EXHIBIT 10.101

 

I.C. ISAACS & COMPANY, INC.

STOCKHOLDERS’ AGREEMENT

 

                This STOCKHOLDERS’ AGREEMENT (the “Agreement”) dated October 3,
2002 is by and among I.C. Isaacs & Company, Inc., a Delaware corporation having
its principal office and place of business at 3840 Bank Street, Baltimore,
Maryland 21224-2522 (the “Company”), and the Persons (as hereinafter defined)
whose names are set forth in Schedule A hereto (the “Stockholders” and each a
“Stockholder”).

 

RECITALS

 

                WHEREAS, Textile Investment International S.A., a Luxembourg
corporation (“Textile Investment”), a wholly–owned subsidiary of Würzburg
Holding S.A., a Luxembourg corporation, also known in abbreviation as Würzburg
S.A. (“Würzburg”), has acquired from Ambra Inc., a Delaware corporation
(“Ambra”), shares of Common Stock, par value $.0001 per share, of the Company
(the “Common Stock”), and Series A Convertible Preferred Stock, par value $.0001
per share, of the Company (the “Preferred Stock”) representing, in the aggregate
and upon conversion of the Preferred Stock, Three Million Nine Hundred Sixty-Six
Thousand Six Hundred Sixty–Seven (3,966,667) shares of Common Stock (the
“Subsequently Acquired Stock”); and

 

                WHEREAS, prior to Textile Investment’s acquisition of the Common
Stock and the Preferred Stock from Ambra, each Stockholder held the number of
shares of Common Stock set forth opposite its name on Schedule A hereto (the
“Initial Stock”); and

 

                WHEREAS, the Company and the Stockholders desire to establish in
this Agreement certain terms and conditions regarding the acquisition and
disposition of securities of the Company by the Stockholders and the
Stockholders’ relationship with the Company.

 

                NOW, THEREFORE, in consideration of the foregoing, and of the
mutual covenants and agreements hereinafter provided, the parties to this
Agreement, on behalf of themselves and their successors and assigns, agree as
follows:

 

1.                                       DEFINITIONS

 

                As used in this Agreement, the following terms shall have the
following meanings:

 

                Affiliate. Affiliate shall have the meaning set forth in
Rule 12b-2 promulgated under the Exchange Act, but shall include, in the case of
a Person who is an individual, any relative or spouse of such Person or any
relative of such spouse, any of whom has the same home as such Person.

 

                Beneficial Ownership. Beneficial Ownership with respect to any
Equity Securities shall mean having “beneficial ownership” of such Equity
Securities as determined pursuant to Rule 13d-3 promulgated under the Exchange
Act, but omitting the words “within 60 days” from Subsection (d)(1)(i) of such
definition.

 

                Board of Directors. Board of Directors shall mean the Board of
Directors of the Company.

 

                Budget. Budget shall mean for fiscal year 2002, the budget
attached hereto as Exhibit A. For each fiscal year after 2002, Budget shall mean
the budget substantially in the form of Exhibit A prepared by Senior Executives
for such year and approved by the Board of Directors by a Supermajority Vote at
least thirty (30) days prior to the commencement of such fiscal year. If no
Budget for a fiscal year is approved by the Board of Directors by a
Supermajority Vote at least thirty (30) days prior to the beginning of a fiscal
year, until such time as a budget for such fiscal year is approved as set forth
herein, expenses, by category (as such categories are set forth in Exhibit A
hereto), for such fiscal year shall be in the same proportion to sales of the
Company for such fiscal year as the proportion of expenses, by category (as such
categories are set forth in Exhibit A hereto), to sales of the Company for the
fiscal year immediately preceding such fiscal year.

 

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                Class I Directors. Class I Directors shall mean the Directors
elected to serve until the 2004 Annual Meeting of Stockholders.

 

                Class II Directors. Class II Directors shall mean the Directors
elected at the 2002 Annual Meeting of Stockholders to serve until the 2005
Annual Meeting of Stockholders.

 

                Class III Directors. Class III Directors shall mean the
Directors elected to serve until the 2003 Annual Meeting of Stockholders.

 

                Code. Code shall mean the Internal Revenue Code of 1986, as
amended.

 

                Common Stock. Common Stock shall have the meaning set forth in
the Recitals of this Agreement.

 

                Company. Company shall have the meaning set forth in the first
paragraph of this Agreement.

 

                Company Directors. Company Directors shall mean (i) the
Company’s Chief Executive Officer and (ii) the Company’s President—Girbaud
Division, or (iii) if such positions are vacant or do not exist, the Chief
Executive Officer and the President—Girbaud Division are the same person, or for
whatever reason either or both of the individuals referred to in (i) and
(ii) above cannot serve, such officers of the Company as are proposed by a
majority of the Directors other than the Satisfactory Nominees.

 

                Company–Nominated Independent Directors. Company–Nominated
Independent Directors shall have the meaning set forth in Section 3.01(b)
hereof.

 

                Company Process Agent. Company Process Agent shall have the
meaning set forth in Section 13 of this Agreement.

 

                Directors. Directors shall mean the members of the Board of
Directors of the Company.

