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ex10_56.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    THIRD
AMENDMENT TO

    LOAN AND SECURITY
AGREEMENT

    

    This
Third Amendment to the Loan and Security Agreement (this “Amendment”) is dated as of this 21 day
of April, 2008, by and among I.C. Isaacs & Company,
L.P., as borrower (“Borrower”), I.C. Isaacs & Company, Inc.
and Isaacs Design,
Inc., as guarantors (collectively,  the “Guarantors”),
and Wachovia Bank, National
Association, as lender (“Bank”).

     

    BACKGROUND

     

    A.           Borrower
and Bank are parties to a certain Loan and Security Agreement dated as of
December 30, 2004 (as amended or otherwise modified from time to time, the “Loan
Agreement”), and
the other Loan Documents (as defined in the Loan
Agreement).  Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Loan Agreement.

     

    B.           Borrower
has informed Bank that Borrower and certain of its partners are negotiating (i)
an additional cash capital contribution by such partners to Borrower in an
amount equal to at least $2,000,000, (ii) an additional cash capital
contribution by Borrower’s management in an amount equal to at least $100,000,
(iii) the deferral of four (4) months of royalty payments owing to Latitude in
an amount equal to at least $1,500,000 through until no earlier than March 31,
2009 (the “Additional
Deferred Royalties”) and (iv) the conversion to equity by such partners
of at least $2,800,000 of Debt owed by Borrower to such partners (collectively,
the “Capital
Infusion”).

     

    C.           The
parties have agreed, subject to the terms and conditions of this Amendment, to
amend the Loan Agreement.

     

    NOW,
THEREFORE, with the foregoing Background hereinafter deemed incorporated by this
reference, the parties hereto, intending to be legally bound, promise and agree
as follows:

     

    1. AMENDMENTS
TO LOAN AGREEMENT

     

    1.1 Definitions.  The
following definitions contained in Section 1.1 of the Loan Agreement are amended
and restated as follows:

     

    “Applicable Margin”
means (a) prior to January 1, 2009, (i) for any Prime Rate Loan, 0.25% and (ii)
for any LIBOR Loan, 2.50%; and (b) on and all times after January 1, 2009, the
per annum rate of interest as determined pursuant to Section 2.2.5
hereof.

     

    “Borrowing Base”
means, at Borrower’s election, subject to the election limitations contained in
this Agreement as amended, an amount equal to either Borrowing Base Option A,
Borrowing Base Option B, Borrowing Base Option AA or Borrowing Base Option
C.

     

    “Deferred Royalties”
means the sum of (a) the aggregate sum not to exceed $2,388,000 payable pursuant
to the terms of the License Agreements, and representing deferred 2004 royalty
payments owing to Latitude and (b) the Additional Deferred Royalties (as defined
in that certain Third Amendment to Loan and Security Agreement among Borrower,
Guarantors and Bank dated April ____, 2008).

     

    1.2 New
Definitions.  The following new definitions are hereby added to
Section 1.1 of the Loan Agreement:

     

    “Borrowing Base Option
AA” means, on any date of determination thereof, an amount equal
to:

     

    (i)           up
to 85% (or such lesser percentage as Bank may determine from time to time in its
reasonable discretion) of the total amount of Eligible Accounts; provided that,
the percentage shall be reduced to the extent Borrower’s Dilution Rate exceeds
five percent (5%), plus

     

    (ii)           the
least of (a) $500,000, and (b) the lesser of (A) up to 45% (or such lesser
percentage as Bank may determine from time to time in its reasonable
discretion) of the
total amount of Eligible Inventory and (B) up to 80% of the NOLV of Eligible
Inventory, minus

     

               (iii)           any
Reserves.

     

    “Borrowing Base Option
C” means, on any date of determination thereof, an amount equal
to:

     

    (i)           up
to 85% (or such lesser percentage as Bank may determine from time to time in its
reasonable discretion) of the total amount of Eligible Accounts; provided that,
the percentage shall be reduced to the extent Borrower's Dilution Rate exceeds
five percent (5%), plus

     

    (ii)           the
least of (a) $8,000,000, and (b) the sum of (i) the lesser of (A) up to 45% (or
such lesser percentage as Bank may determine from time to time in its reasonable
discretion) of the
total amount of Eligible Inventory and (B) up to 80% of the NOLV of Eligible
Inventory; plus
(ii) the lesser of (A) up to 45% (or such lesser percentage as Bank may
determine from time to time in its reasonable discretion) of the total amount of
Eligible LC Inventory and (B) up to 80% of the NOLV of Eligible LC Inventory,
minus

     

    (iii)           any
Reserves.

