EXHIBIT
10.1

    


    
      MEMBERSHIP
INTEREST PURCHASE AGREEMENT

       

      This
MEMBERSHIP INTEREST PURCHASE
AGREEMENT dated as of May 4, 2009 (this “Agreement”)
by and among Iconix Brand Group, Inc., a Delaware corporation (“Iconix”
or the “Buyer”),
Donald Edward Hardy and Francesca Passalacqua, trustees of the Hardy/Passalacqua
Family Revocable Trust (the “Seller”) and
Donald Edward Hardy, individually (“Hardy”).

       

      WITNESSETH:

       

      WHEREAS, Hardy Life, LLC, a
California limited liability company (“Hardy
Life”)
converted into Hardy Way LLC, a Delaware limited liability company (the
“Company”
) effective as of May 1, 2009 pursuant to that certain plan of conversion (the
“Conversion”);

       

      WHEREAS, the Seller is the
owner of in excess of 95% of the membership interests of the
Company;

       

      WHEREAS, the Company owns all
the right, title and interest in and to the Hardy Brand (as hereinafter
defined in Section
3.7)
and related assets;

       

      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

       

      WHEREAS, all references to the
Company in this Agreement relate to the Company and all of its predecessors,
including, but not limited to Hardy Life.

       

      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.           
Purchase
and Sale of Interest.  Subject to the terms and conditions set
forth in this Agreement and in reliance upon the representations, warranties,
covenants and conditions herein contained, on the Closing Date
(as hereinafter defined in Section
7)
the Seller  shall sell, convey, assign, transfer and deliver to the
Buyer and the Buyer shall purchase, 400,000 membership units comprising
immediately following the Closing (as hereinafter defined in Section
7)
fifty percent (50%) of the aggregate outstanding membership interests in the
Company (collectively, the “Interest”),
free and clear of any and all liens, adverse claims, options, security
interests, restrictions, pledges, mortgages, charges and encumbrances of any
kind or nature whatsoever, whether arising by Contract (as hereinafter
defined in Section
3.2),
operation of law or otherwise (collectively, “Liens”).

       

      2.             Payment
of Purchase Price.

       

      2.1.          Purchase
Price.  In consideration of the sale, transfer, conveyance and
delivery of the Interest, Buyer shall, in full payment thereof, pay to the
Seller the aggregate consideration of Seventeen Million Dollars ($17,000,000)
(the “Purchase
Price”).  At the Closing, the Buyer shall pay the Purchase
Price to the Seller as follows: (i) Nine Million Dollars ($9,000,000) shall
be paid by wire transfer in immediately available funds on the Closing Date (the
“Cash Consideration”)
and (ii) the issuance to the Seller, in the manner set forth below of such
number of shares of Buyer’s Stock (as hereinafter defined) as are equal to the
quotient of (A) Eight Million Dollars ($8,000,000) divided by (B) the average
per share closing sales price (the “Per
Share Price”) reported on the Nasdaq Global Select Market for the five
(5) consecutive trading days ending on the trading day immediately preceding the
Closing Date (the “Shares”).  “Buyer’s
Stock” means
shares of common stock, par value $0.001 per share, of Iconix.  The
Shares shall be delivered as follows: (i) such number of shares of Buyer’s
Stock  as are equal to the quotient of (A) One Million Dollars
($1,000,0000) divided by (B) the Per Share Price (the “Escrow
Shares”) shall be delivered to the escrow agent (the “Escrow
Agent”) appointed pursuant to the escrow Agreement attached hereto as
Exhibit
“A” (the
“Escrow
Agreement”); and (ii) the balance of the Shares (“Balance
Shares”) shall be delivered to the Seller.  The Escrow Shares
shall be used to secure the Seller’s and Hardy’s indemnification obligations
under Section
5
of this Agreement.  In addition to the Escrow Shares, Hardy will
pledge, pursuant to the Pledge Agreement, 385,000 membership interests owned by
Hardy which shall be used to further secure Hardy’s indemnification obligations
under Section
5 of this Agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.2.          Additional
Consideration.  Seller shall be
entitled to additional consideration (the “Earn
Out Consideration”) as determined in accordance with and subject to the
terms and conditions set forth in Exhibit
“B” attached hereto.

       

      3.            
Representations
and Warranties Concerning Hardy, the Seller and the
Company.  Hardy hereby represents and warrants to the Buyer as
follows:

       

      3.1.          Organization,
Standing and Power.  The Company is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware.  The Company has the full limited liability company
power and authority to own and operate its properties, and execute, deliver and
perform its obligations under this Agreement and each of the other Transaction
Documents to which the Company is (or is to be) a party.  There is no
action or proceeding pending or contemplated to dissolve the
Company.  Hardy is an individual and has all requisite right, power
and authority and full legal capacity to execute and deliver this Agreement and
each of the Transaction Documents (as defined in Section
3.4)
to which he is a party, to perform his obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby and thereby.  The
Seller is a trust duly organized, validly existing and in good standing under
the laws of the state of its formation.  The Seller has full power and
authority to own the Interests and to execute, deliver and perform its
obligations under this Agreement and any of the Transaction Documents to which
the Seller is (or is to be) a party.  There is no action or proceeding
pending or contemplated to dissolve the Seller.

       

      3.2.          Membership
Interests.  The Seller is the legal and beneficial owner of in
excess of 95% of the issued and outstanding membership interests of the Company,
and owns such membership interests of the Company free and clear of all
Liens.  Immediately following the Closing, the Interest will
constitute a fifty percent (50%) membership interest in the
Company.  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 debt or 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 or assets of the
Company.  Other than the Operating Agreement (as defined in Section
7.1),
none of the Company, the Seller or Hardy 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 contracts, agreements, commitments, arrangements or other undertakings,
whether formal or informal, written or oral, 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.  As of a time immediately prior to the consummation of the
transactions contemplated hereby, Schedule
3.2 sets forth the name of each Member of the Company, the number of
membership units in the Company owned by each such Member, and the percentage of
outstanding membership interests of the Company represented by such
interests.  As of the date hereof, there are 800,000 membership
interests issued and outstanding.

       

      3.3.          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.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      3.4.          Authority;
Binding Agreement.  This Agreement has been, and upon Hardy’s
execution of the Transaction Documents to which he is a party such Transaction
Documents will be, duly and validly executed and delivered by Hardy and this
Agreement constitutes, and upon their execution such Transaction Documents shall
constitute, the legal, valid and binding obligations of Hardy, enforceable
against Hardy 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”).  For
purposes of this Agreement, “Transaction
Documents” shall mean this Agreement, the Operating Agreement (as
hereinafter defined in Section
7.1(c)),
the Escrow Agreement, the Consulting Agreement between the Company and Hardy in
the form attached hereto as Exhibit
“C” (the “Consulting
Agreement”), the Pledge Agreement between Iconix and Hardy in the form
attached hereto as Exhibit
“D” (the “Pledge
Agreement”) and all other documents, instruments and certificates
delivered pursuant hereto or in connection herewith.