 

                Exchange Act. Exchange Act shall mean the Securities Exchange
Act of 1934, as amended.

 

                Equity Rights. Equity Rights shall mean, with respect to any
Person, any subscriptions, options, warrants, commitments, purchase rights,
preemptive rights or agreements of any kind (including any stockholders’ or
voting trust agreements) for the issuance, sale, or voting of, any Equity
Securities in such Person.

 

                Equity Securities. Equity Securities of any Person shall mean
any capital stock of any class, partnership interests, membership interests, or
other ownership interests of any kind, in such Person, or securities convertible
into shares of capital stock of any class, partnership interests, membership
interests, or other ownership interests of any kind, in such Person.

 

                Extraordinary Transaction. Extraordinary Transaction means any
of the following in any one or more transactions: (i) any merger, consolidation,
share exchange or other business combination of the Company or any Subsidiary;
(ii) any sale, lease, pledge, granting of a security interest in, or exchange of
substantially all of the assets of the Company or any Subsidiary; (iii) the
disposal of a material amount of assets of the Company or any Subsidiary other
than in the normal course of business in a transaction involving a member of an
Investor Group; (iv) any issuance by the Company or any Subsidiary of Equity
Rights or Equity Securities to any member of an Investor Group; (v) the adoption
of any plan or proposal for liquidation or dissolution of the Company; (vi) the
making or granting by the Company or any Subsidiary of any loan, advance,
guarantee, pledge or other financial assistance or tax benefit to any member of
an Investor Group, directly or indirectly; (vii) any other material contract,
arrangement or agreement, including without limitation any agreement for the
redemption of Stock, involving the Company or any Subsidiary and a member of an
Investor Group; (viii) any termination, nonrenewal or amendment of or waiver of
any of the terms of, any agreement between the Company or any Subsidiary and any
member of an Investor Group; (ix) any merger, tender offer, reverse stock split
or other transaction that would result in the Company ceasing to be a reporting
company pursuant to

 

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Section 12 of the Exchange Act or in the Common Stock ceasing to be listed on
any of (a) the OTC Bulletin Board, (b) the Nasdaq Stock Market or (c) a national
exchange; or (x) any transaction involving the Company or any Subsidiary
(whether or not involving a member of an Investor Group) and including, without
limitation, any reclassification of securities (including a reverse stock
split), recapitalization or reorganization of the Company, any self-tender offer
or a repurchase of Equity Rights or Equity Securities of the Company by the
Company or any Subsidiary or any other transaction (whether or not with or into
or otherwise involving a member of an Investor Group) which in any such case has
the effect, directly or indirectly, of increasing the proportionate Beneficial
Ownership by any member of an Investor Group of the outstanding shares of any
class of Equity Securities of the Company or any Subsidiary.

 

                Independent Director. Independent Director shall mean any one
(1) of the Independent Directors.

 

                Independent Directors. Independent Directors shall mean
Directors who are (apart from such directorship) independent of, and otherwise
not affiliated with, any Stockholder, the Company or any Subsidiary, or any
Affiliate of any of the foregoing, and none of whom shall be a current or former
officer, employee, consultant or adviser (financial, legal or other) or
Affiliate of any Stockholder, the Company or any Subsidiary or any Affiliate of
any of the foregoing. Notwithstanding the foregoing, the Independent Directors
shall not include any person unless such person has business experience, stature
and character that is commensurate with service on the board of a publicly-held
enterprise and would be deemed an independent director for purposes of Nasdaq
Marketplace Rule 4200(a)(14). Notwithstanding anything in this definition to the
contrary, the Company and the Stockholders agree that each of Jon Hechler and
Neal J. Fox shall be deemed to meet the criteria for Independent Directors set
forth in this definition.

 

                Initial Stock. Initial Stock shall have the meaning set forth in
the Recitals of this Agreement.

 

                Investor Group. Investor Group shall mean (i) the Stockholders,
(ii) any Affiliates of Stockholders, and/or (iii) any Person with whom any of
the Stockholders is part of a 13D Group.

 

                Partnership. Partnership shall mean I.C. Isaacs & Company L.P.,
a Delaware limited partnership.

 

                Person. Person shall mean any individual, corporation,
partnership, limited liability company, association, joint venture or trust.

 

                Preferred Stock. Preferred Stock shall have the meaning set
forth in the Recitals of this Agreement.

 

                Process Agent. Process Agent shall have the meaning set forth in
Section 13 of this Agreement.

 

                Quarterly Payment Amounts. Quarterly Payment Amounts shall have
the meaning set forth for such term in the Subordinated Secured Promissory Note.

 

                Quarterly Payment Dates. Quarterly Payment Dates shall have the
meaning set forth for such term in the Subordinated Secured Promissory Note.

 

                SEC. SEC shall mean the U.S. Securities and Exchange Commission.

 

                Satisfactory Nominee. Satisfactory Nominee shall mean a person
who is (i) a Stockholder Director or (ii) a Stockholder–Nominated Independent
Director.

 

                Securities Act. Securities Act shall mean the Securities Act of
1933, as amended.

