Document:

LICENSE AGREEMENT
                                -----------------

THIS AGREEMENT made as of the 26th Day of April, 2002

BETWEEN:

                   MICHAEL KAVANAUGH, as an individual
                   145 118TH Street SE
                   Bellevue, Washington 98005
                   (referred to as the "Licensor"

AND:
                   GLOBAL HOME MARKETING, INC., a Nevada corporation
                   145 118TH Street SE
                   Bellevue, Washington 98005
                   (referred to as the "Licensee"

WHEREAS:

1. The Licensor is the holder of the rights to a proprietary oil free sunscreen
product known as "Aztec Gold". This "Aztec Gold" oil free sunscreen product,
including variations, improvements from time to time and projected products are
collectively known as the "Product".

2. The Licensor owns the worldwide manufacturing, marketing and distribution
rights to the Product.

3. The Licensee is desirous of obtaining the rights to manufacture, market and
distribute the Product in the territory of the United States. The Licensee may
sub-lease various territories with the written permission of the Licensor.

4. In the event of a sub-license, the sub-licensee shall have the right to
market and distribute the Product within the assigned territory. The Licensor
reserves the right to approve the variations, tradename variations, advertising
and logos, etc. as may be deemed appropriate. Such approval shall not be
unreasonably withheld.

                                       -1-
<PAGE>

5. As of the date of this license, the tradename "Aztec Gold" is not protected
by tradename registration in the United States, however the Licensor undertakes
to protect the tradename "Aztec Gold" in the United States within the next
thirty days. Upon the Licensor receiving tradename registration, such
registration shall be assigned to the Licensee for the territory of the United
States. The Licensor has not registered or undertaken to register any other
tradename other than "Aztec Gold".

6. The Licensor is hereby granting the manufacturing, marketing and distribution
rights to the Product by the terms and conditions more particularly described
herein.

NOW THEREFORE THIS AGREEMENT WITNESSED that in consideration of the mutual
covenants and premises contained herein, and other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

TERMS AND CONDITIONS:

1. The Licensor hereby warrants that it is the possessor of all manufacturing,
marketing and distribution rights holder of the Product and all improvements
thereof, and is rightfully and absolutely possessed of and entitled to the
worldwide manufacturing, marketing and distribution rights of the Product, and
further warrants that such exclusive rights or any portion thereof are fully
assignable and the Licensor has the right to grant or assign the license as set
forth herein.

2. The Licensor hereby grants and assigns to the Licensee, the formula for
manufacturing, marketing and distribution rights to the Product in the territory
of the United States in exchange for 1,000,000 shares of Common Stock of the
Licensee. The Licensee further agrees to pay a continuing 5% royalty, paid
semi-annually, which is based on gross sales, exclusive of any local, state or
federal taxes, or sales commissions or promotional costs.

3.  The Licensee agrees to pay the 5% royalty on minimum sales of the following:
     a)  first year - $50,000 in gross sales
     b)  second year - $50,000 in gross sales
     c)  third year - $50,000 in gross sales
     d)  fourth year - $50,000 in gross sales
     e)  fifth year and every year thereafter - $100,000 in gross sales
The Licensor and Licensee agree that the first year's gross sales will be due 18
months from the date of this agreement allowing the Licensee six months or
organize the business and initiate sales.

                                       -2-
<PAGE>

4.  The Licensor does hereby warrant and agrees that:
     a)   the Licensee and any sub-licensees may manufacture, market and
          distribute the Product anywhere within the territory of the United
          States of America.
     b)   the Licensee and sub-licensees, if any, shall be notified of all
          improvements and amendments to the Product.
     c)   the Product will meet all legal standards and ethical business
          practice with respect to advertising, credit arrangements, sales
          contracts, employees and phases of manufacturing, marketing and
          distribution of the Product.

5. The License Agreement hereby granted shall continue in existence until
terminated, provided that this Agreement may not be terminated except as
follows:

     a)  Upon written consent of the parties hereto.
         At the option of the Licensor if the Licensee defaults or fails to
         perform any of the Licensee's obligations under this Agreement and/or
         fails to cure any such default or take all reasonable steps to do so
         within sixty (60) days after written notice thereof has been given by
         the Licensor to the Licensee.
     b)  At the option of the Licensor:
               i)   if the Licensee becomes insolvent.
               ii)  if a receiver is appointed to take possession of the
                    Licensee's business or property or any part thereof.
               iii) if the Licensee shall make general assignment for the
                    benefit or creditors.
     d)  At the option of the Licensee if the Licensor defaults or fails to
         perform any of their assigned obligations under this Agreement and
         shall fail to cure any such default or take all reasonable steps to do
         so within sixty (60) days after written notice thereof has been given
         to the Licensor to the Licensee.

6. This Agreement provides that the rights and privileges granted hereby to the
Licensee under the terms and conditions of this Agreement, shall apply to any
improved version of the Product, and that the Licensor shall be expedient in the
notification of any and all improvements created for the Product or in place of
the Product.

7. The parties hereto agree to use their best efforts to carry out all of the
provisions of this License Agreement, but in the event of accidents, fires,
delays in manufacturing, delays of carriers and government actions, acts of God,
state of war, or any other cause beyond the control of either party, neither
party shall be required to perform, nor shall the delay, non-performance or
other default resulting from or contributed to by any of the above reasons give
either party the right to terminate this Agreement. The parties hereto agree
that time for performance be extended to allow for the delay resulting from
circumstances and events.

8. The Licensor and Licensee agree that they will, at their sole expense, either
directly or by their agents, take whatever steps necessary to protect the
proprietary nature of the Product and the tradename "Aztec Gold", or any
subsequent tradenames of the Product.

                                       -3-
<PAGE>

9. This Agreement provides that the Licensor and Licensee will take all
reasonable steps to preserve and protect the Protect to the best of its ability
and to protect all trade secrets and proprietary information contained herein.

10. The Licensee hereby accepts the rights to manufacture, market and distribute
the Product and to use its best efforts and to take all reasonable actions to
promote customer interest and effect the sale of the Product.

11. The Licensee's plan of manufacturing and marketing the Product shall be
conducive to quality advertising and distribution standards.

12. The Licensee shall have the right to appoint and sub-license distributors
and/or sales agents within the appointed territory to manufacture and market the
Product. Such distributors and/or sales agents will be appointed at the sole
discretion of the Licensee and such agents and/or distributors shall be
responsible only to the Licensee. The Licensee is responsible to the Licensor.

13. The Licensee herein undertakes that all advertising material conform to
local and federal statutory advertising regulations and to operate within and
conform to territorial laws.

14. This Agreement provides that the Licensor will provide the Licensee with any
and all literature which it may, from time to time, have in its possession with
respect to the promotion of the Product.

15. The Licensee shall be responsible for arranging, at the Licensee's
discretion and cost, all of the advertising and other promotional endeavors
pertaining to the Product and shall be solely responsible for same.

16. In the event that either party hereto shall deem the other party to be in
default of this Agreement, the one party shall give to the other party written
notice of such default and the other party shall have sixty days from the date
of such notice to remedy such default or to institute a bona fide proceeding to
remedy such default.

17. This Agreement contains the entire agreement between the parties and no
representations, inducements or agreements, oral and/or otherwise, not embodied
herein, shall have any force and effect.

                                       -4-
<PAGE>

18. Should any legal dispute arise on the TERMS AND CONDITIONS of this
Agreement, the parties hereto agree to the venue of the State of Washington, and
its applicable laws for any and all disputes.

THE FOLLOWING DO HEREBY AFFIX THEIR SEALS AND SIGNATURES:

Licensor:

-----------------------------------
Michael Kavanaugh, an individual

Licensee:

-----------------------------------
Global Home Marketing, Inc.
by Terrence Quocksister, Secretary & Director

                                       -5-FRAMEWORK AGREEMENT

Exhibit

10.96

 

FRAMEWORK AGREEMENT

 

                This Framework Agreement (this “Agreement”) is made as of the

14th day of May, 2002 (the “Effective Date”), between I.C. ISAACS &

COMPANY, INC., a Delaware corporation (the “Corporation”), I.C. ISAACS

& COMPANY L.P., a Delaware limited partnership (“Isaacs”), Textile Investment

International S.A., a Luxembourg corporation (“Textile Investment”),

Latitude Licensing Corp., a Delaware corporation (“Latitude Licensing”), and

Würzburg Holding S.A., a Luxembourg corporation, also known in abbreviation as

Würzburg S.A. (“Würzburg”) (Textile Investment, Latitude Licensing and

Würzburg are each referred to herein individually as a “Girbaud Entity” and

collectively as the “Girbaud Entities”).

 

                In consideration of the premises and the mutual

promises herein contained, the sufficiency and adequacy of which are

acknowledged and agreed to be fair and adequate, the parties intending to be

legally bound agree as follows:

 

ARTICLE I

CONSTRUCTION AND DEFINED TERMS

 

                SECTION 1.01               Articles and Sections.  The Article and Section headings and

captions in this Agreement are for convenience only and shall not affect the

construction or interpretation of this Agreement.  The references in this Agreement to Articles and Sections shall

be read as Articles or Sections of this Agreement unless otherwise specifically

provided.

 

SECTION 1.02.            Defined

Terms.  Unless otherwise

expressly stated in this Agreement, capitalized terms used in this Agreement

shall have the following meanings:

 

                “Ambra” As defined in Section 2.02.

 

                “Ambra/Textile Purchase Agreement” As

defined in Section 2.02.

 

                “Amendment to Men’s License Agreement” As

defined in Section 2.01.

 

                “Amendment to Women’s License Agreement” As

defined in Section 2.01.

 

                “Certificate of Designation” As defined in

Section 2.01.

 

                “Class II Director” means one of the

Directors elected at the 2002 Annual Meeting of Stockholders to serve until the

2005 Annual Meeting of Stockholders.

 

                “Code” means the Internal Revenue Code of

1986, as amended.

 

                “Common Stock” As defined in Section 2.01.

 

 

                “Company Director” means any Company

Director (as defined in the form of Stockholders’ Agreement attached hereto as Exhibit

D, which definition is incorporated herein by reference).

 

                “Company-Nominated Independent Director”

means any Company-Nominated Independent Director (as defined in the form of

Stockholders’ Agreement attached hereto as Exhibit D, which definition

is incorporated herein by reference).

 

                “Congress Financial”  Congress Financial Corporation, a Delaware

corporation, and its successors and assigns.

 

                “Congress Financial Credit Documents” means

collectively, the Accounts Financing Agreement [Security Agreement] and

Covenant Supplement to Accounts Financing Agreement [Security Agreement] dated

June 16, 1992, by and between Congress Financial and Isaacs, and all

agreements, documents, and instruments at any time executed and/or delivered by

Isaacs or any other Person to, with, or in favor of, Congress Financial in

connection therewith or related thereto, as all of the foregoing may be

amended, modified, supplemented, extended, renewed, restated, or replaced from

time to time.

 

                “Corporation Registered Agent” As defined in

Section 10.07.

 

                “D & O Questionnaire” means any

directors and officers questionnaire for the Corporation prepared by the

Corporation’s counsel.

 

                “Directors” 

means the members of the Board of Directors of the Corporation.

 

                “Exchange Act” As defined in Section 3.05.

 

                “First Consulting Fee Payment”  As defined in Section 3.03.

 

                “Girbaud License Agreements” means the

Trademark License and Technical Assistance Agreement dated January 15, 1998 and

the Trademark License and Technical Assistance Agreement For Women’s

Collections dated March 4, 1998, both by and between Latitude Licensing and Isaacs

and both as amended.

 

                “Isaacs Registered Agent” As defined in

Section 10.07.

 

                “Latitude Registered Agent” As defined in

Section 10.07.

 

                “New York Court” As defined in Section

10.06.

 

                “New York Courts” As defined in Section

10.06.

 

2

 

                “Original Note” means the Subordinated

Secured Promissory Note dated as of March 15, 2001 in the original principal

amount of Seven Million Two Hundred Thousand Dollars ($7,200,000) made by

Isaacs payable to the order of Ambra.

 

                “Person” means any natural person,

corporation, limited liability company, partnership, joint venture, entity,

association, joint-stock company, trust or unincorporated organization and any

governmental authority.

 

                “Process Agent” As defined in Section 10.07.

 

                “Proxy Statement” means the Corporation’s

Proxy Statement for the 2002 Annual Meeting of Stockholders.

 

                “Replacement Note” means the Amended and

Restated Subordinated Secured Promissory Note dated as of May

         , 2002 with a principal

amount of Six Million Five Hundred Fifty-seven Thousand Nine Hundred Eight and

53/100 Dollars ($6,557,908.53) in the form attached hereto as Exhibit A.

 

                “Satisfactory Nominees” As defined in the

form of Stockholders’ Agreement attached hereto as Exhibit D.

 

                “Securities Act” As defined in Section 3.05.

 

                “Stock” As defined in the form of

Stockholders’ Agreement attached hereto as Exhibit D, which definition

is incorporated herein by reference).

 

                “Stockholder Director” means any Stockholder

Director (as defined in the form of Stockholders’ Agreement attached hereto as Exhibit

D, which definition is incorporated herein by reference).

 

                “Stockholder-Nominated Independent Director”

means any Stockholder-Nominated Independent Director (as defined in the form of

Stockholders’ Agreement attached hereto as Exhibit D, which definition

is incorporated herein by reference).

 

                “Stockholders” means Textile Investment and

Würzburg.

 

                “Stockholders’ Agreement” As defined in

Section 2.01.

 

                “Termination Date” As defined in Section

9.01.

 

                “Textile Consent Letter Agreement” means the

consent letter agreement made as of May 3, 2002 by and among the Corporation,

Isaacs, Textile Investment and Würzburg.

 

                “382 Affiliate” As defined in Section 3.07.

 

3

 

                “Transaction Documents” means collectively,

the Amendment to Men’s License Agreement, the Amendment to Women’s License

Agreement, the Stockholders’ Agreement, the Certificate of Designation and the

Warrants.

 

                “2002 Annual Meeting of Stockholders” means

the 2002 annual meeting of stockholders of the Corporation and any adjournments

or postponements thereof.

 

                “Voting 

Agreement” means the Voting Agreement by and among Textile

Investment, Würzburg, Robert J. Arnot, Jon Hechler, Ronald S. Schmidt, Eugene

C. Wielepski, and Thomas Ormandy dated as of the date hereof.

 

                “Warrants” As defined in Section 2.01.

 

ARTICLE

II

TRANSACTION

DOCUMENTS

 

                SECTION 2.01               Execution and Delivery of

Transaction Documents. 

Within fifteen (15) days after the satisfaction of all the conditions

set forth in Sections 2.02 and 2.03 hereof, the Corporation, Isaacs and each of

the Girbaud Entities shall execute and deliver, or to cause to be executed and

delivered and, if necessary for the effectiveness thereof, to be filed with the

appropriate governmental authorities, the following documents:

 

                                (a)           Amendment

No. 4 to Trademark License and Technical Assistance Agreement in the form of Exhibit

B attached hereto (the “Amendment to

Men’s License Agreement”);

 

                                (b)           Amendment

No. 6 to Trademark License and Technical Assistance Agreement for Women’s

Collections in the form of Exhibit C attached hereto (the “Amendment to

Women’s License Agreement”);

 

                                (c)           I.C.

Isaacs & Company, Inc. Stockholders’ Agreement in the form of Exhibit D

attached hereto (the “Stockholders’ Agreement”);

 

                                (d)           Second

Certificate of Amendment to Certificate of Designation, Number, Voting Powers,

Preferences and Rights of the Series of the Preferred Stock of I.C. Isaacs

& Company, Inc. Designated as Series A Convertible Preferred Stock in the

form of Exhibit E attached hereto (the “Certificate of Designation”);

and

 

                                (e)           I.C.

Isaacs & Company, Inc. Common Stock Purchase Warrant No. 1 for 300,000

shares of common stock, par value $0.0001 per share, of the Corporation and

I.C. Isaacs & Company, Inc. Common Stock Purchase Warrant No. 2 for 200,000

shares of common stock, par value $0.0001 per share, of the Corporation (the “Common Stock”)

in the forms of Exhibit F-1 and Exhibit F-2 attached hereto

(collectively, the “Warrants”).

 

4

 

                SECTION 2.02.      Conditions Precedent to Obligation of the Corporation

and Isaacs to Execute the Transaction Documents.  The obligation of the Corporation and Isaacs

to execute and deliver the Transaction Documents, or to cause the Transaction

Documents to be executed and delivered, and, if necessary for the effectiveness

thereof, to be filed with the appropriate governmental authorities, shall be

subject to the satisfaction of each of the following conditions:

 

                                (a)           the

transactions contemplated by that certain Asset Purchase Agreement dated May 6,

2002 by and between Ambra Inc. (“Ambra”), Hugo Boss AG, Textile Investment

and Frontline Clothing Limited (the “Ambra/Textile Purchase Agreement”) have

been consummated and any and all documents, instruments and agreements

contemplated by the Ambra/Textile Purchase Agreement have been executed and

delivered to Ambra, the Girbaud Entities or such other Person as shall be specified

in or required by the terms of the Ambra/Textile Purchase Agreement, and the

Corporation shall have received a fully executed copy of the Ambra/Textile

Purchase Agreement and any such documents, instruments and agreements

contemplated thereby or relating thereto;

 

                                (b)           Congress

Financial shall have consented in writing to the transactions contemplated by

the Ambra/Textile Purchase Agreement and the Corporation shall have received a

complete copy of such written consent;

 

                                (c)           Textile

Investment shall have delivered to Isaacs the Original Note, which shall have

been indorsed to Textile Investment by Ambra and marked “cancelled,” in

exchange for the Replacement Note;

 

                                (d)           each

of Textile Investment and Würzburg shall have fulfilled their obligations under

the Textile Consent Letter Agreement (provided that Textile Investment and

Würzburg shall have until May 13, 2002 to satisfy the obligations required

under the terms of the Textile Consent Letter Agreement to have been satisfied

on or before May 10, 2002);

 

                                (e)           the

Corporation shall have received,

 

(i)            all consents or approvals of

Congress Financial with respect to the Transaction Documents which are required

under any of the Congress Financial Credit Documents;

 

(ii)           an opinion letter or opinion letters

from legal counsel to each of the Girbaud Entities, in form and substance

satisfactory to the Corporation and Isaacs, which include, without limitation,

opinions to the effect that (A) each Girbaud Entity has the power and authority

to enter into each of the Transaction Documents to which it is a party, (B) the

Transaction Documents to which each Girbaud Entity is a party are the legal and

binding obligations of such Girbaud Entity, enforceable against such Girbaud

Entity in accordance with the terms thereof, including without limitation the

provisions of the Transaction Documents relating to choice of law, jurisdiction

and arbitration, and (C) an arbitral award or judgment obtained against any of

the Girbaud Entities would be enforced against such Girbaud Entity in the

courts of the jurisdiction of its formation; and

 

5

 

                                (f)            the

stockholders of the Corporation shall have approved the Transaction Documents

by the vote of a majority of the shares present in person or by proxy and

entitled to vote at the 2002 Annual Meeting of Stockholders.

 

                SECTION 2.03.              Conditions Precedent to Obligation

of the Girbaud Entities to Execute the Transaction Documents.  The obligation of the Girbaud Entities to

execute and deliver the Transaction Documents, or to cause the Transaction

Documents to be executed and delivered, shall be subject to the satisfaction of

each of the following conditions:

 

                                (a)           the

stockholders of the Corporation shall have approved the Transaction Documents

by the vote of a majority of the shares present in person or by proxy and

entitled to vote at the 2002 Annual Meeting of Stockholders; and

 

                                (b)           the

Girbaud Entities shall have received,

 

(i)            an opinion letter or opinion letters

from legal counsel to each of the Corporation and Isaacs, in form and substance

satisfactory to the Girbaud Entities, which include, without limitation,

opinions to the effect that (A) each of the Corporation and Isaacs has the

power and authority to enter into each of the Transaction Documents to which it

is a party, (B) the Transaction Documents to which each of the Corporation and

Isaacs is a party are the legal and binding obligations of the Corporation and

Isaacs, respectively, enforceable against the Corporation and Isaacs,

respectively, in accordance with the terms thereof, including without

limitation the provisions of the Transaction Documents relating to choice of

law, jurisdiction and arbitration, and (C) an arbitral award or judgment

obtained against either the Corporation or Isaacs would be enforceable against

the Corporation or Isaacs, respectively.

 

ARTICLE III

ADDITIONAL COVENANTS

 

SECTION 3.01.  Directors.  (a)  General.  As of the date hereof, the Board of

Directors of the Corporation has nine (9) seats, comprised as follows:

 

	

  Name

  	

   

  
	

   

  	

   

  
	

  Class

  I

  	

   

  
	

  Robert J. Arnot

  	

   

  
	

  Eugene C. Wielepski

  	

   

  
	

  Vacancy

  	

   

  
	

   

  	

   

  
	

  Class

  II

  	

   

  
	

  Danny Gladstone

  	

   

  
	

  Jon Hechler

  	

   

  
	

  Thomas Ormandy

  	

   

  

 

6

 

	

  Class

  III

  	

   

  
	

  Neal J. Fox

  	

   

  
	

  Ronald S. Schmidt

  	

   

  
	

  Vacancy

  	

   

  

 

The Stockholders’

Agreement provides that at all times during the term of such agreement, the

Corporation and the Stockholders shall use their best efforts to cause the

composition of the Board of Directors to reflect the following proportionate

representation of Stockholder Directors, Company Directors, and Independent

Directors:

 

	

  Three (3) Stockholder

  Directors

  	

   

  
	

  Two (2) Company Directors

  	

   

  
	

  Four (4) Independent Directors

  	

   

  

 

The Stockholders’

Agreement further provides that two (2) of the Independent Directors shall be

Stockholder-Nominated Independent Directors and two (2) of the Independent

Directors shall be Company-Nominated Independent Directors.