       

      The
execution and delivery by the Seller of this Agreement and each of the other
Transaction Documents (as hereinafter defined) to which the Seller is (or is to
be) a party, the performance by the Seller of its 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, and the Seller has all necessary power and
authority with respect thereto.  Each of this Agreement and each of
the other Transaction Documents to which the Seller is to be a party, will be,
when executed and delivered by the Seller, the legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance with its
respective terms, except as the same may be limited by the Enforceability
Exceptions.

       

      3.5.          Noncontravention.  Neither
the execution and delivery by the Company, the Seller or Hardy of this
Agreement, or any of the other Transaction Documents to which the Company, the
Seller or Hardy is (or is to be) a party, the consummation by the Company, the
Seller and Hardy of any of the transactions contemplated hereby or thereby, nor
the performance by the Company, the Seller or Hardy of their respective
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 (x) any Existing License (as hereinafter defined in Section
3.7)
or other Contract to which the Company, the Seller or Hardy is a party or bound
or any other obligation of the Company, the Seller or Hardy to any Person, or
(y) the certificate of formation and limited liability company agreement of the
Company, each as amended to date or the organizational documents of the Seller,
each as amended to date, (b) obligate the Company, the Seller, Hardy or the
Buyer to pay any royalty or other compensation to any Person, (c) result in the
creation or imposition of any Lien upon the Interest or any of the Hardy Brand
or any other assets of the Company, the Seller or Hardy, or (d) constitute a
violation of any Legal Requirement (as defined below) applicable to the Company,
the Seller or Hardy.  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
3.6).

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      3.6.          Consents.  Except
as disclosed in Schedule
3.6
hereto, no consent, approval, waiver, notice, order, or authorization of, or
registration, qualification, designation, declaration, recordal or filing with,
any federal, 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 (including any party to an Existing
License) is required in connection with the execution and delivery by the
Company, the Seller or Hardy of this Agreement or any of the other Transaction
Documents to which the Company, the Seller or Hardy is (or is to be) a party,
the performance by the Company, the Seller or Hardy of their respective
obligations hereunder and thereunder or consummation by the Company, the Seller
or Hardy of the transactions contemplated hereby (including the sale by the
Seller of the Interest) or thereby.

       

      3.7.          Intellectual
Property.

       

      (a)           All
rights, title and interests with respect to the Hardy Brand (as defined below)
have been transferred to the Company pursuant to the Conversion, and are owned
by the Company, free and clear of any Liens, other than the Existing Licenses
(as defined below), Existing Claims (as defined below) or as otherwise specified
on Schedule 3.7(a)(i),
and the Company is the owner of all registrations and pending registration
applications for the Hardy Brand in the Territory (as defined
below).  Neither the Company, the Seller, Hardy nor any Affiliate of
the Company owns any rights to any Mark in the Territory other than the Hardy
Brand (all of which have been transferred to the Company pursuant to the
Conversion).

       

      (b)           To
Hardy’s knowledge, and except for the Existing Claims, the use, licensing and/or
sublicensing of the Hardy Brand in the Territory in connection with the design,
manufacture, promotion, advertising and sale of products in the Business (as
hereinafter defined), (each a “Contemplated
Use”) does not and will not infringe upon any intellectual property
rights or any other rights of any other Person.

       

      (c)           Schedule
3.7(c)
hereto is a complete and accurate list of all of the registrations and
applications for registration of Marks (as defined below) owned by the Company
in the Territory. To Hardy’s knowledge, the status of each Hardy
Brand on Schedule
3.7(c)
hereto is complete and accurate, and all of the trademark registrations and
applications for registration for the Hardy Brand in the Territory are valid,
and subsisting, the registrations are enforceable, and, except as set forth in
Schedule
3.7-II
hereto, none of such filings have expired or been abandoned, opposed, canceled
or otherwise invalidated, and the Company and Hardy are unaware of any existing
facts which would form a reasonable basis for opposition, cancellation or
invalidation of any of same; and all fee payments, actions and/or filings
required to be taken or made prior to the Closing Date and within the ninety
(90) day period thereafter in order to maintain such registrations in full force
and effect and maintain such applications pending have been (or will prior to
the Closing Date be) taken and made.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (d)           To
Hardy’s knowledge, except for the Existing Claims, no Person, other than Third
Party Licensees (as defined below) and Third Party Sub Licensees (as defined
below) pursuant to Existing Licenses, has rights in the Territory to any Hardy
Brand.

       

      (e)           Schedule
3.7(e)
hereto constitutes a complete and accurate list of all of the Existing Licenses,
together with a table specifying for each such license, the identity of the
Licensor (as defined below), the Third Party Licensee and Third Party Sub
Licensee granted rights thereunder, the Mark(s) licensed, the licensed goods,
the applicable territory, the term and the status of the agreement.

       

      (f)           The
Company, the Seller and Hardy have delivered to the Buyer a correct and complete
copy of the all documents related to the Conversion and each of the Existing
Licenses (as amended to date).

       

      (g)           To
Hardy’s knowledge, except as disclosed in Schedule
3.7(g)
hereto, (i) each Existing License is valid and in full force and effect and is
enforceable against
the Licensor and the Third Party Licensee or Third Party Sub Licensee and each
other party thereto, except as may be limited by the Enforceability Exceptions,
(ii) neither the Company nor any Licensor is in violation or breach of or in
default of its obligations under any such Existing License and, except as set
forth on Schedule
3.7(g)
hereto, no Third Party Licensee or Third Party Sub Licensee is in violation or
breach of or in default of its obligations under any such Existing License,
which violation, breach or default would, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the Company or the
Licensor or impair the ability of the Company, the Seller or Hardy to perform
their respective obligations hereunder and (iii) and no Person (including any
Third Party Licensee or Third Party Sub Licensee under any Existing License) has
any rights with respect to the Hardy Brand, other than as expressly provided
under an Existing License.  Each of the Existing Licenses relating to
the Hardy Brand is assignable by the Licensor thereof to the
Company.

       

      (h)           To
Hardy’s knowledge, other than Nervous Tattoo, Inc., neither the Company, any
Licensor, any Third Party Licensee, nor any Third Party Sub Licensee, has
breached any provision of an Existing License, which breach would, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the Company or impair the ability of the Company, the Seller or Hardy to perform
their respective obligations hereunder, nor has any Third Party Licensee or
Third Party Sub Licensee provided the Company or any Licensor any written notice
of an intent to breach any such Existing License.