     

    1.3 Adjustment of Interest
Rate. Section 2.2.5 of the Loan Agreement is amended and restated as
follows:

     

    2.2.5           Adjustment of Interest
Rate.  Commencing on January 1, 2009, and thereafter on the
first day of each succeeding Interest Adjustment Period, the interest rate for
all Loans for each applicable Interest Adjustment Period shall be determined
based upon the prior calendar quarter’s average Excess Availability (as
determined by Bank, in its reasonable discretion), in accordance with the
following matrix:

     

    
      	
              Excess Availability

               

               

            	
              Applicable
      Margin for Prime Rate
      Loans

            	
              Applicable
      Margin for LIBOR
  Loans

            
	
              Equal
      to or less than $2,500,000

            	
              0.25%

            	
              2.50%

            
	
              Greater
      than $2,500,000 but equal to or less than $5,000,000

            	
              0%

            	
              2.25%

            
	
              Greater
      than $5,000,000

            	
              -0.25%

            	
              2.00%

            

    

    

     

    For
purposes of the foregoing (i) no downward rate adjustment shall occur if an
Event of Default has occurred and is continuing on the applicable Interest
Adjustment Date, such adjustment to take effect only upon the cure or waiver in
writing of such Event of Default and (ii) if Borrower fails to timely deliver
the applicable compliance certificate and monthly financial statements to Bank
in accordance with this Agreement on the date when due, then at Bank’s option,
the interest rates above shall be increased on such date to the highest rate of
interest pursuant to the above matrix, which rate of interest shall continue in
effect until such compliance certificate and financial statements shall have
been delivered.

     

    1.4 Letters of Credit
Sublimit.  Section 2.10.1 of the Loan Agreement is amended and
restated as follows:

     

    2.10.1                      Issuance of Letters of
Credit.  Bank shall from time to time issue, upon
five  (5) Business Days prior written notice, extend or renew letters
of credit for the account of Borrower or its Subsidiaries; provided that (i) the
aggregate face amount of Letters of Credit issued by Bank which are outstanding
at any one time shall not exceed $2,000,000 at all times during which Borrower
has elected that the Borrowing Base to be determined using Borrowing Base Option
A, $8,000,000 at all times during which Borrower has elected that the Borrowing
Base to be determined using Borrowing Base Option B, $2,000,000 at all times
during which Borrower has elected that the Borrowing Base to be determined using
Borrowing Base Option AA and $8,000,000 at all times during which Borrower has
elected that the Borrowing Base to be determined using Borrowing Base Option C
(ii) Bank shall have no obligation to issue any Letter of Credit if, after
giving effect thereto, the principal amount of all Revolver Loans and the Letter
of Credit Obligations would exceed the lesser of the Borrowing Base and the
Revolver Commitment, and (iii) all other conditions precedent to the issuance of
each such Letter or Credit as set forth herein are satisfied or waived in
writing by Bank.   All payments made by Bank under any such
Letters of Credit (whether or not Borrower is the account party) and all fees,
commissions, discounts and other amounts owed or to be owed to Bank in
connection therewith, shall be paid on demand, unless Borrower instructs Bank to
make a Revolver Loan to pay such amount, Bank agrees to do so, and the necessary
amount remains available to be drawn as a Revolver Loan
hereunder.  All Letter of Credit Obligations shall be secured by the
Collateral.  Borrower shall complete and sign such applications and
supplemental agreements and provide such other documentation as Bank may
require.  The form and substance of all Letters of Credit, including
expiration dates, shall be subject to Bank’s approval, and Bank shall have no
obligation to issue any Letter of Credit which has a maturity date later than
ten (10) days prior to the Termination Date.   Bank may charge
certain fees or commissions for the issuance, handling, renewal or extension of
a Letter of Credit.  Borrower unconditionally guarantees all
obligations of any Subsidiary with respect to Letters of Credit issued by Bank
for the account of such Subsidiary.  Upon a Default, Borrower shall,
on demand, deliver to Bank good funds equal to 105% of Bank’s maximum liability
under all outstanding Letters of Credit, to be held as cash Collateral for
Borrower’s reimbursement obligations and other Obligations.

     

    1.5 Financial
Covenants.  Article 7 of the Loan Agreement is amended and
restated as follows:

     

    7.           Other Covenants of
Borrower.  Borrower covenants and agrees that from the date
hereof and until payment in full of the Obligations and the termination of this
Agreement, Borrower and each Subsidiary shall comply with the following
additional covenants:

     