 

                Senior Executives. Senior Executives shall mean the following
executive officers of the Company only: (i) the President and the Chief
Executive Officer, (ii) the Chief Financial Officer and (iii) the
President—Girbaud Division.

 

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                Senior Executive Employment Agreements. Senior Executive
Employment Agreements shall mean (i) that certain Executive Employment Agreement
by and between Robert J. Arnot and the Partnership, and, for the limited
purposes set forth therein, the Company, dated as of April 17, 2002; (ii) that
certain Executive Employment Agreement by and between Daniel Gladstone and the
Partnership and, for the limited purposes set forth therein, the Company, dated
as of April 17, 2002; and (iii) that certain Executive Employment Agreement by
and between Eugene C. Wielepski and the Partnership and, for the limited
purposes set forth therein, the Company, dated as of April 17, 2002.

 

                Stock. Stock shall mean the Initial Stock, the Subsequently
Acquired Stock and any Equity Securities of the Company or any of its successors
or assigns hereinafter issued or paid, directly or indirectly, in respect of the
Initial Stock and/or the Subsequently Acquired Stock pursuant to the exercise of
any conversion rights, any stock split, stock dividend, recapitalization,
merger, share exchange or otherwise.

 

                Stockholder. Stockholder shall have the meaning set forth in the
first paragraph of this Agreement.

 

                Stockholder Director. Stockholder Director shall mean any
Director who is (a) a Stockholder (if such Stockholder is an individual),
(b) any person who is a current or former officer, employee, partner, owner,
consultant or advisor (financial, legal or other) or Affiliate of any
Stockholder, and (c) any other person proposed by a Stockholder who is not a
Stockholder–Nominated Independent Director and who, in the case of (a), (b) or
(c), at the time of nomination or appointment to the Board of Directors shall
have been satisfactory to the Board of Directors, as determined in its exercise
of its fiduciary duties to the stockholders of the Company.

 

                Stockholder–Nominated Independent Director.
Stockholder–Nominated Independent Director shall have the meaning set forth in
Section 3.01(b) hereof.

 

                Stockholders. Stockholders shall have the meaning set forth in
the first paragraph of this Agreement.

 

                Subordinated Secured Promissory Note. Subordinated Secured
Promissory Note shall mean the Amended and Restated Subordinated Secured
Promissory Note of the Company dated as of May 21, 2002 made payable to the
order of Textile Investment and having an original principal amount of Six
Million Five Hundred Fifty– Seven Thousand Nine Hundred Eight and 53/100 Dollars
($6,557,908.53).

 

                Subsequently Acquired Stock. Subsequently Acquired Stock shall
have the meaning set forth in the Recitals of this Agreement.

 

                Subsidiary. Subsidiary shall mean any Person of which more than
fifty percent (50%) of the outstanding Equity Securities having voting power
generally in the election of directors is Beneficially Owned, directly or
indirectly, by the Company, and shall include, without limitation, the
Partnership.

 

                Supermajority Vote. Supermajority Vote shall mean the
affirmative vote of a number of Directors equal to at least two-thirds (2/3) of
the total number of seats on the Board of Directors (including any seats that
are, at the time of such vote, vacant).

 

                13D Group. 13D Group shall mean any group of Persons who, with
respect to the acquiring, holding, voting or disposing of Voting Securities
would, assuming ownership of the requisite percentage thereof, be required under
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder to file a statement on Schedule 13D with the SEC as a “person” within
the meaning of Section 13(d)(3) of the Exchange Act, or who would be considered
a “person” under Section 13(g)(3) of the Exchange Act.

 

                382 Affiliate. 382 Affiliate shall have the meaning set forth in
Section 2.01 hereof.

 

                2002 Annual Meeting of Stockholders. 2002 Annual Meeting of
Stockholders shall mean the 2002 annual meeting of stockholders of the Company
and any adjournments or postponements thereof.

 

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                Transfer. Transfer shall mean to sell, assign, pledge, grant a
security interest in, hypothecate or otherwise to transfer, voluntarily or
involuntarily, by operation of law or otherwise.

 

                Vote of the Independent Directors. Vote of the Independent
Directors shall mean the affirmative vote of at least a majority of the
Independent Directors, provided that such affirmative vote of at least a
majority of the Independent Directors shall not constitute a Vote of the
Independent Directors unless (a) such affirmative vote of at least a majority of
the Independent Directors includes the affirmative vote of not fewer than one
(1) Independent Director who is not a Satisfactory Nominee, and (b) at the time
of such vote, there shall be no fewer than two (2) Independent Directors who are
not Satisfactory Nominees; provided that preceding clause (b) of this definition
shall not be applicable with respect to a vote taken when one
(1) Company–Nominated Independent Director position is vacant if such position
shall have been vacant for a period of more than thirty (30) consecutive days
without a replacement Company–Nominated Independent Director having been
proposed as a nominee to fill such vacant position of Company–Nominated
Independent Director in accordance with Section 3.01(b) hereof.

 

                Voting Securities. Voting Securities shall mean any outstanding
securities or other interests entitling the holder thereof to vote generally in
the election of directors or managers of a Person.

