<PAGE>
 
                                                                   EXHIBIT 10.65


          PARTNERSHIP INTEREST PURCHASE AGREEMENT, dated as of July 2, 1998,
among ROCKY ACQUISITION, LLC, a Delaware limited liability company (the
"Purchaser"), TARRANT APPAREL GROUP, a California corporation ("TAG"), LIMITED
DIRECT ASSOCIATES, L.P., a Delaware limited partnership ("LDA"), ROCKY APPAREL,
INC., a New York corporation ("RAI"), and GABRIEL MANUFACTURING COMPANY, a
Mississippi corporation ("GMC," and together with LDA and RAI, the "Sellers").

                             W I T N E S S E T H :
                             - - - - - - - - - -  

          WHEREAS, pursuant to a certain limited partnership agreement, dated
May 27, 1994 (the "Limited Partnership Agreement"), LDA, RAI and GMC own 49, 20
and 31 partnership units, respectively, of Rocky Apparel, L.P., a Delaware
limited partnership ("Rocky"), as limited partners and RAI owns an additional 1
partnership unit of Rocky as a general partner;

          WHEREAS, the Purchaser has been formed by TAG for the purpose of
acquiring 100% of the partnership interests in Rocky from the Sellers pursuant
to the terms and conditions of this Agreement;

          WHEREAS, the Sellers desire to sell, and the Purchaser desires to
purchase 100% of the partnership interests in Rocky on the terms and subject to
the conditions set forth in this Agreement;

          NOW, THEREFORE, in consideration of the representations, warranties
and agreements herein contained, the parties hereto agree as follows:

          Section 1.  Sale and Purchase.  In reliance upon the representations
                      -----------------                                       
and warranties contained herein and subject to the terms and conditions hereof,
(a) each of the Sellers, severally and not jointly, will sell to the Purchaser,
 -                                                                             
and the Purchaser will purchase, on the Closing Date (as defined in Section 2),
the partnership units (the "Units") owned by each of the Sellers set forth
opposite such Seller's name on Schedule 1, which in the aggregate represent 100%
of the partnership interests (collectively, the "Partnership Interests") in
Rocky.  The sale and purchase of the Units will be effective as of 12:01 a.m.
(Los Angeles time) on July 1, 1998.

          Section 2.  Closing.
                      ------- 

          2.1  Place and Date.  The closing of the sale and purchase of the
               --------------                                              
Partnership Interests (the "Closing") shall take place at the offices of
Debevoise & Plimpton, 875 Third Avenue, New York, New York at 10:00 a.m. on July
2, 1998, or at such other time and place as the parties to this Agreement shall
agree (the "Closing Date").

                                      -1-
<PAGE>
 
          2.2  Payment of Purchase Price.  Subject to the terms and conditions
               -------------------------                                      
of this Agreement and the Escrow Agreement, the Purchaser shall deliver at the
Closing to each of the Sellers cash and/or common stock of TAG (the "TAG Stock")
in the amount set forth opposite such Seller's name on Schedule 2.2(a), which
amounts shall total $7,500,000 plus 80,890 shares of TAG Stock in the aggregate
for all of the Sellers (the "Initial Purchase Price"), with such cash amounts
payable by wire transfer of immediately available funds to the account or
accounts described on Schedule 2.2(b) of the Agreement or otherwise designated
by each of the Sellers at least two business days prior to the Closing Date.

          Section 3.  Purchase Price Adjustment.  (a)  Delivery and Review of
                      -------------------------        ----------------------
Closing Balance Sheet.  As promptly as practicable, but no later than 60 days
---------------------                                                        
after the Closing Date, the Sellers will cause Rocky to prepare and deliver to
the Purchaser (i) a draft balance sheet of Rocky, dated as of June 30, 1998 (the
               -                                                                
"Closing Balance Sheet"), accompanied by a draft auditors' report thereon from
Pricewaterhouse Coopers LLC ("PC") and (ii) a draft certificate of an officer of
                                        --                                      
Rocky, setting forth the Closing Net Worth together with supporting calculations
in reasonable detail (the "Adjustment Certificate").  The Closing Balance Sheet
shall be prepared in accordance with generally accepted accounting principles.
The Purchaser shall have 45 days from the date on which the Closing Balance
Sheet and the Adjustment Certificate are delivered to it and the PC work papers
are available for review in Los Angeles, California to review such documents
(the "Review Period").  The Purchaser and its accountants shall be provided with
full access to the PC work papers at the Purchaser's Los Angeles, California
office in connection with such review.  If the Purchaser disagrees in any
respect with any item or amount shown or reflected in the Closing Balance Sheet
or the Adjustment Certificate or with the calculation of the Closing Net Worth,
the Purchaser may, on or prior to the last day of the Review Period, deliver a
notice to the Sellers setting forth, in reasonable detail, each disputed item or
amount and the basis for the Purchaser's disagreement therewith, together with
supporting calculations (the "Dispute Notice").  It is mutually agreed that
estimates used in the preparation of the Closing Balance Sheet may be
conclusively disputed by actual results which differ from such estimates prior
to the end of the Review Period.  The Dispute Notice shall set forth the
Purchaser's position as to the proper Closing Net Worth.  If no Dispute Notice
is received by the Purchaser on or prior to the last day of the Review Period,
the Closing Balance Sheet and the Adjustment Certificate shall become final and
be deemed accepted by the Purchaser.  The Purchaser's rights to indemnification
pursuant to Sections 13 and 14 (and any limitations on such rights) shall not be
deemed to limit, supersede or otherwise affect the Purchaser's rights to a full
purchase price adjustment pursuant to this Section 3.

          (b)  The Accountant.  Within 15 days after the Sellers' receipt of a
               --------------                                                 
Dispute Notice and unless the matters in the Dispute Notice have otherwise been
resolved by mutual agreement of the parties, the Purchaser and the Sellers shall
mutually agree upon and jointly contact an independent accounting firm with
experience in the apparel industry, which shall be retained to resolve the
issues set forth in the Dispute Notice. If the Purchaser 
        
                                      -2-
<PAGE>
 
and the Sellers cannot agree on the independent accounting firm to be retained,
the Purchaser and the Sellers shall each submit the name of one accounting firm
that satisfies the qualifications set forth in this Section 3, and the
independent accounting firm shall be selected by lot from those two firms. The
independent accounting firm retained by the Purchaser and the Sellers (the
"Accountant") shall conduct such review of the Closing Balance Sheet, any
related work papers of Rocky's accountants, the Adjustment Certificate and the
Dispute Notice, and any supporting documentation as the Accountant in its sole
discretion deems necessary, and the Accountant shall conduct such hearings or
hear such presentations by the parties as the Accountant in its sole discretion
deems necessary.