       

      (i)           To
Hardy’s knowledge, except for the Existing Claims, neither the Company, the
Seller, Hardy, any Affiliate of the Company (including any Licensor) or their
respective licensees of the Hardy Brand (including the Third Party Licensees and
Third Party Sub Licensees) nor any other party to any Existing License has
infringed upon, misappropriated or otherwise violated, or is currently
infringing upon, misappropriating or otherwise violating, any Marks or any other
intellectual property right of any other Person in
the Territory, and no Person has infringed, misappropriated or otherwise
violated, or is currently infringing, misappropriating or otherwise violating,
or otherwise challenging the validity or enforceability of the Company’s, any
Licensor’s or any other Company’s Affiliates’ rights, any Third Party Licensee’s
rights or any Third Party Sub Licensee’s rights under any Existing License, with
respect to any Hardy Brand in the Territory, or any other intellectual property
right of the Company or any Affiliate of the Company (including any Licensor),
except as specified in Schedule
3.7(i).

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (j)           To
Hardy’s knowledge, except for the Existing Claims, neither the Company, any
Affiliate of the
Company (including any Licensor), nor their respective licensees and Affiliates
has received from any Person any notice, demand, threat, letter, claim or
request alleging that the use or any Contemplated Use of the Hardy Brand in the
Territory has or may have infringed or misappropriated or may be infringing or
misappropriating or may infringe or misappropriate any intellectual property
right of a third party, or challenging the validity, effectiveness or
enforceability of any Existing License, nor is the Company, any Licensor or any
of their Affiliates aware of any existing facts which would form a reasonable
basis for any such claim.

       

      For
purposes of this Agreement,

       

      “Affiliate”
of any Person means any Person which, directly or indirectly controls or is
controlled by that Person, or is under common control with that Person, and
“control” (including, with correlative meaning, the terms “controlled by” and
“under common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly of the power to direct or cause the direction
of the management and policies of such Person, whether through ownership of
voting securities or by contract or otherwise.

       

      “Business”
means (i) the licensing, promotion and advertising of the Brand (as defined in
the Operating Agreement), (ii) all lines of business reasonably related or
ancillary thereto (including the establishment and operation of retail stores)
and (iii) any other line of business duly approved pursuant to the Operating
Agreement.)

       

      “Existing
Claims” means, with respect to the Hardy Brand, those pending or
threatened actions, oppositions, claims and proceedings and Liens, all as listed
on Schedule
3.7-II
hereto.

       

      “Existing
Licenses” means the licenses or other Contracts by and among the Company
and/or Hardy or any of their respective Affiliates (each such Person, in its
capacity as licensor under such Contracts, a “Licensor”)
and certain Persons (each such Person, a “Third
Party Licensee”) granting such Third Party Licensee’s rights to the Hardy
Brand in the Territory, all of which are listed in Schedule
3.7(e) and any sublicenses or other Contracts by and among a Third Party
Licensee and certain persons (each such Person, a “Third
Party Sub Licensee”) granting to such Third Party Sub Licensees rights to
the Hardy Brand in the Territory, all of which are listed on Schedule
3.7(e).

       

      “Hardy
Brand” means all Marks used in connection with the Business, including,
without limitation, each of the Marks listed on Schedule
3.7-III
hereto, and any and all Marks used in connection with the Business of the
Company all registrations and applications for registration thereof owned by the
Company, any Affiliate of the Company in the Territory, all of which have been
validly contributed to the Company pursuant to the Conversion, all Marks derived
therefrom for use in the Territory, and all goodwill associated
therewith.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      “Marks”
means names, trade names, trademarks, service marks, logos, domain names,
characters, symbols, slogans, designations, emblems, designs, colors, and trade
dress, and all identifications, labels, insignia or indicia thereof, and all
registrations and applications for registration for the foregoing and all common
law trademark rights relating thereto.

       

      “Territory”
means throughout the world.

       

      3.8.          No
Actions.  Except as disclosed on Schedule
3.8,
no claim, action, suit, arbitration, inquiry, litigation or investigation or
other proceeding is pending or, to the Company’s knowledge, threatened by or
against the Company, any Licensor or any other Affiliate of the Company, or
Hardy.  Neither the Company, the Seller nor Hardy is a party to or
subject to any writ, order, decree, injunction or judgment of any Governmental
Authority, and no Licensor is a party to or subject to any writ, order, decree,
injunction or judgment of any Governmental Authority that would materially
adversely affect it or him, as the case maybe, or  the performance by
the Company, the Seller or Hardy of their respective obligations hereunder or
any of the other Transaction Documents to which the Company, the Seller or Hardy
is (or is to be) a party.

       

      3.9.          Contracts.  

       

      (a)             
Schedule
3.9(a)
sets forth a true and correct list of all Contracts to which the Company is
bound or subject including, but not limited to, the following types of
Contracts:

       

      (i)         any
Contract under which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, the deferred payment of the purchase price of
any properties or any capitalized lease obligation, or under which it has
imposed a Lien on any of its properties;

       

      (ii)        any
Contract relating to the purchase or sale of inventory, or the furnishing or
receipt of services;

       

      (iii)       any
Contract for capital expenditures;

       

      (iv)       any
leases or similar agreements with respect to any properties, real or personal,
whether as landlord, tenant or otherwise;

       

      (v)        any
Contract for the license, sale or other disposition of any of the Hardy
Brand;

       

      (vi)       any
Contract concerning a partnership or joint venture with another
Person;

       

      (vii)     
any Contract with any Affiliate of the Company; or

       

      (viii)     any
Contract that purports to limit the Company’s freedom to compete freely in any
line of business or in any geographic area. Complete, true and correct copies of
all Contracts have been made available to the Buyer.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (b)           As
of the date hereof, other than as set forth in Schedule
3.9(b),
(i) the Company has complied with and performed all of its material obligations
required to be performed under all of the Contracts and is not in default under
any of them, and no event has occurred which, with or without the giving of
notice, lapse of time or both, would constitute a default by the Company; (ii)
each Contract is a valid and binding obligation of the Company
and  each other party thereto, and is in full force and effect; (iii)
the Company has not received written notice canceling, terminating or
repudiating any Contract; and (iv) the Company has no knowledge that any third
party has failed to pay all amounts due pursuant to each such Contract beyond
any receipt of notice and cure period.

       

      (c)           The
Company does not own any real property.

       

      3.10.      
Absence
of Undisclosed Liabilities; Indebtedness.  Except as disclosed
in the Company Financial Statements and as set forth on Schedule
3.10,
the Company does not have any Liabilities (as defined below) except Liabilities
that are accrued in the ordinary course of business since March 31, 2009, all of
which shall be the responsibility of Hardy to satisfy in accordance with Section
6.2
of this Agreement.  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.
GAAP.

       

      3.11.       
Financial
Information; Licensee Receivables.

       

      (a)           Attached
to Schedule
3.11(a)
are (i) true and complete copies of the unaudited balance sheets for each of
December 31, 2008, December 31, 2007 and December 31, 2006 and the related
unaudited statements of income and cash flows for each such fiscal year, and
(ii) true and complete copies of the unaudited balance sheets of the Company as
of  March 31, 2009 and the related unaudited statements of income and
cash flows for the three-month period ended March 31, 2009 (collectively, and
including the notes thereto, if any, the “Company
Financial Statements”).  Except as indicated in the Company
Financial Statements (including any notes thereto, if any), the Company
Financial Statements (including the notes thereto, if any) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (“GAAP”)
during the periods involved and fairly present in all material respects the
results of the consolidated operations and changes in shareholders’ equity and
financial position of the Company for the respective fiscal periods or as of the
respective dates therein set forth (subject, in the case of any unaudited
Company Financial Statements, including the notes thereto, to any other
adjustments described therein and normal year-end audit
adjustments).

