Document:

Exhibit

10.9

AMENDMENT NO. 2 TO

LOAN AGREEMENT

This AMENDMENT NO. 2 TO LOAN AGREEMENT effective as of

November 13, 2002 (this “Second Amendment”) upon the satisfaction of the

conditions set forth herein, is hereby entered into among FOOTHILL CAPITAL

CORPORATION, a California corporation (“Lender”), and American

Restaurant Group, Inc., a Delaware corporation (“ARG”), ARG Enterprises,

Inc., a California corporation (“Enterprises”), ARG Property Management

Corporation, a California corporation (“Property Management”), and ARG

Terra, Inc., a Delaware corporation (“Terra”; ARG, Enterprises, Property

Management, and Terra are collectively referred to as “Borrowers” and

individually as a “Borrower”).

RECITALS

WHEREAS, Borrowers and Lender executed and

delivered that certain Loan Agreement dated as of  December 17, 2001, as amended by Amendment No. 1 to Loan

Agreement effective as of June 28, 2002 (as further amended, modified, or

supplemented from time to time, the “Loan Agreement”);

WHEREAS, Borrowers have requested an extension

for the time period in which to deliver their projections under Section 6.3(c)

of the Loan Agreement;

WHEREAS,

Borrowers have

represented to Lender that they are in compliance with all aspects of the Loan

Agreement and the other Loan Documents, and have no knowledge of any Defaults

or Events of Default under the Loan Agreement or other Loan Documents, other

than their noncompliance with and the Event of Default under Section 7.20(a)(i)

(Minimum EBITDA) of the Loan Agreement with respect to the period ended

September 30, 2002 (the “Existing Default”) for which Lender is entitled to

exercise all of its rights and remedies under the Loan Documents; and

WHEREAS, Borrowers have requested that Lender

amend the existing Loan Agreement and waive the Existing Default and Lender has

agreed to make such amendments and waive the Existing Default, subject to the

terms and conditions of this Second Amendment;

NOW,

THEREFORE, for

good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,

Borrowers and Lender do hereby agree as follows:

SECTION 1.         RELATION TO THE LOAN AGREEMENT; DEFINITIONS.

1.1  Relation

to Loan Agreement.  This Second Amendment

constitutes an integral part of the Loan Agreement and shall be deemed to be a

Loan Document for all purposes.  Upon

the effectiveness of this Second Amendment, on and after the date hereof each

reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” or

words of like import referring to the Loan Agreement, and each reference in the

other Loan Documents to “the Loan Agreement,” “thereunder,” “thereof” or words

of like import referring to the Loan Agreement, shall mean and be a reference

to the Loan Agreement as amended hereby.

 

1.2  Capitalized

Terms.  For all purposes of this Second Amendment,

capitalized terms used herein without definition shall have the meanings

specified in the Loan Agreement.

SECTION

2.         AMENDMENT TO LOAN AGREEMENT.

2.1  Amendment to Time Period for Delivery of Projections. 

Section 6.3(c) of the Loan Agreement is hereby amended

by deleting the phrase “within 30 days prior to the start of each of Borrowers’

fiscal years” and inserting in lieu thereof the phrase “prior to January 15th

of each of Borrowers’ fiscal years”.

2.2  No

Other Amendments.  Except as specifically amended

herein, the Loan Agreement and all other Loan Documents remain in full force

and effect, and are hereby ratified and confirmed.

SECTION 3.         WAIVER OF EXISTING DEFAULT; RESERVATION OF OTHER RIGHTS.

3.1  Acknowledgement

of Existing Default.  Borrowers acknowledge that the

Existing Default exists and the occurrence of the Existing Default entitles

Lender to exercise its rights and remedies under the Loan Documents.  Except for the Existing Default, Borrowers

represent and warrant that as of the date hereof no other Default or Event of

Default exists or has occurred under the Loan Documents.

3.2  Waiver

of Existing Default; Reservation of Other Rights.  Based

on the foregoing, and in reliance thereon, Lender hereby waives the Existing Default.  Except as provided herein, Lender reserves

all of its rights and remedies under the Loan Documents.