 

The Corporation and the

Stockholders anticipate that immediately following the 2002 Annual Meeting of

Stockholders, the Board of Directors shall have nine (9) members, comprised as

follows:

 

	

  Name

  	

   

  	

  Category

  
	

   

  	

   

  	

   

  
	

  Class I

  	

   

  	

   

  
	

  Robert J. Arnot

  	

   

  	

  Company Director

  
	

  Staffan Ahrenberg 

  	

   

  	

  Stockholder Director

  
	

  To Be Designated by the

  Stockholders

  	

   

  	

  Stockholder Director or

  Stockholder-Nominated Independent Director

  
	

   

  	

   

  	

   

  
	

  Class II

  	

   

  	

   

  
	

  Danny Gladstone

  	

   

  	

  Company Director

  
	

  John Hechler

  	

   

  	

  Company-Nominated

  Independent Director

  
	

  To Be Designated by the

  Stockholders

  	

   

  	

  Stockholder Director or

  Stockholder-Nominated Independent Director

  
	

   

  	

   

  	

   

  
	

  Class III

  	

   

  	

   

  
	

  Neal J. Fox

  	

   

  	

  Company-Nominated

  Independent Director

  
	

  Olivier Bachellerie

  	

   

  	

  Stockholder Director

  
	

  To Be Designated by the

  Stockholders

  	

   

  	

  Stockholder Director or

  Stockholder-Nominated Independent Director

  

 

To cause the membership

of the Board of Directors to be as described above, the Corporation, its Board

of Directors and the Stockholders shall proceed as follows:

 

                                (b)           Incumbent

Directors.  Messrs.

Gladstone and Hechler are presently Directors of the Corporation, and will be

named to the slate of nominees to be proposed for 

 

7

 

election at the 2002

Annual Meeting of Stockholders to continue as Class II Directors.  Mr. Ormandy will not be named to the slate

of nominees to be proposed for election to Class II of the Board of Directors

at the 2002 Annual Meeting of Stockholders, and his term will expire at the

2002 Annual Meeting of Stockholders.

 

                                (c)           Other

Directors Continuing On. 

Messrs. Arnot and Fox are presently Class I and Class III Directors of

the Corporation, respectively, and will continue as Class I and Class III

Directors, respectively.

 

                                (d)           Appointment

of Initial Girbaud Directors. 

Within seven (7) days following satisfaction of the conditions set forth

in Sections 2.02(a) and 2.02(c) hereof, the Board of Directors of the

Corporation shall appoint Staffan Ahrenberg to fill an existing vacancy in

Class I of the Board of Directors of the Corporation and Olivier Bachellerie to

fill an existing vacancy in Class III of the Board of Directors of the

Corporation; provided that Messrs. Ahrenberg and Bachellerie shall have

provided the Corporation with such information as the Corporation shall

reasonably request, including a completed and signed D & O Questionnaire

for each of them, before the expiration of such seven (7) day period.  Upon their appointment, Messrs. Ahrenberg

and Bachellerie shall be deemed Stockholder Directors.

 

                                (e)           Appointment

of Additional Girbaud Directors.  Messrs. Eugene C. Wielepski and Ronald S. Schmidt  have notified the Board of Directors of

their respective resignations, effective as of the 2002 Annual Meeting of

Stockholders, and the Board of Directors has accepted such resignations.  The Corporation shall (i) propose two (2)

Satisfactory Nominees to be elected at the 2002 Annual Meeting of Stockholders

to fill the vacancies in Class I and Class III of the Board of Directors of the

Corporation created by resignations of Eugene C. Wielepski and Ronald S.

Schmidt, respectively, and (ii) name an additional third Satisfactory Nominee

to the slate of nominees to be elected to Class II of the Board of Directors at

the 2002 Annual Meeting of Stockholders; provided in each case that Würzburg

and Textile Investment shall have identified such Satisfactory Nominees and

provided to the Corporation such information regarding such Satisfactory

Nominees as the Corporation shall reasonably request, including a completed and

signed D & O Questionnaire for each such Satisfactory Nominee, at least ten

(10) days prior to the filing of the Proxy Statement.

 

                                (f)            Best

Efforts.  The Corporation

and the Stockholders shall each use its or their best efforts to cause each of

the Satisfactory Nominees named to the slate of nominees pursuant to subsection

(e) above to be elected to the Board of Directors of the Corporation.  For purposes of this Agreement, (i) the

Corporation shall be considered to have used its “best efforts,” as required by

this subsection (f), if it (A) causes two (2) Satisfactory Nominees to be

proposed to be elected at the 2002 Annual Meeting of Stockholders to fill

vacancies in Class I and Class III of the Board of Directors created by the

resignations of Eugene C. Wielepski and Ronald S. Schmidt, and one (1)

Satisfactory Nominee to be named to the slate of nominees to be elected to

Class II of the Board of Directors at the 2002 Annual Meeting of Stockholders,

(B) recommends the election of all such Satisfactory Nominees, and (C) uses all

reasonable efforts to cause the election of such Satisfactory Nominees, including

the solicitation of proxies in favor of the election of such persons, and (ii)

the Stockholders shall be considered to have used their “best 

 

8

 

efforts,” as required by

this subsection (f), if at the 2002 Annual Meeting of Stockholders Würzburg and

Textile Investment vote the Stock and any shares of Common Stock with respect

to which they have been granted a proxy in accordance with the terms of the

Voting Agreement.  Notwithstanding

anything to the contrary contained in this Agreement, of the three (3)

Satisfactory Nominees named to the slate of nominees or proposed to the

stockholders of the Corporation pursuant to Section 3.01(e) above, two (2)

shall be Stockholder-Nominated Independent Directors and one (1) shall be a

Stockholder Director.

 

                                (g)           Proxy

Statement; Annual Meeting. 

The Corporation shall cause the Proxy Statement to be filed with the

U.S. Securities and Exchange Commission and mailed to each stockholder of the

Corporation entitled to vote at the 2002 Annual Meeting of Stockholders or

otherwise entitled to receive the Proxy Statement in accordance with all

applicable laws, which Proxy Statement shall reflect the steps or proposals

described in this Section 3.01.

 

SECTION 3.02.              Transactions

Approval.  The

Corporation, Isaacs, and each of the Girbaud Entities shall use their

respective best efforts to cause the transactions contemplated by this

Agreement and the Transaction Documents to be approved by all necessary

Persons, including, without limitation, the board of directors and/or the

stockholders of the Corporation.  For

purposes of this Section 3.02, (i) the Corporation shall be considered to have

used its “best efforts,” as required by this Section 3.02, if it submits a

proposal to the stockholders of the Corporation regarding the Transaction

Documents and the transactions contemplated thereby and recommends that the

stockholders approve such proposal, and (ii) each of the Girbaud Entities shall

be considered to have used its “best efforts,” as required by this Section

3.02, if at the 2002 Annual Meeting of Stockholders Würzburg and Textile

Investment vote the Stock and any shares of Common Stock with respect to which

they have been granted a proxy in accordance with the terms of the Voting

Agreement.

 

SECTION 3.03.              Payment

of Installment of Consulting Fee.  On June 30, 2002, Isaacs shall pay to Würzburg the first

quarterly installment payment of the annual consulting fee under the Girbaud

License Agreements for the year 2002 in the amount of Sixty-two Thousand Five

Hundred and 00/100 Dollars ($62,500.00) (the “First Consulting Fee Payment”).  Isaacs shall pay the First Consulting Fee

Payment to Würzburg regardless of whether or not the approval of the

stockholders of the Corporation, as described in Section 2.02(f), has been

obtained.  The First Consulting Fee

Payment shall be credited to Isaacs toward the annual consulting fee to be paid

by Isaacs under the Girbaud License Agreements.  If the transactions contemplated by the Transaction Documents are

not consummated, then Würzburg shall refund the First Consulting Fee Payment to

Isaacs immediately upon Isaacs demand therefor.  If upon demand by Isaacs of a refund of the First Consulting Fee

Payment Würzburg fails to refund the First Consulting Fee Payment, then

Latitude Licensing shall be obligated to refund to Isaacs the First Consulting

Fee Payment, or Isaacs may, at its option, set off the First Consulting Fee

Payment against any fees owed by Isaacs under the Girbaud License Agreements.

 

SECTION 3.04.              Exchange

of Original Note.  On or

before May 17, 2002, Textile Investment shall return to Isaacs the original

executed Original Note indorsed by Ambra to Textile Investment and marked

“cancelled” in exchange for the Replacement Note.

 

9

 

SECTION 3.05.              Reporting.  The Girbaud Entities shall cooperate with

the Corporation with respect to reporting under the Securities Act of 1933, as

amended (the “Securities Act”), the Securities Exchange Act of 1934, as

amended (the “Exchange Act”), the rules promulgated under the Securities Act

or the Exchange Act, any state securities laws, rules or regulations, and to

any other U.S. governmental authorities as may be required by law.

 

SECTION 3.06.              Restrictions

on Transfer.  From and after the

date hereof and to and including November 14, 2004, none of (i) Textile

Investment, (ii) Würzburg, or (iii) any other Person(s) the ownership of

securities by which would be attributable to Textile Investment or Würzburg for

purposes of applying Section 382 of the Code (a “382 Affiliate”), shall

acquire or dispose of, directly or indirectly, any interest in the Corporation

if such acquisition and/or disposition, together with all other acquisitions

and/or dispositions of interests in the Corporation prior to or subsequent to

the date hereof involving any one or more of (i) Textile Investment, (ii)

Würzburg, (iii) any 382 Affiliate, and (iv) any other party (to the extent that

the relevant acquisition or disposition involving such other party is actually

known to any of the Girbaud Entities or is reported pursuant to the Exchange

Act), would result in an “ownership change” within the meaning of Section 382

of the Code.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF THE CORPORATION

 

The Corporation

hereby makes the following representations and warranties to each of the

Girbaud Entities on and as of the Effective Date:

 

SECTION 4.01.              Existence.  The Corporation is a corporation duly

incorporated and validly existing under the laws of the State of Delaware and

has all requisite corporate power to execute, deliver and perform this

Agreement.

 

SECTION 4.02.              Authorization.  The execution, delivery and performance of

this Agreement have been duly authorized by all requisite corporate action on

the part of the Corporation and will not (a) violate any applicable law or the

Corporation’s organizational documents or (b) breach the provisions of any

contract binding on the Corporation.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

OF ISAACS

 

Isaacs hereby

makes the following representations and warranties to each of the Girbaud

Entities on and as of the Effective Date:

 

SECTION 5.01.              Existence.  Isaacs is a limited partnership duly

organized and validly existing under the laws of the State of Delaware and has

all requisite power to execute, deliver and perform this Agreement.

 

10

 

SECTION 5.02.              Authorization.  The execution, delivery and performance of

this Agreement have been duly authorized by all requisite action on the part of

Isaacs and will not (a) violate any applicable law or Isaacs’ organizational

documents or (b) breach the provisions of any contract binding on Isaacs.

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

OF TEXTILE INVESTMENT

 

                Textile Investment hereby makes the following

representations and warranties to (and, in the case of Section 6.04, agrees

with) the Corporation and Isaacs on and as of the Effective Date:

 

                SECTION 6.01.              Existence.  Textile Investment is a corporation duly

organized and validly existing under the laws of the country of Luxembourg and

has all requisite power to execute, deliver and perform this Agreement.

 

                SECTION 6.02.              Authorization.  The execution, delivery and performance of

this Agreement have been duly authorized by all requisite action on the part of

Textile Investment and will not (a) violate any applicable law or Textile

Investment’s organizational documents or (b) breach the provisions of any

contract binding on Textile Investment.

 

                SECTION 6.03.              Investor Representations.  Textile Investment is wholly owned by

Würzburg.

 

                SECTION 6.04.              Original Note.  Textile Investment acknowledges that Isaacs

has not defaulted on any of its payment obligations under the Original Note or

the Replacement Note.  Textile Investment

agrees that on the date hereof the outstanding unpaid principal balance of the

Original Note is Six Million Five Hundred Fifty-seven Thousand Nine Hundred

Eight and 53/100 Dollars ($6,557,908.53) and that all of the accrued interest

on the Original Note has been paid in full through March 31, 2002.

 

                SECTION 6.05.              Ambra/Textile Purchase Agreement.  The Ambra/Textile Purchase Agreement has

been duly executed and delivered by all parties thereto, and the transactions

contemplated by the Ambra/Textile Purchase Agreement have been consummated.

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

OF LATITUDE LICENSING

 

                Latitude Licensing hereby makes the following

representations and warranties to the Corporation and Isaacs on and as of the

Effective Date:

 

                SECTION 7.01.              Existence.  Latitude Licensing is a corporation duly

organized and validly existing under the laws of the State of Delaware and has

all requisite corporate power to execute, deliver and perform this Agreement.

 

11

 

                SECTION 7.02.              Authorization.  The execution, delivery and performance of

this Agreement have been duly authorized by all requisite corporate action on

the part of Latitude Licensing and will not (a) violate any applicable law or

Latitude Licensing’s organizational documents or (b) breach the provisions of

any contract binding on Latitude Licensing.

 

ARTICLE

VIII

REPRESENTATIONS

AND WARRANTIES OF WÜRZBURG

 

                Würzburg hereby makes the following representations

and warranties to the Corporation and Isaacs on and as of the Effective Date:

 

                SECTION 8.01.              Existence.  Würzburg is a corporation duly organized and

validly existing under the laws of the country of Luxembourg and has all

requisite corporate power to execute, deliver and perform this Agreement.

 

                SECTION 8.02.              Authorization.  The execution, delivery and performance of

this Agreement have been duly authorized by all requisite corporate action on

the part of Würzburg and will not (a) violate any applicable law or Würzburg’s

organizational documents or (b) breach the provisions of any contract binding

on Würzburg.

 

                SECTION 8.03.  Investor Representations.  The ultimate beneficial owners of Würzburg

are Francois Girbaud, who beneficially owns a fifty percent (50%) ownership

interest, and Marité Bachellerie, who beneficially owns a fifty percent (50%)

ownership interest.

 

ARTICLE

IX

TERMINATION;

EVENTS OF DEFAULT AND REMEDIES

 

SECTION 9.01.      Termination.  (a) 

This Agreement may be terminated and the transactions contemplated

hereby may be abandoned:

 

(i)            at any time by the

mutual agreement of the Corporation, Isaacs and the Girbaud Entities; or

 

(ii)           by either the

Corporation or Isaacs upon the occurrence of an Event of Default by any of the

Girbaud Entities (so long as neither the Corporation nor Isaacs is then in

material breach of any of its covenants, agreements or other obligations

contained in this Agreement); or

 

(iii)          by any of the Girbaud Entities upon

the occurrence of an Event of Default by either the Corporation or Isaacs (so

long as no Girbaud Entity is then in material breach of any of its covenants,

agreements or other obligations contained in this Agreement); or

 

(iv)          by either the Corporation or the

Girbaud Entities upon written notice to the other given not earlier than ten (10)

days following the 2002 Annual Meeting of Stockholders (the “Termination

Date”), if any of the conditions to its obligations set forth in

Sections 2.02 or 

 

12

 

2.03, as applicable, are

not satisfied on or before the Termination Date for any reason other than a

material breach or default by the terminating party of its respective

covenants, agreements or other obligations under this Agreement.

 

(b)           This Agreement shall terminate upon

the execution and delivery of each of the Transaction Documents as contemplated

hereby.

 

SECTION 9.02               Effect of

Termination.  If this

Agreement is terminated pursuant to Section 9.01, all obligations of the

parties under this Agreement will terminate except for the obligations set

forth in Sections 3.04, 3.05 and 3.06 and Article X hereof.

 

SECTION 9.03               Events of

Default.  The occurrence

of any of the following events shall be deemed an “Event of Default” under this

Agreement:

 

(a)           any

party hereto shall materially breach any of its covenants, agreements or other

obligations (other than representations and warranties) under this Agreement,

and such breach remains uncured for a period of ten (10) days after such

breaching party’s receipt of written notice of any such breach; or

 

(b)           any

representation or warranty in this Agreement made by any party hereto shall

prove to be false or is breached in any material respect.

 

SECTION 9.04               Remedies

upon Event of Default. 

Upon the occurrence of an Event of Default the parties shall have the

following rights and remedies:

 

(a)           if

an Event of Default by either the Corporation or Isaacs has occurred, the

Girbaud Entities shall have the right to

 

(i)                    terminate

this Agreement pursuant to Section 9.01(a)(iii); and/or

 

(ii)                   file

suit against the Corporation or Isaacs for damages; and/or

 

(iii)                  seek

specific performance of this Agreement; and

 

(b)           if

an Event of Default by any of the Girbaud Entities has occurred, the

Corporation or Isaacs shall have the right to

 

(i)                    terminate

this Agreement pursuant to Section 9.01(a)(ii); and/or

 

(ii)                   file

suit against any of the Girbaud Entities for damages; and/or

 

(iii)                  seek

specific performance of this Agreement.

 

13

 

ARTICLE X

MISCELLANEOUS

 

                SECTION 10.01.            Congress

Financial Consent.  The

parties hereto agree that if the consent of Congress Financial to the

transactions contemplated by the Transaction Documents is not obtained from

Congress Financial, such failure to obtain such consent shall not be an Event

of Default by any party to this Agreement.

 

                SECTION 10.02.            Stockholders’ Consent.  The parties hereto agree that if the

stockholders of the Corporation do not elect one or more of the Satisfactory

Nominees and/or approve any of the matters to be submitted to such stockholders

hereunder, such failure to elect such Satisfactory Nominee(s) or obtain such

approval shall not be an Event of Default by any party to this Agreement.

 

                SECTION 10.03.            Notices.  Any notice required or permitted by or in connection with this

Agreement shall be in writing and shall be made by telecopy, or by hand

delivery, or by overnight delivery service, or by certified mail, return

receipt requested, postage prepaid, addressed to the parties at the appropriate

address set forth below or to such other address as may be hereafter specified

by written notice by the parties to each other.  Notice shall be considered given as of the earlier of the date of

actual receipt, or the date of the telecopy or hand delivery, or one (1)

business day after delivery to an overnight delivery service (marked for next

business day delivery), or three (3) calendar days after the date of mailing,

independent of the date of actual delivery or whether delivery is ever in fact

made, as the case may be, provided the giver of notice can establish that

notice was given as provided herein. 

Notwithstanding the aforesaid procedures, any notice or demand upon any

party, in fact received by such party, shall be sufficient notice or

demand.  Each undersigned Girbaud Entity (other than Latitude Licensing) hereby

appoints Latitude Licensing as its agent for purposes of receiving notices

under this Agreement, so that notices given to Latitude Licensing shall be

fully effective notice to Latitude Licensing and to each such other undersigned

Girbaud Entity (other than Latitude Licensing).

 

	

  If to the Corporation

  	

   

  	

  I.C. Isaacs &

  Company, Inc.

  
	

  or Isaacs:

  	

   

  	

  350 Fifth Avenue, Suite

  1029

  
	

   

  	

   

  	

  New York, New York

  10118

  
	

   

  	

   

  	

  Attn:  Mr. Robert J. Arnot, President and CEO

  
	

   

  	

   

  	

  Telecopy No.:  212-695-7579

  
	

   

  	

   

  	

   

  
	

  with copy to:

  	

   

  	

  I.C. Isaacs &

  Company L.P.

  
	

   

  	

   

  	

  3840 Bank Street

  
	

   

  	

   

  	

  Baltimore, Maryland

  21224

  
	

   

  	

   

  	

  Attn:  Mr. Eugene C. Wielepski

  
	

   

  	

   

  	

  Telecopy No.:  410-563-1512

  

 

14

 

	

  and

  copy to:

  	

   

  	

  Piper Rudnick

  LLP

  
	

   

  	

   

  	

  6225 Smith

  Avenue

  
	

   

  	

   

  	

  Baltimore,

  Maryland 21209-3600

  
	

   

  	

   

  	

  Attn:  Robert J. Mathias, Esquire

  
	

   

  	

   

  	

  Telecopy

  No.:  410-580-3001

  
	

   

  	

   

  	

   

  
	

  If to Textile

  Investment:

  	

   

  	

  Textile

  Investment International S.A.

  
	

   

  	

   

  	

  41 avenue de la

  Gare

  
	

   

  	

   

  	

  Luxembourg L-1611

  
	

   

  	

   

  	

  Luxembourg

  
	

   

  	

   

  	

  Attn:  René Faltz, Managing Director

  
	

   

  	

   

  	

  Telecopy No.:  011 352 26 48 47 47

  
	

   

  	

   

  	

   

  
	

  with copy to:

  	

   

  	

  Hall Dickler Kent

  Goldstein & Wood, LLP

  
	

   

  	

   

  	

  909 Third Avenue

  
	

   

  	

   

  	

  New York, New York

  10022-4731

  
	

   

  	

   

  	

  Attn:  Steven D. Dreyer, Esquire

  
	

   

  	

   

  	

  Telecopy No.:  212-935-3121

  
	

   

  	

   

  	

   

  
	

  If to Latitude

  Licensing:

  	

   

  	

  Latitude

  Licensing Corp.

