Document:

Exhibit 10.38 Option Agreement Jesse De La Rama (Dec 6, 2004)

    
      
         

                                                        Exhibit
          10.38

         

        I.C.
          ISAACS & COMPANY,
          INC. AMENDED AND RESTATED <?xml:namespace prefix = o ns =
          "urn:schemas-microsoft-com:office:office" />

        OMNIBUS
          STOCK
          PLAN

        NONSTATUTORY
          STOCK OPTION
          GRANT AGREEMENT

        This Grant
          Agreement (the “Agreement”) is entered into with effect from December 6, 2004 by
          and between I.C. ISAACS & COMPANY, INC., a Delaware corporation (the
“Corporation”), and Jesse de la Rama (“Optionee”).

        WHEREAS,
          the
          Corporation’s wholly owned subsidiary, I.C. Isaacs & Company LP (the
“Company”), has entered into an employment agreement dated as of the 1st day of
          March 2004 with the Optionee (the “Employment Agreement”); and

        WHEREAS,
          pursuant
          to the I.C. Isaacs & Company, Inc. Amended and Restated Omnibus Stock Plan
          (the “Plan”), the Compensation Committee of the Board of Directors of the
          Corporation determined, at a meeting held on the December 6, 2004 (the
“Grant
          Date”), to grant an option to the Optionee, subject to the provisions of the
          Plan and this Agreement, to purchase 25,000 shares of the Common Stock,
          par
          value of $.0001 per share, of the Corporation (the “Common Stock”) at the
          exercise price in effect under the Plan for the Grant Date,

        NOW, THEREFORE,
          in
          consideration of the premises, mutual covenants and agreements herein,
          the
          Corporation and Optionee agree as follows:

        ARTICLE
          1

        GRANT
          OF
          OPTION

        Section
          1.1  Grant of Option. 
          The Corporation hereby grants to Optionee, pursuant to the provisions
          of the Plan, a non-qualified stock option to purchase from the Corporation,
          at a
          price of $0.86 per share (the “Exercise Price”), up to 25,000 shares of Common
          Stock, subject to the provisions of this Agreement (the “Option”).  The Option shall expire at 5:00
          p.m.
          Eastern Time on February 28, 2009 (the “Expiration Date”), unless fully
          exercised or terminated earlier pursuant to this Agreement.  Unless stated otherwise herein,
          capitalized terms in this Agreement shall have the meaning set forth in
          the
          Plan.

        ARTICLE
          2

        VESTING

        Section
          2.1  Vesting Schedule. 
Unless
          the Option has earlier terminated
          pursuant to the provisions of this Agreement, the Optionee’s right to purchase
          Common Stock pursuant to this Option shall vest ratably on the first, second
          and
          third anniversaries of the Grant Date, provided that he shall be an active
          employee of the Company on each of such dates. 

        Section
          2.2  Acceleration of Vesting. 
Unless
          the Option has earlier terminated
          pursuant to the provisions of this Agreement, vesting of the Option granted
          to
          Optionee hereunder shall be accelerated so that the unvested portion of
          the
          Option shall become 100% vested in Optionee upon the earliest to occur
          of:
          (i) Optionee’s termination of employment or consulting relationship due to
          Disability, as defined in Article 4 hereunder; (ii) termination of
          Optionee’s employment or consulting relationship with the Corporation as a
          result of Optionee’s death; or (iii) a Change of Control that occurs while
          Optionee is employed by or in a consulting relationship with the Corporation
          or
          an Affiliate.  For purposes of this
          Agreement, the term “Change of Control” shall have the meaning ascribed to such
          term in the Amendment.

        ARTICLE
          3

        EXERCISE
          OF
          OPTION

        Section
          3.1  Exercisability of Option. 
Pursuant
          to the terms of this Agreement,
          the Option shall be exercisable, notwithstanding any contrary provision
          or
          requirement contained in the Plan, for a period of ten years commencing
          on the
          Grant Date (the “Option Term”), provided that, the Optionee’s employment shall
          not be terminated for “Cause” (as such term is defined in the Employment
          Agreement); and further provided, that in the event that vesting of this
          Option
          shall be accelerated pursuant to Section 2.2 hereof, Optionee (or the legal
          representative of his estate) shall be entitled to exercise this Option,
          to the
          extent that it shall not have been exercised prior thereto, during the
          one year
          period ending on the date immediately preceding the first anniversary of
          the
          Termination Date or such shorter period as shall remain until the Expiration
          Dates

        Section
          3.2 Manner of
          Exercise.  The Option may be
          exercised, in whole or in part, by delivering written notice to the
          Corporation’s Secretary in such form as the Administrator may require from time
          to time; provided, however, that the Option may not be exercised at any
          one time
          as to fewer than ten shares (or such lesser number of shares as to which
          the
          Option is then exercisable).  Such
          notice shall specify the number of shares of Stock subject to the Option
          as to
          which the Option is being exercised, and shall be accompanied by full payment
          of
          the Exercise Price for such shares in accordance with this Section 3.2.
          The
          exercise shall be effective upon receipt by the Corporation’s Secretary of such
          written notice accompanied by the required payment.