 

2.                                       RESTRICTIONS ON TRANSFERS AND
ACQUISITIONS

 

                2.01.        Restrictions on Transfer.  No Stockholder may
Transfer any interest in the Stock except to (i) the Company, (ii) an Affiliate
of such Stockholder, (iii) any Person pursuant to Rule 144 promulgated under the
Securities Act, provided that no such Transfers under this clause (iii) are made
to any Person that has (together with its Affiliates and any Persons that are,
together with such Person and/or any of its Affiliates, part of any 13D Group,
after giving effect to such Transfer) Beneficial Ownership of Equity Securities
representing more than 5% of the total Equity Securities of the Company, or
(iv) any Person pursuant to an exemption to the registration requirements of the
Securities Act, provided that the approval requirements of Section 3.05 hereof
are satisfied; provided further that the restrictions contained in this
Agreement shall continue to be applicable to the Stock following any transfer
pursuant to (ii) or (iv) above, and the transferees of any Stock pursuant to
(ii) and (iv) above shall have executed and delivered to the Company an
Instrument of Accession substantially in the form attached hereto as Exhibit B.
Notwithstanding the foregoing, from and after the date hereof and to and
including November 14, 2004, neither the Stockholders nor any other Person(s)
the ownership of securities by which would be attributable to the Stockholders
for purposes of applying Section 382 of the Code (a “382 Affiliate”), shall
Transfer, directly or indirectly, any Equity Security or Equity Rights of the
Company if such Transfer, together with all other acquisitions and/or
dispositions of Equity Securities or Equity Rights of the Company prior to
and/or subsequent to the date hereof involving any one or more of (i) Textile
Investment, (ii) Würzburg, (iii) any 382 Affiliate, and (iv) any other party (to
the extent that the relevant acquisition or disposition involving such other
party is actually known to the Stockholders or Latitude Licensing Corp. or is
reported pursuant to the Exchange Act), would result in an “ownership change”
within the meaning of Section 382 of the Code.

 

                2.02.        Transfers in Breach of this Agreement.  In the
event of any Transfer of Stock in breach of this Agreement, commencing
immediately upon the time of such attempted Transfer, (a) such Transfer shall be
void and of no effect, (b) no dividend of any kind or any distribution pursuant
to any liquidation, redemption or otherwise shall be paid by the Company to the
purported transferee in respect of such Stock (all such rights to payment by the
transferring Stockholder and/or the purported transferee being deemed waived),
and (c) neither the transferring Stockholder nor the purported transferee shall
be entitled to exercise any such rights with respect to such Stock until such
Transfer in breach of this Agreement has been rescinded.

 

 

 

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2.03                           RESTRICTIONS ON ACQUISITIONS

 

                From and after the date hereof and to and including November 14,
2004, neither the Stockholders nor any 382 Affiliate, shall acquire, directly or
indirectly, any Equity Securities or Equity Rights of the Company if such
acquisition, together with all other acquisitions and/or dispositions of Equity
Securities or Equity Rights of the Company prior to and/or subsequent to the
date hereof involving any one or more of (i) Textile Investment, (ii) Würzburg,
(iii) any 382 Affiliate, and (iv) any other party (to the extent that the
relevant acquisition or disposition involving such other party is actually known
to the Stockholders or Latitude Licensing Corp. or is reported pursuant to the
Exchange Act), would result in an “ownership change” within the meaning of
Section 382 of the Code.

 

3.                                       VOTING PROVISIONS

 

                3.01.        Nomination of Satisfactory Nominees.  (a)  At all
times during the term of this Agreement, the Company and the Stockholders shall
use their best efforts to cause the composition of the Board of Directors to
reflect the following proportionate representation of Stockholder Directors,
Company Directors and Independent Directors and to cause the Satisfactory
Nominees to be apportioned as evenly as possible among the Class I Directors,
Class II Directors and Class III Directors:

 

                                                Three (3) Stockholder Directors

                                                Two (2) Company Directors

                                                Four (4) Independent Directors

 

                                                                                               
(b)           At each annual meeting of stockholders of the Company at which the
term of any Independent Director is to expire and at any time that a vacancy of
an Independent Director on the Board of Directors is to be filled, the identity
of the person nominated by the Company to stand for election to the Board of
Directors or to be appointed to fill such vacancy, as the case may be, shall be
determined in the following manner. If the term of any Independent Director
initially proposed by the Stockholders or, thereafter, of any Independent
Director proposed by the committee referred to in this sentence (each, a
“Stockholder– Nominated Independent Director” and, collectively, the
“Stockholder–Nominated Independent Directors”), expires or such position on the
Board of Directors becomes vacant, a committee of Directors, a minority of whom
shall consist of Directors other than Satisfactory Nominees, shall propose to
the Board of Directors the nominee to serve as an Independent Director on the
slate to be recommended by the Board of Directors to fill such vacancy. If the
term of any Independent Director initially proposed by the Senior Executives or,
thereafter, of any Independent Director proposed by the committee referred to in
this sentence (each, a “Company–Nominated Independent Director” and,
collectively, the “Company–Nominated Independent Directors”), expires or such
position on the Board of Directors becomes vacant, a committee of Directors, a
minority of whom shall consist of Directors who are Satisfactory Nominees, shall
propose to the Board of Directors the nominee to serve as an Independent
Director on the slate to be recommended by the Board of Directors to fill such
vacancy. The Board of Directors shall approve the Independent Directors proposed
in accordance with the preceding two (2) sentences unless the Board of Directors
determines that to do so would constitute a breach of its fiduciary obligations
to the Company’s stockholders. For purposes of this Agreement, Neal J. Fox and
Jon Hechler (assuming he was elected to the Board of Directors at the 2002
Annual Meeting of Stockholders) shall be deemed to be Independent Directors
initially proposed by the Senior Executives.