    7.1           Excess
Availability.  At all times during which Borrower has elected
that the Borrowing Base be determined using (a) Borrowing Base Option B,
Borrower shall maintain Excess Availability of at least $2,000,000; provided,
however that such amount shall be reduced to $1,500,000 for such calendar month
at such time as Borrower has maintained a Fixed Charge Coverage Ratio of not
less than 1.20 to 1.00 as of the end of a calendar month determined for the
twelve (12) month period then ending and (b) Borrowing Base Option C, Borrower
shall maintain Excess Availability of at least $1,000,000; provided, however
that such amount shall be increased to $1,500,000 for such calendar month at
such time as Borrower has maintained a Fixed Charge Coverage Ratio of not less
than 1.20 to 1.00 as of the end of a calendar month determined for the twelve
(12) month period then ending (the “Option C Collateral
Block”).  As used herein, “Fixed Charge Coverage
Ratio” means (i) EBITDA, less the sum of (A)
all unfinanced Capital Expenditures made in the Applicable Fiscal Period, and
(B) any dividends and distributions paid in the Applicable Fiscal Period, and
(C) cash taxes paid in the Applicable Fiscal Period (without benefit of any
refunds), and (D) cash payments made in the Applicable Fiscal Period with
respect to Capital Stock based incentive compensation, and (E) any repurchases
of Capital Stock made in the Applicable Fiscal Period, divided by (ii) the sum
of (A) the current portion of scheduled principal amortization on Funded Debt
for the Applicable Fiscal period, plus (B) cash
principal payments paid on Funded Debt for the Applicable Fiscal Period (C) cash
interest payments paid in the Applicable Fiscal Period, plus (D) the amount
of all Deferred Note Payments paid in the Applicable Fiscal Period, plus (E) the amount
of all Deferred Royalties paid in the Applicable Fiscal Period. As used herein,
(i) “EBITDA” means the sum
of (A) consolidated net income of  Borrower and its Subsidiaries in
the Applicable Fiscal Period (computed without regard to any extraordinary items
of gain or loss) plus (B) to the
extent deducted from revenue in computing consolidated net income for such
period, the sum of (1) interest expense, (2) income tax expense, (3)
depreciation and amortization, and (4) non-cash Capital Stock based incentive
compensation, (ii) “Capital Expenditures”
means for any period the aggregate cost of all capital assets acquired by
Borrower and its Subsidiaries during such period, as determined in accordance
with GAAP; (iii) “Applicable Fiscal
Period” means a period of twelve (12) consecutive, trailing calendar
months ending at the end of each prescribed calendar month and (iv) “Funded Debt” means
(A) debt for borrowed funds, (B) debt for the deferred payment by one (1) year
or more of any purchase money obligation, and (C) any subordinated
debt.  Borrower shall calculate its Fixed Charge Coverage Ratio
monthly and such calculation shall be included in each monthly compliance
certificate delivered to Bank pursuant to Section 5.6(d) of the
Agreement.

    

    7.2           Capital
Expenditures.  Borrower shall not expend on gross fixed assets
(including gross leases to be capitalized under GAAP and leasehold improvements)
(i) during the fiscal year ending December 31, 2008 an amount exceeding $250,000
in the aggregate in such fiscal year, (ii) during the fiscal year ending
December 31, 2009 an amount exceeding $300,000 in the aggregate in such fiscal
year and (iii) during the fiscal year ending December 31, 2010 and during any
fiscal year thereafter, an amount exceeding $500,000 in the
aggregate.

    

    7.3           Leases.  Borrower
shall not incur, create, or assume any direct or indirect liability for the
payment of rent or otherwise, under any lease or rental arrangement (excluding
capitalized leases) if immediately thereafter the sum of such lease or rental
payments to be made by Borrower during any 12-month period is increased by
$175,000 in the aggregate.

     

    7.4           Fixed Charge Coverage
Ratio.  At all times during which Borrower has elected that the
Borrowing Base be determined using Borrowing Base Option C, Borrower shall
maintain a Fixed Charge Coverage Ratio (as defined in Section 7.1 of this
Agreement) of not less than 1.00 to 1.00 for the fiscal quarters ending March
31, 2009, June 30, 2009 and September 30, 2009 and 1.20 to 1.00 for the fiscal
quarter ending December 31, 2009 and each fiscal quarter thereafter; provided,
however, the calculation of Fixed Charge Coverage Ratio for the fiscal quarter
ending March 31, 2009 shall be for the one (1) fiscal quarter ending on such
date of determination, the calculation of Fixed Charge Coverage Ratio for the
fiscal quarter ending June 30, 2009 shall be for the two (2) fiscal quarters
ending on such date of determination and the calculation of Fixed Charge
Coverage Ratio for the fiscal quarter ending September 30, 2009 shall be for the
three (3) fiscal quarters ending on such date of determination.

     

    1.6 Capital
Infusion.  Notwithstanding anything to the contrary contained
herein or in the Loan Agreement:

     

    (a) Borrower
may elect to use Borrowing Base Option AA until the earlier of (i) May 30, 2008,
(ii) the date on which Borrower consummates the Capital Infusion or (iii) the
date Borrower is notified that its partners and/or management will not provide
the Capital Infusion.

     

    (b) Borrower
may elect to use Borrowing Base Option C solely following the consummation of
the Capital Infusion so long as Borrower consummates the Capital Infusion on or
before May 30, 2008.

     

    (c) Borrower
shall deliver to Bank any and all documents, instruments and agreements
evidencing and/or relating to the Capital Infusion at least two (2) Business
Days prior to the consummation of the Capital Infusion and the form, substance
and terms thereof shall acceptable to Bank in its sole and absolute
discretion.

     

    (d) Prior to
the consummation of the Capital Infusion, Borrower and Latitude shall have
executed and delivered to Bank an amended and restated Licensor Agreement, in
form and substance acceptable to Bank.