        Payment of
          the
          Exercise Price shall be made (a) in cash (or via certified or cashier’s
          check, or money order); (b) by a broker-assisted cashless exercise in
          accordance with Regulation T of the Board of Governors of the Federal Reserve
          System and the provisions of the next paragraph; or (c) by any combination
          of the foregoing.  In the
          Administrator’s sole and absolute discretion, the Administrator may authorize
          payment of the Exercise Price to be made, in whole or in part, by such
          other
          means as the Administrator may prescribe. 
The Option may be exercised only
          in multiples of whole shares and no
          fractional shares shall be issued. 

        If the Stock
          is
          publicly traded on a national exchange, payment of the exercise price may
          be
          made, in whole or in part, subject to such limitations as the Administrator
          may
          determine, by delivery of a properly executed exercise notice, together
          with
          irrevocable instructions:  (i) to a
          brokerage firm approved by the Corporation to deliver promptly to the
          Corporation the aggregate amount of sale or loan proceeds to pay the exercise
          price and any withholding tax obligations that may arise in connection
          with the
          exercise, and (ii) to the Corporation to deliver the certificates for such
          purchased shares directly to such brokerage firm.

        Section
          3.3  Issuance of Shares and Payment
          of Cash
          upon Exercise.  Upon
          exercise of the Option, in whole or in part, in accordance with the terms
          of
          this Agreement and upon payment of the Exercise Price for the shares of
          Stock as
          to which the Option is exercised, the Corporation shall issue to Optionee,
          the
          brokerage firm specified in the Optionee’s delivery instructions pursuant to a
          broker-assisted cashless exercise, or such other person exercising the
          Option,
          as the case may be, the number of shares of Stock so paid for, in the form
          of
          fully paid and nonassessable Stock and shall deliver certificates therefor
          as
          soon as practicable thereafter.  The
          stock certificates for any shares of Stock issued hereunder shall, unless
          such
          shares are registered or an exemption from registration is available under
          applicable federal and state law, bear a legend restricting transferability
          of
          such shares.

        ARTICLE
          4

        TERMINATION
          OF
          OPTION

        Section
          4.1  Termination, In General. 
The
          Option granted hereby shall
          terminate and be of no force or effect after the Expiration Date set forth
          in
          Section 1.1, unless terminated prior to such time as provided below.  For purposes of this Agreement,
          “Termination Date” shall mean, (a) the effective date of termination of
          Optionee’s employment with the Company, any successor entity thereto or any of
          the Corporation’s other subsidiaries, if such employment is terminated for
“cause” pursuant to Section 9 of the Employment Agreement, without cause
          pursuant to Section 10 of the Employment Agreement, by Optionee pursuant
          to
          Section 11(a)(iii) of the Employment Agreement, as amended by the Amendment
          or
          by Optionee pursuant to Paragraph 7 of the Amendment; or (b) if Optionee’s
          employment with the Company, any successor entity thereto or any of the
          Corporation’s other subsidiaries is terminated due to his death or “Disability”
(as such term is hereinafter defined), the earlier to occur of (i) the
          Expiration Date, or (ii) the first anniversary of (x) the date of the Optionee’s
          death or (y) the date upon which the Optionee shall receive written notice
          of
          the Administrator’s determination that Optionee is disabled (as the case may
          be).

        Section
          4.2  Termination of Employment for
          Cause.  In the event that
          the Optionee’s employment with the Company, any successor entity thereto or any
          of the Corporation’s other subsidiaries is terminated for “cause,” this Option
          shall terminate on the Termination Date with respect to all shares of Common
          Stock not purchased hereunder prior to such Termination Date.  For purposes of this Agreement,
“cause”
shall have the meaning attributed
          thereto by Section 9 of the Employment
          Agreement.

        Section
          4.3  Upon Optionee’s Death. 
Unless
          the Option has earlier terminated
          for cause or due to the Optionee’s Disability, upon Optionee’s death, Optionee's
          executor, personal representative, or the person(s) to whom the Option
          shall
          have been transferred by will or the laws of descent and distribution,
          as the
          case may be, may exercise all or any part of the outstanding Option, provided
          such exercise occurs within one year after the date of Optionee’s death, but not
          later than the Expiration Date of the Option.  Unless sooner terminated, the Option
          shall terminate upon the expiration of such one yearperiod.

        Section
          4.4  Termination of Employment by Reason
          of
          Disability.  Unless the
          Option has earlier terminated for cause or due to the Optionee’s death, in the
          event that Optionee ceases, by reason of Disability, to be an employee
          of the
          Company, any successor entity thereto or any of the Corporation’s other
          subsidiaries, the outstanding Option may be exercised in whole or in part
          at any
          time within one year after the date of Optionee's termination of employment
          due
          to Disability, but not later than the Expiration Date of the Option.  Unless sooner terminated, the Option
          shall terminate upon the expiration of such one yearperiod.