SECTION

4.         REPRESENTATIONS AND WARRANTIES

OF BORROWERS.

4.1  Corporate Organization and Authority.

(a)   Each Borrower is a corporation duly organized

and existing and in good standing under the laws of its jurisdiction of

formation and is duly qualified to do business and in good standing in every

jurisdiction in which the nature of the business done or the property owned by

it would make such qualification necessary.

(b)   Each Borrower has all requisite power and

authority to own and operate its properties, and to conduct its business as

currently conducted and as currently proposed to be conducted.  Each Borrower has all requisite power and

authority necessary to enter into this Second Amendment and to perform its

obligations under this Second Amendment.

4.2  Corporate

Proceedings; Validity of Amendment.  Each Borrower

has taken all corporate action necessary to be taken by it to authorize the

execution and delivery of this Second Amendment.   This Second Amendment has been duly executed and delivered by

each Borrower, and constitutes the legal, valid, and binding obligation of each

Borrower, enforceable against each Borrower in accordance with its terms.

 

 

4.3  No

Default or Event of Default.  No event has

occurred and no condition exists which constitutes a (i) Default or an Event of

Default under the Loan Agreement or the other Loan Documents, other than the

Existing Default, or (ii) default or event of default, or could constitute a

default or event of default with the giving of notice or passage of time or

both, under the Indenture, and Eligible Credit Facility, or any other material

agreement to which any Borrower is a party.

4.4  No

Violations, Consents or Approvals.  The

execution, delivery, and performance by each Borrower of this Second Amendment

do not and will not (i) violate any provision of Federal, state, or local law

or regulation applicable to such Borrower, the Governing Documents of such Borrower,

or any order, judgment, or decree of any court or other Governmental Authority

binding on such Borrower, (ii) conflict with, result in a breach of, or

constitute (with due notice or lapse of time or both) a default under any

material contractual obligation of such Borrower, or (iii) require any approval

of such Borrower’s stockholders or any approval or consent of any Person under

any material contractual obligation of such Borrower.

4.5  Ratification

and Confirmation of Loan Documents.  The Loan Agreement

and all other Loan Documents and all representations, warranties, terms, and

conditions therein remain in full force and effect, and each Borrower hereby

confirms and ratifies each of the provisions of the Loan Agreement and the

other Loan Documents, including, without limitation, the representations and

warranties contained therein which Borrowers confirm are true and correct in

all material respects on the date hereof.

SECTION 5.         MISCELLANEOUS.

5.1  Conditions

to Effectiveness.  This Second Amendment shall not become

effective until Lender has received each of the following:

(a)   duly executed and delivered counterparts of

this Second Amendment by Lender and Borrowers;

(b)   evidence that the execution, delivery, and

performance of this Second Amendment have been duly authorized by all necessary

corporate action on the part of Borrowers;

(c)   consents, if any, required by the Indenture,

any Eligible Credit Facility, or any other agreement to which any Borrower is a

party; and

(d)   Borrowers shall have paid Lender a waiver and

amendment fee in the aggregate amount of $225,000, which fee shall be

nonrefundable and shall be deemed fully earned on the date paid.

5.2  Successors

and Assigns.  This Second Amendment shall be binding upon

and inure to the benefit of the parties hereto and their respective successors

and assigns.

5.3  Counterparts. 

This Second Amendment may be executed simultaneously in two or more

counterparts, each of which shall be deemed to be an original but all of which

shall constitute together but one and the same instrument.

 

 

 

5.4  GOVERNING

LAW. THE VALIDITY OF THIS SECOND AMENDMENT, THE CONSTRUCTION,

INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO

WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE

DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE

STATE OF CALIFORNIA

5.5  Expenses. 

Borrowers agree to pay the expenses of Lender in connection with the

transactions contemplated by this Second Amendment (including, without

limitation, the fees and expenses of counsel for the Lender).