  
	

   

  	

   

  	

  22 Carpenter

  Plaza, Suite 217

  
	

   

  	

   

  	

  Wilmington, Delaware

  19810

  
	

   

  	

   

  	

   

  
	

  with copy to:

  	

   

  	

  Martin & Associates

  LLC

  
	

   

  	

   

  	

  325 E. 58th

  Street, Suite 1

  
	

   

  	

   

  	

  New York, New York

  10022

  
	

   

  	

   

  	

  Attn:  Francois Martin, Esquire

  
	

   

  	

   

  	

  Telecopy No.:  212-754-3397

  
	

   

  	

   

  	

   

  
	

  If to Würzburg:

  	

   

  	

  Würzburg Holding

  S.A.

  
	

   

  	

   

  	

  41 avenue de la

  Gare

  
	

   

  	

   

  	

  Luxembourg L-1611

  
	

   

  	

   

  	

  Luxembourg

  
	

   

  	

   

  	

  Attn:  René Faltz

  
	

   

  	

   

  	

  Telecopy No.:  0 11 352 26 48 47 47

  
	

   

  	

   

  	

   

  
	

  with

  copy to:

  	

   

  	

  Hall Dickler

  Kent Goldstein & Wood, LLP

  
	

   

  	

   

  	

  909 Third Avenue

  
	

   

  	

   

  	

  New York, New

  York 10022-4731

  
	

   

  	

   

  	

  Attn:  Steven D. Dreyer, Esquire

  
	

   

  	

   

  	

  Telecopy

  No.:  212-935-3121

  

 

                SECTION 10.04.            Amendments, Waivers and Consents; Successors and

Assigns.  Neither this

Agreement nor any of the terms hereof may be amended, changed, waived or

discharged, nor 

 

15

 

shall any consent

be given, unless such amendment, change, waiver, discharge or consent is in

writing and signed by the parties hereto. 

This Agreement shall inure to the benefit of and be binding upon each

party hereto and each party’s successors and assigns.  This Agreement may not be assigned by any party hereto without

prior written consent of each of the other parties hereto.

 

                SECTION 10.05.            Governing Law.  The validity, construction, operation and

effect of any and all of the terms and provisions of this Agreement shall be

determined and enforced in accordance with the laws of the State of New York

without giving effect to principles of conflicts of law thereunder.

 

                SECTION

10.06.         JURISDICTION; VENUE.

 

                                                (a)           Each party to this Agreement hereby

irrevocably consents to the exclusive jurisdiction of the Supreme Court of the

State of New York for the County of New York and/or United States District

Court for the Southern District of New York (collectively, the “New York

Courts” and each a “New York Court”) in connection with any and all claims

based upon or arising out of this Agreement or the matters or transactions

contemplated herein, and irrevocably agrees that all claims in respect of any

such matters or transactions may be heard in either of such New York Courts.

 

                                                (b)           Each party to this Agreement hereby

waives any objection to jurisdiction and venue of any such claim brought, or

action instituted, hereunder in any New York Court and further agrees not to

assert (i) any defense based on the lack of jurisdiction or venue in any New

York Court, or (ii) any defense of improper venue or inconvenient forum in any

New York Court.

 

                                                (c)           Each party to this Agreement hereby

waives any right of jurisdiction on account of the place of such party’s

residence, or domicile, or on account of such party’s place of incorporation,

formation or organization.

 

                                                (d)           Each party to this Agreement hereby

acknowledges and agrees that any forum other than a New York Court is an

inconvenient forum and that a suit brought by any party against any other party

in any court other than a New York Court should be transferred to a New York

Court.

 

                SECTION

10.07.         SERVICE OF PROCESS.

 

                                                (a)           Textile Investment hereby irrevocably

and unconditionally appoints Steven D. Dreyer, Esquire of Hall Dickler Kent

Goldstein & Wood, LLP, currently located at 909 Third Avenue, New York, New

York 10022-4731 (the “Process Agent”) as its agent to receive on behalf of

Textile Investment service of copies of the summons and complaint and any other

process which may be served in any action or proceeding within the scope of

Section 10.06 of this Agreement in any New York Court and agrees promptly to appoint

a successor Process Agent in the City of New York (which

 

16

 

appointment such successor Process

Agent shall accept in writing) prior to the termination for any reason of the

appointment of the Process Agent (or the termination of any successor Process

Agent).  In any such action or

proceeding in any New York Court, such service may be made on Textile

Investment by delivering a copy of such process to Textile Investment in care

of the Process Agent at the Process Agent’s above address and by depositing a

copy of such process in the mails (certified or registered, if available), or

by overnight courier, addressed to Textile Investment at its address for

notices in this Agreement (such service to be effective upon receipt by the

Process Agent, and the depositing of such service in the mails (or delivery

thereof to such overnight courier)). 

Textile Investment hereby irrevocably and unconditionally authorizes and

directs the Process Agent to accept such service on Textile Investment’s

behalf.  As an alternative method of

service, Textile Investment hereby irrevocably and unconditionally consents to

the service of any and all process in any such action or proceeding in any New

York Court by mailing of copies of such process to Textile Investment by mail

(certified or registered, if available), or by overnight courier, at its

address for notices in this Agreement. 

Textile Investment agrees that, to the fullest extent permitted by

applicable law, a final judgment in any such action or proceeding in any New

York Court shall be conclusive and may be enforced in any other jurisdiction by

suit on the judgment or in any other manner provided by law.  Textile Investment represents and warrants

to the other parties to this Agreement that the Process Agent has accepted its

appointment as process agent for Textile Investment as herein described, and

Textile Investment covenants to give the other parties to this Agreement prompt

written notice of (x) any change in the name or address of the Process Agent

(or any successor Process Agent) and (y) the name and address of any successor

Process Agent.

 

                                                (b)           Würzburg hereby irrevocably and

unconditionally appoints the Process Agent as its agent to receive on behalf of

Würzburg service of copies of the summons and complaint and any other process

which may be served in any action or proceeding within the scope of Section

10.06 of this Agreement in any New York Court and agrees promptly to appoint a

successor Process Agent in the City of New York (which appointment such

successor Process Agent shall accept in writing) prior to the termination for

any reason of the appointment of the Process Agent (or the termination of any

successor Process Agent).  In any such

action or proceeding in any New York Court, such service may be made on

Würzburg by delivering a copy of such process to Würzburg in care of the

Process Agent at the Process Agent’s address and by depositing a copy of such

process in the mails (certified or registered, if available), or by overnight

courier, addressed to Würzburg at its address for notices in this Agreement

(such service to be effective upon receipt by the Process Agent, and the

depositing of such service in the mails (or delivery thereof to such overnight

courier)).  Würzburg hereby irrevocably

and unconditionally authorizes and directs the Process Agent to accept such

service on Würzburg’s behalf.  As an

alternative method of service, Würzburg hereby irrevocably and unconditionally

consents to the service of any and all process in any such action or proceeding

in any New York Court by mailing of copies of such process to Würzburg by mail

(certified or registered, if available), or by overnight courier, at its

address for notices in this Agreement. 

Würzburg agrees that, to the fullest extent permitted by applicable law,

a final 

 

17

 

judgment in any such action or

proceeding in any New York Court shall be conclusive and may be enforced in any

other jurisdiction by suit on the judgment or in any other manner provided by

law.  Würzburg represents and warrants

to the other parties to this Agreement that the Process Agent has accepted its

appointment as process agent for Würzburg as herein described, and Würzburg

covenants to give the other parties to this Agreement prompt written notice of

(x) any change in the name or address of the Process Agent (or any successor

Process Agent) and (y) the name and address of any successor Process Agent.

 

                                                (c)           Latitude hereby irrevocably and

unconditionally appoints its registered agent, as specified in its charter, as

amended from time to time (the “Latitude Registered Agent”), as its agent to

receive on behalf of Latitude service of copies of the summons and complaint

and any other process which may be served in any action or proceeding within

the scope of Section 10.06 of this Agreement in any New York Court.  In any such action or proceeding in any New

York Court, such service may be made on Latitude by delivering a copy of such

process to Latitude in care of the Latitude Registered Agent at the Latitude

Registered Agent’s address and by depositing a copy of such process in the

mails (certified or registered, if available), or by overnight courier,

addressed to Latitude at its address for notices in this Agreement (such

service to be effective upon receipt by the Latitude Registered Agent, and the

depositing of such service in the mails (or delivery thereof to such overnight

courier)).  Latitude hereby irrevocably

and unconditionally authorizes and directs the Latitude Registered Agent to

accept such service on Latitude’s behalf. 

As an alternative method of service, Latitude hereby irrevocably and

unconditionally consents to the service of any and all process in any such

action or proceeding in any New York Court by mailing of copies of such process

to Latitude by mail (certified or registered, if available), or by overnight

courier, at its address for notices in this Agreement. Latitude agrees that, to

the fullest extent permitted by applicable law, a final judgment in any such

action or proceeding in any New York Court shall be conclusive and may be

enforced in any other jurisdiction by suit on the judgment or in any other

manner provided by law. Latitude represents and warrants to the other parties

to this Agreement that the Latitude Registered Agent has accepted its

appointment as registered agent for Latitude as herein described.

 

                                                (d)           The Corporation hereby irrevocably

and unconditionally appoints its registered agent, as specified in its charter,

as amended from time to time (the “Corporation Registered Agent”), as its agent

to receive on behalf of the Corporation service of copies of the summons and

complaint and any other process which may be served in any action or proceeding

within the scope of Section 10.06 of this Agreement in any New York Court.  In any such action or proceeding in any such

New York Court, such service may be made on the Corporation by delivering a

copy of such process to the Corporation in care of the Corporation Registered

Agent at the Corporation Registered Agent’s address and by depositing a copy of

such process in the mails (certified or registered, if available), or by

overnight courier, addressed to the Corporation at its address for notices in

this Agreement (such service to be effective upon receipt by the Corporation

Registered Agent, and the depositing of such service in the mails (or delivery 

 

18

 

thereof to such overnight

courier)).  The Corporation hereby

irrevocably and unconditionally authorizes and directs the Corporation

Registered Agent to accept such service on the Corporation’s behalf.  As an alternative method of service, the

Corporation hereby irrevocably and unconditionally consents to the service of

any and all process in any such action or proceeding in any New York Court by

mailing of copies of such process to the Corporation by mail (certified or

registered, if available), or by overnight courier, at its address for notices

in this Agreement.  The Corporation

agrees that, to the fullest extent permitted by applicable law, a final

judgment in any such action or proceeding in any New York Court shall be

conclusive and may be enforced in any other jurisdiction by suit on the

judgment or in any other manner provided by law.  The Corporation represents and warrants to the other parties to

this Agreement that the Corporation Registered Agent has accepted its

appointment as registered agent for the Corporation as herein described.

 

                                                (e)           Isaacs hereby irrevocably and

unconditionally appoints its registered agent, as specified in its limited

partnership agreement, as amended from time to time (the “Isaacs Registered

Agent”), as its agent to receive on behalf of Isaacs service of copies of the summons

and complaint and any other process which may be served in any action or

proceeding within the scope of Section 10.06 of this Agreement in any New York

Court.  In any such action or proceeding

in any New York Court, such service may be made on Isaacs by delivering a copy

of such process to Isaacs in care of the Isaacs Registered Agent at the Isaacs

Registered Agent’s address and by depositing a copy of such process in the

mails (certified or registered, if available), or by overnight courier, addressed

to Isaacs at its address for notices in this Agreement (such service to be

effective upon receipt by the Isaacs Registered Agent, and the depositing of

such service in the mails (or delivery thereof to such overnight courier)).  Isaacs hereby irrevocably and

unconditionally authorizes and directs the Isaacs Registered Agent to accept

such service on Isaacs’ behalf.  As an

alternative method of service, Isaacs hereby irrevocably and unconditionally

consents to the service of any and all process in any such action or proceeding

in any New York Court by mailing of copies of such process to Isaacs by mail

(certified or registered, if available), or by overnight courier, at its

address for notices in this Agreement. Isaacs agrees that, to the fullest

extent permitted by applicable law, a final judgment in any such action or

proceeding in any New York Court shall be conclusive and may be enforced in any

other jurisdiction by suit on the judgment or in any other manner provided by

law. Isaacs represents and warrants to the other parties to this Agreement that

the Isaacs Registered Agent has accepted its appointment as registered agent

for Isaacs as herein described.

 

                SECTION

10.08          WAIVER OF IMMUNITY.  Each party to this Agreement represents,

warrants, and agrees that to the extent such party may have or hereafter

acquire any right of sovereign or other immunity from suit, court jurisdiction,

attachment in aid of execution of judgment, set-off, execution or other legal

process, such party hereby irrevocably and unconditionally waives, to the

fullest extent permitted by law, such right of immunity with respect to its

obligations hereunder and with respect to legal proceedings to enforce the same

and to enforce any judgment rendered in such proceedings.

 

19

 

                SECTION 10.09.            Counterparts; Facsimile.  This Agreement may be executed in any number

of counterparts, each of which when so executed and delivered shall be an

original, but all of which shall constitute one and the same instrument.  It shall not be necessary in making proof of

this Agreement to produce or account for more than one such counterpart.  This Agreement may be executed and transmitted

by facsimile and with confirmation of transmission shall have the same binding

effect as though such executed Agreement was delivered as an original.

 

                SECTION 10.10.            Third Party Beneficiaries.  There shall be no third-party beneficiaries

of this Agreement.

 

                SECTION 10.11.            Entire Agreement.  The parties hereto agree that this

Agreement, together with the Textile Consent Letter Agreement, is a complete

and exclusive expression of all of the terms hereof.

 

 

[Remainder of

page intentionally left blank]

 

20

 

IN

WITNESS WHEREOF, and intending to be legally bound hereby, each of the parties

hereto executes this Agreement under seal as of the date first above written.

 

	

   

  	

  I.C. ISAACS &

  COMPANY L.P.,

  
	

   

  	

  a Delaware limited

  partnership

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  I.C. Isaacs &

  Company, Inc., a Delaware

  
	

   

  	

   

  	

  corporation, its

  general partner

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Robert J.

  Arnot

  	

  (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  Robert J. Arnot

  
	

   

  	

   

  	

  Title: 

  	

  Chairman and Chief

  Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  I.C. ISAACS &

  COMPANY, INC.,

  
	

   

  	

  a Delaware corporation

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Robert J.

  Arnot

  	

  (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  Robert J. Arnot

  
	

   

  	

   

  	

  Title:

  	

  Chairman and Chief

  Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  TEXTILE INVESTMENT

  
	

   

  	

  INTERNATIONAL S.A.,

  
	

   

  	

  a Luxembourg

  corporation

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ René Faltz

  	

  (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  René Faltz

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Tom Felgen

  	

  (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  Tom Felgen

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  	

   

  
	

   

  	

  LATITUDE LICENSING

  CORP.,

  
	

   

  	

  a Delaware corporation

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Antoine

  Feidt

  	

  (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  Antoine Feidt

  	

   

  
	

   

  	

   

  	

  Title:

  	

  President

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  WÜRZBURG HOLDING S.A.,

  
	

   

  	

  a Luxembourg

  corporation

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ René Faltz

  	

  (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  René Faltz

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Tom Felgen

  	

  (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  Tom Felgen

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
										

 

21

 

EXHIBIT A

AMENDED AND RESTATED

SUBORDINATED SECURED PROMISSORY NOTE

 

	

  $6,557,908.53

  	

   

  	

  As of May                , 2002

  

 

                        FOR VALUE RECEIVED, the

sufficiency and adequacy of which is hereby acknowledged, I.C. ISAACS &

COMPANY L.P., a Delaware limited partnership (“Maker”), promises to pay to

the order of Textile Investment International S.A., a Luxembourg corporation (“Payee”),

the principal sum of Six Million Five Hundred Fifty-seven Thousand Nine Hundred

Eight and 53/100 Dollars ($6,557,908.53), together with interest until paid, as

set forth in this Note.

 

                        This Note amends, restates

and replaces the Subordinated Secured Promissory Note dated as of March 15,

2001, in the original principal amount of Seven Million Two Hundred Thousand

Dollars ($7,200,000) made by Maker payable to the order of Ambra Inc., a

Delaware corporation (“Ambra”), which Payee purchased from Ambra

on May 6, 2002 (the “Original Note”).

 

                        1.         Interest

Rate.  Interest shall

accrue and be payable on the outstanding unpaid principal balance of this Note

at the fixed interest rate of eight percent (8.0%) per annum (except as

otherwise provided in Section 2(c) of this Note) computed on the basis of the

actual number of days elapsed over a year of 360 days.

 

                        2.         Principal and Interest Payments.  (a) 

Maker shall make quarterly installment payments of principal and interest

on this Note in the Quarterly Payment Amounts set forth below on the

corresponding Quarterly Payment Dates set forth below.

 

	

  Quarterly Payment Amounts

  	

   

  	

  Quarterly Payment Dates

  	

   

  
	

  $210,000

  	

   

  	

  September 30, 2002

  	

   

  
	

  $210,000

  	

   

  	

  December 31, 2002

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  $315,000

  	

   

  	

  March 31, 2003

  	

   

  
	

  $315,000

  	

   

  	

  June 30, 2003

  	

   

  
	

  $315,000

  	

   

  	

  September 30, 2003

  	

   

  
	

  $315,000

  	

   

  	

  December 31, 2003

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  $420,000

  	

   

  	

  March 31, 2004

  	

   

  
	

  $420,000

  	

   

  	

  June 30, 2004

  	

   

  
	

  $420,000

  	

   

  	

  September 30, 2004

  	

   

  
	

  $420,000

  	

   

  	

  December 31, 2004

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  $420,000

  	

   

  	

  March 31, 2005

  	

   

  
	

  $420,000

  	

   

  	

  June 30, 2005

  	

   

  
	

  $420,000

  	

   

  	

  September 30, 2005

  	

   

  
	

  $420,000

  	

   

  	

  December 31, 2005

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  $420,000

  	

   

  	

  March 31, 2006

  	

   

  
	

  $420,000

  	

   

  	

  June 30, 2006

  	

   

  
	

  $420,000

  	

   

  	

  September 30, 2006

  	

   

  
	

  $420,000

  	

   

  	

  December 31, 2006

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  $420,000

  	

   

  	

  March 31, 2007

  	

   

  
	

  $420,000

  	

   

  	

  June 30, 2007

  	

   

  
	

  $420,000

  	

   

  	

  September 30, 2007

  	

   

  
	

  $558,689.72

  	

   

  	

  December 31, 2007

  	

   

  

 

 

                                    (b)  Unless sooner paid in full, the entire

unpaid principal balance of this Note, together with all outstanding and unpaid

accrued interest, shall be due and payable on December 31, 2007.  Without limiting the generality of the

preceding sentence, any payment that is deferred under Section 2(d) of this

Note and has not been made before December 31, 2007 shall be due and payable on

December 31, 2007.  All payments shall

be made in U.S. dollars by wire transfer of immediately available funds to

Payee at:

 

                                            Name

of the account:  Textile Investment

International S.A.

                                            Bank:  Banque Générale du Luxembourg

                                            Account

number:  30-630 563-05-01

                                            Swift

code:  BGLLLULL

 

or to such other

account as Payee shall have previously designated to Maker in writing not later

than fourteen (14) days prior to the date on which such payment becomes

due.  All payments (including any

prepayments) shall be applied first to accrued and unpaid interest, and then to

the unpaid principal balance of this Note.

 

                                    (c)  If Maker fails to make timely payments to

Payee under this Note (except for payments deferred in accordance with Section

2(d) of this Note), Maker shall pay to Payee on demand the amounts due with

interest at the rate of one and one-half percent (1.5%) per month from the due

date until paid.

 

                                    (d)  (i) 

Notwithstanding anything to the contrary contained in this Note, Maker

shall not be obligated to make any quarterly installment payment of principal

and interest on this Note in the Quarterly Payment Amounts set forth above for

the corresponding Quarterly Payment Dates set forth above unless each of the

following conditions is satisfied: (A) as of the date of such payment, the

Excess Availability (as such term is defined in the Senior Credit Agreements

(as hereinafter defined in this Note)) of Maker in accordance with the terms of

the Senior Credit Agreements for the immediately preceding thirty (30)

consecutive day period shall have been not less than $2,500,000, and (B) as of

the date of any such payment, and after giving effect to such payment, the

Excess Availability (as such term is defined in the Senior Credit Agreements)

of Maker in accordance with the terms of the Senior Credit Agreements shall be

not less than $2,500,000, and (C) on the date of any such payment and after

giving effect to such payment, no Event of Default (as such term is defined in

the Senior Credit Agreements), or act, 

 

2

 

condition or event

which with notice or passage of time or both would constitute an Event of

Default under the Senior Credit Agreements, shall exist or have occurred or be

continuing (each quarterly installment payment that, in accordance with this

Section 2(d), is not made as set forth above, is referred to herein as a “Deferred

Quarterly Payment”).

 

                                            (ii)  If there is one (1) Deferred Quarterly

Payment, then the Quarterly Payment Amount of such Deferred Quarterly Payment

shall be paid to Payee in twelve (12) equal monthly installment payments of

principal and interest due on the last day of the month, beginning with the

last day of the month immediately following the Quarterly Payment Date for

which the Quarterly Payment Amount of such Deferred Quarterly Payment was due

and not paid, and on the last day of each of the eleven (11) months thereafter;

provided, however, that Maker shall not make any such monthly installment

payment if on the date of such monthly installment payment, and after giving

effect to such payment, an Event of Default (as such term is defined in the

Senior Credit Agreements), or act, condition or event which with notice or

passage of time or both would constitute an Event of Default under the Senior

Credit Agreements, shall exist or have occurred or be continuing.