        For purposes
          of
          this Agreement, Disability shall mean the inability to engage in any substantial
          gainful activity by reason of any medically determinable physical or mental
          impairment which can be expected to result in death or which has lasted
          or can
          be expected to last for a continuous period of not less than 12 months.  The Administrator may require such
          proof
          of Disability as the Administrator in its sole discretion deems appropriate
          and
          the Administrator’s determination as to whether Optionee is Disabled shall be
          final and binding on all parties concerned.

        Section
          4.5  Leave of Absence. 
For
          purposes of this Agreement, the
          Optionee's employment with the Company, any successor entity thereto or
          any of
          the Corporation’s other subsidiaries shall not be deemed to terminate if the
          Optionee takes any military leave, sick leave, or other bona fide leave
          of
          absence approved by the Administrator of 90 days or less.  In the event of a leave in excess
          of 90
          days, the Optionee's employment shall be deemed to terminate on the 91st
          day of
          the leave unless the Optionee's right to re-employment with the Corporation
          or
          Affiliate remains guaranteed by statute or contract.

        ARTICLE
          5

        ADJUSTMENTS;
          BUSINESS
          COMBINATIONS

        Section
          5.1  Adjustments for Events Affecting
          Common
          Stock.  In the event of
          changes in the Common Stock of the Corporation by reason of any stock dividend,
          split-up, recapitalization, merger, consolidation, business combination
          or
          exchange of shares and the like, the Administrator shall, in its discretion,
          make appropriate adjustments to the number, kind and price of shares covered
          by
          this Option, and shall, in its discretion and without the consent of the
          Optionee, make any other adjustments in this Option, including but not
          limited
          to reducing the number of shares subject to the Option or providing or
          mandating
          alternative settlement methods such as settlement of the Option in cash
          or in
          shares of Common Stock or other securities of the Corporation or of any
          other
          entity, or in any other matters which relate to the Option as the Administrator
          shall, in its sole discretion, determine to be necessary or appropriate.

        Section
          5.2  Pooling of Interests
          Transaction. 
Notwithstanding anything
          in the Plan or this Agreement to the contrary
          and without the consent of the Optionee, the Administrator, in its sole
          discretion, may make any modifications to the Option, including but not
          limited
          to cancellation, forfeiture, surrender or other termination of the Option
          in
          whole or in part regardless of the vested status of the Option, in order
          to
          facilitate any business combination that is authorized by the Board to
          comply
          with requirements for treatment as a pooling of interests transaction for
          accounting purposes under generally accepted accounting principles.

        Section
          5.3  Adjustments for Unusual
          Events.  The Administrator
          is authorized to make, in its discretion and without the consent of the
          Optionee, adjustments in the terms and conditions of, and the criteria
          included
          in, the Option in recognition of unusual or nonrecurring events affecting
          the
          Corporation, or the financial statements of the Corporation or any Subsidiary,
          or of changes in applicable laws, regulations, or accounting principles,
          whenever the Administrator determines that such adjustments are appropriate
          in
          order to prevent dilution or enlargement of the benefits or potential benefits
          intended to be made available under the Option or the Plan.

        Section
          5.4  Binding Nature of
          Adjustments.  Adjustments
          under this Article 5 will be made by the Administrator, whose determination
          as
          to what adjustments, if any, will be made and the extent thereof will be
          final,
          binding and conclusive.  No
          fractional shares will be issued pursuant to this Option on account of
          any such
          adjustments.

        ARTICLE
          6

        MISCELLANEOUS

        Section
          6.1  Non-Guarantee of
          Employment.  Nothing in the
          Plan or this Agreement shall alter the employment status of Optionee, nor
          be
          construed as a contract of employment between the Corporation, the Company,
          any
          successor entity thereto or any of the Corporation’s other subsidiaries, and
          Optionee, or as a contractual right of Optionee to continue in the employ
          of the
          Company, or as a limitation of the right of the Company, any successor
          entity
          thereto or any of the Corporation’s other subsidiaries to discharge Optionee at
          any time with or without cause or notice.

        Section
          6.2  No Rights of Stockholder. 
Optionee
          shall not have any of the
          rights of a stockholder with respect to the shares of Stock that may be
          issued
          upon the exercise of the Option until such shares of Stock have been issued
          to
          him upon the due exercise of the Option. 
No adjustment shall be made for
          dividends or distributions or other
          rights for which the record date is prior to the date such certificate
          or
          certificates are issued.