       

      (b)           Attached
hereto as Schedule
3.11(a)
is a true and complete schedule by Mark for the years ended December 31, 2008
and 2007 and the three months ended March 31, 2009 of (i) all sales reported by
the Third Party Licensees and Third Party Sub Licensees under the Existing
Licenses with respect to the use of the Hardy Brand in the Territory, (ii) all
royalties or other amounts paid or payable by the Third Party Licensees and
Third Party Sub Licensees  in respect of such sales, and (iii) the
unpaid amount of such royalties or other amounts at the end of each such
period.  The Company has no reason to believe that the sales
information reported by any Third Party Licensee or Third Party Sub Licensee is
incomplete or inaccurate in any material respect.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (c)           The
unpaid balance of royalties and other amounts shown in Schedule
3.11(a) as being due as of March
31, 2009 from Third Party Licensees and Third Party Sub Licensees under the
Existing Licenses with respect to the use of the Hardy Brand in the Territory,
together with any such additional royalties or other amounts accrued after March
31, 2009 and unpaid as of the Closing Date (collectively the “Licensee
Receivables”),
arose (or will arise) in the ordinary course of business of the Company (or an
Affiliate of the Company), have been (or will be) fully earned by performance
and represent bona fide claims against the respective debtors for royalties and
other charges due under an Existing License.  No Licensee Receivable
is subject to any set-off or counterclaim of any kind or nature
whatsoever.

       

      3.12.        No
Violation of Law; Company Permits.  None of the Company, the
Seller or Hardy is in violation of, and has not been given written notice
of any violation of, any law, statute, order, rule, regulation, ordinance, code,
ruling, decree or judgment of any Governmental Authority.  No
investigation, proceeding or review relating to the Company, the Seller or
Hardy by any Governmental Authority is pending
or threatened.  The Company has all material permits, licenses,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to own, lease and operate its assets and
properties and conduct its business as presently conducted (collectively, the
“Company
Permits”).  The Company is not in violation of the terms of any
Company Permit, and there has been no suspension of, imposition of additional
conditions or requirements with respect to, default (with or without notice or
lapse of time or both) under, or event giving rise to any right of termination,
amendment or cancellation of (without or without notice or lapse of time or
both), any Company Permit.

       

      3.13.        Taxes.

       

      (a)           All
material Tax Returns (as hereinafter defined) required to be filed by the
Company have been timely filed, all such Tax Returns are correct and complete in
all material respects, and all Taxes (as hereinafter defined) of the Company
that are due and owing (whether or not shown to be due on such Tax Returns) have
been paid; (b) the Company is not currently the beneficiary of any extension of
time within which to file any such Tax Return; (c) the Company has withheld and
paid all material Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor, creditor, or
other third party; (d) as of the date hereof, there are no pending audits or
examinations of the Company with respect to material Tax matters or of any
partner with respect to any taxable income or loss of the Company; (e) there are
no material liens for Taxes (other than liens for Taxes not yet due and payable)
on any assets of the Company; (f) the Company has no material liability for the
Taxes of any person (other than the Company) as a transferee or successor, by
contract, or otherwise; and (g) the Company will not be required to include any
material item of income in, or exclude any material item of deduction from,
taxable income for any taxable period (or portion thereof) ending after the
Closing Date as a result of: (i) any change in a method of accounting for a
taxable period ending on or prior to the Closing Date or (ii) any settlement or
similar agreement with any Governmental Authority executed on or prior to the
Closing Date in respect of tax liabilities.  The Company has elected
to  be classified as a partnership for federal income tax purposes for
all taxable periods since the date of its formation.  For purposes of
this Agreement, “Taxes”
shall mean all federal, state, local or foreign income, gross receipts, profits,
value added, severance, property, production, sales, use, license, excise,
franchise, employment, withholding or other taxes of any kind whatsoever,
together with any interest, additions or penalties imposed with respect thereto
by a Governmental Authority, and “Tax
Returns” shall mean all reports and returns required to be filed with a
Governmental Authority with respect to Taxes.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      3.14.        Employees;
Employee Benefit Plans.

       

      (a)           Set
forth in Schedule
3.14(a),
is an accurate and complete list of the names of all individuals employed by the
Company (“Company
Employees”), together with the following information with respect to each
such Company Employee:  (i) job title of such Company Employee, and
(ii) date of commencement of continuous service with the Company.

       

      (b)           Except
as set forth on Schedule
3.14(b),
the Company is not party to any employee benefit, compensation, bonus,
incentive, deferred compensation, capital appreciation, pension, profit sharing,
retirement, option, equity or equity-based, employment, change of control,
severance, reduction-in-force, termination pay or similar plans, arrangements or
agreements.

       

      3.15.        Brokerage.  Except
as set forth on Schedule
3.15,
no investment banker, broker, finder or other intermediary was engaged by or
dealt with the Company, the Seller or Hardy in connection with any of the
transactions contemplated by this Agreement.

       

      3.16.        Investment
Matters. The Shares to be issued hereunder are being acquired for the
Seller’s own account and not on behalf of any other Person, and all such Shares
are being acquired for investment purposes only and not with a view to, or for
sale in connection with, any resale or distribution of such Shares. The Seller
has received or examined the Buyer’s Annual Report on Form 10-K for the year
ended December 31, 2008 and the Buyer’s 2008 Proxy Statement.  The
Seller has had the opportunity to ask questions and receive answers from the
Buyer concerning the Buyer, and has been furnished with all other information
about the Buyer which it has requested.  The Seller is an “accredited
investor” as defined in Rule 501(a) of the Securities Act of 1933, as amended
(the “Act”).  The
Seller has been fully apprised of all facts and circumstances necessary to
permit it to make an informed decision about acquiring the Shares, that the
Seller has sufficient knowledge and experience in business and financial matters
that it is capable of evaluating the merits and risks of an investment in the
Shares, and that it has the capacity to protect its own interests in connection
with the transactions contemplated hereby.  The Seller has been
advised by the Buyer and understands that, (1) the Shares to be issued hereunder
will not be registered under any federal or state securities laws, (2) such
shares must be held indefinitely unless and until they are subsequently
registered or an exemption from registration becomes available, (3) the
certificates representing such shares shall bear appropriate restrictive
legends, and (4) the Buyer shall have the right to direct the transfer agent of
its common stock to place a stop transfer order against such
certificates.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      3.17.       
Related
Party Transactions.  Other than the Operating Agreement of the
Company, there are no arrangements or Contracts which continue in effect between
(a) the Company and (b) the Seller, Hardy and the Non-Managing Members (as
defined in the Operating Agreement) or any individual who is a member, manager,
officer, trustee, director, or stockholder, member, partner or other owner or
affiliate of the Company, the Seller or Hardy, or any relative of the
foregoing.