          (c) The Adjustment Report.  The Accountant shall, as promptly as
              ---------------------                                       
practicable and in no event later than 45 days following the date of its
retention, deliver to the Purchaser and the Sellers a report (the "Adjustment
Report"), in which the Accountant shall, after considering all matters set forth
in the Dispute Notice, determine what adjustments, if any, should be made to the
Closing Balance Sheet in order for it to comply with this Section 3, and shall
determine the appropriate Closing Net Worth on that basis. The Adjustment Report
shall set forth, in reasonable detail, the Accountant's determination with
respect to each of the disputed items or amounts specified in the Dispute
Notice, and the revisions, if any, to be made to the Closing Balance Sheet, the
Adjustment Certificate and the Closing Net Worth, together with supporting
calculations.  The Sellers shall pay one-half, and the Purchaser shall pay one-
half, of the fees and expenses of the Accountant incurred in connection with the
matters referred to in this Section 3.  The Adjustment Report shall be final and
binding upon the Purchaser and the Sellers, and shall be deemed a final
arbitration award that is enforceable pursuant to the terms of the Federal
Arbitration Act, 9 U.S.C. (S)(S) 1 et seq.
                                   -- --- 

          (d) Adjustment and Payment.  Effective upon the end of the Review
              ----------------------                                       
Period (if a timely Dispute Notice is not delivered), or upon the resolution of
all matters set forth in the Dispute Notice by agreement of the parties or by
the issuance of the Adjustment Report (if a timely Dispute Notice is delivered),
the Initial Purchase Price shall be reduced by the amount, if any, by which the
Closing Net Worth is less than $0, or increased by the amount, if any, by which
the Closing Net Worth is greater than $0.  Any adjustment to the Initial
Purchase Price pursuant to this Section 3 shall be paid by the Purchaser or the
Sellers, as the case may be, on the fifth business day following the end of the
Review Period (if a timely Dispute Notice is not delivered), or five business
days after the date on which the Adjustment Report has been received by the
Sellers and the Purchaser (if a timely Dispute Notice is delivered).  Any such
payment shall be made by wire transfer of immediately available funds to the
account or accounts designated by the Sellers or the Purchaser, as the case may
be, at least two business days prior to the date on which such payment is
scheduled to be made.  "Purchase Price" shall mean the Initial Purchase Price,
as adjusted pursuant to this Section 3.

                                      -3-
<PAGE>
 
          (e)  Definitions.  For purposes of this Section 3:
               -----------                                  

          "Closing Net Worth" shall mean tangible assets (including fixed assets
at Rocky's book value) less liabilities of Rocky, all as shown on the Closing
Balance Sheet, as of the Closing Date and, except for the transfer of the USPA
Assets to GMC in accordance with Section 4.6, prior to giving effect to the
consummation of the transactions contemplated by this Agreement.

          (f) Within 100 days after the Closing Date, Rocky will report to the
Purchaser and the Sellers in writing the dollar amount of accounts receivable
that appeared on the Closing Balance Sheet, without taking into account any
reserve (the "Gross CBS Receivables"), and that were collected on or within 90
days after the Closing Date (the "Collected Receivables").  If such amount
exceeds (x) the amount of the Gross CBS Receivables, less (y) the reserve for
         -                                                 -                 
uncollectible receivables taken into account in the Closing Balance Sheet (such
difference, the "Net CBS Receivables"), then the Initial Purchase Price shall be
increased by, and the Purchaser shall promptly pay to the Sellers, an amount
equal to such excess.  If such amount is less than the Net CBS Receivables, then
the Initial Purchase Price shall be reduced by, and the Sellers shall promptly
pay to the Purchaser, an amount equal to such shortfall.  If after such 90-day
period, additional payments are received by Rocky in respect of Gross CBS
Receivables, such payments shall be paid to the Sellers.  Disputes regarding the
calculations required by this subsection (f) (which may be raised by either the
Sellers or the Purchaser) shall be resolved by the Accountant in accordance with
the procedure set forth in subsections (b) and (c) of this Section 3.

          (g) Allocation of the Purchase Price Adjustment and Accounts
              --------------------------------------------------------
Receivable Adjustment; Limitation.  Each of LDA, GMC and RAI shall receive from
---------------------------------                                              
the Purchaser or pay to the Purchaser, as the case may be, 49%, 31% and 20%,
respectively, of any adjustment to the Initial Purchase Price pursuant to
subsections (d) or (f) of Section 3. Any such adjustment to the Initial Purchase
Price shall be deemed either an addition or a reduction to the Initial Purchase
Price for the Partnership Interests purchased by the Purchaser from the Sellers.
Notwithstanding anything else contained in this Section 3, the Sellers or the
Purchaser, as the case may be, shall not be required to pay any adjustment to
the Initial Purchase Price pursuant to subsections (d) or (f) of this Section 3
unless the aggregate net adjustment to the Initial Purchase Price, after
application of both subsections, exceeds $50,000.

          Section 4.  Conditions to the Obligations of the Purchaser and TAG.
                      ------------------------------------------------------ 
The obligations of the Purchaser and TAG under this Agreement are subject to the
fulfillment prior to or at the Closing of the following conditions:

          4.1 Representations and Warranties.  The representations and
              ------------------------------                          

                                      -4-
<PAGE>
 
warranties of each of the Sellers set forth herein shall be true and correct
when made and in all material respects at and as of the Closing.

          4.2 Performance.  Each of the Sellers shall have performed and 
              -----------                                                   
complied, in all material respects, with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing, unless the same shall have been waived.

          4.3 Closing Certificate.  Each of the Sellers shall have delivered to
              -------------------                                              
the Purchaser a certificate signed by an officer of such Seller dated the
Closing Date, certifying that the conditions specified in Sections 4.1 and 4.2
have been fulfilled with respect to such Seller.

          4.4 Consents.  All consents or waivers required in connection with the
              --------                                                          
transactions contemplated hereby shall have been obtained or waived.

          4.5 Escrow Agreements.  A share escrow and security agreement between
              -----------------                                                
TAG, RAI and GMC, in form and substance reasonably acceptable to TAG, RAI and
GMC (the "Escrow Agreement") shall have been executed and delivered on or prior
to the Closing Date.

          4.6 U.S. Polo Association Assets.  Rocky's receivable from the U.S.
              ----------------------------                                   
Polo Association and any related inventory and any rights in the U.S.P.A. master
license (collectively, the "USPA Assets") shall have been transferred to GMC
immediately prior to Closing.

          4.7 Employment Arrangements. The Purchaser and Gabriel Zeitouni
              -----------------------                                    
("Zeitouni") shall have negotiated in good faith and entered into mutually
satisfactory employment arrangements (the "Employment Agreement") relating to
Zeitouni's employment by Rocky.