        Section
          6.3  Non-Qualified Nature of
          Option.  This Agreement is
          intended to be an agreement concerning a stock option arrangement which
          does
not qualify under section 422 of the Internal Revenue Code, and this
          Agreement shall be so construed. 
Optionee acknowledges that, upon
          exercise of this Option, Optionee will
          recognize taxable income in an amount equal to the excess of the then Fair
          Market Value of the shares over the Exercise Price and must comply with
          the
          provisions of Section 6.6 of this Agreement with respect to any tax withholding
          obligations that arise as a result of such exercise.

        Section
          6.4  Confidential Information. 
In
          consideration of the Option granted
          to the Optionee pursuant to this Agreement, Optionee agrees and covenants
          that,
          except as specifically authorized by the Corporation, the Optionee will
          keep
          confidential any trade secrets or confidential or proprietary information
          of the
          Corporation or any Affiliate which are now or which hereafter may become
          known
          to Optionee as a result of Optionee's employment by the Corporation, the
          Company, any successor entity thereto or any of the Corporation’s other
          subsidiaries, and shall not at any time, directly or indirectly, disclose
          any
          such information to any person, firm, corporation or other entity, or use
          the
          same in any way other than in connection with the business of the Corporation
          or
          any Affiliate, at all times during and after Optionee's employment.

        Section
          6.5  The Corporation's Rights. 
          The existence of this Option shall not affect in any way the
          right or
          power of the Corporation or its stockholders to make or authorize any or
          all
          adjustments, recapitalizations, reorganizations or other changes in the
          Corporation's capital structure or its business, or any merger or consolidation
          of the Corporation, or any issue of bonds, debentures, preferred or other
          stocks
          with preference ahead of or convertible into, or otherwise affecting the
          Stock
          or the rights thereof, or the dissolution or liquidation of the Corporation,
          or
          any sale or transfer of all or any part of the Corporation's assets or
          business,
          or any other corporate act or proceeding, whether of a similar character
          or
          otherwise.

        Section
          6.6  Withholding of Taxes. 
The
          Corporation, the Company, any
          successor entity thereto or any of the Corporation’s other subsidiaries shall
          have the right to deduct from any compensation or any other payment of
          any kind
          (including withholding the issuance of shares of Stock) due Optionee the
          amount
          of any foreign, federal, state or local taxes required by law to be withheld
          as
          the result of the exercise of the Option or the lapsing of any restriction
          with
          respect to any shares of Stock acquired on exercise of the Option; provided,
          however, that the value of the shares of Stock withheld may not exceed
          the
          statutory minimum withholding amount required by law.  In lieu of such deduction, the
          Administrator may require Optionee to make a cash payment to the Corporation
          or
          an Affiliate equal to the amount required to be withheld.  If Optionee does not make such
          payment
          when requested, the Corporation may refuse to issue any Stock certificate
          under
          the Plan until arrangements satisfactory to the Administrator for such
          payment
          have been made.

        Section
          6.7  Optionee. 
Whenever
          the word “Optionee” is used in
          any provision of this Agreement under circumstances where the provision
          should
          logically be construed to apply to the estate, personal representative
          or
          beneficiary to whom this Option may be transferred by will or by the laws
          of
          descent and distribution, the word “Optionee” shall be deemed to include such
          person.

        Section
          6.8  Nontransferability of
          Option.   The Option
          shall be nontransferable otherwise than by will or the laws of descent
          and
          distribution and during the lifetime of Optionee, the Option may be exercised
          only by Optionee or, during the period Optionee is under a legal disability,
          by
          Optionee’s guardian or legal representative.  Except as provided above, the Option
          may
          not be assigned, transferred, pledged, hypothecated or disposed of in any
          way
          (whether by operation of law or otherwise) and shall not be subject to
          execution, attachment or similar process.

        Section
          6.9  Notices. 
All
          notices and other communications
          made or given pursuant to this Agreement shall be in writing and shall
          be
          sufficiently made or given if hand delivered or mailed by certified mail,
          addressed to Optionee at the address contained in the records of the
          Corporation, or addressed to the Administrator, care of the Corporation
          for the
          attention of its Corporate Secretary at its principal office or, if the
          receiving party consents in advance, transmitted and received via telecopy
          or
          via such other electronic transmission mechanism as may be available to
          the
          parties.

        Section
          6.10  Entire Agreement. 
This
          Agreement contains the entire
          agreement between the parties with respect to the subject matter contained
          herein.  Any oral or written
          agreements, representations, warranties, written inducements, or other
          communications made prior to the execution of this Agreement shall be void
          and
          ineffective for all purposes.

        Section
          6.11  Amendments. 
This
          Agreement may not be modified,
          except as provided in the Plan or in a written document signed by each
          of the
          parties hereto.  

        Section
          6.12  Conformity with Plan. 
Except
          for the provisions of this
          Agreement that are contrary to the provsions of the Plan, (a) this Agreement
          is
          intended to conform in all respects with, and is subject to all applicable
          provisions of, the Plan, which is incorporated herein by reference; and
          (b) any
          inconsistencies between this Agreement and the Plan shall be resolved in
          accordance with the terms of this Agreement.  In the event of any ambiguity in
          this
          Agreement or any matters as to which this Agreement is silent, the Plan
          shall
          govern.  A copy of the Plan is
          available upon request to the Administrator.