 

                                            (iii)  If there is more than one (1) Deferred

Quarterly Payment, then as to each Deferred Quarterly Payment subsequent to the

first (1st) Deferred Quarterly Payment (each such subsequent

Deferred Quarterly Payment being referred to herein as a “Subsequent Deferred  Quarterly

Payment”) the Quarterly Payment Amount of such Subsequent Deferred

Quarterly Payment shall be paid to Payee in twelve (12) equal monthly

installment payments of principal and interest due on the last day of the

month, beginning with the last day of the month immediately following the

Quarterly Payment Date for which the Quarterly Payment Amount of such

Subsequent Deferred Quarterly Payment was due and not paid, and on the last day

of each of the eleven (11) months thereafter; provided, however, that Maker

shall not make monthly installment payments of principal and interest on this

Note with respect to any Subsequent Deferred Quarterly Payment unless each of

the following conditions is satisfied: 

(A) as of the date of the monthly installment payment, the Excess

Availability (as such term is defined in the Senior Credit Agreements) of Maker

in accordance with the terms of the Senior Credit Agreements for the

immediately preceding thirty (30) consecutive day period shall have been not

less than $2,500,000, (B) as of the date of any such monthly installment

payment, and after giving effect to such payment, the Excess Availability (as

such term is defined in the Senior Credit Agreements) of Maker in accordance

with the terms of the Senior Credit Agreements shall be not less than

$2,500,000, and (C) on the date of any such monthly installment payment, and

after giving effect to such payment, no Event of Default (as such term is

defined in the Senior Credit Agreements), or act, condition or event which with

notice or passage of time or both would constitute an Event of Default under

the Senior Credit Agreements, shall exist or have occurred or be continuing.

 

                                            (iv)  For purposes of this Note, “Senior Credit

Agreements” shall mean collectively, the Accounts Financing

Agreement [Security Agreement] and Covenant Supplement to Accounts Financing

Agreement [Security Agreement] dated June 16, 1992, by and between Congress

Financial Corporation (referred to herein as “Congress Financial”) and

Maker, and all agreements, documents, and instruments at any time executed

and/or delivered by 

 

3

 

Maker or any other

person or entity to, with, or in favor of, Congress Financial in connection

therewith or related thereto, as all of the foregoing may be amended, modified,

supplemented, extended, renewed, restated, or replaced from time to time.

 

                        3.         Prepayment.  Maker shall be privileged to prepay this Note in whole or in part,

together with all interest accrued through the date of payment, at any time

without premium or penalty.  All partial

prepayments shall be applied in inverse order of maturity.

 

                        4.         Default; Acceleration; Costs of Collection.  The occurrence of any of the following

events shall be an “Event of Default”: (a) failure of Maker to

make any payment of principal or interest under this Note within thirty (30)

days after the due date thereof; or (b) the occurrence of an Insolvency Event

(as defined in Section 10 below).  Upon

the occurrence of an Event of Default, the unpaid principal with interest and

all other sums evidenced by this Note shall, at the option of Payee and in

Payee’s discretion, become immediately due and payable.  Upon and during the continuance of an Event

of Default, Maker shall pay Payee’s reasonable costs and expenses (including

reasonable attorneys fees and expenses) incurred in collecting the principal

and interest due under this Note, including, but not limited to, any reasonable

attorneys fees and expenses incurred by Payee in connection with asserting,

enforcing, pursuing or preserving its claim in any bankruptcy proceeding.  Notwithstanding anything to the contrary in

this Section 4, it shall not be deemed an Event of Default for the failure of

Maker to make any payment of principal or interest under this Note which Maker

shall not be obligated to make under Section 2(d) of this Note.

 

                        5.         Certain Waivers.  As to this Note, Maker waives all applicable

exemption rights, whether under any state constitution or otherwise, and also

waives valuation and appraisement, diligence, presentment, protest, demand for

payment, notice of default, dishonor or nonpayment of this Note, and notice of

acceleration and expressly agrees that the maturity of this Note, or any

payment under this Note, may be extended from time to time without in any way

affecting the liability of Maker.

 

                        6.         Preservation of Payee Rights.  No failure on the part of Payee to exercise

any right or remedy hereunder, whether before or after the happening of an

Event of Default shall constitute a waiver thereof, and no waiver of any past

Event of Default shall constitute waiver of any future default or of any other

Event of Default.  No failure to

accelerate the indebtedness evidenced hereby by reason of any Event of Default

hereunder, or acceptance of a past due installment, or indulgence granted from

time to time, shall be construed to be a waiver of the right to insist upon

prompt payment thereafter, or shall be deemed to be a novation of this Note or

as a waiver of such right of acceleration or any other right, or be construed

so as to preclude the exercise of any right that Payee may have, whether by the

laws of the State of New York, by agreement, or otherwise.  This Note may not be changed orally, but

only by an agreement in writing signed by the party against whom such agreement

is sought to be enforced.

 

                        7.         Notices.  Any notice required or permitted by or in connection with this

Note shall be in writing and shall be made by telecopy, or by hand delivery, or

by overnight delivery service, or by certified mail, return receipt requested,

postage prepaid, addressed to the parties at 

 

4

 

the appropriate

address set forth below or to such other address as may be hereafter specified

by written notice by the parties to each other.  Notice shall be considered given as of the earlier of the date of

actual receipt, or the date of the telecopy or hand delivery, or one (1)

business day after delivery to an overnight delivery service (marked for next

business day delivery), or three (3) calendar days after the date of mailing,

independent of the date of actual delivery or whether delivery is ever in fact

made, as the case may be, provided the giver of notice can establish that

notice was given as provided herein. 

Notwithstanding the aforesaid procedures, any notice or demand upon any

party, in fact received by such party, shall be sufficient notice or demand.

 

 

	

  If to Maker:

  	

   

  	

  I.C. Isaacs &

  Company, Inc.

  
	

   

  	

   

  	

  350 Fifth Avenue, Suite

  1029

  
	

   

  	

   

  	

  New York, New York

  10118

  
	

   

  	

   

  	

  Attn:  Mr. Robert J. Arnot, President and CEO

  
	

   

  	

   

  	

  Telecopy No.:  212-695-7579

  
	

   

  	

   

  	

   

  
	

  With copy to:

  	

   

  	

  I.C. Isaacs &

  Company L.P.

  
	

   

  	

   

  	

  3840 Bank Street

  
	

   

  	

   

  	

  Baltimore, Maryland

  21224

  
	

   

  	

   

  	

  Attn:  Mr. Eugene C. Wielepski

  
	

   

  	

   

  	

  Telecopy No.:  410-563-1512

  
	

   

  	

   

  	

   

  
	

  And copy to:

  	

   

  	

  Piper Rudnick LLP

  
	

   

  	

   

  	

  6225 Smith Avenue

  
	

   

  	

   

  	

  Baltimore, Maryland

  21209-3600

  
	

   

  	

   

  	

  Attn:  Robert J. Mathias, Esquire

  
	

   

  	

   

  	

  Telecopy No.:  410-580-3001

  
	

   

  	

   

  	

   

  
	

  If to Payee:

  	

   

  	

  Textile Investment

  International S.A.

  
	

   

  	

   

  	

  41 Avenue de la Gare

  
	

   

  	

   

  	

  Luxembourg L-1611

  
	

   

  	

   

  	

  Luxembourg

  
	

   

  	

   

  	

  Attn:  René Faltz, Managing Director

  
	

   

  	

   

  	

  Telecopy No.:  011 352 26 48 47 47

  
	

   

  	

   

  	

   

  
	

  With copy to:

  	

   

  	

  Hall Dickler Kent

  Goldstein & Wood, LLP

  
	

   

  	

   

  	

  909 Third Avenue

  
	

   

  	

   

  	

  New York, New York  10022-4731

  
	

   

  	

   

  	

  Attn:  Steven D. Dreyer, Esquire

  
	

   

  	

   

  	

  Telecopy No.:  212-935-3121

  

 

                        8.         Governing Law.  This Note shall be governed by, and

construed in accordance with, the laws of the State of New York applicable to

contracts made and to be performed entirely in the State of New York without

regard to such state’s choice of law rules. 

In the event any legal action becomes necessary to enforce or interpret

the terms of this Note, the parties agree that such action may be brought in

the Supreme Court of the State of New York, County of 

 

5

 

New York, or in

the U.S. District Court for the Southern District of New York sitting in New

York County, and the parties hereby submit to the jurisdiction of such courts.

 

                        9.         Severability.  In case any provision or any part of any

provision contained in this Note shall for any reason be held to be invalid,

illegal, or unenforceable in any respect, such invalidity, illegality, or

unenforceability shall not affect any other provision or remaining part of the

affected provision of this Note, but this Note shall be construed as if such

invalid, illegal, or unenforceable provision or part thereof had never been

contained herein but only to the extent such provision or part thereof is invalid,

illegal, or unenforceable.

 

                        10.       Subordination.  (a) 

Payee, by accepting delivery of this Note, covenants and agrees, for

itself and each and every subsequent holder of this Note, that upon and during

the continuance of any Insolvency Event (as defined below), the indebtedness

evidenced by this Note shall be subordinate and junior in right and priority of

payment to Maker’s indebtedness to Congress Financial and to Maker’s

indebtedness to any other lender (referred to herein as “Other Lender,” which term

shall include its successors and assigns) that may provide financing to Maker

in replacement of Maker’s credit facility from Congress Financial (Congress

Financial and any such Other Lender are referred to herein as “Lender”),

such that upon and during the continuance of any Insolvency Event, (i) no part

of the indebtedness evidenced by this Note shall have any claim to the assets

of Maker on parity with or prior to any claims of Lender to such assets; and

(ii) unless and until Maker’s indebtedness to Lender shall have been

indefeasibly paid in full, Payee shall not without the express prior written

consent of Lender, take or receive from Maker, and Maker shall not make, give

or permit, directly or indirectly, by set-off, redemption, purchase or in any

other manner, any payment of any nature or type for the whole or any part of

the indebtedness evidenced by this Note, provided that no such subordination

shall be effective if all indebtedness owed by Maker to Lender has been

equitably subordinated to the claims of all other general unsecured creditors

of Maker by virtue of Lender’s acts or conduct by a court of competent

jurisdiction under a final and non-appealable order, judgment or decree (a “Subordination

Event”).  Payee, by accepting

delivery of this Note, further covenants and agrees, for itself and each and

every subsequent holder of this Note, that if any payment or distribution,

whether consisting of money, property or securities, shall be collected or

received by Payee, or any such subsequent holder of this Note, in respect of

the indebtedness evidenced by this Note, upon or during the continuance of an

Insolvency Event, provided a Subordination Event has not occurred, then Payee

or such subsequent holder of this Note immediately shall deliver the same to

Lender, in the form received, duly endorsed to Lender, if required, to be

applied to the payment of Maker’s indebtedness to Lender until Maker’s

indebtedness to Lender is paid in full. 

Until so delivered, such payment or distribution shall be held in trust

by Payee, or such subsequent holder of this Note, as property of Lender,

segregated from other funds and property held by Payee, or such other holder of

this Note.  The provisions of this

Section 10 are, and are intended solely, for the purpose of defining the

relative rights of Payee (and any subsequent holder of this Note), on the one

hand, and Lender, on the other, upon and during the continuance of an

Insolvency Event.  Lender is an intended

beneficiary of the subordination provided by the terms of this Section 10.  Notwithstanding anything to the contrary in

this paragraph, such subordination of the indebtedness evidenced by this Note

shall not prevent or limit Payee’s right or ability to assert, enforce or

otherwise pursue its claim under this Note

 

6

 

during any

Insolvency Event provided any payments to Payee are treated in accordance with

this Section.

 

                                                (b)  As used in this Note, “Insolvency Event” means any

of the following: (i) Maker commencing any case, proceeding or other action (A)

under any existing or future law of any jurisdiction, domestic or foreign,

relating to bankruptcy, insolvency, administration, reorganization,

conservatorship, or relief from debtors, seeking to have any order for relief

entered with respect to it, or seeking to adjudicate it a bankrupt or

insolvent, or seeking reorganization, arrangement, adjustment, winding-up,

administration, liquidation, dissolution, composition or other relief with

respect to it or its debts, or (B) seeking appointment of an administrator or

receiver for it or for all or any substantial part of its assets, or Maker

making a general assignment for the benefit of its creditors, or (ii) there

being commenced against Maker any case, proceeding or other action of a nature

referred to in clause (A) hereof, or (iii) there being commenced against Maker

any case, proceeding or other action seeking issuance of a warrant of

attachment, execution, distraint or similar process against all or any substantial

part of its assets which results in the entry of any order for any such relief

that is not satisfied within 90 days, or (iv) Maker taking any action in

furtherance of, or indicating its consent to, approval of, or acquiescence in,

any of the acts set forth in clause (i), (ii) or (iii) above, or (v) Maker

admitting in writing its inability to pay its debts as they become due.

 

                                                    (c)  Notwithstanding anything to the contrary set

forth in this Note, so long as Maker is indebted to Congress Financial, Payee’s

rights under this Note shall also be subject to the terms of that certain

Intercreditor and Subordination Agreement dated as of March 15, 2001, between

Payee and Congress Financial (the “Intercreditor Agreement,” which term shall

include any amendments to and replacements for the Intercreditor Agreement from

time to time) and, in the event of a conflict between the terms of this Note

and the terms of the Intercreditor Agreement, the terms of the Intercreditor

Agreement shall govern.

 

                                                    (d)  Payee, by accepting delivery of this Note,

covenants and agrees, for itself and for each subsequent holder of this Note,

that in the event that Congress Financial (or any subsequent Senior Creditor

(as defined in the Intercreditor Agreement)) shall be replaced by another

Senior Creditor, then promptly upon Maker’s written request Payee shall execute

and deliver to such replacement Senior Creditor an intercreditor and

subordination agreement in favor of such replacement Senior Creditor, which

intercreditor and subordination agreement (a “Replacement Intercreditor  Agreement,”

which term shall include any amendments to and replacements for the Replacement

Intercreditor Agreement) shall be identical to the Intercreditor Agreement in

form and substance, and so long as Maker is indebted to such replacement Senior

Creditor, Payee’s rights under this Note shall also be subject to the terms of

the Replacement Intercreditor Agreement and, in the event of a conflict between

the terms of this Note and the terms of the Replacement Intercreditor

Agreement, the terms of the Replacement Intercreditor Agreement shall govern.

 

                        11.       Mutual Waiver of Jury Trial.  Maker and Payee waive all rights to trial by jury of any claims

of any kind arising under or relating in any way to this Note.  Maker and Payee acknowledge that this is a

waiver of a legal right and represent to each other 

 

7

 

that these waivers are made knowingly

and voluntarily after consultation with counsel of their choice.  Maker and Payee agree that all such claims

shall be tried before a judge of a court having jurisdiction without a jury.

 

                        12.       Original Note.  Payee, by accepting delivery of this Note,

covenants and agrees that Payee shall mark the Original Note “cancelled,” and

immediately return the Original Note to Maker at the address set forth in the

notices provision of this Note.

 

                        IN WITNESS WHEREOF, and

intending to be legally bound hereby Maker executes this Note under seal as of

the date first written above.

 

	

  WITNESS:

  	

   

  	

  I.C. ISAACS

  & COMPANY L.P.,

  
	

   

  	

   

  	

  a Delaware

  limited partnership

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  I.C. Isaacs

  & Company, Inc.,

  
	

   

  	

   

  	

   

  	

  a Delaware

  corporation, its general partner

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  	

  (SEAL)

  
	

   

  	

   

  	

   

  	

  Name:

  	

  Robert J. Arnot

  
	

   

  	

   

  	

   

  	

  Title:

  	

  Chief Executive

  Officer

  
						

 

8

 

EXHIBIT B

 

AMENDMENT NO. 4

TO TRADEMARK LICENSE AND TECHNICAL ASSISTANCE AGREEMENT

 

                This Amendment No. 4, dated                       ,

2002, is to the Trademark License and

Technical Assistance Agreement dated January 15, 1998, by and between Latitude

Licensing Corp. (“Licensor”) and I.C. Isaacs & Company L.P. (“Licensee”)

(the “Agreement”).  Previous amendments

to the Agreement were made effective on November 12, 1998, June 21, 2000 and

May 31, 2001.  Capitalized terms used

herein have the meaning ascribed to them in the Agreement unless otherwise

indicated.

 

                WHEREAS, the parties therefore wish to

extend the term and scope of the Agreement and to provide for certain fees as

set forth herein.

 

                NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of

which are hereby acknowledged, the parties agree to amend the Agreement as

follows:

 

                1.             Section 2 — Term and Territory

 

                Section 2.1 of the Agreement, relating to the term

and territory, is hereby amended by adding the following provision as the last

sentence:

 

In addition,

Licensee shall have the option to renew this Agreement for an additional term

of four (4) years commencing January 1, 2008 and ending December 31, 2011.

 

                2.             Section 5 — Royalties

 

                Section 5.2 of the Agreement, is hereby amended by

adding the following to the Minimum Royalties table set forth therein:

 

	

  Calendar Year

  	

   

  	

  Minimum Royalties

  	

   

  
	

  2008

  	

   

  	

  $

  	

  3,000,000

  	

   

  
	

  2009

  	

   

  	

  $

  	

  3,000,000

  	

   

  
	

  2010

  	

   

  	

  $

  	

  3,000,000

  	

   

  
	

  2011

  	

   

  	

  $

  	

  3,000,000

  	

   

  

 

                3.             Section 9 — Sales

 

                Section 9 of the Agreement, relating to sales, is

hereby amended by adding the following provision as Section 9.3:

 

9.3           Licensor shall retain the services of

a consultant or consultants (which may be or include the Designated

Representative, as such term is hereinafter defined) (the “Consultants”) for

the purpose of assisting Licensee’s senior executives with the implementation

of this Agreement.  The 

 

 

Consultants shall

provide such services by way of interaction solely with Licensee’s senior

management.  The Consultants shall be

selected by Licensor subject to the prior approval of the Chief Executive

Officer of Licensee.  Licensee shall pay

the Licensor Consultants’ fees (the “Consultants’ Fees”) in an aggregate amount

of One Hundred Twenty-five Thousand Dollars ($125,000) for calendar year 2002,

and One Hundred Fifty Thousand Dollars ($150,000) for each remaining calendar

year under the term of this Agreement; such amounts shall be inclusive of all

expenses relating to such Consultants for such calendar year and shall be

prorated for any partial year subsequent to 2002.  The Consultants’ Fees for each year under the term of this

Agreement shall be payable in equal installments on the last day of each fiscal

quarter of the Company (each March 31, June 30, September 30 and December 31 of

any year under the term of this Agreement), beginning on June 30, 2002.

 

For purposes of

this Section, “Designated Representative” shall mean an individual designated

in writing to the Licensee by

                            

as the designated representative of

                             .

 

                4.             Section

26 — Right of First Refusal

 

                The first sentence of Section 26, relating to the

right of first refusal, is hereby deleted and replaced with the following

sentence:

 

Should Licensor decide, at its

initiative or upon an offer from a third party, to introduce, market, import,

manufacture and/or distribute, or cause to be introduced, marketed, imported or

manufactured, within the Territory, any of the following additional products:

(i) Men’s Active, (ii) Boys’, Women’s and Girls’ Jeans, Casual or Active

collections, and (iii) Underwear, Licensee shall have a right of First Refusal

for a license for these products, with terms and royalty rates as offered by

the third party or otherwise to be discussed and agreed upon at that time.

 

                5.             Section 32 — Licensor’s Brand

Strategy

 

                At the end of Section 31 of the Agreement, the

following shall be added to the Agreement as a new section:

 

                Section 32.             Licensor’s

Brand Strategy. Licensor is responsible

for, and will control the brand’s strategic positioning and the voice of the

brand.  Licensor will provide

communication guidelines to Licensee to help in developing communication

execution.  Licensee shall submit to

Licensor for review, prior to submission to the advertising agency, any

campaign briefing materials, and shall consult with Licensor before accepting

any creative 

 

2

 

response to such briefing

materials.  The Trademarks, the visual

representation, and the image of the Products shall be subject to written

approval by Licensor (which shall not be unreasonably withheld) prior to public

distribution or display in any medium; provided, however, that any advertising

or promotional materials supplied by Licensor will not require its approval

prior to dissemination by Licensee, except as otherwise provided in this

Agreement.  All advertising campaigns in

the Territory shall correspond to the international advertising theme and image

worldwide.  Licensor will make available

to Licensee all advertising campaigns produced worldwide.  The Licensee shall cause its advertising

staff and/or agency to consult with Licensor’s designated advertising agency

and/or creative staff, at least twice a year, for a review of Product image and

with a view toward coordinating and enhancing worldwide advertising

strategy.  Approved advertising and

promotional materials shall not be disapproved by Licensor for use within the

same campaign.

 

                6.             Effective

Date

 

                This Amendment No. 4 shall be

effective as of the date first written above.

 

                7.             Full

Force and Effect

 

                Except as expressly amended by

this Amendment No. 4, the Agreement shall continue in full force and effect.

 

                IN WITNESS WHEREOF, the parties, by their

duly authorized representatives, have executed this Amendment No. 4 as of the

dates indicated below.

 

 

	

  LATITUDE LICENSING CORP.

  	

   

  	

  I.C. ISAACS & COMPANY L.P.