     

    1.7 Baltimore
Real Estate.

     

    (a) Contemporaneously
with the disposition of Borrower’s real estate located at 3840 Bank Street,
Baltimore, Maryland 21224 (the “Maryland Real
Property”), Borrower shall prepay the Loans in an amount equal to 100% of
the Net Cash Proceeds of such disposition (the “Real Estate
Prepayment”).  Borrower and Bank agree and acknowledge that
upon such disposition Bank shall institute an additional Reserve against the
Borrowing Base in an amount equal to the Real Estate Prepayment (the “Real Estate
Reserve”); provided, however the Real Estate Reserve shall be permanently
reduced to $0 upon Bank’s receipt of the consolidated audited financial
statements of Isaacs and its Subsidiaries for the fiscal year ending December
31, 2008 so long as at such time (a) no Event of Default or Default has occurred
and is continuing, (b) Borrower has maintained a monthly Free Cash Flow of at
least 85% of the amount set forth on Schedule A attached
hereto as of the end of each calendar month through and including the calendar
month ending December 31, 2008 and (c) on such date the Option C Collateral
Block set forth in Section 7.1 of the Loan Agreement is automatically and
permanently increased to $1,500,000.  Borrower shall calculate its
Free Cash Flow monthly and such calculation shall be included in each monthly
compliance certificate delivered to Bank pursuant to Section 5.6(d) of the
Agreement.

     

    (b) For
purposes of Section 1.7(a), “Free Cash Flow” shall
mean the positive difference, if any, between (i) EBITDA, less the sum of (A)
all unfinanced Capital Expenditures made in the Applicable Fiscal Period, and
(B) any dividends and distributions paid in the Applicable Fiscal Period, and
(C) cash taxes paid in the Applicable Fiscal Period (without benefit of any
refunds), and (D) cash payments made in the Applicable Fiscal Period with
respect to Capital Stock based incentive compensation, and (E) any repurchases
of Capital Stock made in the Applicable Fiscal Period and (ii) the sum of (A)
the current portion of scheduled principal amortization on Funded Debt for the
Applicable Fiscal period, plus (B) cash
principal payments paid on Funded Debt for the Applicable Fiscal Period (C) cash
interest payments paid in the Applicable Fiscal Period, plus (D) the amount
of all Deferred Note Payments paid in the Applicable Fiscal Period, plus (E) the amount
of all Deferred Royalties paid in the Applicable Fiscal Period; “EBITDA” has the
meaning set forth in Section 7.1 of the Loan Agreement (provided for purposes of
the calculation thereof, “Applicable Fiscal Period” shall have the meaning set
forth below); “Capital
Expenditures” has the meaning set forth in Section 7.1 of the Loan
Agreement; “Applicable
Fiscal Period” means the calendar month ending on the date of
determination; “Funded
Debt” has the meaning set forth in Section 7.1 of the Loan Agreement; and
“Net Cash
Proceeds” shall mean the aggregate cash proceeds received by Borrower in
respect of the disposition of the Maryland Real Property, net of (a) direct
costs (including, without limitation, legal, accounting and investment banking
fees, and sales commissions), and (b) taxes paid or payable as a result
thereof.

     

    1.8 Borrowing Base
Certificate.  An updated form of Borrowing Base Certificate is
attached hereto as Exhibit
A.  Each Borrowing Base Certificate delivered by Borrower to
Bank as required by Section 5.6(a) of the Loan Agreement shall include (a) the
calculations of the Borrowing Base determined using each of the Borrowing Base
Option A, the Borrowing Base Option B, Borrowing Base Option AA and Borrowing
Base Option C and (b) notice of Borrower’s election to use either Borrowing Base
Option A, the Borrowing Base Option B, Borrowing Base Option AA or Borrowing
Base Option C until the delivery of the next Borrowing Base
Certificate.

     

    2. CONFIRMATION
OF INDEBTEDNESS

     

    Borrower
hereby confirms and agrees that, as of April 21, 2008, the total principal
outstanding Loans under the Loan Agreement is $2,401,683.50 and the total face
amount of issued and outstanding Letters of Credit is $38,784.20, and that
Borrower is unconditionally liable to Bank for such amount, together all accrued
and unpaid interest and expenses through the Amendment Effective Date, without
any set-off, deduction, counterclaim or defense.

     

    3. FURTHER
ASSURANCES

     

    Borrower
hereby agrees to take all such actions and to execute and/or deliver to Bank all
such agreements, instruments, certificates, assignments, financing statements
and other documents, as Bank may reasonably require from time to time, to
effectuate and implement the purposes of this Amendment.

     

    4. CONFIRMATION
OF COLLATERAL

     

    Borrower
covenants, confirms and agrees that as security for the repayment of the
Obligations, Bank has, and shall continue to have, and is hereby granted a
continuing lien on and security interest in the Collateral, all whether now
owned or hereafter acquired, created or arising, including all proceeds
thereof.  Borrower acknowledges and agrees that nothing herein
contained in any way impairs Bank’s existing rights and priority in the
Collateral.