 

                                                                                               
(c)           For purposes of this Agreement, (i) the Company shall be
considered to have used its “best efforts,” as required in Subsection (a), if it
causes each Satisfactory Nominee and each Company Director whose class then
stands for election to be included in the slate of nominees recommended by the
Board of Directors to the Company’s stockholders for election as directors and
uses all reasonable efforts to cause the election of such Satisfactory Nominees
and Company Nominees, including the solicitation of proxies in favor of the
election of such persons, and (ii) the Stockholders shall be considered to have
used their “best efforts,” as required in Subsection

 

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                                                                (a)          
above, if in each election of Directors they vote the Stock in favor of the
Stockholder Directors, the Company Directors and the Independent Directors.

 

                3.02.        Declassification of the Board of Directors.  The
Company shall include in its proxy statement for the annual meeting of
stockholders to be held in 2003 a proposal that the Amended and Restated
Certificate of Incorporation of the Company be amended to declassify the Board
of Directors and shall recommend to the stockholders of the Company that such
proposal be approved.

 

                3.03.        Committees.  The Board of Directors will not
establish any committee authorized to exercise the power of the Board of
Directors unless (i) the Directors who are not Satisfactory Nominees are granted
representation on such committee consistent with the proportions of the total
number of Directors who are not Satisfactory Nominees to the total number of
Directors as described in Section 3.01(a) and (b) hereof, or (ii) in the case of
the Audit Committee and Compensation Committee, such committees consist of equal
numbers of Stockholder–Nominated Independent Directors and Company–Nominated
Independent Directors. A committee of five (5) Directors having as its members
two (2) Directors who are not Satisfactory Nominees and three (3) Directors who
are Satisfactory Nominees shall be deemed to satisfy the requirements of
clause (i) of the preceeding sentence. The Board of Directors shall not
establish or employ committees as a means designed to circumvent the purposes of
this Agreement.

 

                3.04.        Voting Provisions.  Except for any Extraordinary
Transaction approved by a Vote of the Independent Directors pursuant to
Section 3.05 hereof, the Company shall not take, or cause or permit any
Subsidiary to take, any of the following actions without approval by the Board
of Directors by a Supermajority Vote:

 

                                                                                               
(a)           the creation of any new Subsidiary which is in any way
advantageous or preferential to any member of an Investor Group;

 

                                                                                               
(b)           the entering into by the Company or any of its Subsidiaries of any
joint ventures, partnerships or profit sharing agreements;

 

                                                                                               
(c)           the guarantee by the Company or any Subsidiary of the debts or
obligations of any entity other than a wholly–owned Subsidiary;

 

                                                                                               
(d)           the entering into by the Company or any Subsidiary of any new
supplier or distribution agreements;

 

                                                                                               
(e)           any media expenditures or sponsorships by the Company or any
Subsidiary inconsistent with past practice;

 

                                                                                               
(f)            any material change to, or deviations from, the Budget;

 

                                                                                               
(g)           the hiring and termination of any of the Senior Executives;

 

                                                                                               
(h)           the loaning or advancing of money by, or bank overdrafts on any
account of, the Company or any Subsidiary in excess of $750,000 outstanding at
any time;

 

                                                                                               
(i)            the use of cash or other assets of the Company or any Subsidiary,
or the incurring of any liability by the Company or any Subsidiary, in
connection with the opening of any retail stores, outlets or other retail
distribution outlets; provided, however, that nothing in this subsection shall
prevent the Company or any Subsidiary from entering into franchise agreements
allowing franchisees to open retail stores or outlets using trademarks owned by
or licensed to the Company or any Subsidiary (to the extent that such franchise
agreements do not result in any significant cost to, or the incurrence of
liability by, the Company or any Subsidiary);

 

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(j)            the incurring by the Company or the Partnership of any costs or
liabilities, including without limitation liabilities pursuant to any pledge,
granting of a security interest, or guaranty, not directly related to the
apparel business of the Company or the Partnership;

 

                                                                                               
(k)           any prepayment of the Subordinated Secured Promissory Note; or

 

                                                                                               
(l)            the making of any quarterly installment of principal and interest
on the Subordinated Secured Promissory Note in the Quarterly Payment Amounts on
the corresponding Quarterly Payment Dates set forth in the Subordinated Secured
Promissory Note unless the Partnership has an average of at least Two Million
Five Hundred Thousand Dollars ($2,500,000) of availability under its line of
credit from Congress Financial Corporation (including its successors and
assigns) during the forty-five (45) day period immediately prior to such
Quarterly Payment Date.