          4.8 Proceedings and Documents.  All proceedings in connection with the
              -------------------------                                         
transactions contemplated hereby and all documents and instruments incidental
thereto shall be reasonably satisfactory in substance and form to the Purchaser,
and the Purchaser shall have received all such originals or certified or other
copies of such documents as the Purchaser may reasonably request.

          Section 5.  Conditions to the Obligations of the Sellers.  The
                      --------------------------------------------      
obligations of each of the Sellers under this Agreement are subject to the
fulfillment prior to or at the Closing of the following conditions.

          5.1 Representations and Warranties.  The representations and
              ------------------------------                          

                                      -5-
<PAGE>
 
warranties of the Purchaser and TAG set forth herein shall be true and correct
when made and in all material respects at and as of the Closing.

          5.2 Performance.  Each of the Purchaser and TAG shall have performed
              -----------                                                     
and complied, in all material respects, with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing unless same shall have been waived.

          5.3 Closing Certificate.  Each of the Purchaser and TAG shall have
              -------------------                                           
delivered to the Sellers a certificate signed by an officer, dated the Closing
Date, certifying that the conditions specified in Sections 5.1 and 5.2 have been
fulfilled with respect to such person.

          5.4 Ancillary Agreements.  The Escrow Agreement and the Employment
              --------------------                                          
Agreement (collectively, the "Ancillary Agreements") shall have been executed
and delivered on or prior to the Closing Date.

          5.5 U.S. Polo Association Assets.  The USPA Assets shall have
              ----------------------------                             
been transferred to GMC immediately prior to Closing.

          5.6 Repayment of Certain Borrowings.  All amounts owed (approximately
              -------------------------------                                  
$3,409,242) by Rocky to LDA or its affiliates shall have been paid in full on
the Closing Date by the Purchaser by wire transfer of immediately available
funds, to the same account as LDA's portion of the Initial Purchase Price is
wired.  All amounts owed by Zeitouni to LDA, or their respective affiliates
shall have been paid in full on the Closing Date by Zeitouni or restructured in
a manner satisfactory to LDA in its sole discretion.

          5.7 Employment Arrangements.  The Purchaser and Zeitouni shall have
              -----------------------                                        
negotiated in good faith and entered into the Employment Agreement relating to
Zeitouni's employment by Rocky.

          5.8 Proceedings and Documents.  All proceedings in connection with the
              -------------------------                                         
transactions contemplated hereby and all documents and instruments incidental
thereto shall be reasonably satisfactory in substance and form to each of the
Sellers, and each of the Sellers shall have received all such originals or
certified or other copies of such documents as such Seller may reasonably
request.

          Section 6. Representations and Warranties of GMC and RAI.  GMC and
                     ---------------------------------------------          
RAI, jointly and severally, represent and warrant to the Purchaser and TAG as
follows:

          6.1 Organization and Standing of Rocky.  Rocky is a limited
              ----------------------------------                     
partnership duly organized and validly existing under the laws of the State of
Delaware. 

                                      -6-
<PAGE>
 
Each of RAI and GMC is a corporation duly organized and validly existing under
the laws of their respective states of incorporation.  Rocky is duly qualified
and in good standing as a foreign corporation authorized to do business in all
jurisdictions where the nature of its business or the character of its assets
requires such qualification except where the failure to so qualify would not
have a material adverse effect on the business of Rocky. Each of Rocky, RAI and
GMC has all requisite corporate power and authority to own and operate its
respective properties, to carry on the business conducted by it and to enter
into this Agreement and the Escrow Agreement and the transactions contemplated
herein and therein and to perform its obligations under this Agreement and such
contemplated transactions.

          6.2  Capitalization of Rocky.  (a) Each of GMC and RAI have the full
               -----------------------                                        
capacity, right and lawful authority to transfer the Partnership Interests owned
by GMC and RAI to the Purchaser.  Schedule 1 contains a complete and correct
list of all outstanding partnership interests in Rocky, together with a list of
owners thereof.  Each of GMC and RAI owns beneficially and of record, the
Partnership Interests as indicated on Schedule 1, free and clear of any liens,
claims or encumbrances ("Liens").  Assuming that the Purchaser is acquiring the
Partnership Interests in good faith, upon the delivery of and payment by the
Purchaser of the Initial Purchase Price in the manner described in Section 2.2,
the Purchaser shall acquire good and valid title to the Partnership Interests
from GMC and RAI, free and clear of any Liens.

          (b)  All outstanding partnership interests of Rocky, including the
Units, are duly authorized, validly issued, fully paid and nonassessable.

          (c)  There are no preemptive or similar rights on the part of any
holders of any class of securities of Rocky and no subscriptions, options,
warrants, conversion or other rights, agreements, commitments, arrangements or
understandings of any kind obligating Rocky, GMC or RAI, contingently or
otherwise, to issue or sell, or cause to be issued or sold, any partnership
interest of Rocky, or any securities convertible into or exchangeable for any
such interests, are outstanding, and no authorization therefor has been given.
There are no outstanding contractual or other rights or obligations to or of
Rocky, GMC or RAI to repurchase, redeem or otherwise acquire any outstanding
partnership interests or other securities of Rocky.

          6.3 Investments.  Assuming the liquidation and dissolution of AC
              -----------                                                 
Designs LLC and AC Designs Inc., Rocky does not own any shares of capital stock
or other securities of, or interest in, any other person.

          6.4 Agreement.  This Agreement and the Escrow Agreement have been duly
              ---------                                                         
authorized by all necessary action on the part of each of Rocky, GMC and RAI,
have been duly executed and delivered by each of them and constitute the legal,
valid and binding obligations of each of them, enforceable against each of them
in accordance with 

                                      -7-
<PAGE>
 
their terms, except as such enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting the rights of creditors generally.

          6.5 No Conflicting Instruments.  Except as set forth on Schedule 6.5
              --------------------------                                      
or contemplated by Section 9, the execution, delivery and performance of this
Agreement and the Escrow Agreement and the transactions contemplated herein and
therein by each of Rocky, GMC or RAI will not violate or conflict with its
certificate of incorporation or certificate of limited partnership, or by-laws
or limited partnership agreement, as the case may be, and will not violate,
conflict with, or constitute a default under, any agreement or instrument to
which any of Rocky, GMC or RAI is a party or by which any of Rocky, GMC or RAI
is bound, or any judgment, decree, order, statute, rule or governmental
regulation applicable to any of Rocky, GMC or RAI.