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  Name:

  	

   

  	

   

  	

  Name:

  	

  Robert J. Arnot

  
	

  Title:

  	

   

  	

   

  	

  Title:

  	

  Chief Executive

  Officer

  
	

  Date:

  	

   

  	

   

  	

  Date:

  	

   

  

 

3

 

EXHIBIT C

 

AMENDMENT NO. 6

TO TRADEMARK LICENSE AND TECHNICAL ASSISTANCE AGREEMENT FOR

WOMEN’S COLLECTIONS

 

                This Amendment No. 6, dated                 ,

2002, is to the Trademark License and

Technical Assistance Agreement For Women’s Collections dated March 4, 1998 by

and between Latitude Licensing Corp. (“Licensors”) and I.C. Isaacs &

Company L.P. (“Licensee”) covering Women’s Products (the “Agreement”).  Previous amendments to the Agreement were

made effective on June 18, 1998, November 12, 1998, December 23, 1998, August

2, 1999 and June 21, 2000.  Capitalized

terms used herein have the meaning ascribed to them in the Agreement unless

otherwise indicated.

 

                WHEREAS, the parties wish to

extend the term of the Agreement and to provide for certain fees as set forth

herein.

 

                NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of

which are hereby acknowledged, the parties agree to amend the Agreement as

follows:

 

                1.             Section 2 — Term and Territory

 

                Section 2.1 of the Agreement, relating to the term

and territory, is hereby amended by adding the following provision as the last

sentence:

 

In addition,

Licensee shall have the option to renew this Agreement for an additional term

of four (4) years commencing January 1, 2008 and ending December 31, 2011.

 

                2.             Section 4 — Royalties

 

                Section 4.2 of the Agreement, is hereby amended by

adding the following to the Minimum Royalties table set forth therein:

 

	

  Calendar Year

  	

   

  	

  Minimum Royalties

  	

   

  
	

  2008

  	

   

  	

  $

  	

  1,500,000

  	

   

  
	

  2009

  	

   

  	

  $

  	

  1,500,000

  	

   

  
	

  2010

  	

   

  	

  $

  	

  1,500,000

  	

   

  
	

  2011

  	

   

  	

  $

  	

  1,500,000

  	

   

  

 

                3.             Section 9 — Sales

 

                Section 9 of the Agreement, relating to sales, is

hereby amended by adding the following provision as Section 9.3:

 

9.3           3              Licensor

shall retain the services of a consultant or consultants (which may be or

include the Designated 

 

 

Representative, as

such term is hereinafter defined) (the “Consultants”) for the purpose of

assisting Licensee’s senior executives with the implementation of this

Agreement.  The Consultants shall

provide such services by way of interaction solely with Licensee’s senior

management.  The Consultants shall be

selected by Licensor subject to the prior approval of the Chief Executive

Officer of Licensee.  Licensee shall pay

the Licensor Consultants’ fees (the “Consultants’ Fees”) in an aggregate amount

of One Hundred Twenty-five Thousand Dollars ($125,000) for calendar year 2002,

and One Hundred Fifty Thousand Dollars ($150,000) for each remaining calendar year

under the term of this Agreement; such amounts shall be inclusive of all

expenses relating to such Consultants for such calendar year and shall be

prorated for any partial year subsequent to 2002.  The Consultants’ Fees for each year under the term of this

Agreement shall be payable in equal installments on the last day of each fiscal

quarter of the Company (each March 31, June 30, September 30 and December 31 of

any year under the term of this Agreement), beginning on June 30, 2002.

 

For purposes of

this Section, “Designated Representative” shall mean an individual designated

in writing to the Licensee by

                              

as the designated representative of

                                .

 

                4.             Effective

Date

 

This Amendment No. 6 shall be effective as of the date first written

above.

 

                5.             Full

Force and Effect

 

Except as expressly amended by this Amendment No. 6, the Agreement shall

continue in full force and effect.

 

                IN WITNESS WHEREOF, the parties, by their

duly authorized representatives, have executed this Amendment No. 6 as of the

dates indicated below.

 

 

	

  LATITUDE LICENSING CORP.

  	

   

  	

  I.C. ISAACS & COMPANY L.P.

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  Name:

  	

   

  	

   

  	

  Name:

  	

  Robert J. Arnot

  
	

  Title:

  	

   

  	

   

  	

  Title:

  	

  Chief Executive

  Officer

  
	

  Date:

  	

   

  	

   

  	

  Date:

  	

   

  

 

2

 

EXHIBIT D

 

I.C.

ISAACS & COMPANY, INC.

STOCKHOLDERS’

AGREEMENT

 

 

                This STOCKHOLDERS’ AGREEMENT (the “Agreement”) dated

                         ,

2002 is by and among I.C. Isaacs & Company, Inc., a Delaware corporation

having its principal office and place of business at 3840 Bank Street,

Baltimore, Maryland 21224-2522 (the “Company”), and the Persons (as hereinafter

defined) whose names are set forth in Schedule A hereto (the

“Stockholders” and each a “Stockholder”).

 

RECITALS

 

                WHEREAS, Textile Investment International S.A., a

Luxembourg corporation (“Textile Investment”), a wholly-owned subsidiary of

Würzburg Holding S.A., a Luxembourg corporation, also known in abbreviation as

Würzburg S.A. (“Würzburg”), has acquired from Ambra Inc., a Delaware

corporation (“Ambra”), shares of Common Stock, par value $.0001 per share, of

the Company (the “Common Stock”), and Series A Convertible Preferred Stock, par

value $.0001 per share, of the Company (the “Preferred Stock”) representing, in

the aggregate and upon conversion of the Preferred Stock, Three Million Nine

Hundred Sixty-Six Thousand Six Hundred Sixty-Seven (3,966,667) shares of Common

Stock (the “Subsequently Acquired Stock”); and

 

                WHEREAS, prior to Textile Investment’s acquisition of

the Common Stock and the Preferred Stock from Ambra, each Stockholder held the

number of shares of Common Stock set forth opposite its name on Schedule A

hereto (the “Initial Stock”); and

 

                WHEREAS, the Company and the Stockholders desire to

establish in this Agreement certain terms and conditions regarding the

acquisition and disposition of securities of the Company by the Stockholders

and the Stockholders’ relationship with the Company.

 

                NOW, THEREFORE, in consideration of the foregoing,

and of the mutual covenants and agreements hereinafter provided, the parties to

this Agreement, on behalf of themselves and their successors and assigns, agree

as follows:

 

1.             DEFINITIONS

 

                As used in this Agreement, the following terms shall

have the following meanings:

 

                Affiliate. 

Affiliate shall have the meaning set forth in Rule 12b-2 promulgated

under the Exchange Act, but shall include, in the case of a Person who is an

individual, any relative or spouse of such Person or any relative of such

spouse, any of whom has the same home as such Person.

 

                Beneficial Ownership.  Beneficial Ownership with respect to any

Equity Securities shall mean having “beneficial ownership” of such Equity

Securities as determined pursuant to Rule 

 

 

13d-3 promulgated under the

Exchange Act, but omitting the words “within 60 days” from Subsection (d)(1)(i)

of such definition.

 

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

Company.

 

                Budget. 

Budget shall mean for fiscal year 2002, the budget attached hereto as Exhibit

A.  For each fiscal year after 2002,

Budget shall mean the budget substantially in the form of Exhibit A

prepared by Senior Executives for such year and approved by the Board of

Directors by a Supermajority Vote at least thirty (30) days prior to the

commencement of such fiscal year.  If no

Budget for a fiscal year is approved by the Board of Directors by a

Supermajority Vote at least thirty (30) days prior to the beginning of a fiscal

year, until such time as a budget for such fiscal year is approved as set forth

herein, expenses, by category (as such categories are set forth in Exhibit A

hereto), for such fiscal year shall be in the same proportion to sales of the

Company for such fiscal year as the proportion of expenses, by category (as

such categories are set forth in Exhibit A hereto), to sales of the

Company for the fiscal year immediately preceding such fiscal year.

 

                Class I Directors.  Class I Directors shall mean the Directors elected to serve until

the 2004 Annual Meeting of Stockholders.

 

                Class II Directors. Class II Directors shall

mean the Directors elected at the 2002 Annual Meeting of Stockholders to serve

until the 2005 Annual Meeting of Stockholders.

 

                Class III Directors.  Class III Directors shall mean the Directors elected to serve

until the 2003 Annual Meeting of Stockholders.

 

                Code. 

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

 

                Common Stock. 

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

Agreement.

 

                Company. 

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

Agreement.

 

                Company Directors.  Company Directors shall mean (i) the Company’s Chief Executive

Officer and (ii) the Company’s President—Girbaud Division, or (iii) if such

positions are vacant or do not exist, the Chief Executive Officer and the

President—Girbaud Division are the same person, or for whatever reason either

or both of the individuals referred to in (i) and (ii) above cannot serve, such

officers of the Company as are proposed by a majority of the Directors other

than the Satisfactory Nominees.

 

                Company-Nominated Independent Directors.  Company-Nominated Independent Directors

shall have the meaning set forth in Section 3.01(b) hereof.

 

                Company Process Agent.  Company Process Agent shall have the meaning

set forth in Section 13 of this Agreement.

 

2

 

                Directors. 

Directors shall mean the members of the Board of Directors of the

Company.

 

                Exchange Act. 

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

 

                Equity Rights.  Equity Rights shall mean, with respect to any Person, any

subscriptions, options, warrants, commitments, purchase rights, preemptive

rights or agreements of any kind (including any stockholders’ or voting trust

agreements) for the issuance, sale, or voting of, any Equity Securities in such

Person.

 

                Equity Securities.  Equity Securities of any Person shall mean any capital stock of

any class, partnership interests, membership interests, or other ownership

interests of any kind, in such Person, or securities convertible into shares of

capital stock of any class, partnership interests, membership interests, or

other ownership interests of any kind, in such Person.

 

                Extraordinary Transaction.  Extraordinary Transaction means any of the

following in any one or more transactions: (i) any merger, consolidation, share

exchange or other business combination of the Company or any Subsidiary; (ii)

any sale, lease, pledge, granting of a security interest in, or exchange of

substantially all of the assets of the Company or any Subsidiary; (iii) the

disposal of a material amount of assets of the Company or any Subsidiary other

than in the normal course of business in a transaction involving a member of an

Investor Group; (iv) any issuance by the Company or any Subsidiary of Equity

Rights or Equity Securities to any member of an Investor Group; (v) the

adoption of any plan or proposal for liquidation or dissolution of the Company;

(vi) the making or granting by the Company or any Subsidiary of any loan,

advance, guarantee, pledge or other financial assistance or tax benefit to any

member of an Investor Group, directly or indirectly; (vii) any other material

contract, arrangement or agreement, including without limitation any agreement

for the redemption of Stock, involving the Company or any Subsidiary and a

member of an Investor Group; (viii) any termination, nonrenewal or amendment of

or waiver of any of the terms of, any agreement between the Company or any

Subsidiary and any member of an Investor Group; (ix) any merger, tender offer,

reverse stock split or other transaction that would result in the Company

ceasing to be a reporting company pursuant to Section 12 of the Exchange Act or

in the Common Stock ceasing to be listed on any of (a) the OTC Bulletin Board,

(b) the Nasdaq Stock Market or (c) a national exchange; or (x) any transaction

involving the Company or any Subsidiary (whether or not involving a member of

an Investor Group) and including, without limitation, any reclassification of

securities (including a reverse stock split), recapitalization or

reorganization of the Company, any self-tender offer or a repurchase of Equity

Rights or Equity Securities of the Company by the Company or any Subsidiary or

any other transaction (whether or not with or into or otherwise involving a

member of an Investor Group) which in any such case has the effect, directly or

indirectly, of increasing the proportionate Beneficial Ownership by any member

of an Investor Group of the outstanding shares of any class of Equity

Securities of the Company or any Subsidiary.

 

                Independent Director.  Independent Director shall mean any one (1)

of the Independent Directors.

 

3

 

                Independent Directors.  Independent Directors shall mean Directors

who are (apart from such directorship) independent of, and otherwise not

affiliated with, any Stockholder, the Company or any Subsidiary, or any

Affiliate of any of the foregoing, and none of whom shall be a current or

former officer, employee, consultant or adviser (financial, legal or other) or

Affiliate of any Stockholder, the Company or any Subsidiary or any Affiliate of

any of the foregoing.  Notwithstanding

the foregoing, the Independent Directors shall not include any person unless

such person has business experience, stature and character that is commensurate

with service on the board of a publicly-held enterprise and would be deemed an

independent director for purposes of Nasdaq Marketplace Rule 4200(a)(14).  Notwithstanding anything in this definition

to the contrary, the Company and the Stockholders agree that each of Jon

Hechler and Neal J. Fox shall be deemed to meet the criteria for Independent

Directors set forth in this definition.

 

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

this Agreement.

 

                Investor Group.  Investor Group shall mean (i) the Stockholders, (ii) any

Affiliates of Stockholders, and/or (iii) any Person with whom any of the

Stockholders is part of a 13D Group.

 

                Partnership. 

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

limited partnership.

 

                Person. 

Person shall mean any individual, corporation, partnership, limited

liability company, association, joint venture or trust.

 

                Preferred Stock.  Preferred Stock shall have the meaning set forth in the Recitals

of this Agreement.

 

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

this Agreement.

 

                Quarterly Payment Amounts.  Quarterly Payment Amounts shall have the

meaning set forth for such term in the Subordinated Secured Promissory Note.

 

                Quarterly Payment Dates.  Quarterly Payment Dates shall have the

meaning set forth for such term in the Subordinated Secured Promissory Note.

 

                SEC. 

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

 

                Satisfactory Nominee.  Satisfactory Nominee shall mean a person who

is (i) a Stockholder Director or (ii) a Stockholder-Nominated Independent

Director.

 

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

 

                Senior Executives.  Senior Executives shall mean the following executive officers of

the Company only:  (i) the President and

the Chief Executive Officer, (ii) the Chief Financial Officer and (iii) the

President — Girbaud Division.

 

4

 

                Senior Executive Employment Agreements.  Senior Executive Employment Agreements shall

mean (i) that certain Executive Employment Agreement by and between Robert J.

Arnot and the Partnership, and, for the limited purposes set forth therein, the

Company, dated as of April 17, 2002; (ii) that certain Executive Employment

Agreement by and between Daniel Gladstone and the Partnership and, for the

limited purposes set forth therein, the Company, dated as of April 17, 2002;

and (iii) that certain Executive Employment Agreement by and between Eugene C.

Wielepski and the Partnership and, for the limited purposes set forth therein,

the Company, dated as of April 17, 2002.

 

                Stock. 

Stock shall mean the Initial Stock, the Subsequently Acquired Stock and

any Equity Securities of the Company or any of its successors or assigns

hereinafter issued or paid, directly or indirectly, in respect of the Initial

Stock and/or the Subsequently Acquired Stock pursuant to the exercise of any

conversion rights, any stock split, stock dividend, recapitalization, merger,

share exchange or otherwise.

 

                Stockholder. 

Stockholder shall have the meaning set forth in the first paragraph of

this Agreement.

 

                Stockholder Director.  Stockholder Director shall mean any Director

who is (a) a Stockholder (if such Stockholder is an individual), (b) any person

who is a current or former officer, employee, partner, owner, consultant or

advisor (financial, legal or other) or Affiliate of any Stockholder, and (c)

any other person proposed by a Stockholder who is not a Stockholder-Nominated

Independent Director and who, in the case of (a), (b) or (c), at the time of

nomination or appointment to the Board of Directors shall have been satisfactory

to the Board of Directors, as determined in its exercise of its fiduciary

duties to the stockholders of the Company.

 

                Stockholder-Nominated Independent Director.  Stockholder-Nominated Independent Director

shall have the meaning set forth in Section 3.01(b) hereof.

 

                Stockholders. 

Stockholders shall have the meaning set forth in the first paragraph of

this Agreement.

 

                Subordinated Secured Promissory Note.  Subordinated Secured Promissory Note shall

mean the Amended and Restated Subordinated Secured Promissory Note of the

Company dated as of May

             ,

2002 made payable to the order of Textile Investment and having an original

principal amount of Six Million Five Hundred Fifty-Seven Thousand Nine Hundred

Eight and 53/100 Dollars ($6,557,908.53).

 

                Subsequently Acquired Stock.  Subsequently Acquired Stock shall have the

meaning set forth in the Recitals of this Agreement.

 

                Subsidiary. 

Subsidiary shall mean any Person of which more than fifty percent (50%)

of the outstanding Equity Securities having voting power generally in the

election of directors is Beneficially Owned, directly or indirectly, by the

Company, and shall include, without limitation, the Partnership.

 

5

 

                Supermajority Vote.  Supermajority Vote shall mean the affirmative vote of a number of

Directors equal to at least two-thirds (2/3) of the total number of seats on

the Board of Directors (including any seats that are, at the time of such vote,

vacant).

 

                13D Group. 

13D Group shall mean any group of Persons who, with respect to the

acquiring, holding, voting or disposing of Voting Securities would, assuming

ownership of the requisite percentage thereof, be required under Section 13(d)

of the Exchange Act and the rules and regulations promulgated thereunder to

file a statement on Schedule 13D with the SEC as a “person” within the meaning

of Section 13(d)(3) of the Exchange Act, or who would be considered a “person”

under Section 13(g)(3) of the Exchange Act.

 

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

hereof.

 

                2002 Annual Meeting of Stockholders.  2002 Annual Meeting of Stockholders shall

mean the 2002 annual meeting of stockholders of the Company and any

adjournments or postponements thereof.

 

                Transfer. 

Transfer shall mean to sell, assign, pledge, grant a security interest

in, hypothecate or otherwise to transfer, voluntarily or involuntarily, by

operation of law or otherwise.

 

                Vote of the Independent Directors.  Vote of the Independent Directors shall mean

the affirmative vote of at least a majority of the Independent Directors,

provided that such affirmative vote of at least a majority of the Independent

Directors shall not constitute a Vote of the Independent Directors unless (a)

such affirmative vote of at least a majority of the Independent Directors

includes the affirmative vote of not fewer than one (1) Independent Director

who is not a Satisfactory Nominee, and (b) at the time of such vote, there

shall be no fewer than two (2) Independent Directors who are not Satisfactory

Nominees; provided that preceding clause (b) of this definition shall not be

applicable with respect to a vote taken when one (1) Company-Nominated

Independent Director position is vacant if such position shall have been vacant

for a period of more than thirty (30) consecutive days without a replacement

Company-Nominated Independent Director having been proposed as a nominee to

fill such vacant position of Company-Nominated Independent Director in

accordance with Section 3.01(b) hereof.

 

                Voting Securities.  Voting Securities shall mean any outstanding securities or other

interests entitling the holder thereof to vote generally in the election of

directors or managers of a Person.

 

2.             RESTRICTIONS ON TRANSFERS AND ACQUISITIONS

2.01.        Restrictions on Transfer.  No Stockholder may Transfer any interest in

the Stock except to (i) the Company, (ii) an Affiliate of such Stockholder,

(iii) any Person pursuant to Rule 144 promulgated under the Securities Act,

provided that no such Transfers under this clause (iii) are made to any Person

that has (together with its Affiliates and any Persons that are, together with

such Person and/or any of its Affiliates, part of any 13D Group, after giving

effect to such 

 

6

 

Transfer) Beneficial

Ownership of Equity Securities representing more than 5% of the total Equity

Securities of the Company, or (iv) any Person pursuant to an exemption to the

registration requirements of the Securities Act, provided that the approval

requirements of Section 3.05 hereof are satisfied; provided further that the

restrictions contained in this Agreement shall continue to be applicable to the

Stock following any transfer pursuant to (ii) or (iv) above, and the transferees

of any Stock pursuant to (ii) and (iv) above shall have executed and delivered

to the Company an Instrument of Accession substantially in the form attached

hereto as Exhibit B. 

Notwithstanding the foregoing, from and after the date hereof and to and

including November 14, 2004, neither the Stockholders nor any other Person(s)

the ownership of securities by which would be attributable to the Stockholders

for purposes of applying Section 382 of the Code (a “382 Affiliate”), shall

Transfer, directly or indirectly, any Equity Security or Equity Rights of the

Company if such Transfer, together with all other acquisitions and/or

dispositions of Equity Securities or Equity Rights of the Company prior to

and/or subsequent to the date hereof involving any one or more of (i) Textile

Investment, (ii) Würzburg, (iii) any 382 Affiliate, and (iv) any other party

(to the extent that the relevant acquisition or disposition involving such

other party is actually known to the Stockholders or Latitude Licensing Corp.

or is reported pursuant to the Exchange Act), would result in an “ownership

change” within the meaning of Section 382 of the Code.

 

2.02.        Transfers in

Breach of this Agreement. In the event of any Transfer of Stock in breach

of this Agreement, commencing immediately upon the time of such attempted

Transfer, (a) such Transfer shall be void and of no effect, (b) no dividend of

any kind or any distribution pursuant to any liquidation, redemption or

otherwise shall be paid by the Company to the purported transferee in respect

of such Stock (all such rights to payment by the transferring Stockholder

and/or the purported transferee being deemed waived), and (c) neither the

transferring Stockholder nor the purported transferee shall be entitled to

exercise any such rights with respect to such Stock until such Transfer in

breach of this Agreement has been rescinded.

2.03         RESTRICTIONS ON ACQUISITIONS

                From and after the date hereof and to and including

November 14, 2004, neither the Stockholders nor any 382 Affiliate, shall

acquire, directly or indirectly, any Equity Securities or Equity Rights of the

Company if such acquisition, together with all other acquisitions and/or

dispositions of Equity Securities or Equity Rights of the Company prior to

and/or subsequent to the date hereof involving any one or more of (i) Textile

Investment, (ii) Würzburg, (iii) any 382 Affiliate, and (iv) any other party

(to the extent that the relevant acquisition or disposition involving such

other party is actually known to the Stockholders or Latitude Licensing Corp.

or is reported pursuant to the Exchange Act), would result in an “ownership

change” within the meaning of Section 382 of the Code.