 

                3.05.        Special Approval of Extraordinary Transaction.  The
Company shall not engage in, and shall not cause or permit any Subsidiary to
engage in, any Extraordinary Transaction unless it is determined by a Vote of
the Independent Directors that such Extraordinary Transaction is fair to the
public stockholders of the Company without taking into account any effect of the
stock ownership of the Stockholders and their Affiliates. In making such
determination, the Independent Directors shall be entitled, in their sole
discretion and at the expense of the Company, to retain the services of
independent legal counsel and independent financial advisors to advise them
regarding their fiduciary duties and the overall fairness of the transaction.

 

                3.06.        Covenants of Stockholders.

 

                                                                                               
(a)           Except by virtue of the Stockholders’ representation on the Board,
neither the Stockholders nor any of their Affiliates shall act, alone or in
concert with others, to seek to control the day-to-day management of the Company
or Board of Directors.

 

                                                                                               
(b)           Neither the Stockholders nor any of their Affiliates shall, either
alone or in concert with others, (i) initiate or propose any stockholder
proposal or stockholder nominations or make, or in any way participate in,
directly or indirectly, any “solicitation” of “proxies” to vote, or seek to
influence any Person with respect to the voting of, any voting securities, or
become a “participant” in a “solicitation” (as such terms are defined in
Regulation 14A promulgated under the Exchange Act, as in effect as of the date
hereof) in contravention of any of the provisions of this Agreement;
(ii) otherwise act in contravention of the purposes of this Agreement or
(iii) advise, assist or encourage or finance other Persons in connection with
any of the foregoing types of activities.

 

4.                                       LEGENDS ON CERTIFICATES

 

                The certificates evidencing the Stock held by the Stockholders
shall bear any legends required by federal or state securities law and the
following legend required by Section 202 (a) of the Delaware General Corporation
Law:

 

                                                                                               
“The shares represented by this Certificate are subject to a Stockholders’
Agreement dated as of October 3, 2002, a copy of which is on file at the
principal office of the Company and will be furnished to any prospective
purchaser on request. Such Stockholders’ Agreement provides, among other things,
for certain restrictions on the sale, transfer, pledge, granting of a security
interest, hypothecation or disposition of the shares represented by this
Certificate.”

 

5.                                       BENEFIT

 

                This Agreement shall be binding upon and shall operate for the
benefit of the parties hereto and their respective successors and assigns.

 

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6.                                       INVALIDITY OF ANY PROVISION

 

                The invalidity or unenforceability of any provision of this
Agreement shall not affect the other provisions hereof, and the Agreement shall
be construed in all respects as if such invalid or unenforceable provisions were
omitted, provided that the parties shall negotiate in good faith to replace the
invalid provision with a valid provision reflecting the same balance of economic
interests.

 

7.                                       MODIFICATION OF AGREEMENT

 

                No modification, amendment or waiver of any of the provisions of
this Agreement shall be valid unless approved by a majority of the Board of
Directors (excluding for this purpose any Director who is a Satisfactory
Nominee) and made in writing and signed by the Company and Stockholders owning,
in the aggregate, a majority of the Stock subject to this Agreement.

 

8.                                       FURTHER ACTION

 

                Upon approval by the Board of Directors, a copy of this
Agreement shall be made a part of the minutes of the Company.

 

9.                                       ATTORNEY’S FEES AND COSTS

 

                If any action at law or in equity (including any arbitration
proceeding under Section 11 hereof) is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys’ fees, costs, and necessary disbursements, in addition to any other
relief to which it may be entitled.

 

10.                                 APPLICABLE LAW

 

                This Agreement shall be construed in accordance with the laws of
the State of Delaware without the application of principles of conflicts of law.

 

11.                                 ARBITRATION OF DISPUTES

 

                (a)           Any dispute regarding any aspect of this Agreement
or any act which allegedly has or would violate any provision of this Agreement
will be submitted to binding arbitration. Such arbitration shall be conducted
before an arbitrator sitting in New York, New York or in such other location as
may be agreed upon by the Company and the Stockholders, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect. Judgment may be entered on the award of the arbitrator in any court
having competent jurisdiction.

 

                (b)           The arbitration provision set forth in clause (a)
of this Section shall not restrict or otherwise affect the right of any party to
this Agreement to bring suit for specific performance of this Agreement. The
parties agree that irreparable damage would occur in the event that any of the
provisions of Articles 2 or 3 of this Agreement was not performed in accordance
with its specific terms or was otherwise breached. Each party agrees that, in
the event of any breach or threatened breach by such party of any covenant or
obligation contained in this Agreement, the other parties shall be entitled (in
addition to any other remedy that may be available to them, including monetary
damages) to seek and obtain (i) a decree or order of specific performance to
enforce the observance and performance of such covenant or obligation, and
(ii) an injunction restraining such breach or threatened breach. The parties
further agree that neither the Company nor any other Person shall be required to
obtain, furnish or post any bond or similar instrument in connection with or as
a condition to obtaining any remedy referred to in this Section 11, and
irrevocably waive any rights they may have to require the obtaining, furnishing
or posting of any such bond or similar instrument.