          6.6 Governmental Consent.  Except for the Mississippi governmental
              --------------------                                          
consent as set forth on Schedule 6.5, no consent, approval or authorization of,
or registration, qualification, designation, declaration or filing with, any
governmental authority is required in connection with the execution, delivery or
performance of this Agreement or the Escrow Agreement or of any of the
transactions contemplated hereby or thereby by any of Rocky, GMC or RAI that has
not been obtained.

          6.7 No Undisclosed Liabilities.  Except to the extent reflected or
              --------------------------                                    
reserved against on its balance sheet as at December 31, 1997, disclosed in this
Section 6 or incurred in the ordinary course of business since December 31,
1997, Rocky has no liabilities, whether absolute, accrued, contingent or
otherwise, and whether due or to become due.

          6.8 Inventories.  All inventories of Rocky, including raw materials,
              -----------                                                     
parts, supplies, work in process and finished goods, reflected on the balance
sheet of Rocky, dated as of December 31, 1997 (the "Balance Sheet") or on the
books of Rocky on the Closing Date are of good, usable and merchantable quality
(subject to normal shrinkage, damage and the occurrence of seconds).

          6.9 Patents, Trademarks, etc.  Rocky does not own any patents, trade
              ------------------------                                        
names, trademarks, copyrights and other similar property rights.

          6.10 Financial Statements and Information.  Rocky has delivered to the
               ------------------------------------                             
Purchaser copies of the audited balance sheet, statement of operations and
retained earnings and statement of cash flows of Rocky as at, and for the year
ended, December 31, 1997. All such financial statements have been or will be
prepared in accordance with generally accepted accounting principles, applied
consistently throughout the periods covered 

                                      -8-
<PAGE>
 
thereby, and fairly present the financial condition of Rocky as at the dates
indicated and the results of its operations for the periods indicated.

          6.11 Compliance with Laws.  Rocky is not in violation of any
               --------------------                                   
applicable law, rule or regulation of any governmental authority or of any term
of any applicable order, judgment or decree of any court, arbitrator or
governmental authority, the effect of which violation could adversely affect the
business, condition (financial or other) or prospects of Rocky.

          6.12 Taxes.  Except as disclosed on Schedule 6.12, (a) Rocky has or
               -----                                                         
will have duly and timely filed with the appropriate governmental agencies all
tax returns and reports required to be filed by it on or before the Closing Date
or obtained extensions therefor; (b) all taxes, assessments and other
governmental charges upon Rocky or upon any of its respective properties,
assets, income, receipts, payrolls, transactions, capital, net worth or
franchises (including any interest, penalties or additions to tax payable in
respect thereof) ("Taxes") that are shown as due and payable on such returns or
reports and other Taxes that are due and payable on or before the Closing Date
have been or will be paid; (c) Rocky has duly and timely withheld all Taxes
required to be withheld in connection with its business or assets and such
withheld Taxes have been either duly and timely paid to the proper governmental
authorities or properly set aside in accounts for such purpose; (d) Rocky is not
currently the beneficiary of any extension of time to file any Tax return; and
(e) no claim or assessment (other than a claim or assessment that has been
finally settled) concerning any liability for Taxes of Rocky has been asserted,
raised or threatened by any taxing authority. Rocky is and has been treated as a
partnership for U.S. federal income tax purposes for all relevant taxable
periods.

          6.13 Environmental Matters.  (a)  Rocky has not (i) breached or been
               ---------------------                       -                  
notified by any governmental or regulatory authority to have breached any
Environmental Law, (ii) released any Hazardous Substance or (iii) become aware
                    --                                       ---              
of the release or presence of any Hazardous Substance, except in amounts not
constituting a breach of any Environmental Law, on any property owned, leased or
occupied by Rocky.  There are no underground storage tanks on property owned,
leased or occupied by Rocky.

          (b)  For purposes of this Section 6.13, (i) "Environmental Law" means
                                                   -                           
all Laws relating to the protection of the environment, to human health and
safety, or to any environmental activity, including, without limitation, (x) the
                                                                          -     
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, and the Occupational Safety and Health
Act, (y) all other requirements pertaining to reporting, licensing, permitting,
      -                                                                        
investigation or remediation of emissions, discharges, releases or threatened
releases of any Hazardous Substance into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport or handling of any Hazardous
Substance and 

                                      -9-
<PAGE>
 
(z) all other requirements pertaining to the protection of the health and 
 -                                                            
safety of employees or the public, and (ii) "Hazardous Substance" means any 
                                        --                       
substance that (x) is or contains asbestos, urea formaldehyde foam insulation, 
                -                                                 
poly chlorinated biphenyls, petroleum or petroleum-derived substances or wastes,
radon gas or related materials, (y) requires investigation, removal or 
                                 -          
remediation under any Environmental Law, or is defined, listed or identified as
a "hazardous waste" or "hazardous substance" thereunder or (z) is toxic,
                                                            -
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is regulated by any governmental authority
or Environmental Law.

          6.14  No Brokers or Finders.  No person has or will have, as a result
                ---------------------                                          
of the transactions contemplated by this Agreement, any right, interest or valid
claim against the Purchaser or TAG, for any commission, fee or other
compensation as a finder or broker because of any act or omission by Rocky, RAI
or GMC or any of their agents.

          6.15 Actions to Closing.  During the period from December 31, 1997 to
               ------------------                                              
and including the date hereof, and from the date hereof to and including the
Closing Date, except as otherwise consented to in writing by the Purchaser,
Rocky has and shall have:

          (a)  carried on its business in, and only in, the usual, regular and
ordinary course in substantially the same manner as conducted prior to December
31, 1997 and, to the extent consistent with such business, has retained the
services of its present employees, and preserved its relationships with
customers, suppliers and others having business dealings with Rocky;

          (b)  (i) not mortgaged, pledged or subjected to any encumbrance any of
                -                                                               
the assets, other than encumbrances that do not, individually or in the
aggregate, materially detract from the value of the property subject thereto or
impair the use of such property in the operation of the business of Rocky, (ii)
                                                                            -- 
not purchased or otherwise acquired, or sold or otherwise disposed of, any
material assets, except in the ordinary course of business and (iii) not
                                                                ---     
incurred any indebtedness for borrowed money, incurred any capital lease
obligations or made any distribution to any holders of its partnership interests
other than a tax distribution; and

          (c)  advised the Purchaser of any event or condition of any character,
materially and adversely affecting, either in any case or in the aggregate, the
condition (financial or other), assets, liabilities, revenues, business or
prospects of Rocky other than matters of a general economic or political nature
that do not affect the business of Rocky uniquely.