        Section
          6.13  Governing Law. 
This
          Agreement shall be governed by and
          construed in accordance with the laws of the State of Delaware, other than
          the
          conflict of laws principles thereof.

        Section
          6.14  Headings. 
The
          headings in this Agreement are for
          reference purposes only and shall not affect the meaning or interpretation
          of
          this Agreement.

        IN WITNESS
          WHEREOF,
          the Corporation has caused this Agreement to be executed by its duly authorized
          officer as of the date first above written.

                                                                               
          I.C. ISAACS & COMPANY, INC.

                                                                               
          By:     /s/
Peter
          J
          Rizzo                                                                         

                                                                                       
          Peter J. Rizzo, Chief Executive Officer

        The undersigned
          hereby acknowledges that he/she has carefully read this Agreement and the
          Plan
          and agrees to be bound by all of the provisions set forth in such documents.

                                                                               
          OPTIONEE

                                                                               
                  /s/
Jesses De La
          Rama                                                                           

         

                                                                               
          Date:   8/1/2005                                    

         

      

      CORPORATE
        SECRETARY

      I.C.
        ISAACS & COMPANY,
        INC.

      3840
        BANK
        STREET

      BALTIMORE,
        MARYLAND  21224

       

      Gentlemen:

      I hereby elect
        to
        exercise the Option dated  December
        6, 2004 concerning the grant made to me on December 6, 2004 by I.C. ISAACS
&
COMPANY, INC. (the “Company”), subject to all the terms and provisions of the
        Nonstatutory Stock Option Grant Agreement previously executed by me, and
        the
        I.C. ISAACS & COMPANY, INC. AMENDED AND RESTATED OMNIBUS STOCK PLAN.  Pursuant to this election, I wish
        to
        purchase ____________ shares of Common Stock of the Company at a price of
        $___________ per share.

      Enclosed
        is payment for such
        shares in the amount of $_____________ in the form of:

      £ 
Cash             
        £ 
Certified
        or Cashier’s Check         
£ 
Money
        Order

      £ 
Irrevocable
        Broker-Assisted Cashless
        Exercise Instructions

      I understand
        that
        my election will be effective the date this election notice, together with
        the
        cash, check or other payment of the purchase price, is received by the Company
        as indicated below.

      My
        address of record
        is:

                 
                                                                   

                 
                                                                   

                 
                                                                   

      And
        my Social Security
        Number is:                              

       

      Date:________________________               
        ______________________________________

                                                                             
        (Optionee)

                                                                             
        Received
        by
        I.C. ISAACS & COMPANY, INC. on

                                                                             
        ___________________________, ______

                                                                             
        By:                                                                  
        

       

                                                                             
        Title:Exhibit 10.39 Amended Employement Agreement Jesse De La Rama

                                                                                                Exhibit
      10.39

    
 

    Amendment
      dated as of August 1, 2005 (this “Amendment”) to the Employment Agreement made
      as of the 1st day of March 2004, by and between I.C. Isaacs & Company LP, a
      Delaware limited partnership (“the Company”), and Jesse de la Rama, (the
“Executive”). Unless otherwise indicated, all capitalized terms used in this
      Amendment shall have the meanings attributed thereto by the
      Agreement.

     

    WHEREAS,
      the Executive is employed pursuant to the Agreement as the Company’s Vice
      President of Merchandise Planning and Retail Development; and

     

    WHEREAS,
      the Company desires to modify the terms of the Executive’s employment and his
      responsibilities under the Agreement in the manner hereinbelow provided;
      and

     

    WHEREAS,
      the Executive is willing to accept such modifications,

     

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual terms and provisions
      hereinafter set forth, the parties agree as follows:

     

    1. Amendment
      of Section 1.
      The
      provisions of Section 1 of the Agreement are hereby deemed to have been amended,
      with effect from and after December 6, 2004, the date on which the Board of
      Directors of Isaacs (the “Board”) authorized such change (the “Board
      Authorization Date”), to read, as follows:

     

    “1. Employment. The
      Company hereby employs the executive as Executive Vice President and Chief
      Operating Officer. The Executive will report to the Chief Executive Officer
      of
      the Company’s parent, I.C. Isaacs & Company, Inc. (“Isaacs”).”

     

    2. Amendment
      of Section 3.
      The
      provisions of Section 3 of the Agreement are hereby deemed to have been amended
      with effect from and after the Board Authorization Date, to read, as
      follows:

     

    “3. Base
      Salary. The
      Executive’s base salary during the Term shall be paid at a rate of $250,000 per
      annum. The payment of the Executive’s base salary and all other payments made
      and to be made to the Executive under this Agreement shall be made net of all
      current and lawful withholdings and deductions, including those for federal,
      state and local taxes.”

