Document:

EXHIBIT 4.03

 

 

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, 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 

 

 

2

 

                                                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 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 

 

 

3

 

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

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.

 

 

 

4

 

                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 October

3, 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.

 

                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 

 

 

 

5

 

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: September 18, 2002

  	

  I.C. ISAACS & COMPANY, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Robert

  J. Arnot

  
	

   

  	

   

  	

  Robert J. Arnot, President

  
	

   

  	

   

  	

   

  

 

 

 

 

6

 

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)

  
	

   

  	

   

  

 

 

 

7EXHIBIT 10.101

 

I.C. ISAACS & COMPANY, INC.

STOCKHOLDERS’ AGREEMENT

 

                This

STOCKHOLDERS’ AGREEMENT (the “Agreement”) dated October 3, 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.

 

                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

 

2

 

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.

 

                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.

 

3

 

 

                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 21, 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.

 

                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.

 

4

 

                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 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.

 

 

 

5

 

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 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

 

6

 

                                                                (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 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

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);

 

7

 

                                                                                                (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.

 

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 October 3, 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.

 

8

 

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 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.

 

9

 

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

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.

 

10

 

(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 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.

 

11

 

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.

 

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.

 

12

 

                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:

  	

  /s/ Robert

  J. Arnot

  
	

   

  	

   

  	

  Robert J. Arnot, Chief Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  STOCKHOLDERS:

  
	

   

  	

   

  
	

   

  	

  TEXTILE INVESTMENT INTERNATIONAL S.A.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ René

  Faltz

  
	

   

  	

   

  	

  Name: René Faltz

  Title: Managing Director

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Tom

  Felgen

  
	

   

  	

   

  	

  Name: Tom Felgen

  Title: Managing Director

  
	

   

  	

   

  	

   

  
	

   

  	

  WÜRZBURG HOLDING S.A.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ René

  Faltz

  
	

   

  	

   

  	

  Name: René Faltz

  Title: Managing Director

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Tom

  Felgen

  
	

   

  	

   

  	

  Name: Tom Felgen

  Title: Managing Director

  
	

   

  	

   

  	

   

  

 

 

13

 

SCHEDULE A

 

	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Stockholder

  	

   

  	

  No. of Shares of  

  Common Stock

  
	

  Würzburg Holding S.A.

  	

   

  	

  500,000

  
	

  Textile Investment

  International S.A.

  	

   

  	

  0

  

 

 

14

 

EXHIBIT A

 

Budget

 

 

 

 

 

 

 

15

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