          6.16 Labor; Employee Benefits.  Schedule 6.16 contains a complete and
               ------------------------                                        
correct list of all of Rocky's retirement, pension, savings, profit-sharing,
stock option or other equity plan, health benefit and welfare plan, multi-
employer plans, bonus incentive 

                                      -10-
<PAGE>
 
plans, deferred compensation or similar plans or other employee benefit plans,
and all collective bargaining agreements, employment agreements, consulting
agreements, severance agreements, change of control agreements or retention and
termination agreements to which Rocky is a party. Rocky has not incurred (either
directly or indirectly, including as a result of any indemnification obligation
or statutory joint and several liability obligation) any liability under or
pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and
several liability provisions of the Internal Revenue Code relating to employee
benefit plans and no event, transaction or condition has occurred or exists
which could result in any such liability to Rocky or, following the Closing, the
Purchaser or its affiliates. Since December 31, 1997, the Company has not
experienced any actual or threatened work stoppages, slow-downs or other actions
and neither Rocky, GMC nor RAI has any knowledge of any planned work stoppages,
slow-downs or other job actions or of any union organizing efforts involving
employees of Rocky.

          6.17 Litigation.  Schedule 6.17 contains a complete and correct list
               ----------                                                     
of all suits, actions or legal, administrative, arbitration or other proceedings
or investigations pending, filed or threatened by, against or directly involving
Rocky.  There is no action, proceeding or investigation pending or to the
knowledge of GMC or RAI threatened against GMC or RAI that questions the
validity of this Agreement or any action taken or to be taken by GMC or RAI in
connection herewith.

          6.18 Employees.  GMC or RAI has previously provided to the Purchaser a
               ---------                                                        
complete and correct list of all employees, agents and consultants of Rocky and
their respective rates of compensation.

          6.19 Assets.  GMC or RAI has previously provided to the Purchaser a
               ------                                                        
complete and correct list of all assets (including, but not limited to, all real
property, machinery, furniture, fixtures, equipment and other tangible assets)
used in, or necessary for the conduct of, the business of Rocky as presently
conducted, other than any item the original cost of which was less than $500.
Except as set forth on such list, all such assets are owned or leased by Rocky
free and clear of all liens, claims, charges and encumbrances of any kind or
nature and are in good working condition and repair (subject to normal wear and
tear) and are adequate for their intended uses.  The leases pursuant to which
Rocky holds any such assets are in full force and effect and are enforceable
against each party thereto in accordance with their terms; each party to such
leases are in compliance thereunder; and no event has occurred which through the
giving of notice or the lapse of time could cause or constitute a default or the
acceleration of any obligation of any party thereto or the creation of a lien or
encumbrance upon any such asset.

          6.20 Agreements.  Schedule 6.20 contains a complete and correct list
               ----------                                                     
of all leases, contracts, agreements and commitments, whether written or oral,
to which Rocky is a party or by which it is bound, other than any agreement
providing for the payment 

                                      -11-
<PAGE>
 
of consideration of $5,000 or less in the aggregate.  Each such agreement is in
full force and effect and is valid and is enforceable against each party thereto
in accordance with its terms; each party thereto is in compliance thereunder,
and no event has occurred which through the giving of notice or the lapse of
time could cause or constitute a default or the acceleration of any obligation
of any party thereto or the creation of a lien or encumbrance upon any property
or assets of Rocky.

          6.21 Material Misstatements or Omissions.  No representations,
               -----------------------------------                      
warranties or information furnished by GMC, RAI or Zeitouni to the Purchaser or
TAG in connection with the transactions contemplated hereby contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements and facts contained therein not misleading.

          Section 7.  Representations and Warranties of LDA.  LDA represents and
                      -------------------------------------      
warrants to the Purchaser as follows:

          7.1  Organization and Standing.  LDA is a limited partnership duly
               -------------------------                                    
organized, validly existing and in good standing under the laws of the state of
Delaware and has all requisite power to enter into and perform its obligations
under this Agreement.

          7.2  Validity of Partnership Interests.  LDA has the full capacity,
               ---------------------------------                             
right and lawful authority to transfer the Partnership Interests owned by LDA to
the Purchaser. LDA owns beneficially and of record, the Partnership Interests as
indicated on Schedule 1, free and clear of any Liens.  Assuming that the
Purchaser is acquiring the Partnership Interests in good faith, upon the
delivery of and payment by the Purchaser of the Purchase Price in the manner
described in Section 2.2, the Purchaser shall acquire good and valid title to
the Partnership Interests from LDA, free and clear of any Liens other than Liens
created by the Purchaser.

          7.3 Agreement.  This Agreement has been duly authorized by all
              ---------                                                 
necessary action on the part of LDA, has been duly executed and delivered by LDA
and constitutes the legal, valid and binding obligation of LDA, enforceable
against LDA in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting the rights of creditors generally.

          7.4  No Brokers or Finders.  No person has or will have, as a result
               ---------------------                                          
of the transactions contemplated by this Agreement, any right, interest or valid
claim against the Purchaser or TAG for any commission, fee or other compensation
as a finder or broker because of any act or omission by LDA or any of its
agents.

          7.5  No Conflicting Instruments.  The execution, delivery and
               --------------------------                              

                                      -12-
<PAGE>
 
performance of this Agreement by LDA and the transactions contemplated herein
will not violate or conflict with its certificate of limited partnership or
limited partnership agreement and will not violate, conflict with or constitute
a default under any agreement or instrument

to which LDA is a party or by which LDA is bound, or any judgment, decree,
order, statute, rule or governmental regulation applicable to LDA.

          7.6 Governmental Consent.  No consent, approval or authorization of,
              --------------------                                            
or registration, qualification, designation, declaration or filing with, any
governmental authority is required in connection with the execution, delivery or
performance of this Agreement or the performance by LDA of any of the
transactions contemplated hereby by LDA.

          7.7 Litigation.  There is no action, proceeding or investigation
              ----------                                                  
pending or to LDA's knowledge threatened against LDA that questions the validity
of this Agreement or any action taken or to be taken by LDA in connection
herewith.

          Section 8.  Representations and Warranties of the Purchaser and TAG.
                      ------------------------------------------------------- 
The Purchaser and TAG, jointly and severally, represent and warrant to the
Sellers as follows:

          8.1 Organization and Standing.  The Purchaser is a limited liability
              -------------------------                                       
company duly organized, validly existing and in good standing under the laws of
the state of Delaware and TAG is a corporation duly organized, validly existing
and in good standing under the laws of the state of California.  Each of the
Purchaser and TAG has all requisite power to enter into and perform its
obligations under this Agreement and the Ancillary Agreements to which it is a
party.