     

    5. REPRESENTATIONS
AND WARRANTIES

     

    Borrower
warrants and represents to Bank that:

     

    (a) By
execution of this Amendment, Borrower reconfirms all warranties and
representations made to Bank under the Loan Documents and restates such
warranties and representations as of the date hereof all of which shall be
deemed continuing until all of the Obligations are paid and satisfied in
full;

     

    (b) The
execution and delivery by Borrower and Guarantors of this Amendment and the
performance of the transactions herein contemplated (i) are and will be within
their powers, (ii) have been authorized by all necessary action, and (iii) are
not and will not be in contravention of any order of court or other agency of
government, of law, of any organization document of Borrower or any Guarantor or
of any indenture, agreement or undertaking to which Borrower or any Guarantor is
a party or by which the property of Borrower or any Guarantor is bound, or be in
conflict with, result in a breach of or constitute (with due notice and/or lapse
of time) a default under any such indenture, agreement or undertaking, or result
in the imposition of any lien, charge or encumbrance of any nature on any of the
properties of Borrower or any Guarantor;

     

    (c) This
Amendment and any assignment or other instrument, document or agreement executed
and delivered in connection herewith, will constitute the legal, valid and
binding obligations of Borrower and Guarantor, enforceable in accordance with
their respective terms, subject only to bankruptcy and similar laws affecting
creditors’ rights generally;

     

    (d) Upon the
effectiveness of this Amendment, there are no outstanding Defaults or Events of
Default under any of the Loan Documents; and

     

    (e) There has
been no change which could have a Material Adverse Effect on Borrower, any
Subsidiary or any Guarantor since the date of the most recent financial
statements of such Person delivered to Bank from time to time.

     

    6. CONDITIONS
PRECEDENT

     

    This
Amendment shall not be effective until the following conditions have been met to
the sole satisfaction of Bank (all documents to be in form and substance
satisfactory to Bank):

     

    (a) Borrower
and each Guarantor shall have executed and delivered to Bank this
Amendment;

     

    (b) Borrower
shall have delivered to Bank certified resolutions and written consents
authorizing the execution and delivery and performance of this Amendment and the
Capital Infusion;

     

    (c) Borrower
shall have paid to Bank, in immediately available funds, a non-refundable
amendment fee in an amount equal to $25,000, which fee is fully earned by Bank
as of the Amendment Effective Date; and

     

    (d) Borrower
and each Guarantor shall have executed and delivered, or shall have caused to be
executed and delivered (as applicable), to Bank all other agreements,
instruments and documents which Bank may reasonably require, each in form and
substance acceptable to Bank in its sole discretion.

     

    This
Amendment shall have effect as of the date all conditions precedent in this
Section 6 shall have been satisfied (the “Amendment
Effective Date”).

     

    7. PAYMENT
OF EXPENSES

     

    Borrower
shall pay or reimburse Bank for all reasonable attorneys’ fees and expenses and
all reasonable out of pocket costs in connection with the preparation,
negotiation and execution of this Amendment and all agreements, instruments and
documents provided for herein or related hereto.

     

    8. REAFFIRMATION

     

    This
Amendment shall be incorporated into and made part of the Loan
Agreement.  Except as expressly modified by the terms hereof, all of
the terms and conditions of the Loan Agreement, and all other of the Loan
Documents are hereby reaffirmed and shall continue in full force and effect as
therein written.

     

    9. GUARANTEES

     

    Execution
of this Amendment by each Guarantor reflects the approval of such Guarantor to
this Amendment, and the unconditional acknowledgement by such Guarantor that
such Guarantor’s Guaranty Agreement executed in favor of Bank remains in full
force and effect in accordance with its terms.

     

    10. RELEASE

     

    As further consideration for the
agreement of Bank to enter into this Amendment, Borrower and each Guarantor
hereby waives, releases and discharges Bank, all affiliates of Bank and all of
the directors, officers, employees, attorneys and agent of Bank and all
affiliates of such Persons, from any and all claims, demands, actions or causes
of action whether known or unknown existing as of the date hereof, arising out
of or in any way relating to this Amendment, the Loan Agreement, the Loan
Documents and/or any documents, agreements, instruments, dealings or other
matters connected with this Amendment, the Loan Agreement, the Loan Documents or
the administration thereof.

     

    11. MISCELLANEOUS

     

    11.1 Integrated Agreement.
The Loan Documents and this Amendment shall be construed as integrated and
complementary of each other, and as augmenting and not restricting Bank’s
rights, remedies and security.  If, after applying the foregoing, an
inconsistency still exists, the provisions of this Amendment shall
control.

     

    11.2 Severability.  Any
provision hereof, the Loan Agreement or any other Loan Document that is
prohibited or unenforceable in any jurisdiction shall be, as to such
jurisdiction, ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     

    11.3 Non-Waiver.  No
omission or delay by Bank in exercising any right or power under this Amendment,
or the Loan Documents or any related agreement will impair such right or power
or be construed to be a waiver of any Default or Event of Default or an
acquiescence therein, and any single or partial exercise of any such right or
power will not preclude other or further exercise thereof or the exercise of any
other right, and no waiver will be valid unless in writing and signed by Bank
and then only to the extent specified.  Bank’s rights and remedies are
cumulative and concurrent and may be pursued singly, successively or
together.

     

    11.4 Headings.  The
headings of any paragraph of this Amendment are for convenience only and shall
not be used to interpret any provision of this Amendment.