     

    3. Amendment
      of Section 4.
      Section
      4 of the Agreement is hereby deemed to have been amended, with effect from
      and
      after December 1, 2004, to read, as follows:

     

    “4. Incentive
      Compensation. In
      addition to his base salary, the Executive shall be entitled to receive
      incentive compensation calculated and paid, as follows:

     

    (a)  Initial
      Term and all Renewal Terms.
      The
      Executive shall be eligible to receive the following bonuses with respect to
      calendar years 2004 (to the extent provided in Section 4 of this Amendment),
      2005, 2006 and each Renewal Term:

     

    (i)  In
      the
      event that the earnings before interest and taxes achieved by Isaacs during
      any
      of such years shall be: 

     

    1) not
      less
      than 95% of, and not more than 110% of, the “EBIT Target” specified by the
      Company for such year, the Company shall pay the Executive a bonus of
      $52,500;

     

    2) not
      less
      than 111% of, and not more than 130% of, the “EBIT Target” specified by the
      Company for such year, the Company shall pay the Executive a bonus of $70,000;
      or

     

    3) more
      than
      130% of the “EBIT Target” specified by the Company for such year, the Company
      shall pay the Executive a bonus of $87,5000;

     

    (ii)  in
      the
      event that the increase in cash and cash equivalents reflected on the
      consolidated statement of cash flows contained in Isaacs’ annual audited
      financial statements for any of such years shall be:

     

    1) not
      less
      than 95% of, and not more than 110% of, the “Cash Flow Target” specified by the
      Company for such year, the Company shall pay the Executive a bonus of
      $42,000;

     

    2) not
      less
      than 111% of, and not more than 130% of, the “Cash Flow Target” specified by the
      Company for such year, the Company shall pay the Executive a bonus of $56,000;
      or

     

    3) more
      than
      130% of the “Cash Flow Target” specified by the Company for such year, the
      Company shall pay the Executive a bonus of $70,000; and

     

    (iii)  in
      the
      event that the number of turns of the Company’s inventory during any of such
      years shall be:

     

    1) not
      less
      than 95% of, and not more than 110% of, the “Inventory Turns Target” specified
      by the Company for such year, the Company shall pay the Executive a bonus of
      $10,500;

     

    2) not
      less
      than 111% of, and not more than 130% of, the “Inventory Turns Target” specified
      by the Company for such year, the Company shall pay the Executive a bonus of
      $14,000; or

     

    3) more
      than
      130% of the “Inventory Turns Target” specified by the Company for such year, the
      Company shall pay the Executive a bonus of $17,500.

     

    (b)  Definitions.
      For
      purposes of this Agreement, the term:

     

    (i)  “EBIT
      Target” shall mean the amount that the Company shall designate as the earnings
      before interest and taxes that Isaacs must achieve in order for the Executive
      to
      earn the bonus described in Section 4 (a) (i) of this Agreement; 

     

    (i)  “Cash
      Flow Target” shall mean the amount that the Company shall designate as the cash
      provided by operating activities that Isaacs must achieve in order for the
      Executive to earn the bonus described in Section 4 (a) (ii) of this Agreement;
      and

     

    (ii)  “Inventory
      Turns Target” shall mean the number of turns of the Company’s inventory that the
      Company must achieve, as designated by the Company, in order for the Executive
      to earn the bonus described in Section 4 (a) (iii) of this
      Agreement.

     

    (c)  The
      EBIT
      Target, Cash Flow Target and Inventory Turns Target shall (i) not be greater
      than any of the EBIT Targets, Cash Flow Targets and Inventory Turns Targets
      applicable to any other senior executive of the Company; (ii) be determined
      by
      the Compensation Committee of the Board after consultation with the Executive;
      and (iii) be specified in writing by the Company not later than February 28,
      2005 with respect to calendar year 2005, and not more than 60 days after the
      first day of each other year during the Initial Term and each Renewal Term
      with
      respect to such year.

     

    (d)  Determination
      of the achievement of:

     

    (ii)  the
      EBIT
      Target shall be made by adding the sum of the interest expense net of interest
      income, and income tax expense (but not income tax benefit) reflected on the
      consolidated statement of operations contained in Isaacs Financial Statements
      for the year in question from the line item entitled Net income” on such
      consolidated statement of operations;

     

    (iii)  the
      Cash
      Flow Target shall be made by reference to the line item entitled “cash provided
      by operating activities” reflected on the consolidated statement of cash flows
      contained in the Isaacs Financial Statements for the year in question;
      and

     

    (iv)  the
      Inventory Turns Target shall be made by reference to the quotient obtained
      by
      dividing:

     

    1) the
      cost
      of goods sold reflected on the consolidated statement of operations contained
      in
      the Isaacs Financial Statements for the year in question by

     

    2) the
      quotient derived by dividing the sum of the beginning and ending inventories
      for
      the year in question, as determined by reference to the notes to the Isaacs
      Financial Statements for such year, by the number 2.