          8.2 Agreement.  This Agreement and each of the Ancillary Agreements to
              ---------                                                         
which the Purchaser or TAG is a party have been duly authorized by all necessary
action on the part of the Purchaser or TAG, have been duly executed and
delivered by the Purchaser or TAG and constitute the legal, valid and binding
obligation of the Purchaser or TAG, enforceable against the Purchaser or TAG in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting the rights of creditors generally.

          8.3  No Brokers or Finders.  No person has or will have, as a result
               ---------------------                                          
of the transactions contemplated by this Agreement, any right, interest or valid
claim against any of the Sellers for any commission, fee or other compensation
as a finder or broker because of any act or omission by the Purchaser, TAG or
any of their agents.

          8.4  No Conflicting Instruments.  The execution, delivery and
               --------------------------                              

                                      -13-
<PAGE>
 
performance of this Agreement or any of the Ancillary Agreements by the
Purchaser or TAG will not violate or conflict with its certificate of formation
or certificate of incorporation, or limited liability company agreement or by-
laws, as the case may be, and will not violate, conflict with or constitute a
default under any agreement or instrument to which the Purchaser or TAG is a
party or by which the Purchaser or TAG is bound, or any judgment, decree, order,
statute, rule or governmental regulation applicable to the Purchaser or TAG.

          8.5  Governmental Consent.  No consent, approval or authorization of,
               --------------------                                            
or registration, qualification, designation, declaration or filing with, any
governmental authority is required in connection with the execution, delivery or
performance of this Agreement or any of the Ancillary Agreements or the
performance of any of the transactions contemplated hereby or thereby by the
Purchaser or TAG.

          8.6  Reports.  TAG has filed all required reports, schedules, forms,
               -------                                                        
statements and other documents required to be filed by it with the Securities
and Exchange Commission (the "SEC") since January 1, 1996 (collectively,
including all exhibits thereto and any registration statement filed with the SEC
since such date, the "TAG Disclosure Documents").  None of the TAG Disclosure
Documents, as of their respective dates (and, if amended or superseded by a
filing prior to the date of this Agreement or the Closing Date, then on the date
of such filing), contained or will contain any untrue statement of a material
fact or omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  All of the TAG
Disclosure Documents, as of their respective dates (and as of the date of any
amendment), complied as to form in all material respects with the applicable
requirements of the Securities Act of 1933, as amended (the "1933 Act"), the
Securities Act of 1934, as amended, and the rules and regulations promulgated
thereunder.

          8.7  Litigation.  There is no action, proceeding or investigation
               ----------                                                  
pending or to the Purchaser's or TAG's knowledge threatened against the
Purchaser or TAG that questions the validity of this Agreement or any action
taken or to be taken by the Purchaser or TAG in connection herewith.

          8.8 TAG Stock.  Except as provided in the Escrow Agreement, upon the
              ---------                                                       
delivery by the Purchaser, each of GMC and RAI shall acquire good and valid
title to the TAG Stock from TAG, free and clear of any Lien, and the TAG Stock
will be duly authorized, validly issued, fully paid and non-assessable.

          8.9 Investment Representation.  The Purchaser is acquiring the
              -------------------------                                 
Partnership Interests for its own account and not with a view to, or for sale in
connection with, any distribution thereof that would require registration under
the 1933 Act.

          Section 9.  Post-Closing Covenants.  (a)  Following the Closing, the
                      ----------------------                                  

                                      -14-
<PAGE>
 
Purchaser will offer continued employment to all employees of Rocky, and the
Purchaser and TAG will be jointly and severally responsible for severance or
termination costs, costs relating to compliance with the Worker Adjustment and
Retraining and Notification Act (29 U.C.S. (S)(S) 2101 et seq.), plant closing
                                                       ------
costs and the costs of compliance with any other applicable laws or regulations
relating to the rights of employees.

          (b)  Following the Closing, the Purchaser and TAG will cause Rocky to
timely satisfy all of its liabilities existing as of the Closing Date and
reflected on the Closing Balance Sheet.

          (c)  Following the Closing, in the event that any tax returns of Rocky
for any period up to and including June 30, 1998 shall be audited by any taxing
authority, Purchaser shall permit any of the Sellers (at such Seller's expense),
to participate in the audit process and shall provide to such Seller all
appropriate documents.  The Purchaser shall not settle or compromise any
contested amounts without the consent of each of the Sellers which consent shall
not be unreasonably withheld.

          (d)  Following the Closing, RAI and GMC shall deliver good and
marketable title to the properties located in the State of Mississippi listed on
Schedule 9 to Rocky and shall deliver all required governmental consents in
connection therewith within 75 days after the Closing Date.

          (e)  Zeitouni shall pay all amounts owed to Rocky (approximately
$30,147) in full within 30 days of the Closing Date.

          Section 10.  Public Communications.  Except as required by law, there
                       ---------------------                                   
shall be no public communications (including communications to members of the
trade) regarding this Agreement, the Ancillary Agreements or the transactions
contemplated herein or therein without the prior consent of the Purchaser and
the Sellers.

          Section 11. Further Assurances. After the Closing, for no further
                      ------------------                                   
consideration, each of the parties shall perform all such other actions and
shall execute, acknowledge and deliver all such documents as the other parties
or their respective counsel may reasonably request to vest in the Purchaser, and
protect the Purchaser's right, title and interest in, and enjoyment of, the
Partnership Interests.

          Section 12.  Survival of Representations and Warranties.  The
                       ------------------------------------------      
representations and warranties of the parties hereto contained in this Agreement
or otherwise made in writing in connection with the transactions contemplated
herein and the indemnification obligations of the parties hereto in respect of
such representations and warranties shall survive the making of this Agreement
and any examination by or on behalf 

                                      -15-
<PAGE>
 
of such parties, (i) in respect of the representations and warranties regarding 
                  -                   
Taxes set forth in Section 6.13 of this Agreement, until the expiration of the
statute of limitations applicable to any tax liability for which such
representations and warranties are made, (ii) in respect of any representations
                                          --
and warranties set forth in Section 6, for three years from the Closing Date and
(iii) in respect of any representations and warranties set forth in Section 7 of
 ---
this Agreement, for one year from the Closing Date.