     

    11.5 Survival.  All
warranties, representations and covenants made by Borrower herein, or in any
agreement referred to herein or on any certificate, document or other instrument
delivered by it or on its behalf under this Amendment, shall be considered to
have been relied upon by Bank.  All statements in any such certificate
or other instrument shall constitute warranties and representations by Borrower
hereunder.  All warranties, representations, and covenants made by
Borrower hereunder or under any other agreement or instrument shall be deemed
continuing until the Obligations are indefeasibly paid and satisfied in
full.

     

    11.6 Successors and
Assigns.  This Amendment shall be binding upon and shall inure
to the benefit of Borrower and Bank, and their respective successors and
assigns; provided, that Borrower may not assign any of its rights hereunder
without the prior written consent of Bank, and any such assignment made without
such consent will be void.

     

    11.7 Governing Law. This Amendment, the Loan
Agreement and the Loan Documents shall be deemed contracts made under the laws
of the State of the Jurisdiction and shall be governed by and construed in
accordance with the laws of said state (excluding its conflict of laws
provisions if such provisions would require application of the laws of another
jurisdiction) except insofar as the laws of another jurisdiction may, by reason
of mandatory provisions of law, govern the perfection, priority and enforcement
of security interests in the Collateral.

     

    11.8 WAIVER OF JURY
TRIAL.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AMENDMENT, THE LOAN AGREEMENT, THE LOAN DOCUMENTS OR ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS AMENDMENT OR THE LOAN
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO.  THIS
PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ENTER INTO AND ACCEPT THIS
AGREEMENT.

     

    11.9 Counterparts.  This
Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original and all of which when taken together shall
constitute but one and the same instrument.  Any signature delivered
by a party by facsimile transmission shall be deemed to be an original signature
hereto.

     

    [SIGNATURES
ON FOLLOWING PAGE]

    
      
        
          

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered by their duly authorized officers as of the date first above
written.

     

    
      	
              BORROWER:

            	
              I.
      C. ISAACS & COMPANY, L.P.

              By:  I.C.
      Isaacs & Company, Inc., general partner

               

               

              By:           ________________________________

              Robert S. Stec, Chief Executive
      Officer

               

            
	
              BANK:

            	
              WACHOVIA
      BANK, NATIONAL ASSOCIATION

               

               

              By:           _______________________________

              Georgios Kyvernitis,
      Director

               

            
	
              GUARANTORS:

            	
              I.
      C. ISAACS & COMPANY, L.P.

               

               

              By:           ________________________________

              Robert S. Stec, Chief Executive
      Officer

               

            
	 
      	
              ISAACS
      DESIGN, INC.

               

               

              By:           ________________________________

              Robert S. Stec, Chief Executive
      Officer

               

            

    

    

    
      
        
          [SIGNATURE
PAGE TO THIRD AMENDMENT

          TO
LOAN AND SECURITY AGREEMENT]

          S-1ex10_54.htm

    SEPARATION AGREEMENT AND
GENERAL RELEASE

     

    AGREEMENT
made this 18 day of December, 2007 (this “Agreement”), by and between Gregg A.
Holst (“Employee”) and I.C. Isaacs & Company LP, a Delaware limited
partnership (the “Company”).

     

    WHEREAS,
the parties previously entered into an Executive Employment Agreement, dated
December 19, 2005 (the “Employment Agreement”), pursuant to which Employee has
been employed by the Company as its Executive Vice President and Chief Financial
Officer; and

     

    WHEREAS,
the parties have agreed to a mutual separation of the employment relationship
and release of claims on the terms set forth herein.

     

    NOW
THEREFORE, for good and valuable consideration, receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

     

    1. Employee’s
employment with the Company is terminated as of December 3, 2007 (“Effective
Date”).  Employee hereby resigns from all positions held as an
employee or otherwise with the Company, I.C. Isaacs & Company, Inc. and any
of their affiliates and agrees to execute any and all documents of such
resignation requested by the Company, but he shall be treated for all purposes
as having so resigned as of December 3, 2007, regardless when or whether he
executes any such documentation.

     

    2. Employee
acknowledges that he has been paid his regular salary and bonuses, minus
applicable tax withholding, through December 3, 2007.

     

    3. Employee
had 13 unused vacation days and one unused personal day as of the date of
termination for which the Company shall pay Employee.

     

    4. The
Company shall pay Employee $350,000 as severance in substantially equal
installments in accordance with the Company’s normal payroll practices during
the 12-month period following the termination of his employment.

     

    5. Employee
shall continue to participate in the Company’s medical and dental plans to the
extent eligible under the applicable terms of the plans through December 31,
2008, and shall have the right to exercise his rights to continue such insurance
thereafter pursuant to COBRA..  Employee shall not be eligible to
continue to participate in the Company’s option plan and any pension,
profit-sharing, 401(k) or similar retirement plan or arrangement after the
Effective Date, but shall be entitled to his rights under those plans as of the
Effective Date.

     

    6. Employee’s
rights with respect to outstanding equity awards shall be determined under the
terms of the applicable plan and award agreement.