 

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12.            JURISDICTION; VENUE

 

                                                                                               
(A)          Each party to this Agreement hereby irrevocably consents to the
exclusive jurisdiction of the Supreme Court of the State of New York for the
County of New York and/or United States District Court for the Southern District
of New York (collectively, the “New York Courts” and each a “New York Court”) in
connection with any and all claims based upon or arising out of this Agreement
or the matters or transactions contemplated herein, and irrevocably agrees that
all claims in respect of any such matters or transactions may be heard in either
of such New York Courts.

 

                                                                                               
(B)           Each party to this Agreement hereby waives any objection to
jurisdiction and venue of any such claim brought, or action instituted,
hereunder in any New York Court and further agrees not to assert (i) any defense
based on the lack of jurisdiction or venue in any New York Court, or (ii) any
defense of improper venue or inconvenient forum in any New York Court.

 

                                                                                               
(C)           Each party to this Agreement hereby waives any right of
jurisdiction on account of the place of such party’s residence, or domicile, or
on account of such party’s place of incorporation, formation or organization.

 

                                                                                               
(D)          Each party to this Agreement hereby acknowledges and agrees that
any forum other than a New York Court is an inconvenient forum and that a suit
brought by any party against any other party in any court other than a New York
Court should be transferred to a New York Court.

 

13.            SERVICE OF PROCESS; TEXTILE INVESTMENT; WÜRZBURG

 

(a)    Textile Investment hereby irrevocably and unconditionally appoints Steven
D. Dreyer, Esquire of Hall Dickler Kent Goldstein & Wood, LLP, currently located
at 909 Third Avenue, 27th Floor, New York, New York 10022 (the “Process Agent”)
as its agent to receive on behalf of Textile Investment service of copies of the
summons and complaint and any other process which may be served in any action or
proceeding within the scope of Section 11 or 12 of this Agreement in any New
York Court and agrees promptly to appoint a successor Process Agent in the City
of New York (which appointment such successor Process Agent shall accept in
writing) prior to the termination for any reason of the appointment of the
Process Agent (or the termination of any successor Process Agent). In any such
action or proceeding in any New York Court, such service may be made on Textile
Investment by delivering a copy of such process to Textile Investment in care of
the Process Agent at the Process Agent’s above address and by depositing a copy
of such process in the mails (certified or registered, if available), or by
overnight courier, addressed to Textile Investment at its address for notices in
this Agreement (such service to be effective upon receipt by the Process Agent,
and the depositing of such service in the mails (or delivery thereof to such
overnight courier)). Textile Investment hereby irrevocably and unconditionally
authorizes and directs the Process Agent to accept such service on Textile
Investment’s behalf. As an alternative method of service, Textile Investment
hereby irrevocably and unconditionally consents to the service of any and all
process in any such action or proceeding in any New York Court by mailing of
copies of such process to Textile Investment by mail (certified or registered,
if available), or by overnight courier, at its address for notices in this
Agreement. Textile Investment agrees that, to the fullest extent permitted by
applicable law, a final judgment in any such action or proceeding in any New
York Court shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment or in any other manner provided by law. Textile Investment
represents and warrants to the other parties to this Agreement that the Process
Agent has accepted its appointment as process agent for Textile Investment as
herein described, and Textile Investment covenants to give the other parties to
this Agreement prompt written notice of (x) any change in the name or address of
the Process Agent (or any successor Process Agent) and (y) the name and address
of any successor Process Agent.

 

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(b)    Würzburg hereby irrevocably and unconditionally appoints the Process
Agent as its agent to receive on behalf of Würzburg service of copies of the
summons and complaint and any other process which may be served in any action or
proceeding within the scope of Section 11 or 12 of this Agreement in any New
York Court and agrees promptly to appoint a successor Process Agent in the City
of New York (which appointment such successor Process Agent shall accept in
writing) prior to the termination for any reason of the appointment of the
Process Agent (or the termination of any successor Process Agent). In any such
action or proceeding in any New York Court, such service may be made on Würzburg
by delivering a copy of such process to Würzburg in care of the Process Agent at
the Process Agent’s address and by depositing a copy of such process in the
mails (certified or registered, if available), or by overnight courier,
addressed to Würzburg at its address for notices in this Agreement (such service
to be effective upon receipt by the Process Agent, and the depositing of such
service in the mails (or delivery thereof to such overnight courier)). Würzburg
hereby irrevocably and unconditionally authorizes and directs the Process Agent
to accept such service on Würzburg’s behalf. As an alternative method of
service, Würzburg hereby irrevocably and unconditionally consents to the service
of any and all process in any such action or proceeding in any New York Court by
mailing of copies of such process to Würzburg by mail (certified or registered,
if available), or by overnight courier, at its address for notices in this
Agreement. Würzburg agrees that, to the fullest extent permitted by applicable
law, a final judgment in any such action or proceeding in any New York Court
shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law. Würzburg represents and
warrants to the other parties to this Agreement that the Process Agent has
accepted its appointment as process agent for Würzburg as herein described, and
Würzburg covenants to give the other parties to this Agreement prompt written
notice of (x) any change in the name or address of the Process Agent (or any
successor Process Agent) and (y) the name and address of any successor Process
Agent.