               Section 13.  Indemnification by GMC and RAI.
                            ------------------------------ 

          (a)  GMC and RAI (the "Indemnifying Parties"), jointly and severally,
shall defend, indemnify and hold harmless the Purchaser, TAG and their
respective officers, directors, shareholders, members, employees, attorneys,
accountants, affiliates, agents, successors and assigns and any person who
controls or is deemed to control any of them (the "Indemnified Parties") from,
against and in respect of any and all payments, damages, claims, demands,
losses, expenses, costs, obligations and liabilities (including, but not limited
to, attorneys' fees and costs, and costs of investigation and preparation) (a
"Loss") which, directly or indirectly, arise or result from or are related to
(i) any breach by either of the Indemnifying Parties of any of its
representations, warranties, covenants or commitments contained in this
Agreement or the Escrow Agreement or the transactions to which they relate, (ii)
                                                                             -- 
the business, operations, liquidation or dissolution of AC Designs LLC and AC
Designs Inc., (iii) any matter described on Schedule 6.17, (iv) that certain
               ---                                          --              
Agreement dated February 14, 1997 between USPA Properties, Inc. and Quade, Inc.,
as amended to date, or the transaction described in Section 4.6 or (v) the
                                                                    -     
failure to pay any Tax with respect to the business or operations of Rocky prior
to the Closing Date.  The Indemnifying Parties, jointly and severally, shall
reimburse each Indemnified Party on demand for any payment made or loss suffered
by it at any time after the date hereof, based upon the judgment of any court of
competent jurisdiction or pursuant to a bona fide compromise or settlement of
claims, demands or actions to which the foregoing indemnity relates.
Consummation of the transactions contemplated by this Agreement shall not be
deemed or construed to be a waiver of any right or remedy of any Indemnified
Party hereunder, nor shall this section or any other provision of this Agreement
be deemed or construed to be a waiver of any ground of defense by it.  The
obligation to advance or pay promptly on demand all amounts as they are incurred
shall exist irrespective of the ultimate final judicial determination, and in
the event of a dispute about amounts owed, such amounts shall be advanced as
they are incurred pending resolution and final judicial determination.

          (b)  Notwithstanding anything to the contrary contained in this
Agreement, the Indemnifying Parties shall not be liable to the Purchaser or TAG
under this Section 13, as a result of the breach of any representation,
warranty, covenant or commitment of an Indemnifying Party contained in this
Agreement unless and until the aggregate amount of the Losses suffered by the
Purchaser and TAG as a result of all such breaches shall exceed $50,000 and in
such case, the Indemnifying Parties shall only be liable for Losses in excess 

                                      -16-
<PAGE>
 
of such $50,000.

          (c)  Each Indemnified Party shall promptly notify the Indemnifying
Parties of the existence of any claim, demand or other matter involving
liabilities to third parties to which the Indemnifying Parties' indemnification
obligations could apply and shall give the Indemnifying Parties a reasonable
opportunity to defend the same at their expense and with counsel of their own
selection (who shall be approved by the Indemnified Party, which approval shall
not be withheld unreasonably); provided, how ever, that (i) the Indemnified
                               --------                  -                 
Party shall at all times also have the right to fully participate in the defense
at its own expense, (ii) if (other than in connection with the matters described
                     --                                                         
in Schedule 6.17), in the reasonable judgment of the Indemnified Party, based
upon the written advice of counsel, a conflict of interest may exist between the
Indemnified Party and any of the Indemnifying Parties, the Indemnifying Parties
shall not have the right to assume such defense on behalf of such Indemnified
Party and (iii) the failure to so notify the Indemnifying Parties shall not
           ---                                                             
relieve the Indemnifying Parties from any liabilities that they may have
hereunder or otherwise, except to the extent that such failure so to notify the
Indemnifying Parties materially prejudices the rights of the Indemnifying
Parties.  If the Indemnifying Parties shall, within a reasonable time after said
notice, fail to defend, the Indemnified Party shall have the right, but not the
obligation, to undertake the defense of, and to compromise or settle the claim
or other matter on behalf, for the account and at the risk and expense of the
Indemnifying Parties.  The Indemnifying Parties shall not compromise or settle
the claim or other matter (other than the matters described in Schedule 6.17)
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld).  If the claim is one that cannot by its nature be
defended solely by the Indemnifying Parties, the Indemnified Party shall make
available all information and assistance that the Indemnifying Parties may
reasonably request; provided, however, that any associated expenses shall be
                    --------                                                
paid by the Indemnifying Parties.

          (d)  If the indemnification provided for in this Section 13 is
unavailable as a matter of law or public policy to any Indemnified Party in
respect of any Loss, then the Indemnifying Parties, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by the
Indemnified Party as a result of such Loss, in such proportion as is appropriate
to reflect the relative fault of the Indemnifying Parties, taken as a whole, on
the one hand, and such Indemnified Party, on the other, in connection with the
actions, statements or omissions which resulted in such Loss, as well as any
other relevant equitable considerations.  The relative fault of the Indemnifying
Parties, taken as a whole, on the one hand, and such Indemnified Party, on the
other, shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of material
fact or omission or alleged omission to state a material fact, has been taken
by, or relates to information supplied by, either an Indemnifying Party or such
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The parties

                                      -17-
<PAGE>
 
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 13 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above.

          (e)  The Indemnifying Parties' obligations hereunder shall be in
addition to any liability that they or any other person may otherwise have to
the Indemnified Parties, and shall be binding upon, and inure to the benefit of,
their successors and assigns, and shall inure to the benefit of the heirs,
personal representatives, successors and assigns of each Indemnified Party.

          Section 14.  Indemnification by LDA.
                       ---------------------- 

          (a)  LDA shall defend, indemnify and hold harmless the Purchaser and
TAG and their respective successors and assigns (the "LDA Indemnified Parties")
from, against and in respect of any and all payments, damages, claims, demands,
losses, expenses, costs, obligations and liabilities (including, but not limited
to, attorneys' fees and costs, and costs of investigation and preparation) (a
"LDA Loss") which, directly or indirectly, arise or result from or are related
to (i) any breach by LDA of any of its representations, warranties, covenants or
    -                                                                           
commitments contained in this Agreement, or (ii) the failure of LDA to pay any
                                             --                               
Tax with respect to the business or operations of Rocky prior to the Closing
Date that is as a matter of law imposed on LDA in its capacity as a limited
partner of Rocky.  LDA shall reimburse each LDA Indemnified Party on demand for
any payment made or loss suffered by it at any time after the date hereof, based
upon the judgment of any court of competent jurisdiction or pursuant to a bona
fide compromise or settlement of claims, demands or actions to which the
foregoing indemnity relates. Consummation of the transactions contemplated by
this Agreement shall not be deemed or construed to be a waiver of any right or
remedy of any LDA Indemnified Party hereunder, nor shall this section or any
other provision of this Agreement be deemed or construed to be a waiver of any
ground of defense by it.  The obligation to advance or pay promptly on demand
all amounts as they are incurred shall exist irrespective of the ultimate final
judicial determination, and in the event of a dispute about amounts owed, such
amounts shall be advanced as they are incurred pending resolution and final
judicial determination.