       

      3.18.        Insurance.  Schedule
3.18
sets forth an accurate description of each material insurance policy to which
the Company is a party, a named insured or otherwise the beneficiary of
coverage, or Hardy is a party, a named insured or otherwise a beneficiary of
coverage in connection with his relationship with the Company.  All of
such insurance policies are legal, valid, binding and enforceable and in full
force and effect and the Company is not in breach or default with respect to its
obligations under such insurance policies (including with respect to payment of
premiums).  

       

      4.            
Representations
and Warranties of the Buyer.  The Buyer represents and warrants
to Hardy as follows:

       

      4.1.          Organization,
Standing and Power.  The Buyer is a 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 and deliver, and perform its obligations under, this
Agreement and each of the other Transaction Documents to which the Buyer is (or
is to be) a party.

       

      4.2.          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
(or is to be) 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 to be 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.

       

      4.3.          Issuance
of Buyer’s Stock.  The shares of Buyer’s Stock issued in
connection with this Agreement are duly authorized and when issued will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens
and will not be subject to preemptive or similar rights.

       

      4.4.          Regulatory
Compliance.  Since December
31, 2006, the Buyer has duly and timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the Securities
and Exchange Commission (the “Commission”)
pursuant to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”),
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
(the foregoing materials being collectively referred to herein as the “SEC
Reports”). As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder and other federal, state
and local laws, rules and regulations applicable to such documents and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Buyer included in the SEC Reports comply
in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with GAAP,
except as may be otherwise specified in such financial statements or the notes
thereto, or, in the case of unaudited financial statements, as permitted by Rule
10-01 of Regulation S-X promulgated under the Act and the Exchange Act, and
fairly present in all material respects the financial position of the Buyer and
its consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit
adjustments.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      4.5.           Noncontravention.  Neither
the execution and delivery by the Buyer of this Agreement or any of the other
Transaction Documents to which the Buyer is (or is to be) a party, the
consummation 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 to pay any royalty or other
compensation to any Person, or (c) constitute a violation of any Legal
Requirement applicable to the Buyer.

       

      4.6.          Consents.  No
consent, approval, waiver, notice, order, or authorization of, or registration,
qualification, designation, declaration, recordal or filing with, any
Governmental Authority on the part of the Buyer is required, and no other
consents or waivers 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 (or is to be) 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 Interest) or thereby.

       

      4.7.          No
Actions.  Except as set forth in the SEC Reports, 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 this Agreement or any of the other
Transaction Documents to which the Buyer is (or is to be) a party, or the right
of the Buyer to enter into this Agreement or any such other Transaction
Document, or to consummate the transactions contemplated hereby or thereby, or
(ii) which might, either individually or in the aggregate, have a material
adverse effect on the Buyer or impair the ability of the Buyer or to perform its
obligations hereunder.  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.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      4.8.          Investment
Intent.  The Buyer understands that the Interest has not been
registered under the Act, and that the 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 Interest and is capable of
evaluating the merits and risks of an investment in the Interest.  The
Buyer is acquiring the 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.

       

      4.9.          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.

       

      5.             
Indemnification.

       

      5.1.          Survival.

       

      (a)           Each
of the parties hereto hereby agrees that representations and warranties made by
or on behalf of it in this Agreement or in any Transaction Document delivered
pursuant hereto shall survive the Closing, except as provided in Section
5.1(b).  The
covenants and agreements of the parties contained herein that by their terms are
to be performed in whole or in part after the Closing Date (which shall include
all covenants and agreements of the parties in this Section
5.1)
shall survive the Closing and continue in effect in accordance with their
terms.

       

      (b)           Neither
Hardy nor the Seller shall have any liability under their joint and several
agreement to indemnify the Buyer Indemnified Parties under Section
5.2
against breach of or inaccuracy in any representation or warranty set forth in
Section
3
(other than those contained in Sections 3.1
(Organization, Standing and Power), 3.2
(Membership Interests), 3.4
(Authority; Binding Agreement), 3.7
(Intellectual Property), 3.9
(Contracts), or 3.10 (Absence
of Undisclosed Liabilities)), and the Buyer shall have no liability under
its agreement to indemnify the Seller Indemnified Parties under Section
5.3
against breaches of the representations and warranties set forth in Section
4
(other than those contained in Sections
4.1
(Organization, Standing and Power) and 4.2
(Authority; Binding Agreement)), in each case (i) unless the indemnifying
party receives notice in writing from the indemnified party(ies) of a claim
under said indemnities on or before the date which is eighteen (18) months
following the Closing Date.  The representations and warranties of the
Company, the Seller and/or Hardy contained in Sections 3.1
(Organization, Standing and Power), 3.2
(Membership Interests), 3.4
(Authority; Binding Agreement), 3.7
(Intellectual Property), 3.9
(Contracts), or 3.10 (Absence
of Undisclosed Liabilities), and the representations and warranties of
the Buyer contained in Sections
4.1
(Organization, Standing and Power) and 4.2
(Authority; Binding Agreement) shall survive the Closing indefinitely
(subject to any applicable statutes of limitations).

       

      5.2.          Indemnification
by Hardy.  From and after the date hereof, Hardy, as the former
owner of the Company, and the Seller shall jointly and severally indemnify and
defend and hold harmless the Buyer, its Affiliates and their respective
officers, directors, shareholders, members, employees, advisors, agents and
controlling persons (the “Buyer
Indemnified Parties”) from
and against any and all losses, obligations, deficiencies, liabilities, claims
(whether actual or threatened), damages, costs and expenses (including, without
limitation, the amount of any settlement entered into pursuant hereto, and all
reasonable legal fees and other expenses incurred in connection with the
investigation, prosecution or defense of any matter indemnified pursuant hereto)
(“Losses”) which
the Buyer Indemnified Parties may sustain, suffer or incur and which arise out
of, are caused by, relate to, or result or occur from or in connection with (a)
any breach of or inaccuracy in any representation or warranty made by the
Company, the Seller or Hardy in this Agreement or any other Transaction Document
to which the Company, the Seller and/or Hardy is a party, (b) any breach or
default in performance by the Company, the Seller and/or Hardy of any covenant
or agreement of the Company, the Seller and/or Hardy in this Agreement or any
other Transaction Document to which the Company, the Seller and/or Hardy is a
party or (c) any Claim against the Company, whether arising before or after the
Closing, including, but not limited to, Claims arising from or relating to the
ownership of the Company or actions or inactions of the Company or any affiliate
prior to the Closing.  “Claim”  means
any claims, demands, obligations, liabilities, indebtedness, breaches of
contract, breaches of duty or any relationship, acts, omissions, misfeasance,
malfeasance, causes of action, promises, damages, costs, losses and expenses of
every kind, nature, description and character which exist or which could or may
be claimed to exist, whether known or unknown, suspected or unsuspected,
liquidated or unliquidated, claimed or unclaimed, whether based on contract,
tort, breach of any duty, or other legal or equitable theory of
recovery.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      5.3.          Indemnification
by Buyer.  From and after the date hereof, the Buyer shall
indemnify and defend and hold harmless Hardy and the Seller (the “Seller
Indemnified Parties”) from
and against any and all Losses which they may sustain, suffer or incur and which
arise out of, are caused by, relate to, or result or occur from or in connection
with (a) any breach of or inaccuracy in any representation or warranty made by
the Buyer in this Agreement or any other Transaction Document to which the Buyer
is a party, or (b) any breach or default in performance by the Buyer of any
covenant or agreement made by the Buyer in this Agreement or any other
Transaction Document to which the Buyer is a party.