     

    (e)  Each
      of
      the bonuses described in Sections 4(a) which shall be earned during any calendar
      year or part thereof during the Term shall be paid not more than 10 days after
      the date upon which Isaacs’ Annual Report on Form 10-K for the year in question
      shall be filed with the SEC.”

     

    4. Calculation
      of 2004 Incentive Compensation.
      

     

    (a) The
      aggregate amount of any incentive compensation to be paid to the Executive
      with
      respect to 2004 shall be determined by calculating the amount of the incentive
      compensation that would have been payable pursuant to Section 4 of the Agreement
      as though (i) this Amendment had not been executed by the parties (the “Original
      Amount”), and (ii) this Agreement, as amended by this Amendment, had been in
      effect during all of 2004 (the “Amendment Amount”).

     

    (b) The
      aggregate amount of any incentive compensation to be paid to the Executive
      with
      respect to 2004 will be the sum derived by adding 11/12 of the Original Amount
      to 1/12 of the Amendment Amount.

     

    5. Amendment
      of Section 10.
      The
      provisions of Section 10 of the Agreement are hereby deemed to have been amended
      to read, as follows:

     

    “10. Termination
      of Employment by the Company Without Cause.
      Notwithstanding the provisions of Section 2 of this Agreement, the Company
      may
      terminate the Executive’s employment as provided under this Agreement, at any
      time, for reasons other than for Cause by notifying the Executive in writing
      of
      such termination. If the Executive’s employment is terminated pursuant to this
      Section 10, the Company shall pay to the Executive, in accordance with the
      normal payroll practices of the Company, if such termination occurs at any
      time
      during any Renewal Term, an amount equal to the Executive’s base salary for a
      period of 12 months commencing on the Termination Date. Such payments shall
      be
      reduced by any compensation paid to the Executive during said 12 month period
      with respect to other employment or consulting services he performs for other
      persons or entities. In addition to the foregoing payments, the Executive’s
      participation in all of the Company’s benefit plans, programs, arrangements and
      practices, including all disability, medical, life insurance and similar
      programs, but excluding the Option Plan and any pension, 401-K or similar
      retirement income or profit sharing plans, shall continue for the 12 month
      period during which he shall receive such payments.”

     

    6. Amendment
      of Section 11.
      The
      provisions of Section 11 of the Agreement are hereby deemed to have been amended
      to read, as follows:

     

    11. “Confidential
      Information; Non-Competition; Non-Solicitation.

     

    (a) The
      Executive agrees that during the Term of this Agreement and during the one
      year
      period following the Termination Date, if this Agreement is terminated by the
      Company for cause, or during any period when the Company shall make payments
      to
      the Executive pursuant to Section 10 of this Agreement, he will:

     

    (i) not
      disclose to any person or use the same in any way, other than in the discharge
      of his duties under this Agreement in connection with the business of the
      Company, any trade secrets or confidential or proprietary information of the
      Company, including, without limitation, any information or knowledge relating
      to
      1) the business, operations or internal structure of the Company, 2) the clients
      (or customers) or potential clients (or potential customers) of the Company,
      3)
      any method and/or procedure (such as records, programs, systems, correspondence,
      or other documents), relating or pertaining to projects developed by the Company
      or contemplated to be developed by the Company, or 4) the Company’s business,
      which information or knowledge the Executive shall have obtained during the
      term
      of this Agreement, and which is otherwise of a secret or confidential nature;
      

     

    (ii) not,
      directly or indirectly, within the United States, whether as a partner,
      proprietor, employee, consultant, agent or otherwise, participate or engage
      in
      any business that competes with, restricts or interferes with the business
      of
      the Company, including, without limitation, any business in the young men’s and
      women’s contemporary sportswear and jeanswear industry;

     

    (iii) not,
      directly or indirectly (for his own account, or for the account of others),
      urge
      any current or potential client, customer, supplier or contractor of the Company
      to discontinue business, in whole or in part, or not to do business, with the
      Company or otherwise interfere with the Company’s relationship or potential
      relationship with any parties;

     

    (iv) refrain
      from soliciting or recruiting any employee who was employed by the Company
      as of
      the Termination Date to leave his or her employment with the
      Company.

     

    (b) The
      Executive expressly acknowledges and agrees that, upon leaving the employ of
      the
      Company for any reason whatsoever, the Executive shall not take with him,
      without prior written consent of the Company, any documents, forms or other
      reproductions of any data or any information relating to or pertaining to the
      Company, any clients (or customers) or potential clients (or potential
      customers) of the Company, or any other confidential information or trade
      secrets and will promptly return any such materials already in his possession
      to
      the Company.

     

    (c) The
      Executive further expressly acknowledges and agrees that (i) the restrictions
      set forth in this Section 11 are reasonable in terms of scope, duration,
      geographic area and otherwise; (ii) the protections afforded to the Company
      hereunder are necessary to protect its legitimate business interests; and (iii)
      the agreement to observe such restrictions forms a material part of the
      consideration of this Agreement and the Executive’s employment by the
      Company.