          (b)  Notwithstanding anything to the contrary contained in this
Agreement, LDA shall not be liable to the Purchaser or TAG under this Section
14, as a result of the breach of any representation, warranty, covenant or
commitment of LDA contained in this Agreement (i) unless and until the aggregate
                                               -                                
amount of the LDA Losses suffered by the Purchaser and TAG as a result of all

such breaches shall exceed $50,000 and in such case, LDA shall only be liable
for LDA Losses in excess of such $50,000 or (ii) for an amount in excess of
                                             --                            
$4,500,000.

                                      -18-
<PAGE>
 
          (c)  Each LDA Indemnified Party shall promptly notify LDA of the
existence of any claim, demand or other matter involving liabilities to third
parties to which LDA's indemnification obligations could apply and shall give
LDA a reasonable opportunity to defend the same at their expense and with
counsel of their own selection (who shall be approved by the LDA Indemnified
Party, which approval shall not be withheld unreasonably); provided, however,
                                                           --------          
that (i) the LDA Indemnified Party shall at all times also have the right to
      -                                                                     
fully participate in the defense at its own expense, (ii) if, in the reasonable
                                                      --                       
judgment of the LDA Indemnified Party, based upon the written advice of counsel,
a conflict of interest may exist between the LDA Indemnified Party and LDA, LDA
shall not have the right to assume such defense on behalf of such LDA
Indemnified Party and (iii) the failure to so notify LDA shall not relieve LDA
                       ---                                                    
from any liabilities that it may have hereunder or otherwise, except to the
extent that such failure so to LDA materially prejudices the rights of LDA.  If
LDA shall, within a reasonable time after said notice, fail to defend, the LDA
Indemnified Party shall have the right, but not the obligation, to undertake the
defense of, and to compromise or settle the claim or other matter on behalf, for
the account and at the risk and expense of LDA.  LDA shall not compromise or
settle the claim or other matter without the written consent of the LDA
Indemnified Party (which consent shall not be unreasonably withheld).  If the
claim is one that cannot by its nature be defended solely by LDA, the LDA
Indemnified Party shall make available all information and assistance that LDA
may reasonably request; provided, however, that any associated expenses shall be
                        --------                                                
paid by LDA.

          (d) LDA's sole obligations hereunder arising out of the breach of its
representations, warranties, covenants or commitments contained in this
Agreement shall be pursuant to this Section 14 and LDA shall not have any other
liability to the LDA Indemnified Parties.

          Section 15.  Expenses, etc.  Each of the Purchaser and the Sellers
                       -------------                                        
shall pay such party's own expenses and costs incidental to the preparation of
this Agreement and to the consummation of the transactions contemplated hereby.

          Section 16.  Notices.  All notices and other communications hereunder
                       -------                                                 
shall be in writing and shall be delivered by hand or sent by first-class mail,
postage prepaid, as follows:

If to the Purchaser or TAG, at:

               Tarrant Apparel Group
               3151 East Washington Boulevard
               Los Angeles, California  90023
               Attention:  Chief Financial Officer

                                      -19-
<PAGE>
 
with a copy to:

               Manatt, Phelps & Phillips, LLP
               11355 West Olympic Boulevard
               Los Angeles, California  90064
               Attention:  Peter M. Menard, Esq.

If to LDA, at:

               Limited Direct Associates, L.P.
               c/o The Limited, Inc.
               Three Limited Parkway
               Columbus, Ohio 43230
               Attention:  General Counsel

with a copy to:

               Debevoise & Plimpton
               875 Third Avenue
               New York, New York 10022
               Attention:  Robert F. Quaintance, Jr.


If to RAI or GMC, to such party at:

               c/o Rocky Apparel, L.P.
               1384 Broadway, 14th Floor
               New York, New York 10018
               Attention: Gabriel Zeitouni

with a copy to:

               Steven M. Gerber, Esq.
               1114 Avenue of the Americas, 45th Floor
               New York, New York 10036

or, in each case, at such address and to the attention of such person as either
party shall have furnished to the other by notice.

                                      -20-
<PAGE>
 
          Section 17.  Miscellaneous.  Each of the parties hereto hereby
                       -------------                                    
irrevocably and unconditionally consents to submit to the exclusive
jurisdictions of the courts of the State of New York and of the United States of
America, in each case located in the County of New York, for any litigation
arising out of or relating to this Agreement or the transactions contemplated
hereby, and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in Section
16 of this Agreement shall be effective service of process for any litigation
brought against it in any court.  Each of the parties hereto hereby irrevocably
and unconditionally waives any objection to the laying of venue of any
litigation arising out of this Agreement or the transactions contemplated hereby
in the courts of the State of New York or the United States and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such litigation brought in any such court has been brought
in an inconvenient forum.  This Agreement together with the Escrow Agreement
contemplated in Section 4.5 constitute the entire understanding between the
parties hereto.  This Agreement may be modified or terminated only by an
instrument in writing signed by the parties hereto. This Agreement shall be
binding on and shall inure to the benefit of the successors and legal assigns of
the parties hereto.  This Agreement shall be governed by the laws of the State
of New York as applied to contracts made and fully performed in New York.  This
Agreement may be executed in one or more separate counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.  The headings of the sections of this Agreement are solely
for convenience of reference and shall not affect the meaning of any of the
provisions hereof.

          Section 18.  Transfer Taxes. The Sellers shall pay all stock transfer
                       --------------                                          
and other transfer taxes required to be paid in connection with the sale to the
Purchaser of the Partnership Interests.  Rocky and the Sellers shall file,
independently or jointly with the Purchaser, as the law requires, all real
property and other transfer tax filings required to be filed by it in connection
with the sale and delivery to the Purchaser of the Partnership Interests.

                                      -21-
<PAGE>
 
                IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the date first above-written.

                         ROCKY ACQUISITION, LLC


                         By:      /s/ Mark B. Kristof
                              -----------------------------------------
                                  Name:    Mark B. Kristof
                                  Title:   Vice President

                         TARRANT APPAREL GROUP


                         By:      /s/ Mark B. Kristof
                              -----------------------------------------
                                  Name:    Mark B. Kristof
                                  Title:   Vice President

                         LIMITED DIRECT ASSOCIATES, L.P.

                         By:  Limited Direct, Inc., as General Partner


                         By:      /s/ Kenneth Gilman
                              -----------------------------------------
                                  Name:    Kenneth Gilman
                                  Title:   President

                         ROCKY APPAREL, INC.


                         By:      /s/ Gabriel Zeitouni
                              -----------------------------------------
                                  Name:    Gabriel Zeitouni
                                  Title:   President

                         GABRIEL MANUFACTURING COMPANY


                         By:      /s/ Gabriel Zeitouni
                              -----------------------------------------
                                  Name:  Gabriel Zeitouni
                                  Title:   President

                                      -22-