 

(c)    The Company hereby irrevocably and unconditionally appoints its
registered agent, as specified in its charter, as amended from time to time (the
“Company Registered Agent”), as its agent to receive on behalf of the Company
service of copies of the summons and complaint and any other process which may
be served in any action or proceeding within the scope of Section 11 or 12 of
this Agreement in any New York Court. In any such action or proceeding in any
such New York Court, such service may be made on the Company by delivering a
copy of such process to the Company in care of the Company Registered Agent at
the Company Registered Agent’s address and by depositing a copy of such process
in the mails (certified or registered, if available), or by overnight courier,
addressed to the Company at its address for notices in this Agreement (such
service to be effective upon receipt by the Company Registered Agent, and the
depositing of such service in the mails (or delivery thereof to such overnight
courier)). The Company hereby irrevocably and unconditionally authorizes and
directs the Company Registered Agent to accept such service on the Company’s
behalf. As an alternative method of service, the Company hereby irrevocably and
unconditionally consents to the service of any and all process in any such
action or proceeding in any New York Court by mailing of copies of such process
to the Company by mail (certified or registered, if available), or by overnight
courier, at its address for notices in this Agreement. The Company agrees that,
to the fullest extent permitted by applicable law, a final judgment in any such
action or proceeding in any New York Court shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law. The Company represents and warrants to the other parties
to this Agreement that the Company Registered Agent has accepted its appointment
as registered agent for the Company as herein described.

 

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14.            WAIVER OF IMMUNITY

 

                Each party to this Agreement represents, warrants, and agrees
that to the extent such party may have or hereafter acquire any right of
sovereign or other immunity from suit, court jurisdiction, attachment in aid of
execution of judgment, set-off, execution or other legal process, such party
hereby irrevocably and unconditionally waives, to the fullest extent permitted
by law, such right of immunity with respect to its obligations hereunder and
with respect to legal proceedings to enforce the same and to enforce any
judgment rendered in such proceedings.

 

15.                                 ENTIRE AGREEMENT

 

                This Agreement supersedes all agreements as to the subject
matter hereof among the Stockholders and the Company including in each case
amendments thereto, previously executed by the Stockholders and the Company,
including without limitation the Company’s Shareholders’ Agreement dated
August 9, 1999. This Agreement sets forth all of the provisions, covenants,
agreements, conditions and undertakings between the parties hereto with respect
to the subject matter hereof, and supersedes all prior and contemporaneous
agreements and understandings express or implied, oral or written as to the
subject matter hereof.

 

16.                                 NOTICES

 

                Unless otherwise specified herein, all notices, requests,
demands and other communications to be given under this Agreement shall be in
writing and shall be deemed given if (i) delivered in person, or by United
States mail, certified or registered, with return receipt requested, (ii) if
sent by telex or facsimile transmission, with a copy mailed on the same day in
the manner provided in (i) above, when transmitted and receipt is confirmed by
telephone, or (iii) if otherwise actually delivered:

 

 

TO THE COMPANY:

3840 Bank Street, Baltimore, MD 21224-2522;

 

 

 

 

TO ANY STOCKHOLDER:

As the name and address of such Stockholder appears on the records of the
Company;

 

or at such other address as may have been furnished by such person in writing to
the other parties. Any such notice, demand or other communication shall be
deemed to have been given on the date actually delivered or as of the date
mailed, as the case may be.

 

17.                                 TERM OF AGREEMENT

 

                This Agreement shall be effective until the earliest to occur of
(i) the Stockholders becoming the Beneficial Owners of all of the Equity
Securities of the Company; (ii) liquidation or dissolution of the Company; or
(iii) November 14, 2004.

 

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

 

 

I.C. ISAACS & COMPANY, INC.

 

 

 

 

By:

/s/ Robert J. Arnot

 

 

Robert J. Arnot, Chief Executive Officer

 

 

 

 

STOCKHOLDERS:

 

 

 

TEXTILE INVESTMENT INTERNATIONAL S.A.

 

 

 

 

By:

/s/ René Faltz

 

 

Name: René Faltz

Title: Managing Director

 

 

 

 

By:

/s/ Tom Felgen

 

 

Name: Tom Felgen

Title: Managing Director

 

 

 

 

WÜRZBURG HOLDING S.A.

 

 

 

 

By:

/s/ René Faltz

 

 

Name: René Faltz

Title: Managing Director

 

 

 

 

By:

/s/ Tom Felgen

 

 

Name: Tom Felgen

Title: Managing Director

 

 

 

 

 

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SCHEDULE A

 

 

 

 

 

 

 

Stockholder

 

No. of Shares of
Common Stock

Würzburg Holding S.A.

 

500,000

Textile Investment International S.A.

 

0

 

 

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EXHIBIT A

 

Budget

 

 

 

 

 

 

 

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