 

3.             VOTING PROVISIONS

3.01.        Nomination of Satisfactory Nominees.  (a) 

At all times during the term of this Agreement, the Company and the

Stockholders shall use their best efforts to cause the composition of the Board

of Directors to reflect the following proportionate representation of

Stockholder Directors, Company Directors and Independent Directors and to cause

the 

 

7

 

Satisfactory Nominees to

be apportioned as evenly as possible among the Class I Directors, Class II

Directors and Class III Directors:

 

                Three (3) Stockholder Directors

                Two (2) Company Directors

                Four (4) Independent Directors

 

(b)           At each annual meeting of

stockholders of the Company at which the term of any Independent Director is to

expire and at any time that a vacancy of an Independent Director on the Board

of Directors is to be filled, the identity of the person nominated by the

Company to stand for election to the Board of Directors or to be appointed to

fill such vacancy, as the case may be, shall be determined in the following

manner.  If the term of any Independent

Director initially proposed by the Stockholders or, thereafter, of any

Independent Director proposed by the committee referred to in this sentence

(each, a “Stockholder-Nominated Independent Director” and, collectively, the

“Stockholder-Nominated Independent Directors”), expires or such position on the

Board of Directors becomes vacant, a committee of Directors, a minority of whom

shall consist of Directors other than Satisfactory Nominees, shall propose to

the Board of Directors the nominee to serve as an Independent Director on the

slate to be recommended by the Board of Directors to fill such vacancy.  If the term of any Independent Director

initially proposed by the Senior Executives or, thereafter, of any Independent Director

proposed by the committee referred to in this sentence (each, a

“Company-Nominated Independent Director” and, collectively, the

“Company-Nominated Independent Directors”), expires or such position on the

Board of Directors becomes vacant, a committee of Directors, a minority of whom

shall consist of Directors who are Satisfactory Nominees, shall propose to the

Board of Directors the nominee to serve as an Independent Director on the slate

to be recommended by the Board of Directors to fill such vacancy.  The Board of Directors shall approve the

Independent Directors proposed in accordance with the preceding two (2)

sentences unless the Board of Directors determines that to do so would

constitute a breach of its fiduciary obligations to the Company’s stockholders.  For purposes of this Agreement, Neal J. Fox

and Jon Hechler (assuming he was elected to the Board of Directors at the 2002

Annual Meeting of Stockholders) shall be deemed to be Independent Directors

initially proposed by the Senior Executives.

 

(c)           For purposes of this Agreement, (i)

the Company shall be considered to have used its “best efforts,” as required in

Subsection (a), if it causes each Satisfactory Nominee and each Company

Director whose class then stands for election to be included in the slate of

nominees recommended by the Board of Directors to the Company’s stockholders

for election as directors and uses all reasonable efforts to cause the election

of such Satisfactory Nominees and Company Nominees, including the solicitation

of proxies in favor of the election of such persons, and (ii) the Stockholders

shall be considered to have used their “best efforts,” as required in

Subsection (a) above, if in each election of Directors they vote the Stock in

favor of the Stockholder Directors, the Company Directors and the Independent

Directors.

 

3.02         Declassification of the Board of

Directors.      The Company shall

include in its proxy statement for the annual meeting of stockholders to be

held in 2003 a proposal that the 

 

8

 

Amended and Restated

Certificate of Incorporation of the Company be amended to declassify the Board

of Directors and shall recommend to the stockholders of the Company that such

proposal be approved.

 

3.03.        Committees.  The Board of Directors will not establish any

committee authorized to exercise the power of the Board of Directors unless (i)

the Directors who are not Satisfactory Nominees are granted representation on

such committee consistent with the proportions of the total number of Directors

who are not Satisfactory Nominees to the total number of Directors as described

in Section 3.01(a) and (b) hereof, or (ii) in the case of the Audit Committee

and Compensation Committee, such committees consist of equal numbers of

Stockholder-Nominated Independent Directors and Company-Nominated Independent

Directors.  A committee of five (5)

Directors having as its members two (2) Directors who are not Satisfactory

Nominees and three (3) Directors who are Satisfactory Nominees shall be deemed

to satisfy the requirements of clause (i) of the preceeding sentence.  The Board of Directors shall not establish

or employ committees as a means designed to circumvent the purposes of this

Agreement.

 

3.04         Voting Provisions.  Except for any Extraordinary Transaction

approved by a Vote of the Independent Directors pursuant to Section 3.05

hereof, the Company shall not take, or cause or permit any Subsidiary to take,

any of the following actions without approval by the Board of Directors by a

Supermajority Vote:

 

(a)           the creation of any new Subsidiary

which is in any way advantageous or preferential to any member of an Investor

Group;

 

(b)           the entering into by the Company or

any of its Subsidiaries of any joint ventures, partnerships or profit sharing

agreements;

 

(c)           the guarantee by the Company or any

Subsidiary of the debts or obligations of any entity other than a wholly-owned

Subsidiary;

 

(d)           the entering into by the Company or

any Subsidiary of any new supplier or distribution agreements;

 

(e)           any media expenditures or

sponsorships by the Company or any Subsidiary inconsistent with past practice;

 

(f)            any material change to, or

deviations from, the Budget;

 

(g)           the hiring and termination of any of

the Senior Executives;

 

(h)           the loaning or advancing of money by,

or bank overdrafts on any account of, the Company or any Subsidiary in excess

of $750,000 outstanding at any time;

 

(i)            the use of cash or other assets of

the Company or any Subsidiary, or the incurring of any liability by the Company

or any Subsidiary, in connection with the opening of 

 

9

 

any retail stores,

outlets or other retail distribution outlets; provided, however, that nothing

in this subsection shall prevent the Company or any Subsidiary from entering

into franchise agreements allowing franchisees to open retail stores or outlets

using trademarks owned by or licensed to the Company or any Subsidiary (to the

extent that such franchise agreements do not result in any significant cost to,

or the incurrence of liability by, the Company or any Subsidiary);

 

(j)            the incurring by the Company or the

Partnership of any costs or liabilities, including without limitation

liabilities pursuant to any pledge, granting of a security interest, or

guaranty, not directly related to the apparel business of the Company or the

Partnership;

 

(k)           any prepayment of

the Subordinated Secured Promissory Note; or

(l)            the making of any quarterly

installment of principal and interest on the Subordinated Secured Promissory

Note in the Quarterly Payment Amounts on the corresponding Quarterly Payment

Dates set forth in the Subordinated Secured Promissory Note unless the

Partnership has an average of at least Two Million Five Hundred Thousand

Dollars ($2,500,000) of availability under its line of credit from Congress

Financial Corporation (including its successors and assigns) during the

forty-five (45) day period immediately prior to such Quarterly Payment Date.

 

3.05         Special Approval of Extraordinary

Transaction.  The Company shall not

engage in, and shall not cause or permit any Subsidiary to engage in, any

Extraordinary Transaction unless it is determined by a Vote of the Independent

Directors that such Extraordinary Transaction is fair to the public

stockholders of the Company without taking into account any effect of the stock

ownership of the Stockholders and their Affiliates.  In making such determination, the Independent Directors shall be

entitled, in their sole discretion and at the expense of the Company, to retain

the services of independent legal counsel and independent financial advisors to

advise them regarding their fiduciary duties and the overall fairness of the

transaction.

 

3.06         Covenants

of Stockholders.

 

                (a)           Except by virtue of the Stockholders’ representation on

the Board, neither the Stockholders nor any of their Affiliates shall act,

alone or in concert with others, to seek to control the day-to-day management

of the Company or Board of Directors.

 

(b)           Neither the Stockholders nor any of

their Affiliates shall, either alone or in concert with others, (i) initiate or

propose any stockholder proposal or stockholder nominations or make, or in any

way participate in, directly or indirectly, any “solicitation” of “proxies” to

vote, or seek to influence any Person with respect to the voting of, any voting

securities, or become a “participant” in a “solicitation” (as such terms are

defined in Regulation 14A promulgated under the Exchange Act, as in effect as

of the date hereof) in contravention of any of the provisions of this

Agreement; (ii) otherwise act in contravention of the purposes of this

Agreement or (iii) advise, assist or encourage or finance other Persons in

connection with any of the foregoing types of activities.

 

10

 

4.             LEGENDS ON CERTIFICATES

 

The certificates evidencing the Stock held by the Stockholders shall

bear any legends required by federal or state securities law and the following

legend required by Section 202 (a) of the Delaware General Corporation Law:

“The shares represented

by this Certificate are subject to a Stockholders’ Agreement dated as of

              

   , 2002, a copy of which is on file at the principal office of

the Company and will be furnished to any prospective purchaser on request.  Such Stockholders’ Agreement provides, among

other things, for certain restrictions on the sale, transfer, pledge, granting

of a security interest, hypothecation or disposition of the shares represented

by this Certificate.”

5.             BENEFIT

This Agreement shall be binding upon and shall operate for the benefit

of the parties hereto and their respective successors and assigns.

6.             INVALIDITY

OF ANY PROVISION

The invalidity or unenforceability of any provision of this Agreement

shall not affect the other provisions hereof, and the Agreement shall be

construed in all respects as if such invalid or unenforceable provisions were

omitted, provided that the parties shall negotiate in good faith to replace the

invalid provision with a valid provision reflecting the same balance of

economic interests.

7.             MODIFICATION

OF AGREEMENT

No modification, amendment or waiver of any of the provisions of this

Agreement shall be valid unless approved by a majority of the Board of

Directors (excluding for this purpose any Director who is a Satisfactory Nominee)

and made in writing and signed by the Company and Stockholders owning, in the

aggregate, a majority of the Stock subject to this Agreement.

8.             FURTHER ACTION

Upon approval by the Board of Directors, a copy of this Agreement shall

be made a part of the minutes of the Company.

9.             ATTORNEY’S FEES AND COSTS

If any action at

law or in equity (including any arbitration proceeding under Section 11 hereof)

is necessary to enforce or interpret the terms of this Agreement, the

prevailing party shall 

 

11

 

be entitled to reasonable

attorneys’ fees, costs, and necessary disbursements, in addition to any other

relief to which it may be entitled.

 

10.           APPLICABLE

LAW

This Agreement shall be construed in accordance with the laws of the

State of Delaware without the application of principles of conflicts of law.

11.           ARBITRATION

OF DISPUTES

(a)  Any dispute regarding any

aspect of this Agreement or any act which allegedly has or would violate any

provision of this Agreement will be submitted to binding arbitration.  Such arbitration shall be conducted before

an arbitrator sitting in New York, New York or in such other location as may be

agreed upon by the Company and the Stockholders, in accordance with the

Commercial Arbitration Rules of the American Arbitration Association then in

effect.  Judgment may be entered on the

award of the arbitrator in any court having competent jurisdiction.

(b)  The arbitration provision

set forth in clause (a) of this Section shall not restrict or otherwise affect

the right of any party to this Agreement to bring suit for specific performance

of this Agreement.  The parties agree

that irreparable damage would occur in the event that any of the provisions of

Articles 2 or 3 of this Agreement was not performed in accordance with its

specific terms or was otherwise breached. 

Each party agrees that, in the event of any breach or threatened breach

by such party of any covenant or obligation contained in this Agreement, the

other parties shall be entitled (in addition to any other remedy that may be

available to them, including monetary damages) to seek and obtain (i) a decree

or order of specific performance to enforce the observance and performance of

such covenant or obligation, and (ii) an injunction restraining such breach or

threatened breach.  The parties further

agree that neither the Company nor any other Person shall be required to

obtain, furnish or post any bond or similar instrument in connection with or as

a condition to obtaining any remedy referred to in this Section 11, and

irrevocably waive any rights they may have to require the obtaining, furnishing

or posting of any such bond or similar instrument.

12.          JURISDICTION;

VENUE

 

                                                (A)          Each party to this Agreement hereby

irrevocably consents to the exclusive jurisdiction of the Supreme Court of the

State of New York for the County of New York and/or United States District

Court for the Southern District of New York (collectively, the “New York

Courts” and each a “New York Court”) in connection with any and all claims

based upon or arising out of this Agreement or the matters or transactions

contemplated herein, and irrevocably agrees that all claims in respect of any

such matters or transactions may be heard in either of such New York Courts.

 

                                                (B)          Each party to this Agreement hereby

waives any objection to jurisdiction and venue of any such claim brought, or

action instituted, hereunder in any New York Court and further agrees not to

assert (i) any defense based on the lack of 

 

12

 

jurisdiction or venue in any New York

Court, or (ii) any defense of improper venue or inconvenient forum in any New

York Court.

 

                                                (C)          Each party to this Agreement hereby

waives any right of jurisdiction on account of the place of such party’s

residence, or domicile, or on account of such party’s place of incorporation,

formation or organization.

 

                                                (D)          Each party to this Agreement hereby

acknowledges and agrees that any forum other than a New York Court is an inconvenient

forum and that a suit brought by any party against any other party in any court

other than a New York Court should be transferred to a New York Court.

 

13.          SERVICE OF PROCESS; TEXTILE

INVESTMENT; WÜRZBURG

                                                (a)           Textile Investment hereby irrevocably

and unconditionally appoints Steven D. Dreyer, Esquire of Hall Dickler Kent

Goldstein & Wood, LLP, currently located at 909 Third Avenue, 27th

Floor, New York, New York 10022 (the “Process Agent”) as its agent to receive

on behalf of Textile Investment service of copies of the summons and complaint

and any other process which may be served in any action or proceeding within

the scope of Section 11 or 12 of this Agreement in any New York Court and

agrees promptly to appoint a successor Process Agent in the City of New York

(which appointment such successor Process Agent shall accept in writing) prior

to the termination for any reason of the appointment of the Process Agent (or

the termination of any successor Process Agent).  In any such action or proceeding in any New York Court, such

service may be made on Textile Investment by delivering a copy of such process

to Textile Investment in care of the Process Agent at the Process Agent’s above

address and by depositing a copy of such process in the mails (certified or

registered, if available), or by overnight courier, addressed to Textile

Investment at its address for notices in this Agreement (such service to be

effective upon receipt by the Process Agent, and the depositing of such service

in the mails (or delivery thereof to such overnight courier)).  Textile Investment hereby irrevocably and

unconditionally authorizes and directs the Process Agent to accept such service

on Textile Investment’s behalf.  As an

alternative method of service, Textile Investment hereby irrevocably and

unconditionally consents to the service of any and all process in any such

action or proceeding in any New York Court by mailing of copies of such process

to Textile Investment by mail (certified or registered, if available), or by

overnight courier, at its address for notices in this Agreement.  Textile Investment agrees that, to the

fullest extent permitted by applicable law, a final judgment in any such action

or proceeding in any New York Court shall be conclusive and may be enforced in

any other jurisdiction by suit on the judgment or in any other manner provided

by law.  Textile Investment represents

and warrants to the other parties to this Agreement that the Process Agent has

accepted its appointment as process agent for Textile Investment as herein

described, and Textile Investment covenants to give the other parties to this

Agreement prompt written notice of (x) any change in the name or address of the

Process Agent (or any successor Process Agent) and (y) the name and address of

any successor Process Agent.

 

13

 

                                                (b)           Würzburg hereby irrevocably and

unconditionally appoints the Process Agent as its agent to receive on behalf of

Würzburg service of copies of the summons and complaint and any other process

which may be served in any action or proceeding within the scope of Section 11

or 12 of this Agreement in any New York Court and agrees promptly to appoint a

successor Process Agent in the City of New York (which appointment such

successor Process Agent shall accept in writing) prior to the termination for

any reason of the appointment of the Process Agent (or the termination of any

successor Process Agent).  In any such

action or proceeding in any New York Court, such service may be made on

Würzburg by delivering a copy of such process to Würzburg in care of the

Process Agent at the Process Agent’s address and by depositing a copy of such

process in the mails (certified or registered, if available), or by overnight

courier, addressed to Würzburg at its address for notices in this Agreement

(such service to be effective upon receipt by the Process Agent, and the

depositing of such service in the mails (or delivery thereof to such overnight

courier)).  Würzburg hereby irrevocably

and unconditionally authorizes and directs the Process Agent to accept such

service on Würzburg’s behalf.  As an

alternative method of service, Würzburg hereby irrevocably and unconditionally

consents to the service of any and all process in any such action or proceeding

in any New York Court by mailing of copies of such process to Würzburg by mail

(certified or registered, if available), or by overnight courier, at its

address for notices in this Agreement. 

Würzburg agrees that, to the fullest extent permitted by applicable law,

a final judgment in any such action or proceeding in any New York Court shall

be conclusive and may be enforced in any other jurisdiction by suit on the

judgment or in any other manner provided by law.  Würzburg represents and warrants to the other parties to this

Agreement that the Process Agent has accepted its appointment as process agent

for Würzburg as herein described, and Würzburg covenants to give the other

parties to this Agreement prompt written notice of (x) any change in the name

or address of the Process Agent (or any successor Process Agent) and (y) the

name and address of any successor Process Agent.

 

                                                (c)           The Company hereby irrevocably and

unconditionally appoints its registered agent, as specified in its charter, as

amended from time to time (the “Company Registered Agent”), as its agent to

receive on behalf of the Company service of copies of the summons and complaint

and any other process which may be served in any action or proceeding within

the scope of Section 11 or 12 of this Agreement in any New York Court.  In any such action or proceeding in any such

New York Court, such service may be made on the Company by delivering a copy of

such process to the Company in care of the Company Registered Agent at the Company

Registered Agent’s address and by depositing a copy of such process in the

mails (certified or registered, if available), or by overnight courier,

addressed to the Company at its address for notices in this Agreement (such

service to be effective upon receipt by the Company Registered Agent, and the

depositing of such service in the mails (or delivery thereof to such overnight

courier)).  The Company hereby

irrevocably and unconditionally authorizes and directs the Company Registered

Agent to accept such service on the Company’s behalf.  As an alternative method of service, the Company hereby

irrevocably and unconditionally consents to the service of any and all process

in any such action or proceeding in any New York Court by 

 

14

 

mailing of copies of such process to

the Company by mail (certified or registered, if available), or by overnight

courier, at its address for notices in this Agreement.  The Company agrees that, to the fullest

extent permitted by applicable law, a final judgment in any such action or

proceeding in any New York Court shall be conclusive and may be enforced in any

other jurisdiction by suit on the judgment or in any other manner provided by

law.  The Company represents and warrants

to the other parties to this Agreement that the Company Registered Agent has

accepted its appointment as registered agent for the Company as herein

described.

 

14.          WAIVER OF IMMUNITY

Each

party to this Agreement represents, warrants, and agrees that to the extent

such party may have or hereafter acquire any right of sovereign or other

immunity from suit, court jurisdiction, attachment in aid of execution of

judgment, set-off, execution or other legal process, such party hereby

irrevocably and unconditionally waives, to the fullest extent permitted by law,

such right of immunity with respect to its obligations hereunder and with

respect to legal proceedings to enforce the same and to enforce any judgment

rendered in such proceedings.

15.           ENTIRE

AGREEMENT

This Agreement supersedes all agreements as to the subject matter

hereof among the Stockholders and the Company including in each case amendments

thereto, previously executed by the Stockholders and the Company, including

without limitation the Company’s Shareholders’ Agreement dated August 9,

1999.  This Agreement sets forth all of

the provisions, covenants, agreements, conditions and undertakings between the

parties hereto with respect to the subject matter hereof, and supersedes all

prior and contemporaneous agreements and understandings express or implied,

oral or written as to the subject matter hereof.

16.           NOTICES

Unless otherwise specified herein, all notices, requests, demands and

other communications to be given under this Agreement shall be in writing and

shall be deemed given if (i) delivered in person, or by United States mail,

certified or registered, with return receipt requested, (ii) if sent by telex

or facsimile transmission, with a copy mailed on the same day in the manner

provided in (i) above, when transmitted and receipt is confirmed by telephone,

or (iii) if otherwise actually delivered:

	

  TO THE COMPANY:

  	

   

  	

  3840 Bank Street,

  Baltimore, MD 21224-2522;

  
	

   

  	

   

  	

   

  
	

  TO ANY STOCKHOLDER:

  	

   

  	

  As the name and address

  of such Stockholder appears on the records of the Company;

  

 

or at such other address

as may have been furnished by such person in writing to the other parties.  Any such notice, demand or other

communication shall be deemed to have been given on the date actually delivered

or as of the date mailed, as the case may be.

 

15

 

17.           TERM

OF AGREEMENT

This Agreement

shall be effective until the earliest to occur of (i) the Stockholders becoming

the Beneficial Owners of all of the Equity Securities of the Company; (ii)

liquidation or dissolution of the Company; or (iii) November 14, 2004.

 

16

 

IN

WITNESS WHEREOF, the parties hereto have executed and sealed this Agreement as

of the day and year first above written.

 

	

   

  	

  I.C. ISAACS &

  COMPANY, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Robert J. Arnot, Chief

  Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  STOCKHOLDERS:

  
	

   

  	

   

  	

   

  
	

   

  	

  TEXTILE INVESTMENT

  INTERNATIONAL S.A.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

  René Faltz

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Tom Felgen

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  WÜRZBURG HOLDING S.A.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

  René Faltz

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Tom Felgen

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
								

 

17

 

SCHEDULE A

 

 

	

  Stockholder

  	

   

  	

  No. of

  Shares of Common Stock

  	

   

  
	

  Würzburg Holding S.A.

  	

   

  	

  500,000

  	

   

  
	

  Textile Investment International S.A.