       

      5.4.          Third
Party Claims.  If a claim by a third party is made against any
party or parties hereto and the party or parties against whom said claim is made
intends to seek indemnification with respect thereto under Sections
5.2
or 5.3,
the party or parties seeking such indemnification shall promptly notify the
indemnifying party or parties, in writing, of such claim; provided, however, that the
failure to give such notice shall not affect the rights of the indemnified party
or parties hereunder except to the extent that such failure materially and
adversely affects the indemnifying party or parties due to the inability to
timely defend such action.  The indemnifying party or parties shall
have 10 business days after said notice is given to elect, by written notice
given to the indemnified party or parties, to undertake, conduct and control,
through counsel of their own choosing (subject to the consent of the indemnified
party or parties, such consent not to be unreasonably withheld) and at their
sole risk and expense, the good faith settlement or defense of such claim, and
the indemnified party or parties shall cooperate with the indemnifying parties
in connection therewith; provided: (a) all settlements require prior reasonable
consultation with the indemnified party and the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld, and (b) the
indemnified party or parties shall be entitled to participate in such settlement
or defense through counsel chosen by the indemnified party or parties, provided
that the fees and expenses of such counsel shall be borne by the indemnified
party or parties.  So long as the indemnifying party or parties are
contesting any such claim in good faith, the indemnified party or parties shall
not pay or settle any such claim; provided, however, that
notwithstanding the foregoing, the indemnified party or parties shall have the
right to pay or settle any such claim at any time, provided that in such event
they shall waive any right of indemnification therefor by the indemnifying party
or parties.  If the indemnifying party or parties do not make a timely
election to undertake the good faith defense or settlement of the claim as
aforesaid, or if the indemnifying parties fail to proceed with the good faith
defense or settlement of the matter after making such election, then, in either
such event, the indemnified party or parties shall have the right to contest,
settle or compromise (provided that all settlements or compromises require the
prior reasonable consultation with the indemnifying party and the prior written
consent of the indemnifying party, which consent shall not be unreasonably
withheld) the claim at their exclusive discretion, at the risk and expense of
the indemnifying parties.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      5.5.          Assistance.  Regardless
of which party is controlling the defense of any claim, each party shall act in
good faith and shall provide reasonable documents and cooperation to the party
handling the defense.  

       

      5.6.          Limitations
on Indemnification.  Notwithstanding anything contained in this
Agreement to the contrary, Hardy and the Seller, on the one hand, and the Buyer,
on the other hand, shall not be obligated to indemnify the other party unless
and until a claim is asserted before the end of the relevant survival period
specified in Section
5.1(b).  In
addition, notwithstanding anything contained in this Agreement to the contrary,
Hardy or the Seller shall not be required to pay an aggregate amount in excess
of Eighteen Million Dollars ($18,000,000) (the “Cap”)
in respect of all Losses incurred by the Buyer Indemnified Parties by reason of
the misrepresentation of Hardy, the Company or the Seller, and the Buyer shall
not be required to pay an aggregate amount in excess of the Cap in respect of
all Losses incurred by the Seller Indemnified Parties by reason of the
misrepresentation of the Buyer.  No party to this Agreement shall have
an obligation for indemnification under this Section
5 unless the aggregate Losses suffered by the Seller Indemnified Parties
or Buyer Indemnified Parties, as the case may be, under Section
5.3 or 5.2,
respectively, exceed Twenty-Five Thousand Dollars ($25,000) (the “Basket”).  Losses
to which the Basket applies, as described in the
preceding sentence, are hereinafter referred to as the “Basket
Losses” At such time as their Basket Losses exceed
Twenty-Five Thousand Dollars ($25,000) in the aggregate, the Seller Indemnified
Parties or Buyer Indemnified Parties, as applicable, shall be entitled to be
indemnified against the full amount of all such Basket
Losses that have been incurred or suffered by such indemnitees for which they
are entitled to be indemnified under this Agreement (and not merely the portion
of such Basket Losses exceeding Twenty-Five Thousand Dollars
($25,000).  Notwithstanding anything to the contrary contained in this
Section
5.6
the amount of indemnity payable (i) by Hardy and the Seller as a result of any
Losses arising out of Sections 3.1
(Organization, Standing and Power), 3.2
(Membership Interests), 3.4
(Authority: Binding Agreement), 3.7
(Intellectual Property),
3.9
(Contracts) or 3.10 (Absence
of Undisclosed Liabilities) of this
Agreement shall not be subject to the Cap or the Basket; (ii) by Buyer as a
result of any Losses arising out of Sections
4.1
(Organization, Standing and Power) or 4.2
(Authority: Binding Agreement) of this Agreement shall not be subject to
the Cap or the Basket and (iii) by either the Buyer, on the one hand, or Hardy
and the Seller, on the other hand, as a result of Losses arising out of the
covenants or agreements of the parties contained in this Agreement that by their
terms are to be satisfied after the Closing Date shall not be subject to the Cap
or the Basket.

       

      In calculating any amount of Losses
recoverable pursuant to this Section
5.5,
the amount of such Losses shall be reduced by any insurance proceeds actually
received by the indemnified party relating to such Loss (net of any costs of
collection of such amounts, including, but not limited to, attorneys fees and
expenses) and any recoveries actually received by the indemnified party from
third parties pursuant to indemnification or similar obligations and increased
by the cost of enforcing such claim for indemnification (including, but not
limited to, attorney’s fees and expenses).  The parties agree to treat
any indemnification payment pursuant to this Section
5.5
as an adjustment to the Purchase Price for tax purposes.

       

      5.7.          Exclusive
Remedy.  The Buyer, on the one hand, and Hardy and the Seller,
on the other hand, acknowledge and agree that except for claims based upon the
fraudulent conduct, intentional misrepresentation or willful misconduct of the
other party, the indemnification rights contained herein shall be the sole and
exclusive remedy for any matter,
event, act or failure to act which would constitute a breach of this Agreement
by any party hereto, it being acknowledged and agreed that such limitation shall
not affect in any way the obligations of the parties or their respective
Affiliates under any other Transaction Document.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      6.            
Certain
Covenants.

       

      6.1.          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 desirable in the reasonable opinion of
any of the parties hereto, or their respective legal counsel, to consummate the
transactions contemplated by this Agreement.