     

    7. Employee
agrees and acknowledges that the payments and benefits provided to Employee by
the Company and referred to herein exceed any payment, benefit or other valuable
right to which Employee would otherwise be entitled under the Employment
Agreement or under any policy plan or procedure of the Company.

     

    8. (a)           In
exchange for the consideration provided for herein, Employee for himself and for
his heirs, executors, administrators and assigns (hereinafter referred to
collectively as “Releasors”), forever releases and discharges the Company, I.C.
Isaacs & Company, Inc. and any of their subsidiaries, divisions, affiliates
or related business entities, successors and assigns and any of their past or
present members, shareholders, directors, officers, attorneys, agents, trustees,
administrators, employees or assigns (whether acting as agents or in their
individual capacities) (all entities and persons being released are hereinafter
collectively referred to as “Releasees”), to the maximum extent permitted by law
from any and all claims, demands, causes of action, fees, damages and
liabilities of any kind whatsoever, whether known or unknown, which Releasors
ever had, now have or may have against Releasees by reason of any actual or
alleged act, omission, transaction, practice, conduct, occurrence or other
matter up to and including the Effective Date, provided however, that this
release shall not relate to (1) any claims by Employee to enforce his rights
pursuant to this Agreement, or (2) any rights Employee has to be indemnified by
the Company as provided in the Company’s Articles of Incorporation, By-laws,
Company policies,  or any related Director and Officer insurance
policies.

     

    (b) Without
limiting the generality of the foregoing, this Agreement is intended to and
shall release Releasees from any and all claims, whether known or unknown, which
Releasors ever had, now have and may have against Releasees
arising  from (i) any claim under the Civil Rights Act of 1964, as
amended; (ii) any other claim of discrimination or retaliation in employment
(whether based on federal, state or local law, statutory or decisional),
including but not limited to, the New York State Human Rights Law, the New York
City Human Rights Law Administrative Code, the Americans with Disabilities Act
of 1990 and the Family and Medical Leave Act; (iii) any claim of discrimination
or breach of fiduciary duty under the Employee Retirement Income Security Act of
1974, as amended (except claims for accrued vested benefits under any employee
benefit plan of the Company in accordance with the terms of such plan and
applicable law); (iv) any claim arising under the Age Discrimination in
Employment Act of 1967, as amended, and the applicable rules and regulations
thereunder; and (v) any claim for attorney’s fees, costs, disbursements and/or
the like relating to claims pursuant to such statutes.

     

    9. (a)           Employee
covenants, except to the extent prohibited by law, not to commence, maintain,
prosecute or participate in any action, charge, complaint or proceeding of any
kind (on his own behalf and/or on behalf of any other person or entity and/or on
behalf of or as a member of any alleged class of persons) in any court, or
before any administrative or investigative body or agency (whether public,
quasi-public or private), against Releasees with respect to any act, omission,
transaction or occurrence up to and including the date on which this Agreement
is executed.

     

    (b) Employee
further represents that he has not commenced, maintained, prosecuted or
participated in any action, charge, complaint or proceeding of any kind (on his
own behalf and/or behalf of any other person and/or on behalf of or as a member
of any alleged class of persons) that is presently pending in any court, or
before any administrative or investigative body or agency (whether public,
quasi-public, or private), against or involving Releasees.

     

    10. Employee
agrees that he will not disparage (or induce or encourage others to disparage)
the Company and its affiliates and the officers and employees of the Company and
its affiliates.  The Company as an entity, and its officers, will not
disparage (or induce or encourage others to disparage) Employee.  For
the purposes of this paragraph, the term “disparage” includes, without
limitation, comments or statements to the press about such other party or to any
individual or entity with whom the other party has a relationship which would
adversely affect in any manner the conduct of such other party’s business or the
reputation of the other party.

     

    11. Employee
agrees that he shall not, prior to December 2, 2008, disclose to any person or
use in any way, any trade secrets or confidential or proprietary information of
the Company, including, without limitation, any information or knowledge
relating to (i) the business, operations or internal structure of the Company or
its affiliates, (ii) the clients (or customers) or potential clients (or
potential customers) of the Company or its affiliates, (iii) any method and/or
procedure (such as records, programs, systems, correspondence, or other
documents), relating or pertaining to projects developed by the Company or its
affiliates or contemplated to be developed by the Company or its affiliates, or
(iv) the Company’s or its affiliates’ business, which information or knowledge
Employee obtained during the term of his employment with the Company, and which
is otherwise of a secret or confidential nature.  Further, Employee
covenants that he has returned to the Company, any documents, forms or other
reproductions, of any data or any information relating to or pertaining to the
Company or its affiliates, any clients (or customers) or potential clients (or
potential customers) of the Company or its affiliates, or any other confidential
information or trade secrets and has not retained any copies of such documents,
forms or other reproductions, except as authorized by the Company in
writing.  Employee also covenants that he has returned to the Company
all equipment or other property belonging to the Company or its
affiliates.

     

    12. Employee
agrees to cooperate with the Company as may be reasonably required concerning
matters that relate to or arise out of Employee’s employment with the
Company.  The Company agrees to reimburse you for any reasonable costs
and expenses you may incur in connection with such cooperation.