  	

   

  	

  0

  	

   

  

 

 

18

 

EXHIBIT A

 

Budget

 

 

 

EXHIBIT B

 

Instrument

of Accession

 

 

The undersigned,

                         

, in order to become the owner or holder of

                     

shares of Common Stock, $.0001 par value per share (the “Shares”), of

I.C. Isaacs & Company, Inc., a Delaware corporation, hereby agrees to

become a Stockholder under, and a party to, that certain Stockholders’

Agreement, dated as of

            

   , 2002 (the “Stockholder  Agreement”), a copy of

which is attached hereto.  This

Instrument of Accession shall become a part of such Stockholders’ Agreement.

                Executed as of the date set

forth below under the laws of the State of Delaware.

 

 

 

	

   

  	

  Signature:

  	

   

  
	

   

  	

  Address:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Date:

  	

   

  

 

	

  Accepted:

  
	

   

  
	

  I.C. ISAACS & COMPANY, INC.

  
	

   

  	

   

  
	

  By:

  	

   

  
	

   

  	

   

  
	

  Date:

  	

   

  

 

2

 

EXHIBIT E

 

Second Certificate of Amendment to

 

Certificate of Designation, Number, Voting Powers,

Preferences and Rights of the Series of the Preferred Stock

of

 

I.C. Isaacs & Company, Inc.

 

Designated as Series A Convertible Preferred Stock

 

 

I.C.

Isaacs & Company, Inc. (the “Corporation”), a corporation organized and

existing under and by virtue of the General Corporation Law of the State of

Delaware (the “DGCL”), does hereby certify as follows:

FIRST:

   The name of the Corporation is I.C.

Isaacs & Company, Inc.

SECOND:  The Corporation desires to amend its Amended

and Restated Certificate of Incorporation (the “Certificate of Incorporation”)

by amending certain provisions contained in the Certificate of Designation

relating to the Series A Convertible Preferred Stock of the Corporation, as

filed with the Secretary of State of the State of Delaware (the “Secretary”)

on November 5, 1999, as amended pursuant to a Certificate of Amendment filed

with the Secretary on March 30, 2001 (as so amended, the “Certificate of Designation”).

THIRD:  The following resolutions were duly adopted

by the Board of Directors of the Corporation on

                        ,

2002, in accordance with the provisions of Sections 151 and 242 of the DGCL and

pursuant to the authority conferred on the Board of Directors of the

Corporation by the Certificate of Incorporation.  Pursuant to such resolutions, the Certificate of Designation is

hereby amended, from and after the date of acceptance of this Certificate of

Amendment by the Secretary, as follows:

WHEREAS,

under Article Fourth of the Amended and Restated Certificate of Incorporation

(the “Certificate

of Incorporation”) of the Corporation, the Board of Directors of the

Corporation is permitted to authorize the issuance of one or more classes of

its preferred stock with the designations, preferences, and relative

participating, optional, or other rights and qualifications, limitations, or

restrictions as may be fixed by the Board of Directors, and to amend the same;

and

WHEREAS,

pursuant to the authority conferred on the Board of Directors of the

Corporation by the Certificate of Incorporation and in the provisions of

Section 151 of the General Corporation Law of the State of Delaware, (i) the

Corporation duly adopted on November 1, 1999 a resolution providing for the

establishment and issuance of a series of preferred stock of the Corporation,

par value $0.0001 per share, which was designated “Series A Convertible

Preferred Stock” (the “Preferred Stock”) and which consisted of

3,300,000 shares, and had such preferences and rights as are set forth in the

Certificate of Designation filed with the Secretary of State of the State of

Delaware (the “Secretary”) on November 5, 1999 (the “Original Certificate of Designation”),

and (ii) 

 

 

the

Corporation duly adopted on March 23, 2001 a resolution providing for an

amendment to the Original Certificate of Designation to amend the preferences

and rights of the Preferred Stock as set forth in the Certificate of Amendment

filed with the Secretary on March 30, 2001 (as so amended, the “Certificate

of Designation”); and

WHEREAS,

the directors deem it fair, advisable and in the best interests of the

Corporation and its stockholders to amend the terms of the Preferred Stock as

set forth in the Certificate of Designation as follows:

RESOLVED,

that Resolution Paragraphs (2) through (3) of the Certificate of Designation

shall be deleted in their entirety and replaced with the following Paragraphs

(2) through (3):

(2)           Until and including December 31, 2006

(the “Conversion

Period”), the shares of Preferred Stock shall be convertible, in

whole as to all of such shares but not in part, at the option of the holders

thereof, into fully paid and nonassessable shares of common stock of the

Corporation, par value $0.0001 per share (the “Common Stock”), at a

conversion ratio of 1:1 (the “Conversion Ratio”).  The shares of Common Stock issuable upon

conversion of the shares of Preferred Stock, when such shares of Common Stock

shall be issued in accordance with the terms thereof, are hereby declared to be

and shall be duly authorized, validly issued, fully paid and nonassessable

shares of Common Stock held by the holders thereof.

(3)                                  a.             To convert shares of Preferred

Stock into shares of Common Stock pursuant to Paragraph (2) above, the holders

thereof shall surrender the certificate or certificates therefor, duly

endorsed, at the office of the Corporation or to the transfer agent for the

Preferred Stock or the Common Stock, together with written notice to the

Corporation stating that it elects to convert the same and setting forth the

name or names in which the certificate or certificates for the shares of Common

Stock should be issued.

b.             No

fractional shares of Common Stock shall be issued upon conversion of shares of

Preferred Stock.  Any fractional shares

of Common Stock resulting from conversion of the Preferred Stock shall be

rounded down to the nearest whole share.

c.             The

Corporation shall, as soon as practicable after the surrender of the

certificate or certificates evidencing shares of Preferred Stock for conversion

at the office of the Corporation or the transfer agent for the Preferred Stock

or the Common Stock, issue to each holder of such shares, or its nominee or

nominees, a certificate or certificates evidencing the number of shares of

Common Stock (and any other securities and property) to which it shall be

entitled.  Such conversion shall be

deemed to have been 

 

2

 

made

immediately prior to the close of business on the date of such surrender of the

shares of Preferred Stock to be converted, and the person or persons entitled

to receive the shares of Common Stock issuable upon such conversion shall be

treated for all purposes as the record holder or holders of such shares of

Common Stock at such date and shall, with respect to such shares, have only

those rights of a holder of Common Stock of the Corporation.  At the time the conversion is deemed to have

occurred, the rights of the holders of the shares of Preferred Stock shall

cease except for the right to receive such shares of Common Stock.

d.             If outstanding shares of the Common

Stock shall be subdivided into a greater number of shares, or combined into a

smaller number of shares, or a dividend or other distribution in shares of

Common Stock or other securities of the Corporation convertible into or

exchangeable for shares of Common Stock shall be paid in respect of the

outstanding shares Common Stock (in which latter event the number of shares of

Common Stock issuable upon the conversion or exchange of such securities shall

be deemed to have been distributed), the Conversion Ratio in effect immediately

prior to such subdivision or combination or at the record date of such dividend

or distribution shall, simultaneously with the effectiveness of such

subdivision or combination or immediately after the record date of such

dividend or distribution, be proportionately adjusted so that the holders of

shares of Preferred Stock shall have the right to convert such shares of

Preferred Stock into the number of shares of Common Stock which they would have

owned after the event had such shares of Preferred Stock been converted

immediately before the happening of such event.  Any adjustment to the Conversion Ratio under this Paragraph (3)d.

shall become effective at the close of business on the date the subdivision,

combination, dividend or distribution referred to herein becomes effective.

e.             In the event of any capital

reorganization, any reclassification of the Common Stock (other than a change

in par value), or the consolidation or merger of the Corporation with or into

another Person (collectively referred to hereinafter as a “Reorganization”), the holders

of the Preferred Stock shall thereafter be entitled to receive, and provision

shall be made therefor in any agreement relating to a Reorganization, upon

conversion of the Preferred Stock pursuant to Paragraph (2) above, the kind and

number of shares of Common Stock or other securities or property (including

cash) of the Corporation, or other corporation resulting from such

consolidation or surviving such 

 

3

 

merger, to which a

holder of the number of shares of the Common Stock of the Corporation which

such holder would have owned had such shares of Preferred Stock been converted

immediately before such Reorganization (based on the Conversion Ratio then in

effect) would have been entitled to receive with respect to such

Reorganization; and in any such case appropriate adjustment shall be made in

the application of the provisions herein set forth with respect to the rights

and interests thereafter of the holders of the Preferred Stock, to the end that

the provisions set forth herein (including the specified changes and other

adjustments to the Conversion Ratio) shall thereafter be applicable, as nearly

as reasonably practicable, in relation to any shares, other securities or

property thereafter receivable upon conversion of the Preferred Stock.  The provisions of this Paragraph (3)e. shall

similarly apply to successive Reorganizations.

f.              The Corporation shall at all times

reserve and keep available out of its authorized but unissued shares of Common

Stock, solely for the purpose of effecting the conversion of the Preferred

Stock, such number of its shares of Common Stock as shall from time to time be

sufficient to effect a conversion of all outstanding shares of the Preferred

Stock, and if at any time the number of authorized but unissued shares of

Common Stock shall not be sufficient to effect the conversion of all then

outstanding shares of the Preferred Stock, the Corporation shall promptly seek

such corporate action as may, in the opinion of its counsel, be necessary to

increase its authorized but unissued shares of Common Stock to such number of

shares as shall be sufficient for such purpose.  In the event of the consolidation or merger of the Corporation

with another corporation where the Corporation is not the surviving

corporation, effective provisions shall be made in the certificate or articles

of incorporation, merger, or consolidation, or otherwise of the surviving

corporation so that such corporation will at all times reserve and keep

available a sufficient number of shares of common stock or other securities or

property to provide for the conversion of the Preferred Stock in accordance

with the provisions of Paragraph (3) hereof.

g.             No conversion rights shall attach

to the Preferred Stock after the expiration of the Conversion Period.  Upon liquidation of the Corporation, the

right of conversion shall terminate as of the close of business on the day

fixed for payment of the liquidation preference payable with respect to the

Preferred Stock pursuant to Paragraph (4) hereof.

 

4

 

IN

WITNESS WHEREOF, the Corporation has caused this certificate to be signed by

Robert J. Arnot, its President and Chief Executive Officer, this

             day of

                           ,

2002.

 

	

   

  	

  I.C. Isaacs &

  Company, Inc.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Robert J. Arnot,

  President and CEO

  

 

5

 

EXHIBIT F-1

 

NEITHER THIS WARRANT NOR

THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF, HAVE BEEN REGISTERED UNDER

THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE,

AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE

DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER

SUCH LAWS.

 

No. 1

 

 

I. C. ISAACS & COMPANY, INC.

 

Common Stock Purchase Warrant

 

 

                I.C. Isaacs & Company, Inc.,

a Delaware corporation (the “Company”), hereby certifies that, for value received,

Textile Investment International S.A. (the “Holder”), is entitled, subject to the terms set forth

below, to purchase from the Company at any time after the date hereof (the “Eligibility Date”)

and before 5:00 P.M., New York time, on the Expiration Date (as hereinafter

defined), Three Hundred Thousand (300,000) fully paid and nonassessable shares

of Common Stock (as hereinafter defined) at a price of $0.75 per share (the “Exercise Price”).  The number of shares of Common Stock and the

Exercise Price are subject to adjustment as provided herein.

 

                As used herein, the following

terms, unless the context otherwise requires, have the following respective

meanings for purposes of this Warrant:

 

(a)                                  “Affiliate” means, with respect to a particular Person,

any other Person, whether now or hereafter existing, which controls, is

controlled by, or is under common control with, such Person.  For this purpose, “control” shall mean

ownership of 50% or more of the total combined voting power or value of all

classes of stock or interests of the Person.

 

(b)                                 “Company” means the Company and any Person that shall

succeed or otherwise assume the obligations of the Company hereunder.

 

(c)                                  “Common Stock” means (i) the Company’s common stock,

$0.0001 par value per share, and (ii) any other securities or other property

into which or for which such common stock may be converted or exchanged

pursuant to a plan of recapitalization, reorganization, merger, sale of assets

or other similar corporate rearrangement.

 

(d)                                 “Expiration Date” means December 31, 2011.

 

 

(e)                                  “Fair Market Value” of a share of Common Stock on the

date of determination shall have the following meaning:

 

(i)                                     In the event that, as of the date of

determination, the Company is a Reporting Company, then Fair Market Value of

the Common Stock shall mean the last reported sale price per share of Common

Stock on such date or, in case no such sale takes place on such date, the

average closing bid and asked prices, in either case as reported in the

principal consolidated transaction reporting system with respect to securities

listed or admitted to trading on a national securities exchange or included for

quotation on the Nasdaq-National Market or the Nasdaq Small Cap Market, as

applicable, or if the Common Stock is not so listed or admitted to trading or

included for quotation, the average high bid and low asked prices in the OTC

Bulletin Board (or other over-the-counter market regulated by the National

Association of Securities Dealers, Inc.) or, if such system is no longer in

use, the principal other automated quotations system that may then be in use

or, if the Common Stock is not quoted by any such organization, the average of

the closing bid and asked prices, as furnished by a professional market maker

making a market in the Common Stock as selected in good faith by the Board of

Directors of the Company or by such other source or sources as shall be

selected in good faith by the Board of Directors of the Company.  If the date of determination is not a

trading day, the determination shall be made as of the next preceding trading

day.  As used herein, the term “trading day”

shall mean a day on which public trading of securities occurs and is reported

in the principal consolidated reporting system referred to above, or if the

Common Stock is not listed or admitted to trading on a national securities

exchange or included for quotation on the Nasdaq-National Market or Nasdaq

Small Cap Market, any business day.

(ii)                                  If, as of the date of the determination

of Fair Market Value, the Company is not a Reporting Company, then the Fair

Market Value shall be the appraised fair market value as of such date, as

determined by an independent appraiser of recognized standing and appraisal

method selected by the Board of Directors of the Company.

 

(f)                                    “Person” means a natural person or any association, corporation, general

partnership, limited partnership or limited liability company.

 

(g)                                 “Reporting Company”

means a company the

common stock of which is registered under Section 12 of the Securities Exchange

Act of 1934, as amended.

 

                1.             Exercise of Warrant.  The Holder may exercise this Warrant at any time and from time to

time after the date hereof until 5:00 P.M., New York time, on the Expiration

Date, 

 

2

 

provided however,

that if such day is a day on which banking institutions in the State of New

York are authorized by law to close, then on the next succeeding day that shall

not be such a day.

(a)           Full Exercise.  This Warrant may be exercised by the Holder

by surrender of this Warrant, with the form of subscription at the end hereof

duly executed by the Holder to the Company at its principal office, accompanied

by payment, in cash or by certified or official bank check payable to the order

of the Company, in the amount obtained by multiplying the number of shares of

Common Stock for which this Warrant is then exercisable by the Exercise Price.

 

(b)           Partial

Exercise.  This Warrant may be

exercised in part by surrender of the Warrant in the manner and at the place

provided in Section 1(a) except that the amount payable by the Holder on such

partial exercise shall be the amount obtained by multiplying the number of shares

of Common Stock designated by the Holder in the subscription at the end hereof

by the Exercise Price.  Upon any such

partial exercise, the Company at its expense will forthwith issue and deliver

to or upon the order of the Holder a new warrant or warrants of like tenor, in

the name of the Holder may request, calling in the aggregate on the face or

faces thereof for the number of shares of Common Stock for which such warrant

or warrants may still be exercised.

 

(c)           Exercise by Exchange of Warrant.  Notwithstanding the provisions of Subsection

(a) above, the exercise price may be paid at the Holder’s election by surrender

of all or a portion of the Warrant at any time or from time to time prior to

its expiration (“Net Issuance”).  If the Holder elects the Net Issuance

method, the Company will, as promptly as practicable, issue certificates

representing shares of its Common Stock to the Holder hereof in accordance with

the following formula:

 

X

=  (P)(A-B)

      A

Where:                                                         X = the number of shares of Common Stock

to be issued to the Holder for the portion of the Warrant being exercised.

P = the number of

shares of Common Stock for which this Warrant is requested to be exercised.

A = the Fair

Market Value of one (1) share of the Company’s Common Stock as of the date of

such exercise.

B = the Exercise

Price.

Such exchange

shall be effective upon the date of receipt by the Company of the original

Warrant surrendered for cancellation and a written request from the Holder that

the exchange pursuant to this section be made, or at such later date as may be

specified in such request.  No

fractional shares arising out of the above formula for determining the number

of shares issuable in such exchange shall be issued, and the Company shall in

lieu thereof make payment to the Holder of 

 

3

 

cash in the amount

of such fraction multiplied by the then Fair Market Value of such securities on

the date of the exchange.

 

                2.             Delivery of Stock Certificates, on Exercise.  As soon as practicable after the exercise of

this Warrant in full or in part, and in any event within five (5) business days

thereafter, the Company, at its expense (including the payment by it of any

applicable issue taxes), will cause to be issued in the name of and delivered

to the Holder, a certificate or certificates for the number of fully paid and

non-assessable shares of Common Stock to which the Holder shall be entitled on

such exercise, plus, any cash in lieu of any fractional share to which the

Holder would otherwise be entitled (calculated in accordance with Section 1

(c), together with any other stock or other securities and property (including

cash, where applicable) to which the Holder is entitled upon such exercise

pursuant to Section 1 or otherwise.

 

                3.             Adjustment for Dividends in Other Stock, Property,

Reclassification.  In case at any

time or from time to time, the holders of Common Stock shall have received, or

shall have become entitled to receive (on or after the record date fixed

therefor), without payment therefor,

 

(a)                                  other or additional stock or other

securities or property (other than cash) by way of dividend, or

 

(b)                                 any cash (excluding cash dividends

payable solely out of earnings or earned surplus of the Company), or

 

(c)                                  other or additional stock or other

securities or property (including cash) by way of spin-off, split-up,

reclassification, recapitalization, combination of shares or similar corporate

rearrangement,

 

other than

additional shares of Common Stock issued as a stock dividend or in a

stock-split (adjustments in respect of which are provided for in Section 5

hereof), then and in each such case the Holder, upon the exercise hereof as

provided in Section 1 hereof, shall be entitled to receive the amount of stock

and other securities and property (including cash in the cases referred to in

subdivisions (b) and (c) of this Section 3) that Holder would hold on the date

of such exercise if on the date hereof had he been the holder of record of the

number of shares of Common Stock called for on the face of this Warrant and had

thereafter, during the period from the date hereof to and including the date of

such exercise, retained such shares and all such other or additional stock and

other securities and property (including cash in the cases referred to in

subdivisions (b) and (c) of this Section 3) receivable by him as aforesaid

during such period, giving effect to all adjustments called for during such

period by Sections 4 and 5.

 

                4.             Adjustment for Reorganization,

Consolidation, Merger.

 

(a)           General.  In case at any time or from time to time,

the Company shall (i) effect a reorganization, (ii) consolidate with or merge

into any other Person, or (iii) transfer all or substantially all of its

properties or assets to any other Person under any plan or arrangement

contemplating the dissolution of the Company, then, in each such case, except

as otherwise 

 

4

 

provided in

Section 4(c) hereof, Holder, upon the exercise hereof as provided in

Section 1 hereof, at any time after the consummation of such reorganization,

consolidation or merger or the effective date of such dissolution, as the case

may be, shall receive, in lieu of Common Stock issuable on such exercise prior

to such consummation or such effective date, the stock and other securities and

property (including cash) to which such holder would have been entitled upon

such consummation or in connection with such dissolution, as the case may be,

if such holder had so exercised this Warrant immediately prior thereto, all

subject to further adjustment thereafter as provided in Sections 3 and 5

hereof.

 

(b)           Dissolution.  In the event of any dissolution of the

Company following the transfer of all or substantially all of its properties or

assets, the Company, prior to such dissolution, shall at its expense deliver or

cause to be delivered the stock and other securities and property (including

cash, where applicable) receivable by the holders of this Warrant after the

effective date of such dissolution pursuant to this Section 4 to a bank or

trust company, as trustee for Holder.

 

(c)           Continuation

of Terms.  Except as otherwise

provided herein, upon any reorganization, consolidation, merger or transfer

(and any dissolution following any transfer) referred to in this Section 4,

this Warrant shall continue in full force and effect and the terms hereof shall

be applicable to the shares of stock and other securities and property

receivable on the exercise of this Warrant after the consummation of such

reorganization, consolidation or merger or the effective date of dissolution

following any such transfer, as the case may be, and shall be binding upon the

issuer of any such stock or other securities, including, in the case of any

such transfer, the Person acquiring all or substantially all of the properties

or assets of the Company, whether or not such Person shall have expressly

assumed the terms of this Warrant.

 

                5.             Adjustment for Extraordinary Events.  In the event that the Company shall (a)

issue additional shares of Common Stock as a dividend or other distribution on

outstanding Common Stock, (b) subdivide its outstanding shares of Common

Stock, or (c) combine its outstanding shares of Common Stock into a

smaller number of shares of Common Stock, then, in each such event, the

Exercise Price shall, simultaneously with the happening of such event, be

adjusted by multiplying the Exercise Price by a fraction, the numerator of

which shall be the number of shares of Common Stock outstanding immediately

prior to such event and the denominator of which shall be the number of shares

of Common Stock outstanding immediately after such event, and the product so

obtained shall thereafter be the Exercise Price then in effect.  The Exercise Price, as so adjusted, shall be

readjusted in the same manner upon the happening of any successive event or

events described in this Section 5.

 

                The holder of this Warrant shall

thereafter, on the exercise hereof as provided in Section 1 hereof, be entitled

to receive that number of shares of Common Stock determined by multiplying the

number of shares of Common Stock which would otherwise (but for the provisions

of this Section 5) be issuable on such exercise by a fraction, the

numerator of which is the Exercise Price that would otherwise (but for the

provisions of this Section  5) be in effect, and the denominator of which

is the Exercise Price in effect on the date of such exercise.