       

      6.2.          Reconciliation
of Royalty Payments and Liabilities.  Except with respect to
certain Existing Litigation Settlement Proceeds described in Section
3.07 of the Operating Agreement, any amount received by the Company in
payment of any Royalties earned prior to the Closing Date shall be paid to the
Seller within ten (10) days of such receipt.  Any Royalties received
by the Company in payment of Royalties earned after the Closing Date shall be
the property of the Company.  “Royalties”
means all license fees, franchise fees, royalty fees, or other fees, payments,
consideration or compensation (excluding any and all marketing fees) earned and
actually received any Third Party Licensee or Third Party Sub Licenses or any of
their respective Affiliates relating to, arising out of or in connection with
the Hardy Brand. In addition, all Liabilities associated with the Company that
accrue or are related to periods prior to or on the Closing Date (the “Pre-Closing
Liabilities”) are the responsibility
of Hardy and Hardy shall pay all of such Pre-Closing Liabilities within a
reasonable amount of time of when they are invoiced or become
due.  The Buyer shall not be responsible for any Pre-Closing
Liabilities of any nature whatsoever.

       

      6.3.          Payment
in Respect of Liens.  Hardy shall pay, as and when the same
become due and without deduction from or credit to any amount payable by Hardy
hereunder, any and all fees and other amounts payable on or with respect to the
Liens set forth on Schedule
3.7(a)(i) and Schedule
3.7-II.

      


      6.4.          UCC
Filings; Evidence of Pay Off.  Prior to the Closing, Hardy
shall have filed or caused to be filed such financing statement amendments or
terminations thereof necessary or desirable to effect the release of any Liens
of record on or with respect to the Hardy Brand and any other assets of the
Company and/or to vest in the Company all right, title and interest of the
Company and its Affiliates in and to the Hardy Brand and any other assets of the
Company.  Prior to the Closing, Hardy shall have caused the Company to
satisfy all of its obligations and pay all amounts related to the Loan and
Security Agreement between Continental Business Credit, Inc. and Hardy Life
dated December 2007 (the “Bank
Debt”).

       

      6.5.          Form
D.  The
Buyer shall file on a timely basis a Notice of Sale of Securities on Form D with
respect to the Shares and shall provide a copy thereof to the
Seller.

       

      6.6.          Non-Competition.  In consideration
for the Company and the Buyer entering into this Agreement and the Consulting
Services Agreement and in connection with the sale of the Business, Hardy hereby
agrees that he shall not, during the Term (as defined in the Consulting Services
Agreement) of the Consulting Services Agreement, and, for a period of two (2)
years after the date of the termination of the Consulting Services Agreement,
directly or indirectly, engage, have an interest in or render any services to
any business (whether as owner, manager, operator, licensor, licensee, lender,
partner, stockholder, joint venturer, employee, consultant or otherwise)
competitive with the business activities conducted by the Company during the
Term of the Agreement.  Notwithstanding the foregoing, (a) nothing
herein shall prevent Hardy from owning stock or other equity interests in a
publicly traded corporation whose activities compete with the Company, provided
that such stock holdings do not at any time constitute more than five percent
(5%) of the outstanding voting equity securities of such corporation and (b) if,
during the Term of the Consulting Services Agreement, Hardy engages in an
activity in which the Company is not, at such time as Hardy commences engaging
in such activity, then engaging, then if the Company thereafter enters into such
activity, such activity shall be deemed not to be competitive with the business
activities conducted by the Company.

       

      6.7.          Non-Solicitation.  During the Term
of the Consulting Services Agreement and for two (2) years thereafter, Hardy
shall not, directly or indirectly, influence or attempt to influence customers
or suppliers of the Company, Iconix or their affiliates, to divert their
business to any competitor of the Company or Iconix (unless otherwise requested
by Iconix to do so hereunder).  Hardy agrees that, during the Term of
the Consulting Services Agreement and for two (2) years thereafter, he will not,
directly or indirectly, solicit or recruit any employee of the Company or Iconix
for the purpose of being employed by him or by any competitor of the Company or
Iconix on whose behalf he is acting as an agent, representative or
employee.

       

      6.8.          Termination
of Employees.  Prior to the Closing Date, the employment of
Steven Hoel and Hardy shall have been terminated.  On and after the
Closing Date, Hardy shall provide services to the Company upon the terms and
conditions set forth in the Consulting Agreement.  Any amounts payable
to any Company employees, including health benefits, severance and any other
payments, whether by statute, contract or otherwise, shall be the responsibility
of Hardy.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      7.            
The
Closing.  The closing of the transactions contemplated by this
Agreement (the “Closing”)
will take place at 10:00 A.M. (New York time) at the offices of Blank Rome LLP,
405 Lexington Avenue, New York, New York on the date hereof, or at such other
time, place and date as the Buyer and the Company shall mutually agree in
writing.  The date upon which the Closing occurs is referred to herein
as the “Closing
Date”.

       

      7.1.          Conditions
Precedent to the Obligations of Each of the Parties.  The
obligation of each of the parties to consummate the transactions contemplated
hereby is subject to the satisfaction or waiver by such party, on or before the
Closing, of the following conditions precedent:

       

      (a)           No
Injunction.  No preliminary or permanent injunction or other
order shall have been issued by any court or by any Governmental Authority and
remain in effect at the Closing Date which prohibits, and no preliminary or
permanent injunction or other order shall be pending or threatened which would
prohibit, the consummation of the transactions contemplated by this Agreement or
the Operating Agreement or which has or would have the effect of making the
transactions contemplated by this Agreement or the Operating Agreement illegal
(each party agreeing to use its commercially reasonable efforts to have any such
issued injunction or order lifted).

       

      (b)           Statutes.  No
statute, rule, regulation, executive order, decree or order of any kind shall
have been enacted, entered, promulgated or enforced by any Governmental
Authority which prohibits the consummation of the transactions contemplated by
this Agreement or the Operating Agreement or has the effect of making the
transactions contemplated by this Agreement or the Operating Agreement
illegal.

       

      (c)           Operating
Agreement.  On or before the Closing Date, each party shall
have duly executed and delivered to the other party the amended and restated
operating agreement of the Company, dated as of the Closing Date, in the form
attached hereto as Exhibit
“E” (the “Operating
Agreement”).

       

      (d)           Escrow
Agreement.  As of the Closing Date, each party shall have duly
executed and delivered to the other party the Escrow Agreement, the Consulting
Services Agreement, the Pledge Agreement and all other Transaction
Documents.

       

      7.2.          Conditions
Precedent to the Obligations of the Buyer.  The obligation of
the Buyer to consummate the transactions contemplated hereby and in the
Operating Agreement is additionally subject to the satisfaction or waiver on or
before the Closing Date of the following conditions precedent:

       

      (a)           All
representations and warranties of Hardy, the Company and the Seller contained
herein shall be true and correct as of the Closing Date with the same force and
effect as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties shall be true and correct as of such other date.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      (b)           Hardy
and the Seller shall have performed in all material respects, all of their
respective obligations and agreements, and complied in all material respects
with all covenants and conditions, contained in this Agreement.