     

    (d) In
      the
      event that the Executive violates any of the provisions of Section 11(a) hereof,
      the Company’s obligation to pay any sums to the Executive pursuant to Section 10
      or 13 hereof, or otherwise, and the Executive’s entitlement to exercise any
      options granted to him under the Option Plan, shall thereupon be
      terminated.

     

    (e) The
      provisions of this Section 11 shall survive the termination of this
      Agreement.

     

    7. New
      Section 13.
      The
      Agreement is hereby deemed to have been amended to add the following as Section
      13 thereof:

     

    “13. Change
      of Control.

     

    (a) Anything
      elsewhere contained in this Agreement to the contrary notwithstanding, if
      Executive’s employment is terminated:

     

    (i) other
      than for Cause by the Company within 90 days prior to a “Change of Control” (as
      defined herein), or

     

    (ii) other
      than for Cause by the Company (or its successor corporation) at any time after
      a
      Change of Control, or

     

    (iii) as
      a
      result of Executive’s resignation within 60 days following a Change of Control,

     

    Executive
      shall receive, in lieu of any payments that he might otherwise be entitled
      to
      receive pursuant to Section 10 of this Agreement, an amount equal to the
      Executive’s base salary for a period of 12 months commencing on the Termination
      Date, as the case may be. All of such payments shall be made in accordance
      with
      the normal payroll practices of the Company then in effect.

     

    (b) For
      purposes of this Agreement, a “Change of Control” shall occur if:

     

    (i) any
      “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities
      Exchange Act of 1934, as amended), other than François Girbaud, Marithé
Bachellerie and/or any Person directly or indirectly controlled by either or
      both of them, is or becomes the “beneficial owner” (as defined in Rule 13d-3
      under said Act), directly or indirectly, of securities of Isaacs representing
      50% or more of the total voting power represented by Isaacs’ then outstanding
      voting securities; 

     

    (ii) any
      merger or consolidation of Isaacs with any other Person that has been approved
      by the stockholders of Isaacs, other than a merger or consolidation which would
      result in the voting securities of Isaacs outstanding immediately prior thereto
      continuing to represent (either by remaining outstanding or by being converted
      into voting securities of the surviving Person) more than fifty percent (50%)
      of
      the total voting power represented by the voting securities of Isaacs or such
      surviving Person outstanding immediately after such merger or consolidation,
      or
      the stockholders of Isaacs approve a plan of complete liquidation of Isaacs;
      or

     

    (iii) any
      sale,
      merger, dissolution or other disposition of the Company; or

     

    (iv) any
      sale
      or other disposition, in one transaction or a series of related transactions,
      of
      all or substantially all the Company’s assets; or 

     

    (v) a
      change
      in the composition of the Board occurring within a two-year period, as a result
      of which fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” will mean directors who 1) are directors of Isaacs as of
      the Effective Date, or 2) are elected, or nominated for election, to the Board
      with the affirmative votes of at least a majority of the Incumbent Directors
      at
      the time of such election or nomination, or 3) are elected by Isaacs’
stockholders after nomination by a) a majority of the Incumbent Directors at
      the
      time of such election, or b) a committee of the Board at least a majority of
      which shall be Incumbent Directors.”

     

    8. New
      Section 14.
      The
      Agreement is hereby deemed to have been amended to add the following as Section
      14 thereof:

     

    “14. Additional
      Option Plan Option.
      On
      February 10, 2005 (the “New Option Grant Date”), the Compensation Committee of
      the Board approved the grant to the Executive of a non-qualified stock option
      to
      purchase 75,000 shares of Common Stock (the “New Option”) pursuant to the Option
      Plan. The New Option shall be granted under, and shall be subject to all of
      the
      terms and conditions of, the Option Plan. The New Option shall be exercisable
      (a) for a period of ten (10) years commencing on the New Option Grant Date
      (the
“New Option Term”), but only if the Executive is an active employee of he
      Company on each date when he exercises the New Option; and (b) at the price
      per
      share which must be applied to all non-qualified stock options granted under
      the
      Option Plan on the New Option Grant Date. The Executive’s right to purchase
      Common Stock pursuant to the New Option shall vest ratably on the first, second
      and third anniversaries of the New Option Grant Date, provided that he shall
      be
      an active employee of the Company on each of such dates.”

     

    9. Continuation
      of Effectiveness of the Agreement.
      The
      Agreement, as amended by this Amendment, shall continue in full force and
      effect.

     

    IN
      WITNESS WHEREOF, the parties have executed this Amendment as of the date first
      above written.

     

    I.C.
      Isaacs & Company, L.P.

    

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

    General
      Partner

    

    

    By:     /s/ 
      Peter J Rizzo                

    Peter
      J.
      Rizzo, Chief Executive officer

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