 

5

 

                6.             Reservation of Stock, etc., Issuable on Exercise of

Warrant.  The Company will at all

times reserve and keep available, solely for issuance and delivery on the

exercise of this Warrant, all shares of Common Stock from time to time issuable

on the exercise hereof.

 

                7.             Exchange of Warrant.  On surrender for exchange of this Warrant, properly endorsed, to

the Company, the Company at its expense will issue and deliver to or on the

order of the Holder thereof a new warrant or warrant of like tenor, in the name

of the Holder, calling in the aggregate on the face or faces thereof for the

number of shares of Common Stock for which this Warrant is then exercisable.

 

                8.             Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of

the loss, theft, destruction or mutilation of this Warrant and, in the case of

any such loss, theft or destruction of this Warrant, on delivery of an

indemnity agreement or security reasonably satisfactory in form and amount to

the Company or, in the case of any such mutilation, on surrender and

cancellation of such Warrant, the Company at its expense will execute and

deliver, in lieu thereof, a new warrant of like tenor.

 

                9.             Resale of Warrant or Securities.  Neither this Warrant nor the securities

issuable upon exercise of this Warrant have been registered under the

Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any

state.  Neither this Warrant nor such

securities when issued may be sold, transferred, pledged or hypothecated,

directly or indirectly, in whole or in part, in the absence of (i) an effective

registration statement for this Warrant or such securities, as the case may be,

under the Securities Act and such registration or qualification as may be

necessary under the securities laws of any state, or (ii) an opinion of counsel

reasonably satisfactory to the Company that such registration or qualification

is not required.  The Company shall

cause a certificate or certificates evidencing all or any of the securities

issued upon exercise of this Warrant prior to said registration and

qualification of such securities to bear the following legend: “The shares

evidenced by this certificate have not been registered under the Securities Act

of 1933, as amended, or under the securities laws of any state.  These shares may not be sold, transferred,

pledged, hypothecated or otherwise disposed of, directly or indirectly, in

whole or in part, in the absence of an effective registration statement under

the Securities Act of 1933, as amended, and such registration or qualification as

may be necessary under the securities laws of any state, or an opinion of

counsel reasonably satisfactory to the Company that such registration or

qualification is not required.”

 

                10.           Restrictions on Transfer.  In addition to the restrictions set forth in Section 9 above,

this Warrant shall not be transferred, pledged or hypothecated, directly or

indirectly, in whole or in part, by the Holder to any Person other than the

Company or an Affiliate of the Holder without the prior written consent of the

Company.  The Holder agrees that any of

the shares of Common Stock issued upon the exercise of this Warrant shall be

subject to the Stockholders’ Agreement by and between the Company and the

Holder dated                           ,

2002, as hereinafter amended (the “Stockholders’ Agreement”), which imposes certain stock

transfer and other restrictions on the holder of such shares as set forth in

the Stockholders’ Agreement.

 

6

 

                11.           Notices, Etc. 

All notices and other communications from the Company to the Holder of

this Warrant shall be mailed by first class registered or certified mail,

postage prepaid, at such address as may have been furnished to the Company in

writing by the Holder.

 

                12.           Governing Law. 

This Warrant shall be governed by, and construed in accordance with, the

laws of the State of Delaware.

 

                13.           Miscellaneous. 

The headings in this Warrant are for purposes of reference only, and

shall not limit or otherwise affect any of the terms hereof.  This Warrant is being executed as an

instrument under seal.  The invalidity

or unenforceability of any provision hereof shall in no way affect the validity

or enforceability of any other provision.

 

 

	

  Issue Date: 

                   

     , 2002

  	

  I.C. ISAACS & COMPANY,

  INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Robert J. Arnot,

  President

  

 

7

 

FORM OF

SUBSCRIPTION

(To be signed only

on exercise of Warrant)

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

 

                The undersigned Holder of the

attached Warrant hereby irrevocably elects to exercise this Warrant for, and to

purchase thereunder,

              

shares of Common Stock of I.C. Isaacs & Company, Inc. and [herewith makes

payment of $                 

therefor] [hereby elects to have such shares issued as a Net Issuance], and

requests that the certificates for such shares be issued in the name of, and

delivered to

                            ,

whose address is

                                            .

 

                Effective as of Holder’s

purchase of such shares of Common Stock of I.C. Isaacs & Company, Inc.

pursuant to the attached Warrant, Holder [and/or each person in whose name

certificates for shares of Common Stock of the Company are issued pursuant

hereto] agrees to be fully bound by, and be subject to, all of the covenants,

terms and conditions of the Company Stockholders’ Agreement dated

                       

, 2002 (which has been made available to the undersigned) as though an original

party thereto and agrees that he/she/it shall be deemed a “Stockholder” for all

purposes thereof.

 

	

   

  	

  [HOLDER]

  
	

   

  	

   

  
	

  Dated:

  	

   

  
	

   

  	

  (Signature must conform

  to name of holder as

  specified on the face of this Warrant)

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  (Address)

  
	

   

  	

   

  
	

   

  	

   

  
	

  Dated:

  	

  [Stockholder(s)]

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  (Address)

  

 

 

EXHIBIT F-2

 

NEITHER THIS WARRANT NOR

THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF, HAVE BEEN REGISTERED UNDER

THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE,

AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE

DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER

SUCH LAWS.

 

No. 2

 

 

I. C. ISAACS & COMPANY, INC.

 

Common Stock Purchase Warrant

 

 

                I.C. Isaacs & Company, Inc.,

a Delaware corporation (the “Company”), hereby certifies that, for value received,

Textile Investment International S.A. (the “Holder”), is entitled, subject to the terms set forth

below, to purchase from the Company at any time after the date hereof (the “Eligibility Date”)

and before 5:00 P.M., New York time, on the Expiration Date (as hereinafter

defined), Two Hundred Thousand (200,000) fully paid and nonassessable shares of

Common Stock (as hereinafter defined) at a price of $0.75 per share (the “Exercise Price”).  The number of shares of Common Stock and the

Exercise Price are subject to adjustment as provided herein.

 

                As used herein, the following

terms, unless the context otherwise requires, have the following respective

meanings for purposes of this Warrant:

 

(a)                                  “Affiliate” means, with respect to a particular Person,

any other Person, whether now or hereafter existing, which controls, is

controlled by, or is under common control with, such Person.  For this purpose, “control” shall mean

ownership of 50% or more of the total combined voting power or value of all

classes of stock or interests of the Person.

 

(b)                                 “Company” means the Company and any Person that shall

succeed or otherwise assume the obligations of the Company hereunder.

 

(c)                                  “Common Stock” means (i) the Company’s common stock,

$0.0001 par value per share, and (ii) any other securities or other property

into which or for which such common stock may be converted or exchanged

pursuant to a plan of recapitalization, reorganization, merger, sale of assets

or other similar corporate rearrangement.

 

(d)                                 “Expiration Date” means December 31, 2011.

 

 

(e)                                  “Fair Market Value” of a share of Common Stock on the

date of determination shall have the following meaning:

 

(i)                                     In the event that, as of the date of

determination, the Company is a Reporting Company, then Fair Market Value of

the Common Stock shall mean the last reported sale price per share of Common

Stock on such date or, in case no such sale takes place on such date, the

average closing bid and asked prices, in either case as reported in the

principal consolidated transaction reporting system with respect to securities

listed or admitted to trading on a national securities exchange or included for

quotation on the Nasdaq-National Market or the Nasdaq Small Cap Market, as

applicable, or if the Common Stock is not so listed or admitted to trading or

included for quotation, the average high bid and low asked prices in the OTC

Bulletin Board (or other over-the-counter market regulated by the National

Association of Securities Dealers, Inc.) or, if such system is no longer in

use, the principal other automated quotations system that may then be in use

or, if the Common Stock is not quoted by any such organization, the average of

the closing bid and asked prices, as furnished by a professional market maker

making a market in the Common Stock as selected in good faith by the Board of

Directors of the Company or by such other source or sources as shall be

selected in good faith by the Board of Directors of the Company.  If the date of determination is not a

trading day, the determination shall be made as of the next preceding trading

day.  As used herein, the term “trading

day” shall mean a day on which public trading of securities occurs and is

reported in the principal consolidated reporting system referred to above, or

if the Common Stock is not listed or admitted to trading on a national

securities exchange or included for quotation on the Nasdaq-National Market or

Nasdaq Small Cap Market, any business day.

(ii)                                  If, as of the date of the determination

of Fair Market Value, the Company is not a Reporting Company, then the Fair

Market Value shall be the appraised fair market value as of such date, as

determined by an independent appraiser of recognized standing and appraisal

method selected by the Board of Directors of the Company.

 

(f)                                    “Person” means a natural person or any association, corporation, general

partnership, limited partnership or limited liability company.

 

(g)                                 “Reporting Company”

means a company the

common stock of which is registered under Section 12 of the Securities Exchange

Act of 1934, as amended.

 

                1.             Exercise of Warrant.  The Holder may exercise this Warrant at any time and from time to

time after the date hereof until 5:00 P.M., New York time, on the Expiration

Date, 

 

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provided however,

that if such day is a day on which banking institutions in the State of New

York are authorized by law to close, then on the next succeeding day that shall

not be such a day.

(a)           Full Exercise.  This Warrant may be exercised by the Holder

by surrender of this Warrant, with the form of subscription at the end hereof

duly executed by the Holder to the Company at its principal office, accompanied

by payment, in cash or by certified or official bank check payable to the order

of the Company, in the amount obtained by multiplying the number of shares of

Common Stock for which this Warrant is then exercisable by the Exercise Price.

 

(b)           Partial

Exercise.  This Warrant may be

exercised in part by surrender of the Warrant in the manner and at the place

provided in Section 1(a) except that the amount payable by the Holder on such

partial exercise shall be the amount obtained by multiplying the number of

shares of Common Stock designated by the Holder in the subscription at the end

hereof by the Exercise Price.  Upon any

such partial exercise, the Company at its expense will forthwith issue and

deliver to or upon the order of the Holder a new warrant or warrants of like

tenor, in the name of the Holder may request, calling in the aggregate on the

face or faces thereof for the number of shares of Common Stock for which such

warrant or warrants may still be exercised.

 

(c)           Exercise by Exchange of Warrant.  Notwithstanding the provisions of Subsection

(a) above, the exercise price may be paid at the Holder’s election by surrender

of all or a portion of the Warrant at any time or from time to time prior to

its expiration (“Net Issuance”).  If the Holder elects the Net Issuance

method, the Company will, as promptly as practicable, issue certificates representing

shares of its Common Stock to the Holder hereof in accordance with the

following formula:

 

X

=  (P)(A-B)

      A

Where:                                                         X = the number of shares of Common Stock

to be issued to the Holder for the portion of the Warrant being exercised.

P = the number of

shares of Common Stock for which this Warrant is requested to be exercised.

A = the Fair

Market Value of one (1) share of the Company’s Common Stock as of the date of

such exercise.

B = the Exercise

Price.

Such exchange

shall be effective upon the date of receipt by the Company of the original

Warrant surrendered for cancellation and a written request from the Holder that

the exchange pursuant to this section be made, or at such later date as may be

specified in such request.  No

fractional shares arising out of the above formula for determining the number

of shares issuable in such exchange shall be issued, and the Company shall in

lieu thereof make payment to the Holder of 

 

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cash in the amount

of such fraction multiplied by the then Fair Market Value of such securities on

the date of the exchange.

 

                2.             Delivery of Stock Certificates, on Exercise.  As soon as practicable after the exercise of

this Warrant in full or in part, and in any event within five (5) business days

thereafter, the Company, at its expense (including the payment by it of any

applicable issue taxes), will cause to be issued in the name of and delivered

to the Holder, a certificate or certificates for the number of fully paid and

non-assessable shares of Common Stock to which the Holder shall be entitled on

such exercise, plus, any cash in lieu of any fractional share to which the

Holder would otherwise be entitled (calculated in accordance with Section 1

(c), together with any other stock or other securities and property (including

cash, where applicable) to which the Holder is entitled upon such exercise

pursuant to Section 1 or otherwise.

 

                3.             Adjustment for Dividends in Other Stock, Property,

Reclassification.  In case at any

time or from time to time, the holders of Common Stock shall have received, or

shall have become entitled to receive (on or after the record date fixed

therefor), without payment therefor,

 

(a)                                  other or additional stock or other

securities or property (other than cash) by way of dividend, or

 

(b)                                 any cash (excluding cash dividends

payable solely out of earnings or earned surplus of the Company), or

 

(c)                                  other or additional stock or other

securities or property (including cash) by way of spin-off, split-up, reclassification,

recapitalization, combination of shares or similar corporate rearrangement,

 

other than

additional shares of Common Stock issued as a stock dividend or in a

stock-split (adjustments in respect of which are provided for in Section 5

hereof), then and in each such case the Holder, upon the exercise hereof as

provided in Section 1 hereof, shall be entitled to receive the amount of stock

and other securities and property (including cash in the cases referred to in

subdivisions (b) and (c) of this Section 3) that Holder would hold on the date

of such exercise if on the date hereof had he been the holder of record of the

number of shares of Common Stock called for on the face of this Warrant and had

thereafter, during the period from the date hereof to and including the date of

such exercise, retained such shares and all such other or additional stock and

other securities and property (including cash in the cases referred to in

subdivisions (b) and (c) of this Section 3) receivable by him as aforesaid during

such period, giving effect to all adjustments called for during such period by

Sections 4 and 5.

 

                4.             Adjustment

for Reorganization, Consolidation, Merger.

 

(a)           General.  In case at any time or from time to time,

the Company shall (i) effect a reorganization, (ii) consolidate with or merge

into any other Person, or (iii) transfer all or substantially all of its

properties or assets to any other Person under any plan or arrangement

contemplating the dissolution of the Company, then, in each such case, except

as otherwise 

 

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provided in

Section 4(c) hereof, Holder, upon the exercise hereof as provided in

Section 1 hereof, at any time after the consummation of such reorganization,

consolidation or merger or the effective date of such dissolution, as the case

may be, shall receive, in lieu of Common Stock issuable on such exercise prior

to such consummation or such effective date, the stock and other securities and

property (including cash) to which such holder would have been entitled upon

such consummation or in connection with such dissolution, as the case may be,

if such holder had so exercised this Warrant immediately prior thereto, all

subject to further adjustment thereafter as provided in Sections 3 and 5

hereof.

 

(b)           Dissolution.

In the event of any dissolution of the Company following the transfer of all or

substantially all of its properties or assets, the Company, prior to such

dissolution, shall at its expense deliver or cause to be delivered the stock

and other securities and property (including cash, where applicable) receivable

by the holders of this Warrant after the effective date of such dissolution

pursuant to this Section 4 to a bank or trust company, as trustee for Holder.

 

(c)           Continuation

of Terms.  Except as otherwise

provided herein, upon any reorganization, consolidation, merger or transfer

(and any dissolution following any transfer) referred to in this Section 4,

this Warrant shall continue in full force and effect and the terms hereof shall

be applicable to the shares of stock and other securities and property

receivable on the exercise of this Warrant after the consummation of such

reorganization, consolidation or merger or the effective date of dissolution

following any such transfer, as the case may be, and shall be binding upon the

issuer of any such stock or other securities, including, in the case of any

such transfer, the Person acquiring all or substantially all of the properties

or assets of the Company, whether or not such Person shall have expressly

assumed the terms of this Warrant.

 

                5.             Adjustment for Extraordinary Events.  In the event that the Company shall (a)

issue additional shares of Common Stock as a dividend or other distribution on

outstanding Common Stock, (b) subdivide its outstanding shares of Common

Stock, or (c) combine its outstanding shares of Common Stock into a

smaller number of shares of Common Stock, then, in each such event, the

Exercise Price shall, simultaneously with the happening of such event, be adjusted

by multiplying the Exercise Price by a fraction, the numerator of which shall

be the number of shares of Common Stock outstanding immediately prior to such

event and the denominator of which shall be the number of shares of Common

Stock outstanding immediately after such event, and the product so obtained

shall thereafter be the Exercise Price then in effect.  The Exercise Price, as so adjusted, shall be

readjusted in the same manner upon the happening of any successive event or

events described in this Section 5.

 

                The holder of this Warrant shall

thereafter, on the exercise hereof as provided in Section 1 hereof, be entitled

to receive that number of shares of Common Stock determined by multiplying the

number of shares of Common Stock which would otherwise (but for the provisions

of this Section 5) be issuable on such exercise by a fraction, the

numerator of which is the Exercise Price that would otherwise (but for the

provisions of this Section  5) be in effect, and the denominator of which

is the Exercise Price in effect on the date of such exercise.

 

5

 

                6.             Reservation of Stock, etc., Issuable on Exercise of

Warrant.  The Company will at all

times reserve and keep available, solely for issuance and delivery on the

exercise of this Warrant, all shares of Common Stock from time to time issuable

on the exercise hereof.

 

                7.             Exchange of Warrant.  On surrender for exchange of this Warrant, properly endorsed, to

the Company, the Company at its expense will issue and deliver to or on the

order of the Holder thereof a new warrant or warrant of like tenor, in the name

of the Holder, calling in the aggregate on the face or faces thereof for the

number of shares of Common Stock for which this Warrant is then exercisable.

 

                8.             Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of

the loss, theft, destruction or mutilation of this Warrant and, in the case of

any such loss, theft or destruction of this Warrant, on delivery of an indemnity

agreement or security reasonably satisfactory in form and amount to the Company

or, in the case of any such mutilation, on surrender and cancellation of such

Warrant, the Company at its expense will execute and deliver, in lieu thereof,

a new warrant of like tenor.

 

                9.             Resale of Warrant or Securities.  Neither this Warrant nor the securities

issuable upon exercise of this Warrant have been registered under the

Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any

state.  Neither this Warrant nor such

securities when issued may be sold, transferred, pledged or hypothecated,

directly or indirectly, in whole or in part, in the absence of (i) an effective

registration statement for this Warrant or such securities, as the case may be,

under the Securities Act and such registration or qualification as may be

necessary under the securities laws of any state, or (ii) an opinion of counsel

reasonably satisfactory to the Company that such registration or qualification

is not required.  The Company shall

cause a certificate or certificates evidencing all or any of the securities

issued upon exercise of this Warrant prior to said registration and

qualification of such securities to bear the following legend: “The shares evidenced

by this certificate have not been registered under the Securities Act of 1933,

as amended, or under the securities laws of any state.  These shares may not be sold, transferred,

pledged, hypothecated or otherwise disposed of, directly or indirectly, in

whole or in part, in the absence of an effective registration statement under

the Securities Act of 1933, as amended, and such registration or qualification

as may be necessary under the securities laws of any state, or an opinion of

counsel reasonably satisfactory to the Company that such registration or

qualification is not required.”

 

                10.           Restrictions on Transfer.  In addition to the restrictions set forth in Section 9 above,

this Warrant shall not be transferred, pledged or hypothecated, directly or

indirectly, in whole or in part, by the Holder to any Person other than the

Company or an Affiliate of the Holder without the prior written consent of the

Company.  The Holder agrees that any of

the shares of Common Stock issued upon the exercise of this Warrant shall be

subject to the Stockholders’ Agreement by and between the Company and the

Holder dated

                    ,

2002, as hereinafter amended (the “Stockholders’ Agreement”), which imposes certain stock

transfer and other restrictions on the holder of such shares as set forth in

the Stockholders’ Agreement.

 

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                11.           Notices, Etc. 

All notices and other communications from the Company to the Holder of

this Warrant shall be mailed by first class registered or certified mail,

postage prepaid, at such address as may have been furnished to the Company in

writing by the Holder.

 

                12.           Governing Law. 

This Warrant shall be governed by, and construed in accordance with, the

laws of the State of Delaware.

 

                13.           Miscellaneous. 

The headings in this Warrant are for purposes of reference only, and

shall not limit or otherwise affect any of the terms hereof.  This Warrant is being executed as an instrument

under seal.  The invalidity or

unenforceability of any provision hereof shall in no way affect the validity or

enforceability of any other provision.

 

 

	

  Issue Date: 

                              ,

  2002

  	

  I.C. ISAACS &

  COMPANY, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Robert J. Arnot,

  President

  

 

7

 

FORM OF

SUBSCRIPTION

(To be signed only

on exercise of Warrant)

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

 

                The undersigned Holder of the

attached Warrant hereby irrevocably elects to exercise this Warrant for, and to

purchase thereunder,

           shares of Common

Stock of I.C. Isaacs & Company, Inc. and [herewith makes payment of

$               

therefor] [hereby elects to have such shares issued as a Net Issuance], and

requests that the certificates for such shares be issued in the name of, and delivered

to

                                  ,

whose address is                                                      .

 

                Effective as of Holder’s

purchase of such shares of Common Stock of I.C. Isaacs & Company, Inc.

pursuant to the attached Warrant, Holder [and/or each person in whose name

certificates for shares of Common Stock of the Company are issued pursuant

hereto] agrees to be fully bound by, and be subject to, all of the covenants,

terms and conditions of the Company Stockholders’ Agreement dated                          ,

2002 (which has been made available to the undersigned) as though an original

party thereto and agrees that he/she/it shall be deemed a “Stockholder” for all

purposes thereof.

 

 

	

   

  	

  [HOLDER]

  
	

   

  	

   

  
	

  Dated:

  	

   

  
	

   

  	

  (Signature must conform

  to name of holder as

  specified on the face of this Warrant)

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  (Address)

  
	

   

  	

   

  
	

   

  	

   

  
	

  Dated:

  	

  [Stockholder(s)]

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  (Address)

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