       

      (c)           All
consents, approvals and other actions by, all notices to any Person and all
notices and all filings with all Governmental Authorities that are required to
have been obtained, taken or made to consummate the transactions contemplated by
this Agreement, the Operating Agreement and the Conversion shall have been
obtained, undertaken or made, except for such consents, approvals, notices and
filings, the failure to obtain which would not have a material adverse effect on
the Company or the Hardy Brand after giving effect to the transactions
contemplated hereby and by the Operating Agreement.

       

      (d)           Prior
to the Closing, no event shall have occurred or failed to occur, which
occurrence, or failure to occur, as the case may be, has had or is reasonably
likely to have a material adverse effect on the Hardy Brand or any of the
Existing Licenses.

       

      (e)           The
Buyer shall have received satisfactory evidence of transfer of the Hardy Brand
from Hardy Life to the Company.

       

      (f)           The
Seller shall have delivered or cause to be delivered to the Buyer a duly
executed certificate representing the Interest.

       

      (g)           Hardy
shall have delivered or cause to be delivered, on his behalf and on behalf of
the Seller, as applicable, to the Buyer a duly executed counterpart of the (i)
Consulting Services Agreement, (ii) the Escrow Agreement (iii) the Pledge
Agreement and (iv) all other Transaction Documents.

       

      (h)           Hardy
shall have caused to be delivered the signature pages of the Seller and all
signatories to the Operating Agreement, other than Iconix.

       

      (i)           Hardy
shall have delivered or caused to be delivered to the Buyer evidence to the
Buyer’s reasonable satisfaction of the termination and satisfaction of the
Company’s obligations pursuant to the Bank Debt.

       

      (j)           Hardy
shall have delivered or caused to be delivered to the Buyer evidence to the
Buyer’s reasonable satisfaction of the release of any Liens of record on or with
respect to the Hardy Brand and any other assets of the Company.

       

      7.3.          Conditions
Precedent to the Obligations of Hardy and the Seller.  The
obligations of Hardy and the Seller to consummate the transactions contemplated
hereby is additionally subject to the satisfaction or waiver on or before the
Closing Date of the following conditions precedent:

       

      (a)           All
representations and warranties of the Buyer contained shall have been true and
correct when made and shall be true and correct as of the Closing Date with the
same force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct as of such other
date.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      (b)           The
Buyer shall have performed in all material respects all obligations and
agreements, and complied in all material respects with all covenants and
conditions, contained in this Agreement to be performed or complied with by it
prior to the Closing Date.

       

      (c)           All
consents, approvals and other actions by, all notices to and all filings with
all Governmental Authorities that are required to have been obtained, taken or
made to consummate the transactions contemplated by this Agreement, the
Operating Agreement and the Escrow Agreement shall have been obtained,
undertaken or made, except for such consents, approvals, notices and filings,
the failure to obtain which would not have a material adverse effect on the
Company after giving effect to the transactions contemplated hereby and by the
Operating Agreement.

       

      (d)           Prior
to the Closing, no event shall have occurred or failed to occur, which
occurrence, or failure to occur, as the case may be, has had or is reasonably
likely to have a material adverse effect on the Buyer.

       

      (e)           The
Buyer shall have delivered to (i) the Seller, the Cash Consideration
and  the Balance Shares; and (ii) the Escrow Agent, the Escrow
Shares.

       

      7.4.          Other
Deliveries.  In addition, the parties shall execute and deliver
such other documents as may be required by this Agreement and as any of them or
their respective counsel may reasonably require in order to document and carry
out the transactions contemplated by this Agreement, including notices to all
third parties conducting business with the Company of the new address for
notices, bills, payments, etc.

       

      8.            
General
Provisions.

       

      8.1.          Fees and
Expenses.  Except as otherwise provided in this Agreement, each
of the parties hereto shall bear its own expenses in connection with the
transactions contemplated hereby.

       

      8.2.          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.

       

      8.3.          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.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      8.4.          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):

       

      
        
          
            
              
                	
                        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 or Hardy:

                      	
                        Donald
      Edward Hardy

                        700
      Lombard Street

                        San
      Francisco, CA 94133

                        Fax:
      (808)734-5506

                      
	 	 
	
                        with
      copies to:

                      	
                        Arthur
      Cohen

                        2
      Venture, suite 120

                        Irvine,
      California 92618

                        Fax:
      (949)
766-3041

                      


              

            

          

        

      

      


      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.

      


      8.5.          Knowledge.  For
purposes of this Agreement, “knowledge,” “best
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 Andrew Tarshis and Warren Clamen after reasonable inquiry of
those individuals responsible for the matters represented or warranted, and (b)
Hardy shall mean the actual knowledge of any of Donald Edward Hardy after
reasonable inquiry of those individuals responsible for the matters represented
or warranted.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      8.6.          Dollar
Amounts.  All dollar amounts in this Agreement are stated, and
shall be interpreted to be, in United States dollars.

       

      8.7.          Amendment.  This
Agreement may not be amended except by an instrument in writing signed by each
of the parties hereto.

       

      8.8.          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 transactions contemplated
hereby are fulfilled to the greatest extent possible.

       

      8.9.          Entire
Agreement.  This Agreement (together with the Exhibits and
Schedules annexed hereto and incorporated herewith) and the agreements referred
to herein, including, but not limited to, the Operating Agreement, the
Consulting Services Agreement, the Escrow Agreement and the documents related to
the Conversion and the Pledge Agreement 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.

       

      8.10.       
No
Assignment.  This Agreement shall not be assigned by any party
hereto, whether by operation of law or otherwise, and any such assignment shall
be null and void.

       

      8.11.       
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.

       

      8.12.       
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.

       

      8.13.       
Governing
Law.  This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York 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 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.

       

      8.14.        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.

       

      8.15.       
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.

       

      -Signature
Page Follows-

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      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 CEO	 


          

        

      

       

      
        
          	 	
                  SELLER:

                  


                  Donald
      Edward Hardy and Francesca

                  Passalacqua,
      trustees of the

                  Hardy/Passalacqua
      Family Revocable Trust Company
      Name

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/
      Donald Edward Hardy	 
	 	 	Name:
      Donald Edward Hardy 	 
	 	 	Title:  Trustee	 


        

      

    

     

    
      
        
          
            
              	
                       

                    	
                      By:
      

                    	/s/
      Francesca Passalacqua	 
	 	 	Name:  Francesca
      Passalacqua	 
	 	 	Title:  Trustee	 


            

          

        

      

    

     

    
      
        
          
            
              
                	
                         

                      	
                         

                      	/s/
      Donald Edward Hardy	 
	 	 	Donald
      Edward Hardy	 


              

            

          

        

      

    

    


     

    [Signature
page to Purchase Agreement]

     

    
      
        
        

      

      
        22