     

    13. In view
of the irreparable harm and damage which would be incurred by the Company in the
event of any violation by Employee of any of the provisions of Paragraphs 10, 11
and 12, Employee hereby consents and agrees that in any such event, the Company
in addition to any other rights it may have, and without prejudice to any other
remedies which may be available at law or in equity, shall be entitled to an
injunction or similar equitable relief to be issued by any court of competent
jurisdiction restraining Employee from committing or continuing any such
violation, without the necessity of proving damage, or posting any bond or other
security.

     

    14. Employee
acknowledges that: (i) he has carefully read this Agreement in its entirety;
(ii) he has had an opportunity to consider fully the terms of this Agreement;
(iii) he has been advised to seek the advice of an attorney of his choosing in
connection with this Agreement; (iv) he fully understands the significance of
all the terms and conditions of this Agreement; (v) he has discussed it with his
independent legal counsel, or has had a reasonable opportunity to do so; (vi) he
has had answered to his satisfaction any questions he has asked with regard to
the meaning and significance of any of the provisions of this Agreement; (vii)
he has been given 21 days from the date he received a copy of this Agreement to
execute it;  and (viii) he is signing this Agreement voluntarily and
of his own free will and assents to all the terms and conditions contained
herein.

     

    15. If any
provision of this Agreement shall be held by a court of competent jurisdiction
to be illegal, void, or unenforceable, such provision shall be of no force and
effect.  However, the illegality or unenforceability of such provision
shall have no effect upon, and shall not impair the enforceability of, any other
provision of this Agreement.  Further, if Employee seeks to challenge
the validity of or otherwise vitiate this Agreement, Employee shall, as a
precondition, be required to repay the Company all amounts paid to Employee
pursuant to this Agreement.

     

    16. It is the
intention of the parties to this Agreement that no payment or entitlement
pursuant to this Agreement will give rise to any adverse tax consequences to
Employee under Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”). This Agreement shall be interpreted to that
end.  Notwithstanding any other provision herein, if the timing of any
or all of the payments or continued provision of any benefits under this
Agreement are subject to the special timing rules contained in Sections
409A(a)(2)(A)(i) and 409A(2)(B)(i) of the Code, such payments or provisions that
Employee would otherwise be entitled to receive during the first six months
after termination of employment shall be accumulated and paid or provided on the
first business day after the six-month anniversary of the termination of
employment in a single lump sum. Each payment under this Agreement shall be
treated as a separate payment under Treas. Reg. Section
1.409A-2(b)(iii).  Notwithstanding the foregoing, Employee shall be
solely responsible, and the Company shall have no liability, for any taxes,
acceleration of taxes, interest or penalties arising under the provisions of
Section 409A.

     

    17. This
Agreement represents the complete understanding between the parties and
supersedes any and all agreements, understandings and discussions, whether
written or oral, between the parties.  No other promises or agreements
shall be binding unless in writing and signed by the parties hereto after the
execution of this Agreement.  The provisions of the Employment
Agreement are terminated and shall be of no further force or
effect.

     

    18. This
Agreement shall be governed by and construed and enforced in accordance with,
the laws of the State of New York without giving effect to the principles or
conflicts of law thereof.  For purposes of any suit, action or
proceeding involving this Agreement, Employee submits to the jurisdiction of the
State Court sitting in New York County, New York, and agrees that such Court has
exclusive jurisdiction over any suit, action, or proceeding involving this
Agreement.

     

    19. Any
dispute regarding any aspect of the Agreement or any act which allegedly has or
would violate any provision of the Agreement shall be submitted to binding
arbitration.  Such arbitration shall be conducted before a single
arbitrator sitting in New York, New York, in accordance with the rules of the
American Arbitration Association then in effect.  Judgment may be
entered on the award of the arbitrator in any court having competent
jurisdiction.  In any such proceeding, the prevailing party shall be
entitled to recover its legal fees and expenses from the losing
party.

     

    20. This
Agreement is binding upon, and shall be inure to the benefit of, the parties and
their respective heirs, executors, administrators, successors and
assigns.

     

    21. This
Agreement may be executed in one or more counterparts, each of which together
shall constitute one and the same agreement.

     

    22. Employee
has the right to revoke his consent to this Agreement for seven days following
his execution of this Agreement by sending written notice to the Company
addressed to Lynne MacFarlane, I.C. Isaacs & Company, Inc., 475 10th Avenue,
9th
Floor, New York, N.Y.  10018.  In order for Employee’s
revocation to be effective, it must be mailed to the above addressee within the
seven-day period.  This Agreement shall become effective on the eighth
day following the execution of this Agreement, provided that Employee has not
timely revoked his consent to this Agreement.

     

    WHEREFORE,
the parties hereto have caused this Separation Agreement and General Release to
be signed as of the day and date first written above.

     

    

    GREGG A.
HOLST

     

    I.C.
ISAACS & COMPANY LP

     

    
      
      

    

     

    
      
        	 	 	 	 	 
	
                /s/
      Gregg A. Holst

              	 	 	
                /s/
      Robert S. Stec

              	 
	
                 

              	 	 	
                CEO

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