5.6  Release.

(a)   Each Borrower, its respective

successors-in-title, legal representatives, and assignees and, to the extent

the same is claimed by right of, through or under any Borrower, for its

respective past, present, and future employees, agents, representatives,

officers, directors, shareholders, and trustees, do hereby forever remise,

release, and discharge Lender, and Lender’s respective successors-in-title,

legal representatives, and assignees, past, present, and future officers,

directors, shareholders, trustees, agents, employees, consultants, experts,

advisors, attorneys, and other professionals and all other persons and entities

to whom Lender would be liable if such persons or entities were found to be

liable to Borrowers, or any of them (collectively hereinafter the “Lender

Parties”), from any and all manner of action and actions, cause and causes of

action, counterclaims, suits, debts, dues, sums of money, accounts, reckonings,

bonds, bills, specialties, covenants, contracts, controversies, damages,

judgments, expenses, executions, liens, claims of liens, claims of costs,

penalties, attorneys’ fees, or any other compensation, recovery, or relief on

account of any loss, liability, obligation, demand, or cause of action of

whatever nature relating to, arising out of, or in connection with the Loan

Agreement or any other Loan Document, including, but not limited to, acts,

omissions to act, actions, negotiations, discussions, and events resulting in

the finalization and execution of this Second Amendment, as, among, and between

the Borrowers and the Lender Parties, such claims whether now accrued and

whether now known or hereafter discovered, from the beginning of time through the

date hereof, and specifically including, without any limitation, any claims of

liability asserted or which could have been asserted with respect to, arising

out of, or in any manner whatsoever connected directly or indirectly with any

“lender liability-type” claim.

(b)   As to each and every claim released

hereunder, Borrowers represent that they have received the advice of legal

counsel with regard to the releases contained herein, and having been so

advised, each of them specifically waives the benefit of the provisions of

Section 1542 of the Civil Code of California which provide:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF

EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS

SETTLEMENT WITH THE DEBTOR.”

 

 

 

5.7  Ratification.  Except as expressly amended, any conditions of the

Loan Documents shall remain unamended and unwaived.  The amendments set forth herein shall be limited precisely as

provided for herein to the provisions expressly amended herein and shall not

(i) be deemed to be a waiver of, amendment of, consent to or modification of

any other term or provision of any other document or of any transaction or

further action on the part of the Borrowers that would require the consent of

Lender under the Loan Agreement or (ii) create a course of conduct or dealing

among the parties hereto.

 

[remainder of page

intentionally blank]

 

 

 

IN

WITNESS WHEREOF,

each of the parties hereto have caused this Second Amendment to be executed and

delivered by a duly authorized representative.

 

	

  AMERICAN RESTAURANT GROUP, INC.

  
	

  a Delaware corporation

  
	

   

  	

   

  
	

  By:

  	

   

  
	

  Title:

  	

  Vice President

  
	

   

  	

   

  
	

  ARG ENTERPRISES, INC.

  
	

  a California

  corporation

  
	

   

  	

   

  
	

  By:

  	

   

  
	

  Title:

  	

  Vice President

  
	

   

  	

   

  
	

  ARG PROPERTY MANAGEMENT

  CORPORATION,

  
	

  a California

  corporation

  
	

   

  	

   

  
	

  By:

  	

   

  
	

  Title:

  	

  Vice President

  
	

   

  	

   

  
	

  ARG TERRA, INC.

  
	

  a Delaware corporation

  
	

   

  	

   

  
	

  By:

  	

   

  
	

  Title:

  	

  Vice President

  
	

   

  	

   

  
	

  FOOTHILL CAPITAL CORPORATION,

  
	

  a California

  corporation

  
	

   

  	

   

  
	

  By:

  	

   

  
	

  Title:EXHIBIT 4.02

 

 

 

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, 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

 

 

 

2

 

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 

 

 

 

4

 

effect on the date of such exercise.

 

                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 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

  

 

 

 

5

 

 

 

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)

  

 

 

6

 

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:

  	

   

  

 

 

7

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